Chapter preview-III
Strategic Management for Minerals Business
Traditional structural sources of advantage
for most of the mineral industries—for example, geographic barriers, regulatory barriers, and economies of scale—have
eroded. Squeezing savings from operations generally yields diminishing returns. Even the bumper profiting market is vulnerable
to poaching. In the search for new sources of advantage, two broad schools of strategy have emerged. So far, we have discussed in relatively
static terms capabilities as they exist today. As competition intensifies, managers who see their capabilities as static will
find themselves rapidly outflanked by more aggressive competitors. The challenge is to accelerate and convert capability building
into performance improvement as rapidly as possible—and across enterprises. Let us begin by discussing strategy first.
Following Michael E. Porter’s seminal work on strategy, (Harvard Business Review,Nov-Dec,1996 ) one can explain
strategy in business as realizing hitherto unexplained opportunities and moving
rapidly to exploit the opportunities at present and also ,may be in different forms , in the future ,at the same time retaining
the flexibility to respond favourably to any adverse situation..
Porter has differentiated the attributes
of strategy as the following and consider them as strategy:
•
Differentiation: the property and capability to produce and serve in a manner that can not be emulated by the
competitors.
•
Innovation: A commercially successful change in the process or service or to bring in a material the novelty
of which in use or application can bring success. A innovation by its property
usually gets a favoured position as against an entrenched practice/product or process. These innovations can be both in material
or product , or in service.
•
Increase in value chain : To move up in the ladder in value addition to the product or service before very few
do it. From uncut diamond to cut diamond is a value addition.
•
Scaling by alliance, merger and acquisition : To quickly respond to the demands of growth, competition and venturing
into new market areas, firms adopt these methods of inorganic growth.
•
Integration by fit, Convergence: Understanding the areas of core strength ( more popularly today as core competence
and technological ability) and building steadily on them to dismantle the competition.
Interestingly Porter also has said what strategy
is not. Some of them are the following:
•
Only Cost Reduction : The possibility may be long existing. So
there is no novelty. A competitor may soon emulate or catch up.
•
Leveraging : The positional, political and some structural advantages
are usually temporary and thus are not strategy by themselves.
•
Operational Effectiveness : So the plant was not running to its potential ! The possibilities might have been
existing for long. Why it could not be started before?
•
Positioning : The traditional positioning is not of great permanent advantage.
•
Working to the potential : Increased utilization, value from the same products –the scope long existing
– are not strategy by itself.
The
organizational attributes
Importantly , not all organizations are structurally oriented to strategic planning
1. Learning Organizations.
2. Non-linear Thinking.
3. Competition Tempered.
4. Exploratory in
Nature.
5. Expansion or Growth
Oriented.
The obvious question here is how strategic
planning is different from planning or long range planning. The essential difference is in time and space. For example, when
a company or a firm involves itself in ordinary planning exercise it assumes that the market requirements are largely static
or dynamic in a predictable manner. The following questions are to be asked:
•
Are the Company’s
internal resources and capabilities well aligned, in order to respond those environmental changes?
•
Which can be the useful strategic initiatives to create the significant business value for the Company?
•
Does the company encourage innovations in products, process and services ?
•
Does it have capable profit-centered research and analysis group?
Planning Studies
Strategic planning requires in depth assessment
of the organizational capability and deficiencies, positions of weakness, unexploited market, threat from existing and emerging
players and capability building requirements. The studies include:
1.
Macro-environment analysis
2.
Industry segmentation
3.
Industry attractiveness analysis
4.
Major competitor analysis
5.
Structural change scenarios
6.
Cash flow analysis
7.
Return on Investment per Component (ROIC) analysis.
8.
Business portfolio analysis
9.
Value chain analysis
10. Supply
Chain Management Capability
11. Core competence analysis
12. Unexplored or
Hidden value analysis.
13. Market share analysis
14. Strength ,Weakness, Opportunities and
Threat ( SWOT) analysis
15 Benchmarking report
16. Strategic market evaluation
17. Product-market mix strategy
18 .Cost reduction strategy
19. Generic strategy in all organizational aspects.
20.Differentiation strategy
21.Growth strategy
22.Functional capability
23. Total Quality Management and Assurance Requirements
Tools for implementation of Strategic Planning
Architecture in organization
Strategic planning today is nearly impossible
without the framework of networking architecture and supportive software and hardware implements. The following are necessary
for an organization to prepare itself for strategic planning demands.
•
Network Infrastructure- Internet Support.
•
Supply Chain Management Framework.
•
New Accounting and auditing standards.
•
Performance mapping tools.
•
Integration of marketing knowledge: Not to miss small and large pictures.
•
Forecasting
•
Overall knowledge integration.
•
Templating and standardizations.
