Innovation And Entrepreneurship In Fortescue Metals Group Ltd: An Essay.

Discuss About The Innovation And Entrepreneurship The Company?

The company was founded in 2003 and has a market value of about three hundred million Australian dollars in market value. The company’s successful operations are growing very fast as a result of innovation and entrepreneurship (Simpson, 2014). The focus on innovation and entrepreneurship has made the company to be the de facto leader in iron ore and a vital exporter of iron ore (Mattingley, 2014). The company has been continuously expanding its global share of the market through increased investments. The company has made a strategic expansion into Brazil which a lot of mine resources so that it can increase its annual output. This report seeks to discuss the processes of innovation and entrepreneurship in Fortescue Metals Group Ltd and offer recommendations for improvements.

Entrepreneurship is a term that is used to refer to the process of seizing or creating an opportunity and pursuing it whether there are resources that are currently controlled or not (Gandhi et al., 2015). Entrepreneurship is considered to take place both at an individual level or organizational level. Entrepreneurs are individuals who possess enterprise and are ready to take risks to seize opportunities that exist within the organization (Galindo & Méndez, 2014; Santos, Navarro, & Kaszowska, 2016). An entrepreneur owns and operates the business with the expectation of getting financial profit. Fortescue Metals Group Ltd is an example of a corporate entrepreneur.

Intrapreneurship is a process by which individual in an organization pursue an opportunity independent of the resources that he/she currently control (Kuratko, Hornsby, & Hayton, 2015).  It entails the framing the mindset and behaviors for the outside to create and build a business (Karlsson & Warda, 2014; Mro?ewski, & Kratzer, 2016). It suffices to mention that small businesses and corporate are required enhancing innovativeness to prosper and gain competitive advantage (Ester & Maas, 2016). Fortescue Metals Group Ltd has employed several intrapreneurs who create new products and ideas.

Innovation is defined as the successful commercial and implantation of new ideas, technology, and knowledge (Agarwal, & Thiel, 2014; Kuratko, Hornsby & Hayton, 2015). It has to do with the conversion of new ideas into meaningful socio-economic well-being. The innovative process is deemed to extend from the time of inception of ideas to the actual commercial release. This process entails production, distribution, and consumption (Spinosa, Schlemm, & Reis, 2017). Thus, innovation is a process which integrates economics, entrepreneurship, management, and science and technology. It suffices to point out that innovation is also dependent on the collective effort in an organization (Berger & Kuckertz, 2016).

Overview of Innovation and Entrepreneurship theories

Several theories have been posited to explain the motivation for entrepreneurship and innovation (Berger, & Kuckertz, 2016; Kuratko, Hornsby & Hayton, 2015). Frank Knight developed one such theory. He developed the Risk Bearing Theory which argues that risk is an important trait in entrepreneurship (Agarwal & Thiel, 2014). According to Frank Knight, uncertainty is a critical factor in production. According to this theory, an entrepreneur gets profit which acts as a reward for taking risks (Cunha, dos Santos, & Sereno-Ramirez, 2016). A different view of an entrepreneur is given by Alfred Marshall’s theory of entrepreneurship. In this theory, entrepreneurship is vital in organizing the other factors of production that include labor, organization, land, and capital (Santos, Navarro, & Kaszowska, 2016). Schumpeter’s Innovation Theory posits that an entrepreneur is an individual with foresight, creative, and innovative (Galindo & Méndez, 2014; Spinosa, Schlemm, & Reis, 2017). In this case, an entrepreneur is an individual who can locate new sources of raw material, can develop new ideas, discover new markets, and comes up with new production means (Simpson, 2014; Mattingley, 2014). These theories are essential in explaining the trends and emerging issues in innovation and entrepreneurship (Karlsson & Warda, 2014).

Fortescue Metals Group Ltd has invested heavily in innovations that have expanded its operations. The company recognizes that technology is integral in its operations (Simpson, 2014). The company has developed a strong technological environment that includes communication systems, infrastructure, network, and enhanced logistics in foreign countries where investments are made (Mattingley, 2014). Fortescue Metals Group Ltd is working towards developing innovative ways of protecting, preserving, and conserving the environment (Simpson, 2014).

It is vital to mention that sustainable development can only be achieved through environmental protection (Agarwal, & Thiel, 2014). The company has been paying over one billion Australian dollars in royalties, taxes, and other government assessments. The company has invested heavily in the construction of more kilometers of railways (Simpson, 2014). The company has invested in power stations, port, roads, and several housing units. The innovative undertaking of Fortescue Metals Group Ltd has resulted in the creation of job opportunities for thousands of poor Australians. Fortescue Metals Group Ltd has operations that span four mines in Pilbara. These four mines include Christmas Creek mine, Cloudbreak mine, Solomon Hub and the Kings Valley mines (Mattingley, 2014). The company operates and owns an integrated supply chain. In the value chain of Fortescue Metals Group Ltd, innovation design and process is a key component of the strategy to compete in the challenging industry standards (Simpson, 2014). The value chain enables the company to be more effective and efficient in delivering its product suite from the mine zones to the market. Successful enterprises lay emphasis on strong value chains for sustainability (Berger & Kuckertz, 2016).

