The Future of Rio Tinto's Business Strategy

Bachelor Project in Business Administration

Group members: Federica Giuseppini (58314), Peter Ravnborg

Nissen (57918), Viktor Satterup Morell Hansen (58272)

Project supervisor: Poul Dines

Number of Characters: 123.943

Year: 2018

Abstract

In this paper a critical realistic research about scenario planning & the computer program

NVivo has been conducted. The focus of the research was to see how the two combined

methodological approaches could be used to improve and formulate future business

strategies of Rio Tinto. The analysis started with the implementation of NVivo. Furthermore,

the research identifies key forces related to Rio Tinto and the mining industry by using

Porters Five Forces. A PESTEL analysis of external driving factors is needed to assess the

uncertainties. The results provided by this analysis will be used to construct two scenarios.

From the research it was concluded that NVivo can be used as a tool for scenario planning.

Furthermore Scenario planning showed that uncertainties were present in the external

environmental of the company. However it was also concluded that scenario planning has a

limited impact over the business strategy of Rio Tinto.

1

Introduction 4

Problem Area 5

Company description 7

Scientific foundation - Critical Realism 8

Theory 9 Intro about NVivo 9 Scenario planning 10

What is Scenario Planning? 10 Types of methodologies 11

Methodology 14 Data Gathering 14 Scenarios to Strategic Planning 16

Analysis 18 NVivo 18 Porter's Five Forces 21

Buyer & Competitive rivalry 21 Supplier Power 25 Barriers to entry 27 Threat of substitutes 28 Sub-Conclusion - Porter's Five Forces 29

PESTEL analysis of Rio Tinto 30 Political factors 30

Australian government 31 Corporate tax 31 Workforce 32

Economic factors 34 World GDP 34 Chinese Economy 35

Social factors 36 Technological factors 38 Environmental factors 40

Constructing scenarios 42 Strategic planning of scenarios 43

Scenario - Deep sea 43 Deep sea impact on key forces 44 Prioritization of strategic objectives 45 Portfolio management 45 Performance management 45 People 46

2

Partners 46 Sub-conclusion on the Deep sea strategy 46

Scenario - Coral reef 47 Coral-reef impact on key forces 47 Prioritization of strategic objectives 48 Portfolio management 48 Performance management 49 People & Partners 49 Sub conclusion on the Deep sea strategy 50

Conclusion 50

(De)Limitation & Reflections 51

Bibliography 54

3

Introduction

Managers live in a constantly changing environment, facing around-the-clock important

decision-making and endless strategic choices. In international business; governments, industries and

local communities constantly challenge the managers to always be one step ahead. Methods like

forecasting can be a useful management tool for planning ahead, but when uncertainty becomes too

unpredictable one cannot be confident with a single forecast. “What was the "if only we had known

that... fact?” (Ringland, 1998 p. 86). Scenario planning attempts to deal with this issue, by suggesting

methods constructing and forecasting multiple hypothetical futures. It is not about predicting the

future, but showing a range of possible futures, to expose oneselves as subject, to alternative scenarios

and decision-making.

Despite the fact that new uncertainties enter the markets everyday, the field of scenario planning

literature and methodology has not been modified for two decades. The latest material was written in

the 1990’s and the main body of research was related to understanding the potential of the internet,

with questions such as how the internet would evolve as its development was surrounded by

uncertainty.. While some of the scenarios actually followed history, the methodology stayed in the

past.

Global factors are shaping the competitive landscape of industries, impacting and restructuring the

political, economical, social and technological tendencies. Leading economic nations like the US and

China that are in dispute over Tariffs are examples of external impacting factors, as this disputes are a

threat of restricted trade liberalization. Assessing and responding to these forces is essential for

companies to sustain a competitive advantage, as they impact the daily operations

Before the chinese manufacturing of steel reached its peak, only 5 companies were producing iron ore

in Australia. During the 21 century more than 20 new companies have entered the market, but due to

low commodity prices few of them are still operational (Ironorefacts, 2017). Currently, the three

largest producers of iron ore are Rio Tinto, BHP Billiton and Fortescue Metals Group. Since earlier

2000’s, metal price has increased by 176% as of 2014 (Global Agenda Survey 2012, 2018). Because

of China’s rapid growth, demand has led a significant increase of commodity prices, but during the

past few years the hike in commodity prices has stopped and stabilized. As the demand for raw

materials in China has diminished, which represented one of the main geographical areas of revenue

4

generation for mining companies, it created new obstacles and challenges, specifically regarding the

long term strategic planning process in the mining industry.

Problem Area

Scenario planning, originally founded by Herman Bang in 1961, has been applied overtime to

strategic management in organizations like Shell and ICL (Ringland, 1998). It has prepared managers

for uncertain futures and challenging strategic decisions, in different feasible future environments.

While the implementation of scenario planning has proved to be successful, criticism has also arose.

Scenario planning is a very time consuming and high-priced tool, requiring a lot of resources and

manpower. The different typologies were developed between the 1960-90’s. To gather empirical data,

managers had to conduct many interviews with experts or develop their own computer programs such

as trend- and cross impact analysis. This can be an explanation as of why “only 20% of large

organizations use scenarios currently, the need for good thinking - to set content and process - is

clear: it is a leading edge activity” (Ringland, 1998, p. 190). As scenario planning has only been

applied by large-medium companies, who have resources to do so, we have decided to challenge this

procedure with the aim of making it more accessible.

