Rio Tinto was a prominent entity with market leadership in global market leadership until 2010. The company had been considered for offering sustainable management practices related to mining for more than two decades. Mr. Sam Walsh, the Executive Director and Chief Executive Director of Rio Tinto Iron Ore Group addressed Australian-Japan Cooperation Committee in 2009 regarding significance of climatic alterations in mining industry. Stating, that there is a need to take serious initiatives to reduce uncertainties and exploit opportunities. Moreover, it is a responsibility of Rio Tinto to offer industrial solutions regarding greenhouse gas emissions and usage of alternative energies.
Specified Problems
According to World Commission on Environment and Development, numerous global companies including Rio Tinto failed to respond climatic changes in timely manner. Instead, these organizations proposed their thoughts on environmental sustainability almost a decade later. Strategic management itself is a time consuming procedure for companies to integrate in their operations. Hence, Rio Tinto needs to develop an effective plan that provides similar outcome in precise span.
As detected and stated by Mr. Walsh in 2009, climatic alterations have increased tendency of uncertainties in corporate environment. Simultaneously, the company does not want to pursue for ‘wait and watch’ approach and aim for change making activities. This raises another strategic management issue, which is expert planning. Management needs to forecast environmental changes with least distinctiveness in order to minimize risks. For accomplishing elements of certainties, there is a critical need of effective monitoring and contingency planning related to market circumstances, economic factors, and environmental compliance.
Lastly, Rio Tinto is among the nine largest mining organizations that are willing to take serious initiatives towards environmental sustainability. Being a large-scale organization, there are implementation difficulties of strategic management. These difficulties include plan communication, active participation, leadership selection, check and balance, and consistency in procedure.
Model Selection
Management Theorist, Michael Porter proposed an economic model, which is also known as “Diamond Model”, in his book named “The Competitive Advantage of Nations”. Based on this model, Porter gave reasons and evidences of competitive success for multinational organizations. The model evaluates various clusters of small industries, which specifies competitiveness of one organization is interconnected with the performance of other organizations. The factors in diamond model are collectively integrated in value chain of companies, customer relation and retention activities, and/or regional stages (Harzing and Giroud 1-23).
In diamond model, six expanded factors were discussed by Porter that are utilized in examining organizational viability. First, factor conditions incorporate human resources, information supplies, physical inputs or productivity, and infrastructural developments. Organizations utilize factor conditions to design specialized resources in alignment with industry they operate. The specialized resources are responsible for mitigating competitive disadvantages (Harzing and Giroud 1-23).
Second, the demand condition focuses on sophistication of buying decisions of home consumers that leads towards industrial competitiveness. This assists in developing unique selling points (USPs) in products and services (Harzing and Giroud 1-23).
Third, related and supporting industries focus on achieving economies of scale for organization and improving value chain. Fourth, firm strategy, structure and rivalry focus on creating objectives, monitoring activities of competitors, and allocating resources accordingly. Proceeding, influence of government alters product supply and each factor discussed above in determining tendency of competition. Lastly, chance defines events that are beyond control of organization. These events are important for consideration due to probabilities of discontinuation and defining environmental uncertainties (Recklies).
Analysis of Model & Solutions
Time management is a huge concern for Rio Tinto since organizations in mining industry today has integrated environmental perspective since formation. As stated, Rio Tinto is almost a decade behind to cope up with environmental requirements of contemporary era. Hence, factor conditions will allow the company to develop specialized resources to meet environmental compliance and reduce disadvantage related to time. Rio Tinto would need to identify and offer USPs that global mining industry lacks significantly.
In order to comply with environment and reduce periodic gap of specialization, creating an effective plan was another challenge. The factor condition from diamond model would allow Rio Tinto to allocate physical, human, and productivity in systematic manner. Moreover, the company can re-establish internal infrastructure by allocating factor resources in order to cope up with periodic gap effectively. In personal opinion, the diamond model will allow Rio Tinto to meet with contemporary lacking and implement changes related environmental sustainability in value chain. This will provide the company to acquire competitive advantages for longer period along with environmental sustainability.
Implementation of strategic plan within a large-scale organization such as Rio Tinto is another serious concern. Defining appropriate firm structure, development of efficient strategy and monitoring activities of competitors will provide a healthy push regarding implementation. Rio Tinto would be able to align challenges with proposed solutions and generate a synergy impact, both internally and externally. Strict control on internal resources, and timely assessment and improvisation in activities based on external environment would allow the company to utilize opportunities and diversify risks promptly.
Identifying dynamic and quick events in timely manner, which is uncontrollable for organization, would assist in managing uncertainties. Diamond model defines a dimension in strategic management in order to detect and consider events that can alter objectives, operations, and adapted approaches of the organization. With precise forecasting, company can re-allocate resources according to accomplishment of environmental sustainability and achieve objectives.
Conclusion
In order to address these dilemmas, Rio Tinto is suggested to utilize diamond model proposed by Michael Porter in his book. The factors specified in this model will assist the company to allocate resources, developing USPs and monitoring events to deal with uncertainties effectively.
Works Cited
Harzing, Anne-Wil and Axele Giroud. "The Competitive Advantage Of Nations: An Application To Academia". Harzing (2013): 1-23. Web. 15 July 2016.
Recklies, Dagmar. "Porters Diamond – Determining Factors Of National Advantage". Themanager.org. N.p., 2015. Web. 15 July 2016.
