Discuss about the Factors Impacting Decision Making in Rio Tinto Company.
The decision-making process is crucial in every organization. However, these decisions are greatly affected by factors both internal and external. The environment plays a significant role in ensuring that firms achieve their set objectives. With globalization, competition is increasing and this calls for the need for organizations to make the best decisions based on those factors. The Rio Tinto Company, which is a British-Australian firm is one of the leading mining and metal companies. Rio Tinto was started in 1873. The company operates worldwide. Operating globally exposes the company to several competitors. For Rio Tinto management to make sound decisions which will lead to the achievement of its objectives, a critical analysis of the operational environment is relevant. The Rio Tinto company is one of the leading producers of copper, iron ore, uranium, coal, diamonds and several others. Despite mineral extraction, Rio Tinto refines iron ore and bauxite. The vision of Rio Tinto is to become the leading mining and metal company in the world.
The trending issue is that the demand for minerals and metals keep on increasing despite the declining economy. As technology improves each day, the demand rises since most of those technologies make use of the minerals. The political, economic, social, technological, environmental and legal (PESTLE) factors play a key role in the demand and supply of goods for the company (Marmol, Feys & Probert, 2015). Governments have raised taxes on the extraction of iron due to the prediction that the iron ore is declining. The impact of this is that management has to make decisions on how to finance the mining, extraction, and distribution of the products. Some economic factors affecting the company include a drop in sales due to the increase of iron products from the United States, and the slowdown of the Chinese economy (Pyle, 2014). Nevertheless, Europe is in an economic crisis. One of the major social problems associated with mining is pollution. People are complaining about the pollution effects caused by industries on the environment (Sell, 2015). The emission of gasses into the atmosphere leads to the depletion of the ozone layer giving way for the harmful ultra violet radiations into the earth’s surface. Problems associated with the UV rays include skin cancer and the destruction of plants. Nevertheless, acid rains due to harmful gasses destroy plants making it hard for societies to survive as poverty levels are likely to increase. (Pol & Thomas, 2014). Management also has to decide on technology. For instance, driverless tracks and trains in the mining sites which will facilitate operations (Geological Survey, 2014). Several legal requirements have emerged. Management is now required to do reports regarding the greenhouse gas emissions (Kumar, 2015). For any project likely to contribute to the emission of gasses, Rio Tinto is to report to the authorities (Rio Tinto, 2017).
But what are the company’s strengths and opportunities in making decisions? The Rio Tinto’s strengths, weaknesses, opportunities, and threats are also important when making decisions (Pahl, Richter & University of Applied Science Berlin, 2014). A critical analysis of the four items is crucial. The internal business environment has modern technologies for mining and extraction of metals. Another strength is that the Rio Tinto brand is well-known in over fifty (50) countries in the world. As a leader in the copper and aluminum extraction, Rio Tinto has an opportunity to expand its operational zone. The rising need for aluminum provides the company with an opportunity to grow. The social media has also provided the company with a platform where it can conduct its marketing activities and attract more clients. However, some of the threats and weaknesses which face the company include strict government laws regarding the company’s processing activities, government interventions which lead to operational inefficiencies and the high debt rates. Nevertheless, the company is facing a stiff competition from companies like De Beer SA, Alcoa Inc., Anglo American plc and Newmont Mining Corporation. From the SWOT analysis, there are several things which management can do to improve the organization’s position. To increase the employee performance, new technologies have to be introduced. This will in turn, lead to an increase in production. New and updated systems can serve as motivational factors for some people. Management has to put this into consideration in the decision-making process. Competitors affect the business strategy of an organization in several ways. For instance, the competition faced by Rio Tinto is very high. To counter the competitors, their marketing strategy will have to change. As most people use the social media for communication, there is need to make use of the platform to inform people of the existence of the company (Brown & British Computer Society, 2013).