Instead of collecting 60 managers in a workshop, over a duration of 6 months, this paper has the

function to prove that social science methodology ‘automated content analysis’, can become an

alternative to this costly and time consuming approach. The computer program named Nvivo, an

instrument used for quantitative and qualitative document analysis, will be used to understand key

actors opinion on future uncertainties, caused by external driving factors like economic growth or

climate changes. The methodologies of scenario planning were built before technological

advancements e.g. before the introduction of internet, a very different world than today. Our research

aims to create an innovative method for managers to conduct most of the empirical data gathering and

analysis from their own desk. Additionally, to test whether we can create a modern, less time and

resources consuming methodology for companies both large or SME. We have chosen to challenge

scenario planning, by using a company with a medium level of uncertainty, to determine if this can be

considered a reliable tool in the strategic decision-making process.

Rio Tinto, was founded in 1873. Over 150 years of experience in exploring, expanding, operating and

innovating, it became Australia's and the world largest producer of mining materials. Through history,

5

they have expanded their operations, by the use of mergers & acquisition (M&A), Research &

Development (R&D), and capital management. China has become Rio Tinto’s biggest client,

accounting for 40% of the organization revenue (Riotinto.com, 2018). Rio Tinto’s current situation

can be described as good, but uncertainty lies ahead. Threats as trade liberalization, climate changes

and automations of operation, are a concern. While these can be defined to be certain trends of our

world, the uncertainty relies in the influence and outcome of external driving factors and key forces

over the industry. Can scenario planning together with NVivo, be used as a comprehensive framework

for Rio Tinto upcoming strategic decision-making and avoid possible substantial loss?

Research Question: How can Rio Tinto business strategy be improved by applying scenario

planning and the use of NVivo?

Objectives

To answer the research question, three sub-questions need to be address:

● What scenarios can be constructed by examining current macro-environmental forces?

● How will future external driving factors impact industrial key forces?

● How do future key forces change Rio Tinto’s business strategy?

This paper is structured as follows. Starting with an overview of Rio Tinto strategy and mission to

better understand the background of the research, we will then present the scientific foundation upon

which the research is built. Furthermore, we will define the theories chosen to pursue the study and its

methodology. Following there will be the analytical section based on the application of the main

selected theories and theoretical tools on the mining industry and Rio Tinto. Finally, we will address

the delimitations of the paper and its conclusion.

6

Company description Vision

Our vision To provide Rio Tinto Group companies with competitive advantage by collaborating with

business units to reduce their Total Cost of Ownership (TCO) in procured goods and services.

Mission

Our mission To increase shareholder value by exercising our procurement expertise and leveraging

Group scale.

Rio Tinto was founded in 1873 and today is one of the main companies of the mining industries

across the globe. It is one of the largest producers of essential metals such as aluminum and steel.

Competitive advantage: According to their annual report, one of Rio Tinto’s factors contributing to its

competitive advantage lies in their ability to provide a diversified portfolio in continue optimization.

Furthermore, the company believes that a strong balance sheet is a major advantage, their 2017 results

consisted in US$3.8 billion with a net ratio of 7 per cent, according to the report, this results provide

Rio Tinto with resilience against macroeconomic and market volatility. “Forward plan The Group

believes that having a strong balance sheet is a major competitive advantage and is essential in a

cyclical business, and will therefore continue to manage net debt carefully. ” They believe that a

future competitive advantage of the company will be new technological techniques such as artificial

intelligence, however this could also be seen as a possible threat.

Strategy: On Rio Tinto annual report and website, the overall strategy and ultimate goal for the

company is described as deliver the highest value to their shareholders. They believe it can be fulfilled

focusing on what they call “four Ps”:

Portfolio – as previously mentioned, one of the competitive advantage of Rio Tinto is the

diversification on its portfolio of multi-decade assets. Performance – safety is defined as the first

priority and core value in every action the company takes. Rio Tinto aims to generate value through

every step of their value chain. People – part of Rio Tinto group strategy is to recruit and attract the

right people with the required capabilities to build a committed and diverse workforce in the

organization. Partners – as the environment around the company becomes more complex, it is

7

important to recognize opportunities in the partnership of external stakeholders (e.g. customers,

governments and suppliers).

Rio Tinto strategy focuses on the maximization of cash through an approach based on quality of

products instead of volume and providing their shareholders with remarkable returns. As they deliver

their strategy, worldwide Rio Tinto workers share a code of conduct based on values such as safety,

respect, teamwork, integrity and excellence. Furthermore, partnership is one of the key focal points of

Rio Tinto strategy.

- Rio Tinto Annual report 2017

Scientific foundation - Critical Realism

To answer the problem formulation previously explained, the research is conducted on the foundation

of Critical realism. The approach was conceived by authors such as Roy Bhaskar, Rom Harré and

Tony Lawson (Egholm, 2014). It is a structuralist perspective build as a critique to positivism,

hermeneutic and social constructivism. Critical realism obstructs and criticise unity-of-science, which

believes in objective processes and conclusions (Ibid). The ontological view consists in seeing the

world as a combination of structures and relations that exist independently of the researcher. The

objective is to discover the invisible structures and mechanisms that endure in reality, by

understanding and explaining at the same time (Ibid). They focus on the way in which meaning and

signification is a product of a system of signs. Instead of theories of language which asset that words

and language refer to a world of objects, structuralists and critical realist argue that meaning depends

on relation between different elements of a system (Jørgensen and Phillips, 2002). Structures can be

8

linguistic, economical and social. They examine both collective and historical constructions, that

create the collective actions. Additionally the individual is seen as part of a collective, which is a

reflection of the environment they interact with (Ibid).

In Critical realism they apply a retroduction and nomothetic approach to studies. Observations can

never empirically be confirmed, so researchers have to inductively interpret frequent patterns and

elements in the chosen material. Moreover, they establish deductively hypotheses about structures.

They believe that all objects, in our case Rio Tinto’s business strategy, can be divided into surface and

depth. The starting point is to identify what external driving factors exist in the macro environment,

based on methodological pluralism (ibid).

