Discuss about the Competitive Advantage for Rio Tinto Company.
E-Learning Material (Week -3)
Every business organization faces competition over the production and provision of services in the market especially from firms offering the same products that the company offers. As per David and Davis, (2016, p.120), creating a competitive strategy requires an evaluation of the strengths, weaknesses, opportunities, and threats in the industry. Companies must design long-term competitive strategies to establish a defensive position against the competitors and gain a competitive edge over the rivals. For the international companies to gain a competitive advantage over the other global firms, enhancing universality of customer services in all subsidiaries is crucial. Competitive advantage arises from companies ability to withstand the market demands, attracting new and retaining the existing clients, and its sensitivity when it comes to pricing and after sales services to the clients. However, Kumar, (2011, p.370) argues that companies can not maximize their profitability in the competitive environment without devising clear goals and objectives. Setting goals helps the management to plan work effectively, motivate and inspire the technical team, provide guidance and direction, and assist in the evaluation and control performance in case deviations arise. Well, set objectives guide the personnel in designing high-quality products that meet the current market demands and utilize resources efficiently so that shortages get avoided. According to Ployhart, (2012, p.80), competing for a strong customer base in the market is important and an excellent tool for innovation and provides opportunities for creative thinking. With creative thinking, innovation of unique product brands follows and this creates a larger market for the company since the newly and high-quality products invented get highly demanded in the industry. Further, after designing the right product brands for the customers, the prices set for the product should be affordable and reasonable, and this creates a competitive advantage over the competitors.
Application to Rio Tinto Company
Rio Tinto is an Australian based company that provides finding, mining, and processing services for metals and minerals in Australia, Africa, Asia, and North American markets. The main competitors that Rio Tinto faces in the global market include Xstrata Plc, De Beers SA, BHP Billiton, Anglo American plc, and Newmont Mining Corporation. However, with the adoption of the above competitive strategies, Rio Tinto can gain a competitive advantage in the minerals and metal market sector in the world. From the analysis, the potential opportunities for the company include expanding the business operations in other territories, rising demand for aluminum in attempts to replace iron, and diversification of business along with other international players. According to Kumar, et al., (2011, p.16), the management for Rio Tinto should invest more financial resources in the mining of aluminum products and ensure that the brand made is of high quality and available in different quantities all over in the global markets. Since the company has a strong brand presence internationally and has employed the use high technology in the extraction process, the company should establish regulations in particular to environmental conservation and security issues. With strict adherence to the government policies, the company ensures a sustenance growth and development and thus obtaining a competitive advantage. Also, the company should come up with a unique brand positioning statement that communicates its services to the customers and clearly differentiates itself from the competitors Dul and Ceylan, (2014, p.1266). Further, Rio Tinto should establish pricing policies such that the clients do not get exploited as the other firms may not control the charges for the minerals to their direct customers. Therefore, a clear understanding of the opportunities, strengths, weaknesses and threats of a company in the business environment enables the management to create a sound competitive strategy and thus, able to gain a competitive advantage over the rivals.
E-Learning Material (Week-4)
Innovation and creativity remain critical skills that companies should apply to achieve success in the economy. The fact that creativity involves the ability to produce new and unique ideas, innovation entails the implementation of that creativity; this suggests that creativity goes hand in hand with innovation. Dul and Ceylan, (2014, p.1255) argues that gaining a competitive advantage over the competitors requires a firm to use intensively sophisticated technologies that enhance creativity and innovation. The high productivity of a company depends on the enormous resources invested for; this calls for businesses to invest hugely in fascinating technologies that provide a breakthrough for innovation. The change process must always aim at increase the customer's satisfaction value of a product as well as lowering the costs associated with its production, and this directly reduces the price for the product. As per Haque and Deegan, (2010, p.320) statement, with low prices for an enterprise’s products, the company gains a competitive advantage and thus positioning itself firmly in the market. However, the innovation product should effectively target the desired customer. It is necessary for the technical personnel to learn that designing a well-featured product without a target market does not add value to the company, it is only a waste of resources. Therefore, this justifies Mithas, et al.,(2013, p.512) argument that before coming up with a new idea that benefits the company, the management must first analyze the current business problem that the product or service seeks to solve. Further, the technical team in the production sector should clearly communicate the existing gap in the market that needs to get closed, so that the management provides adequate resources for the innovation process. Also, the new idea should aim at long term key performance indicators of the company so that unnecessary costs for changing from one technology to another get avoided.
Application by Rio Tinto
With the implementation of strategic technology and innovation management, Rio Tinto Company can effectively benefit by enlarging the customer base in the market. Currently, the mining industry is very competitive given the natural advantage possessed by different countries across the world, this call for the adoption of sophisticated technologies by the mining companies so that they may produce unique and high-quality minerals. Rio Tinto should remain alert with technological transformations and always make use of the current technologies in the manufacture of metal items. The technical team should be creative and ready to innovate new ideas that would assist the company to improve its productivity, and this justifies Dul and Ceylan, (2014, p 1267) argument. Improving performance of the company would require investing high amounts of capital in the acquisition of modern production equipment and machinery. The company should provide adequate resources to the technical team so that the innovation process takes place smoothly. For example, provision of computers and the internet so that the IT managers can spend most of their time browsing for the new offers, new production methods, and new markets for the company's mined resources. Ployhart, (2012, p.81) argues that obtaining first-hand information about the market would enable the business comes up with long term ideas for meeting the market demand, and this creates a great opportunity for gaining a competitive advantage over the world competitors. The management should ensure that all the innovated ideas are unique and secured with passwords such that the competing firms can not have access to the technologies applied by the company in establishing a strong position in the business environment. The innovation process should follow the right channels to avoid confusion in the production sector that would adversely result to poor results and in turn lead to a destabilized position in the market for Rio Tinto Company. Therefore, the creativity and innovation processes should be linked, unified, and integrated together such that the ideas developed to meet the market demands.
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