Innovative and Entrepreneurial Activities

The company is conducting extensive research in exploration and discovery so as to identify valuable iron deposits. Through exploration and discovery, the company has been able to continuously produce quality goods for the market (Simpson, 2014). Additionally, the company has efficient extraction and recovery mechanisms. The company’s ability to use innovative technologies that match the requirement of its iron ore deposits is evident. In fact, the company boasts of the best technology in the mining sector in Australia (Mattingley, 2014). Furthermore, through continued innovation, the company has created a state of the art processing facilities (Simpson, 2014). Efficient production is essential in reducing the production costs and increases the profit margins (Carayannis Samara, & Bakouros, 2015).

The company has the iron ore processing facility that is designed for wet processing is central to optimizing output. Regarding transporting the mined iron ore to the port, the company has the heaviest haul rail which has a total of forty-two-ton axle load. The innovative trend at the company has seen the development of heavy haul railway track and the five berths Herb Elliot Port. The company has exploited the accessibility to China as a result of a shorter seaborne journey from Port Hedland to China (Simpson, 2014). This accessibility has strengthened the relationship between the company and its stakeholders and customer. Globalization is central in influencing business activities in the modern times (Ester & Maas, 2016). Companies should focus on developing mechanisms for meeting global standards to remain competitive (Cunha, dos Santos, & Sereno-Ramirez, 2016). Further, Fortescue Metals Group Ltd has engrained innovation in its approach to business (Mattingley, 2014). Indeed, Fortescue Metals Group Ltd is the first company in the world to control a railway which is outside of operation.

Additionally, through innovation, the company has a reputation of using CAT autonomous haulage technology (Simpson, 2014). This technology is being used on a commercial scale. The company’s port is designed to facilitate easy blending and stockpiling. The design has therefore improved the rate of production of iron ores to meet the market demand. In respect to this, the company has been able to maintain loyal customers (Mattingley, 2014). It is imperative to note that for a company to maintain its high-value customers, it must sustain the quality of its products.

To further increase efficiency, the company has invested in ship loading (Simpson, 2014). Fortescue Metals Group Ltd has invested in three ship-loaders, five berths that are meant to maximize utilization and the out-load capacity. It is also imperative to point out that Fortescue Metals Group Ltd has invested in intensive market research. The objective of the market research is developing favorable marketing practices (Simpson, 2014; Mattingley, 2014). The company is helping its customers to achieve the best value in the use of the products sold to them. Also, the company has developed a strategy that is aimed at expanding its international market base. The company has, therefore, invested in shipping to deliver goods to international customers according to their specifications (Mattingley, 2014; Simpson, 2014; Galindo & Méndez, 2014). It suffices to point out that Fortescue Metals Group Ltd is committed to enhancing indigenous employment (Kuratko, Hornsby & Hayton, 2015). The company has developed a training program that has helped in creating over sixty-thousand jobs in Australia. Fortescue Metals Group Ltd has created Vocational Training and Employment Center (VTEC) which has been integral in producing young entrepreneurs (Simpson, 2014).

To realize greater productive and gain the competitive advantage, Fortescue Metals Group Ltd should implement a raft of recommendations discussed hereunder.

Firstly, Fortescue Metals Group Ltd should invest in open innovation so as to improve its production levels and gain entry into new global markets. The open innovation will enhance its revenue base and improve its rate of return on investments. Open innovation strategy will enable the company to improve its technology and acquire more patents in other countries.

Secondly, Fortescue Metals Group Ltd can enhance its management system. The company should adopt best practices in management so as to ensure that its employees remain productive. The company should allow its employees to be more innovative. The churning of new ideas in the company will spur growth and generate more revenue to the company. Additionally, flexibility in management will help in adapting to the new foreign environment. This adoption will be integral in guarding against asset damage and environment destruction. Improving the company’s managerial abilities will enhance its image and maintaining a sustained growth.

Conclusion

Fortescue Metals Group Ltd is a successful mining company in Australia as a result of continuous innovation and entrepreneurship. The company has maintained the best managerial acumen in the mining industry. The company has invested in talented employees with innovative and entrepreneurial skills. Fortescue Metals Group Ltd has invested heavily in modern technology that has expanded its exploration and shipment of products to customers in Australia and beyond. I summation, Fortescue Metals Group Ltd has implemented programs that are meant to foster sustained growth of its business operations. The company is striving to achieve international best practices such as reduction in carbon emissions and environmental protection.

References

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