Business structures and strategies change depending on the operational environment. For instance, an individual operating a sole proprietorship might find it hard to compete with partnerships or companies. What is the person supposed to do? For most, the best thing to do is to change the operational strategy to either a partnership of a sole proprietor (Spadaccini, 2017). Trade is about building a company’s reputation and attaining the set goals and objectives. For Rio Tinto to be effective globally, several changes need to take place. For instance, the introduction of new management in the foreign nations where expansion needs to take place and the introduction of new technologies to increase output. Nevertheless, due to the government regulation of activities, Rio Tinto has to change its operational strategies to fit the government’s demands. Operational strategies will have to change to favor environmental friendly methods. This will help to reduce the pollution rates thereby doing away with some social problems. The customer-client relationship is what builds organizations. Strategies to improve the relationship are of great significance. Without customers, why the need for a business then? Clients form part of the business environment. This makes the study of the demographics an element of study for any organization. But what is Rio Tinto to do regarding this? A strategy to reach the potential consumers on time is of the essence. Special offers can be made to the potential consumers to build trust between them and the firm. What about those people who do not know the existence of the organization? The best strategy is to find online marketers who are well established to market their brand.
The decision-making process is not an easy task as some individuals might think (Baker, 2014). It needs the analysis of the political, social, environmental, economic and legal environments. Whichever decision made, it must comply with those factors. All the factors can be found within, or outside the business. The employee-employer relationship is a great determinant of what strategy is to be adopted. However, the most important factor to put into consideration is the organizational culture. Organizational culture is what shapes the operations of Rio Tinto mining company. The culture supports business ethics. What does ethics entail? So many things which include the rules and regulations to follow to achieve the objectives of Rio Tinto. Abiding by the rules is a strategy which management should ensure that every person follows. Rules govern every operation. The decision-making relies on those rules. Following rules, in any event, be it production or sporting events will always lead to the desired direction. Paying attention to even the slightest changes in the rules should be a basic need for employees. Organizational changes begin with changes of the rules. To be able to implement the best business strategies, rules must be present as well as consideration of the internal and external factors affecting business operations. The managers of Rio Tinto should:
Environmental factors are the determine factors of how a business operates, how it relates to the society and how its future is likely to be. It is good for management to invest more and keep progress of the changing environment. The Rio Tinto management should track changes in the economy, technology, legal environment as well as the demographics which provide them with the market (Roll, 2013). The SWOT and PESTLE analysis are crucial for the Rio Tinto management to attaining its goal and objectives. In fact, decisions made by the company should be based analysis of the two concepts. Evaluation of the implemented strategies should be done. Evaluation will show the company where it is in its operations. This information is helpful since managers can use it to make predictions and hence formulate new strategies if the existing ones are not working out well. Human resource should also be considered as a factor affecting decision making by the Rio Tinto industry. The employees are part of the company and any decisions made will affect them either directly or indirectly. Motivating the employees will lead to an increase in productivity, the creation of good employer-employee relationship and thereby improving the reputation of Rio Tinto.
References
Rio Tinto. (2017, April 7). About Rio Tinto. Retrieved from Rio Tinto: https://www.riotinto.com/aboutus/about-rio-tinto-5004.aspx
Geological Survey. (2014). Minerals Yearbook: Area Reports: International Review 2007:Asia and the Pacific. Geological Survey
Marmol, T. ., Feys, B., & Probert, C. (2015). PESTLE analysis. Place of publication not Identified.
Pahl, N., Richter, A., & University of Applied Science Berlin. (2014). SWOT analysis: Idea, methodology and a practical approach. Munchen: GRIN Verlag
Sweeney, S., & Craig, R. (2013). Social media for business: 101 ways to grow your business without wasting your time. Gulf Breeze, FL: Maximum Press
Brown, E., & British Computer Society. (2013). working the crowd: Social media marketing For business. London: BCS
Pol, L. G., & Thomas, R. K. (2014). Demography for business decision making. Westport,Conn: Quorum
Baker, A. J. (2014). Business decision making. London: Croom Helm Sell, N. J. (2015). Industrial pollution control: Issues and techniques. New York: John Wiley & Sons.
Kumar, A. (2016). Industrial pollution: Problems and solutions. Delhi: Daya Publishing House
Pyle, D. J. (2014). Chinese Lessons or Chinese Puzzles?
Spadaccini, M. (2017). Business structures. Irvine, CA: Entrepreneur Press.
Roll. I. E. R. (2013). Economics, government, and business. London: Athlone Press
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