Roy Bhaskar believed that the environment’s surface and depth is divided into three levels (Ibid). The

real level looks at structures that make the phenomena possible, in our case China and Australia. The

actual level examines events and actions established by structures, which create the foundation for the

surface level. The deep level, also called transitive, is the epistemological part of the research. In this

stage the concept of truth is applied. Critical realism believes that scientific truth or validity to

describe structures exist if it can occur outside the reality researchers see (Ibid). First, it assume that

the structures exist even if they can not be physically seen. Secondly, creating hypotheses based on

findings from the material of repeating patterns and elements. Finally it is set up against the empirical

data explaining the phenomena and its actions, or in our cases the scenarios needed to revision Rio

Tinto’s business strategy (Ibid).

Theory

Intro about NVivo

NVivo is an innovative tool aiming to assist in researches providing qualitative data analysis. This

instrument is based on providing distinct results following a certain procedure.

Docs: when creating a new project in NVivo you are allowed to attach files to represent data you

implemented in the analytical process but don’t wish to directly include. The typologies or files are

several e.g. reports, notes, vocal registrations and interviews. Nodes: they consist in a set of categories

and coding. Nodes can represent different categories such as concepts, people, ideas and so forth.

NVivo possess the capacity to symmetrically associate nodes in different documents uploaded

(Richards, 1999). Qualitative Coding: by adopting symmetrical associations of several nodes in

9

different sets of data the tool is capable to unify them into plausible patterns and generate prevailing

themes (Richards, 1999).

Scenario planning

In this chapter, there will be a clarification of different scenario planning methods. First, an

introduction to scenario planning. Secondly, a summary of scenario plannings origin and academic

literatures development. Then, a review of how the three dominating methods differ. The authors used

in this paper agree that scenarios planning is about multiple future outcomes, but the methodologies

have dissimilarities in regards to use of qualitative and quantitative utilization. In the methodology

chapter we will put together our own method to answer the research question. We will use inspiration

by previous litteratur and methods from Gill G. Ringland’s book ‘Scenario Planning’, to choose

components that will suit our research.

What is Scenario Planning?

-Ringland, 1998.

After World War II, new opportunities for research fundings by the US government opened. The

government was interested in enhancing the american academic research, to strengthen the military

technology (Ringland, 1998). A research corporation named Research ANd Development (RAND)

choosed Herman Kahn in 1961, a well-known military researcher and pioneer to future studies. He

established the Hudson Institute in 1961, focusing on development of techniques for analysing the

future uncertainties of the world (Ibid). In 1967, he introduced the book “The Year 2000: A

Framework for Speculation on the Next Thirty-Three Years”, defining scenario planning as an

emerging method for military and corporate planning (Amer, Daim and Jetter, 2013). In the same

period other researchers were attempting similar approaches. One of these individuals, who used and

10

succeed in practice, was Pierre Wack in 1960s (Ringland, 1998). He was working as an oil executive

for Shell’s headquarter in London, who had success in creating scenarios used to prepare strategic

maneuver, for events such as 80s oil crises or downfall of Berlin wall. (Wack, 1985).

Different definitions have over the years been developed, “Michael Porter's defined scenarios as “an

internally consistent view of what future might turn out to be - not a forecast, but one possible future

outcome”. Peter Schwartz as “a tool for ordering one’s perceptions about alternative future

environments in which one’s decisions might be played out, and Ringland as “that part of strategic

planning which relates to the tools and technologies for managing the uncertainties of the future” (T,

Chermack, A. Lynham and E. A. Ruona, 2001, p. 8).

Throughout the different schools and academic literature, some key indicators and common themes

can over the years be identified in scenario planning. “A networking process that challenges strategic

paradigms and forces firms to rethink their internal and external boundaries (Varum and Melo, 2009,

p. 356). It is themes such as history, theory of scenario and impact on decision-making as a way of

optimizing strategy and organizational learning (Ibid). It locates companies in different future

environments, by the use of mixed, qualitative or quantitative measures (Amer, Daim and Jetter,

2013). Scenarios do not attempt to predict the future but construct multiple scenarios, based on

findings of uncertainties in the macro environment, to expand managers own understanding of

alternative thinking as an attempt of de-attaching one self from present time.

Types of methodologies

Since 1960’s advancement of scenario planning, three types of analysis have commonly been known

and practiced. (Varum and Melo, 2009). The overall differentiation, thought they do have similarities,

is the framework and whether to apply quantitative, qualitative or mixed methods. The three school

are: Intuitive logics, Probabilistic modified trends and La prospective.

Intuitive Logics

The methods use a qualitative approach, built on the foundation of Kahn’s Intuitive Logics approach.

Some of the most knowledgeable writers, who was build upon his approach is Peter Schwartz, Paul J.

H. Schoemaker and Kees Van der Heijden (Ringland, 1998). “The emphasis is on creating a coherent

and credible set of stories of the future as a "wind tunnel" for testing business plans or projects,

prompting public debate or increasing coherence.” (Ringland, 1998, p. 27). He made scenario

11

planning feasible, by qualitative measures, used in organizations such as SRI International and Shell.

It consider business decisions, to be based on a relationship of factors; political, economical, social

and technological. “These scenarios are hypothetical sequences of events constructed for the purpose

of focusing attention on causal processes and decision-points” (Amer, Daim and Jetter, 2013. p. 27).

Different models for sequences to follow in Intuitive Logics was heavily debated, but the general

consensus is to challenge managers mindset.

Probabilistic modified Trends

Same organization as Kahn, RAND also gave funding to Olaf Helmer and Ted Gordon, who

developed ‘‘probabilistic modified trends’. It was a quantitative approach to scenario planning,

focusing on trend impact- and cross impact analysis, by use of computerized programmes (Amer,

Daim and Jetter, 2013). The two type of quantitative methods, have been applied by different schools

and companies to predict the future outcomes.

