Rio Tinto Industry Analysis

Topics: Mining, Rio Tinto Group, Titanium Pages: 9 (2817 words) Published: September 26, 2011

Globalization is becoming a common thing nowadays, as companies and people around the globe are becoming more connected to each other than ever before. Information and money flow more quickly now. Goods and services produced in one part of the world are increasingly available in all parts of the world and international communication is easy. The "globalization." era has actually started more than 2 decades ago (Modelski, 1972). Technological innovation, the rise of market institutions, advances in production and incentives for long-distance trade stimulated businesses worldwide to reach other parts of the globe. Thus, the international markets are seemingly attractive to most businesses and more businesses are now trying to capture markets internationally to gain competitive advantage and also economies of scale which will eventually lead to higher returns. Rio Tinto is one such company.

Rio Tinto is a successful international company in finding, mining and processing the earth's mineral resources such as aluminium, copper, gold, diamonds, industrial minerals (borax, titanium dioxide, etc), iron ore and energy products (coal and uranium). Rio Tinto is a combination of several subsidiaries with each subsidiary focusing on a type of product. This report will be focusing on Rio Tinto's industrial minerals group of ilmenite miners that are comprise of wholly owned QIT - Fer et Titane in Canada and also 50% interest Richards Bays Mineral located in South Africa. Both subsidiary mine ilmenite which produces titanium dioxide as the main products that are usually used for pigments used in paper, plastics, paints, etc.

This report will analyze the importance of both the general and industry assessment and the impact environment will have on the company, strategies that are set to achieve the organization goals and also Porter's 5 forces theory for the industry assessment. The report will be focusing on a mix of both QIT - Fer et Titane and also Richards Bay Mineral and Rio Tinto as a whole.

The importance of environment assessment
According to Deresky (2002), the first thing that a company should do in setting global strategy is to define or clarify mission and objectives. Assessment of the external environment that the firm will face in future should be done next and also analysis of the company's capabilities in dealing successfully with the environment. Environment factors are significant factors that will influence the success of a company's global expansion. Rio Tinto's fundamental objective is "to maximise the overall return to shareholders by operating responsibly and sustainably in finding, mining and processing minerals - areas of expertise in which the Group has a clear competitive advantage" ( Rio Tinto Ilmenite mining operates in Canada and South Africa, the risks of operating in different geographic area should be carefully considered. According to Deresky (2002), environmental scanning refers to the process of gathering information and forecasting relevant trend, competitive action, and circumstances that will effect operation in geographic area of potential interest. Hanson et al's (2002) found that a firm might not be able to control the general environment's segment and element; instead, it can gather the information required to understand each segment and its implication for the selection and implementation of the appropriate strategies. Thus, general environment assessment is essential, the general environment that should be considered are demographic, economic, political/legal, sociocultural, technological and global dimensions which affect the company's global expansion. - Demographic

According to U.S. Census Bureau, the world population is 6.4 M currently and is projected to reach 6.5 M by January 2006. Thus the need for titanium dioxide is increasing steadily based on the rapid world's population grow which is evidenced from Fig1 below. To cope with the increasing...
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