Trend-impact analysis was used in organizations like ‘The Futures Group’ in early 1990s. It was an

international strategic and policy research company, hired by a couple of defense companies, to

define the future of the American defense industry (Varum and Melo, 2009). More specifically, they

were interested in the global demand for how their products would evolve in the future. Trend-impact

analysis examined areas such as political tensions, demographic and population over time. It tried to

look for key issues, impacting trends. First, it used different statistical measurements, to forecast

different future patterns of data. Followed, by an identification of key issues, in regards to the

occurrences and degree of impact (Ibid)

Cross-impact is defined as a technology, usually by a computer program, applied to analyse complex

systems. Different types of computer techniques have been programmed, whereas some also use

trend-impact analysis (Amer, Daim and Jetter, 2013). It can be programs like Battelle BASISC,

Comprehensive Situation Mapping and computer driven simulations. In 1988, an American IT

company hired Battelle to create different scenarios for how the development of the European IT

market could be. It was about protecting current shares, but also to enhance the decision-making

whether it was worth to expand into EU. After evaluation of scenarios and strategic options, it was

concluded a good investment, but in the process, they also realised it was important, to be close to

their customer base (Ringland, 1998). The cross-impact emphasis it usefulness, when researchers have

a confident understanding of the external driving factors. It examines factors, external and internal,

12

who has an impact on the company, industry and global. Especially, it looks at the relationship of how

events and variables can change, either positive or negative, as a way of deciding forces that seems

plausible for scenarios. It can be criticized for the normative approach of defining external factors

quantified, but it also has an advantage for researchers, as it can identify very large set of data for a

more explicit overview, of how specific events, uncertainties and factors are interconnected (Varum

and Melo, 2009).

La Prospective school

The intuitive and probabilistic methods had its origin in US, whereas ‘La Prospective’ by Michel

Godet, is in France. He created a quantitative computerized program for cross impact, and also used

qualitative interviews (Ibid). In 1990, the iron industry was interested in how the future would play

out. Michael Godet was hired and developed six final scenarios. He approached the problem

formulation by using his own invention ‘MICMAC’ combined with structural analysis. The computer

program was used to “helps highlight interdependencies between interrelated variables that more

simplified procedures may ignore” (Ringland, 1998, p. 217). First, he defined all external and internal

variables. Afterwards, plugging data into his program to conduct an identification of the system. Then,

he used the cross-impact analysis, to see how each factor had an impact on each other, to be able to

define key issues. Based on these issues, he produced hypotheses for continuing trends, combined

with a morphological analysis, to break down possible uncertain futures. In the end, he applied

another program ‘SMIC’, together with an evaluation of scenarios, by talking to experts in the field. It

was used as a verifier, for whether the subjective probabilities, in regards to experts, was aline with

the scenarios been produced in first round (Ibid).

Summary Scenario-planning

Intuitive Logics Probabilistic

modified trends

La Prospective

Purpose Multiple scenarios of

uncertain futures, as a

qualitative method to

understand diverse

situations

Quantitative method

by computerized

predictions and

probabilities.

Mixed method of

qualitative interviews

and quantitative

programs

13

Developing Scenarios Expert interview,

Porters five forces,

PESTEL analysis

Trend put in relation

to series of data, to

make scenarios out of

statistic uncertains

Interviews with

experts, stakeholders

and CEO’s.

Cross-impact

Methodology From La Prospective school we will apply mixed method to collect data, using quantitative measures

inspired by probabilistic model and qualitative research from intuitive logics. The methodology will

be presented in three parts that will answer the research question: ‘how can scenario planning

combined with Nvivo, be used as a method to prepare and change Rio Tinto’s current business

strategy in uncertain scenarios of possible futures’. Part 1 will explain how we assembled our data to

build scenarios. Part 2 explains the construction of scenarios. Part 3 will consist in the implementation

of scenarios to Rio Tinto’s strategic planning.

Data Gathering

Critical realism and scenario planning emphasize a vast amount of data needed to conduct a proper

analysis, therefore our chosen empirical material is based on many different sources. Scenario’s

starting point can either be ‘inside-out’ to allocate a focal issue who has an impact on two or more

distinctive ways of forming strategy, or ‘outside-in’ by beginning with an external analysis of

uncertainties (Ringland, 1998). Because we do not know the inside of Rio Tinto, in our methodology

we have decide to begin by applying NVivo as our analysis of the ‘outside-in’ However we will also

include ‘inside-out’ as the internal issue of decision-making is not possible to reach. Therefore we will

apply Porter’s Five Forces- followed by a PESTLE-analysis as a way of determine the current

situation of Rio Tinto and the potential uncertainties hidden within external driving factors.

Nvivo

NVivo research tool will be implemented in the process with the aim to provide the paper

with systematic and accurate process of investigation. We decided to adopt this tool to

discover current arguments and discourses to delimitate the focus of the research.

Furthermore, we want to define themes and factors to build possible scenarios upon. The

14

process follows four main steps to reach a summary of analytical results of qualitative data to

apply in scenario planning. NVivo will guide us through the allocation of main themes and

focal points of the mining industry and it will lead us to a better understanding of the topic

and its surrounding. We implemented this analytical tool in order to address our research

focus. With the gathering diverse datasets we expect to reach a desirable level of objectivity.

The choice and explanations of sources will be clarified in the analysis section.

With the results (e.g. themes and focal points) of NVivo qualitative analysis we will then

apply Porter’s Five Forces as a way of analysing competitive positioning of Rio Tinto among

the industry. Furthemore, we will conduct a PESTEL analysis to address forces influencing

the macro environment.

PORTERS

Michael E. porter developed a framework where he underlines the importance of strategy formulation

to gain competitive advantage for industries. He believed that the state of competition (the industry

position among competitors) depends on five forces: threat of new entrants, threat of substitute

products or services, power of suppliers and power of customers. Together they determine the level of

attractiveness of Rio TInto’s industry in terms of profitable potential. The understanding and

knowledge of these key forces provides the basis of a strategic agenda of action (Porter, 1979).

Our empirical data mainly consists of qualitative data from annual reports, articles related to the

mining industry and government news. The annual report will be from Rio Tinto, BHP & FMG, as

they are the main competitors in Australia (Government of Western Australia, 2017). In scenario

planning it is suggested that researchers use data as close to present time as possible. Therefore will

the material for the competitive analysis in Porter's Five Forces, only consist of data from 2017 and

2018.

PESTEL

PESTEL stands for macro-environmental factors; political, economical, social, technological,

environmental & legislation. In the analysis it has been decided that legislation will be included in the

5 prior factors, as they often occur in more than one. As PESTE(L) also relies on managers ability to

limit research to only relevant factors impacting the company (Kim-Keung Ho, 2014). Therefore

when we begin our PESTEL-analysis, we will determine the limitation of external driving factors

based on the relevance of Rio Tinto’s key forces found in Porter’s.

15

The empirical data will be build mostly on qualitative material. The analysis will use business data

from Marketline & PWC, news article and government press release from Australia and China, annual

reports, articles from mining related websites, and legislation from Australia. It has not been possible

to find Chinese legislations, but they will be described through articles explaining them. Our

quantitative data will mainly consist of websites like Statista, Trading Economic & world population

review, as sources for external driving factors explained by quantitative measures. The timeline is

following the same logic as Porter’s so all the chosen material is from 2017-18.

Building Scenarios After the findings of external driving factors relevant to Rio Tinto’s key forces we will begin to

construct the two scenarios. Our foundation for the construction in inspired by ICl’s work (Ringland,

1998). Based on critical realism and intuitive logics scenario setup, we will “tell a coherent story and

be internally consistent, whether written in narrative, bullet points or even pictures, depending on the

audience. (Ringland, 1998. 278). It should be noted that the uncertain findings, also sets the

limitation to what can be said about the scenarios. Additionally, we could have used a quantitative

approach to construction, by applying trend & cross-impact analysis, to find subjective probabilities.

The uncertainties analyzed from each external driving factor in PESTE, which consequence can occur

across factors, will be compared and divide by opposite outcomes. The external driving factors that

has an uncertainty that can evolve in both direction, are grouped together by their common correlating

uncertainty. This is based upon the contradiction that exists between some of the external driving

factors. Take for instance ‘high growth’ and ‘low technological development’. The technological

development is seen as a result of the economic growth, making their path identical (Kureer, 2010).

Depending on the amount and outcome of each uncertainty, the amount of scenarios will also be

impacted by this. If the analyse only show two contradictions between the patterns of uncertainties,

the scenarios will be limited to two. However an example of four scenarios could be Electronic

commerce, who made parameters based on limited customization and market entry. Once again, it

depends on what uncertainties the researcher can spot. Finally the starting point to the scenarios will

be determined by short-term uncertainties, because they are closest to present time.

Scenarios to Strategic Planning

This section will be divided into two parts for each scenario and it strategic applications. Every

scenario will follow the same step of sequences. First the macro-environment of the analyzed

uncertain external driving factors will be put together into a coherent story. Followed by an analysis of

16

how the uncertainties will influence the key forces of Rio Tinto’s competitiveness in the mining

industry. To discuss how Rio Tinto should change its strategic options, we will go through different

subjects to evaluate. There will be an analysis of: competition, new mission statement, strategic

objectives, portfolio management, performance management, people and partners.

Process Mapping of Methodology

17

Analysis

NVivo

1. The first step of the process was to carefully select the types of documents we have chosen and

uploaded for the analysis in NVivo are several. Starting with the latest annual report (2017) of Rio

Tinto to gain essential and internal data of the company, newspapers and journals articles regarding

the environmental issues and the economic and political regulations concerning the mining industry

with a special focus on China. The last kind of documents that has been incorporated in the research

are interviews, six is the total of transcripts. In order to obtain a proper level of content objectivity and

legitimacy we have chosen out of the total transcripts, two interviews talking about the same ‘point of

view’ for instance there are two interviews from Rio Tinto CEO discussing several issues and

opportunities for the company. Two interviews from the Australian government the first of the

ministry of treasure from Treasurer Scott Morrison speech regarding budget and economic situation in

Australia during the past few years with particular attention over mining industry. The second of

Steve Ciobo the Australia’s trade minister regarding USA-China trade and its possible effects on

Australian economy. Furthermore, we gathered two transcripts concerning the mining industry

development during the past few years, examining factors such as demand, threats, opportunities and

elements of risk.

18

2. The second step of our analytical data collection is the creation of nodes and the attribution of

references to them. As explained in the methodology section, nodes are defined as “containers” of

groups of categories of concepts, ideas and so forth. It was possible to further break down nodes into

main and secondary. The nodes we have come across during this process are numerous. For example

one of the principal nodes is risks. The category of risk is respectively divided into sub ones e.g.

environmental policies, substitutes (mostly about aluminum) and economic factors (trade and tariff).

The process of categorizing, allocating nodes turned to be a dynamic procedure among the qualitative

research. Thus the choice of secondary nodes like environmental policies was matured after constantly

executing words queries (explained in step 3). There is more than one type of nodes to associate, we

have chosen to implement theme nodes (descriptive and analytical). Because of the ambitions and

goals in regards of the application of NVivo in the research.

3. The third step consists in conducting a series of queries to better select nodes in the following

phase. The investigations we have chosen to follow in this section are the world count and word

search of terms based on their frequency and prevalence. The figure below shows an overview of the

word frequency criteria of the documents previously described. The results indicate a dominance of

these terms.

19

The second set of images displays a summary of the word count function which supported the

understanding of main topics across our set of data. Going into specific and searching for main terms

facilitate the comprehension of where the prevalence and arrangement of the words. In this examples,

we focused on the terms: iron ore, trade, pollution, environment and government. We were able to

starting recognizing patterns and possible connections between themes. Being aware of this statistics

is an advantage in the processes of narrowing and leading towards principal themes and issues

discussed by experts with the aim to collect dissimilar viewpoints on same main topics of our

research. For instance the allocation of references regarding pollution and environmental regulations

in documents related to China, the mining industry and Rio Tinto.

4. The fourth and final step resides in coding the themes that emerged from associations of nodes.

There is more than one possibility on how to approach the coding part, the illustration below exhibits

the automatic deducted coding approach. Selecting in our case environmental policies and substitutes,

some of the secondary nodes described above, we were first able to define the magnitude of key

themes to a greater extent and increase our awareness of who, when and why they talked about them in

order to further investigate the different takes on the topics. The step “Queries & visualize” is

constantly exercised during coding as well as the other phases. We executed a cross check to identify

20

connection, more precisely what kind of issues linked with Rio Tinto and the industry

where present in the uploaded documentation. The purpose of this process was to

accurately assess main arguments and to set the foundations to develop and guide the

macro and micro analysis of the environment around the company presented later on.

This is also the reason why we have chosen articles, reports and transcripts discussing

Australian and Chinese market and the industry as a whole.

These images are one example of themes that emerged through the qualitative analysis. The

visualization of the arguments in NVivo facilitated the process of establishing the construction of the

research. The connection between factors and arguments allocated to nodes is further developed in

analysis based on theories such as Porter’s 5 forces and PESTE(L). Potential scenarios based on the

data of these inquiries will be established and potential sustainable strategies for Rio Tinto will be

developed and explained.

Porter's Five Forces

Buyer & Competitive rivalry

Buyers possess the same bargain as suppliers, as the demand determines what specific characteristics

are needed (e.g. higher quality and more services). As such,, the buyers have a large influence on the

price range of commodities provided by any industry (Porter, 1979). Australia is the biggest exporter

of iron ore, China is the biggest manufacturer of steel. China is hereby considered the biggest importer

of iron ore, with around 953 million metric tons, accounting for two-thirds of the global exports

(ironorefacts, 2017).

21

The prices of iron ore are constantly fluctuating on the global market. When demand increases, price

and supply tend to rise. Since the 1990’s, the Chinese economy has experienced growth, becoming

one of the largest iron ore consumer and steel producer in the world (Ironorefacts, 2017). They have

their own production of steel, but annually import nearly 70% of the existing global production of iron

ores (Ibid). The biggest iron ore producer is Vale, a company located in Brazil (Ibid). Their

production reaches every corner of the world, but their geographical location is a major disadvantage,

when China is responsible for most of the iron ore import (Ironorefacts, 2017). The ores in the

underground currently lack purity, making them less competitive in the Chinese market (Government

of Western Australia, 2017). Australia is located closer to China than Brazil is, making their

geographical position a key force regarding distribution. The content within the mines can vary, but

the product output of Australia, is consistently of good quality (Ibid).

Source: Government of Western Australia, 2017

The largest companies in the Australian mining industry are: Rio Tinto, BHP Billiton and Fortescue

Metals Group, followed by many smaller competitors. All national production is exported, since there

is no industry for steel production in Australia (Ibid). In 2015 Australia accounted for 37 percent of

domestic production of iron ore, becoming the biggest national exporter (Ibid). An increase of

Chinese demand, along with commodity price above unit cost, made the Australian mining industry

more profitable (Financials.morningstar.com, 2018). The competition is fought on the parameters;

value chain management, cost efficiency, strategic alliances, greenfield, brownfield investments and

sharp focus on the contractors (BHP, 2017; Rio Tinto, 2017; FMGL, 2017). Rio Tinto is one of the

leaders in supply chain management, which makes the operations fast responsive to unforeseen

increase of demand (Rio Tinto, 2017). BHP focuses on cost efficiency and has managed, over the past

5 years, to reduce cost by 40% (BHP, 2017). Both are global enterprises having multiple strategic

22

business units, meaning they have increased their risk by operating a wide portfolio of raw materials,

located across different markets (table 1). Both companies operate with iron ores, but the rest of their

portfolio is quite different (Hyett, 2018).

The exploitation of geographical area with beneficial raw materials is called greenfield investments,

that can lead to major growth to the companies. This makes the Australian west-coast a challenging

battleground in terms of land and property. In contrast, the concept of brownfield investments occurs

when valuable mining lands get discovered by smaller firms. Rio Tinto and BHP are inclined to buy

the new entrants, in times of recessive economy, making use of their economy of scale (BHP, 2017;

Rio Tinto, 2017).

Fortescue Metals Group was a smaller player, founded in 2003, riding the growing economy until the

financial crisis affected the industry in 2007 (FMGL, 2017). By being cost efficient from the

beginning the company have managed to grow, and are now employing 8,095 workers. Even though

they existed for a short period of the company have managed to become cost-leaders in the industry

(Ibid). During the period between 2015 and 2017, they have reduced the cost of iron ore from $32

USD pr. ton to $12 USD pr. ton. They are the fourth largest company in the global mining industry

today (Ibid). A common nominator for all the large companies is their focus on safety, low cost and

diversifying investments. To determine the strengths of each competitor, a comparison of their

profitability is presented below.

Return on equity is a measure used to define profitability in relation to shareholder’s equity,

measuring how much the company was profitable given the investments provided by its shareholders..

Rio Tinto and Fortescue revenues are dictated by their profitability on Iron ores, due to the amount of

revenue generated by this strategic business unit (SBU), being the main revenue generation SBU. The

three companies have respectable returns on average, but with a few exceptions. Rio Tinto in 2012

and 2015, was affected by a decrease of prices on commodities, resulting in a shortage of assets

combined with annual losses (Rio Tinto, 2017). Fortescue has managed to gain the best return on

average, due to the iron ore percentage of total revenue, and their low-cost advantage in the industry

(FMGL, 2017).

23

The return of invested capital (ROIC) is the degree of revenue a company can generate with respect to

the capital it invests. It is a measure that defines how well the company is using the money invested to

generate revenues. All the brown and greenfield investments made in this industry are fueled by

significant amount of capital. Investments are not always profitable, its rather a premeditated risk with

beneficial intentions. Rio Tinto still suffers from low prices on aluminum, an investment made in

2007, making their return ROIC decrease accordingly. BHP is sensible towards oil prices as they have

placed a large amount of assets in this commodity (Hyett, 2018). The price on production of iron ore

pr. ton is significantly lower than the price of buying iron pr. ton. The average best return is made by

Fortescue, whom has large parts of their assets placed in iron ore.

The profit margin or the net margin, gives a visualization of how many cents a company are earning

pr. $1 of revenue. All the companies are specializing in low cost production of iron ores, making this

specific SBU very profitable for all companies. The primary product of Fortescue is iron ores, but

they do not trade other raw materials to same extent as Rio Tinto and BHP. By looking at these

numbers, one might argue, Fortescue is the most profitable company, however these ratios do not take

scale into account.

Asset turnover is a measurement of the overall performance of the company, indicating the amount of

revenue generated by every $1 of assets. Take Rio Tinto, in 2017 they made $0,43 of every 1$, or

increased their assets by 43%, if they had no cost. Had the ratio been negative, their assets would not

manage to generate any revenue. The asset turnover is following the development of ROIC, due to the

fluctuating commodity prices and the emphasis on good and bad investments.

24

Degree of financial leverage is a measurement fto define how much debt is used to finance the

company’s earnings before interest and tax. Rio Tinto had a high FGEAR in 2008, giving an

indication the assets were financed mostly by liabilities rather than equity. Between 2009 and 2014,

Fortescue financed large amounts of their assets through liabilities as it is harder to obtain equity for a

relatively new company.

The key forces analysed in competitive rivalry & Buyers

● Geographical accesses to China

● Financial benchmark measures

Supplier Power

Suppliers have the ability to raise prices or decrease the quality of products, reducing the overall

profitability of an industry, as they power in market inputs (Johnson et al. 2016).

In 2017, Rio Tinto accentuate a ‘Know you supplier’ approach. Adapting a strict supplier code of

conduct, with a obligation for strict human rights rules (Rio Tinto, 2017). A balance between a global,

national and local use of supply, primarily focusing on the last two. There is an emphasis of

commitment for people & partners by investing in local communities and development programs.

Technology is another condition for competitive advantage, but they believe it will never completely

replace human interactions (Riotinto.com, 2018).

Good relations

For mining operations, local workforce rights and safety is a huge priority. In 2013, Rio Tinto

received hard criticism from the mongolian community who accused them of breaching

environmental and human rights (Neate, 2018). For Rio Tinto a key forces in supplier power is the

need for good relations in the local communities, because they need high-skilled labour. The company

25

has worked on many different initiatives for strengthen the relationship between their operations and

the local community, often by working on partnership agreements, intended to support the local areas.

They have partnerships like ‘The Community Infrastructure and Services Partnership (CISP)’,

investing a total of 23 million dollars into projects like festivals to childcare facilities. Moreover, they

made workshops for local businesses to include the local people into Rio Tinto’s operations (Ibid).

At national level, a key force is good relations between government and local landowners. When

requiring new mining facilities government and local stakeholders must be satisfied. For 16 years, Rio

Tinto had an agreement with ‘Traditional Owner groups in Pilbara’. In 2015, they employed 968

indigenous to their operations, achieving a closer connection to local communities (Ibid).

Additionally, they collaborated on projects with the Australian government. Royalties and regulations

for landscape exploitation, is determined by political legislations. This type of supplier also needs

good relations to the companies working in their geographical area (Perera, 2018). They conducted

projects together with the Australian government and Technical and Further Education (TAFE), a

company for business, creating new educational and training initiatives for future employees of the

industry (Ibid).

Innovative Equipment

In the mining industry, innovative equipment and technology is a key force to a strong competitive

position. The innovations can have an impact on operational excellence, environmental impacts and

resource scarcity. Resources such as power and fuel are essential for mining operations. However,

power of supplier for energy is considered low, as companies usually make long-term contract

between buyer and seller (Perera, 2018). For technological mining equipment Rio Tinto has so far had

a 10-year research partnership with University of Sydney. Since December 2017, they innovated

autonomous drills, fleets and soon railroad trains (Rio Tinto, 2017). “The company’s driverless trucks

have proven to be roughly 15 percent cheaper to run than vehicles with humans behind the wheel”

(Simonite, 2018). The new technological advancements are expected to increase safety, resource

usage and productivity, indicating an important key force for supplier power.

Another key force in relation to technology is the building blocks for environmental sustainability.

For more than 30 years, Rio Tinto has had a collaboration with the automotive sectors; conducting

research on equipment, safety and reduction of carbon emission on a long-term. They believe climate

change is one of the biggest issues of the future. An attempt to address this concern can be seen in

their approach to local communities, where management of water was implemented into their daily

operations (Riotinto.com, 2018). In 2017, together with Kitimat Community, they won an award from

26

‘Canadian-American Business Council’s Corporate Leadership Award’, for innovative attributes

lowering carbon outputs (Rio Tinto, 2017).

The key forces analysed in the supplying power:

● Local environment - High-skilled Workforce

● Government

● Innovation in:

○ Equipment

○ Environmental

○ Safety concerns

Barriers to entry

Threat from entry occurs when an industry can be penetrated by new companies, with differentiated

capabilities, who will take market share from existing companies (Johnson et al. 2016). The level of

threat depends on the development of industry barriers associated with entry. Examples of entry

barriers, according to M. Porter, are the economies of scale, the required access to capital and

governmental policies (Ibid).

To enter the mining industry, key forces are high capital and geographical access. Additionally, key

forces like innovative assets such as railroad systems or automated machinery create a huge

distinction between top and low producers (Perera, 2018). Rio Tinto and BHP have been a part of the

industry for more than 100 years, giving them scale of experience, differently FMG was founded in

2003 and ranks as third within the top three mining companies in Australia thus analyzed. A

consequence of the recent founding of FMG, the company has to make agreements with Rio Tinto and

BHP to gain access to assets like railroad systems, which have been previously created. Furthermore,

companies in the industry need to rely on long-term contracts, so when demand is low the cash flow

would still outflow (Ibid). For partnership agreements in China, it is a commitment to find buyers who

can fulfill this long term obligations.

Threat of new entrants is relatively low as old companies have a stronger portfolio of assets. New

competitors need resources such as rail road systems, which in turn create profitable contracts for Rio

Tinto and BHP. Moreover, a matching fit for the mentioned companies, is the common commitments

27

for local, environmental and safety concerns (Cabinet, 2018). This is another key force, as the

companies have great applications for national M&A, creating a strong infrastructure in the Australian

mining industry.

The key forces analysed in the barriers to entry:

● Solid foundation for M&A (Geographical and power)

Threat of substitutes

Substitutes is a product or service, introduced in the market, replacing or limiting potential

profitability in an industry. It depends on price in comparison to performance, of new products or

services, provided to the market and its customers. Substitutes that develop rapidly in the market, are

characterized by innovative technological advancements, causing more competition and lower

profitability in the industry.

As mentioned in supplier power and barriers to entry, threat of substitutes share the same key forces;

solid M&A and innovation in equipment. The current concern for new substitutes can either be

examined short-term as low danger, or long-term as a moderate threat. In general, threat from new

substitutes is difficult to allocate as it relies on new technological innovations (Perera, 2018). The

aluminium industry is competing with the steel industry. A key forces for substitutes success can be

new uses of material and lower carbon technology. Aluminium has the ability to be recycled, and can

achieve an economic of scale. This can be a potential threat as demand from buyers can shift towards

another substitute, as innovation between low-cost aluminium and steel is uncertain in the future. An

example can be the car industry, where lightweighting aluminum has outpaced high-strength steel

(Engineering.com, 2018).

The key forces analysed in threat of substitutes:

● Solid foundation for M&A (Geographical and power)

● Innovation in equipment

28

Sub-Conclusion - Porter's Five Forces

In an industry with many competitors, competitions over the buyers results in buyers gaining more

power, due to high demand. In China, the steelmakers demand discounts and companies like Rio

Tinto are indirectly forced to meet criteria. Rio TInto strategy is to delivery low cost and high quality

products. This result is primarily caused by the unproportioned growth of the global demand over the

production of Iron ore.

There are several factors that indicate the amount of bargain power the the buyers have, within the

mining industry. The large and increasing number of demand worldwide is index of the decrease over

the buyers power in the industry. However, the high concentration of buyer in China and the high

level of consumption and demand is one of the elements enhancing the power they have over the

industry. Furthermore, the existence of substitutes of iron ore such as aluminum in the market increase

the buyers power over the price of the commodity. The buyers have a high level of power when they

have knowledge of demand, market prices and so on.

Threat of buyer and suppliers is moderate. Innovation, international and national relations, and

educated local workforce, is essential key forces in Rio Tinto’s competitive advantage. Projects such

as automated fleets or educational initiatives, is approached by strategic alliances specialized in

business for mining. Rio Tinto is in a strong buyer positioning as the suppliers of equipment relies

only on this type of industry, but workforce could be uncertain, as political or economical influences

can impact labour market.

- The Key Forces:

● Good relation to local community, government and land owners

● Innovative equipment

● High capital

● Geographical accesses locally

● Solid foundation for M&A in Austra

● Good partnerships in China

29

PESTEL analysis of Rio Tinto

Political factors

Political factors impact the economic, social, technological and environmental factors of the

macro-environment. Political uncertainty can be difficult for companies to predict. The external

driving factors mostly relate to the Australian and Chinese government, who has an impact on the key

forces.

Political factors:

● Sustainable development

● Climate Changes

● Corporate tax cut

● Infrastructure

○ Employment - Education

30

Australian government

Australia is a federal parliamentary democracy. The governmental power is decentralized, with actors

been divided by states and the parliament. In 2015, Malcolm Turnbull became the leader of the

Liberal Party of Australia and Prime Minister. Before 2020, there is a possibility Turnbull will engage

in another election to gain majority votes (Marketline, 2017).

Corporate tax

The mining industry of Australia, accounts for 15% of the nations GDP and about 10% of total

employment. Companies like BHP and Rio Tinto is currently paying corporate taxes at 30%. They

have been arguing for a cut in tax because it causes international disadvantage for competitiveness, for

their international competitiveness. Rio Tinto also experienced problems with corporate tax

legislations. In 2013, they received a tax bill at 447m dollars, for transfer pricing between their

operations in Australia and Singapore (Mining Technology, 2018). Corporate tax, is a important

driving force for Rio Tinto. It can impact key forces such as high capital, local workforce and

innovative equipment, and opportunities for more green - and brownfield investments.

Turnbull and the government's political goal for 2027 is to reduce large companies tax rate, cutting the

corporate tax from 30% to 25%. The current issue between senators, is whether Australia can afford a

cut. Because of the nations structural deficit, there is an oppositions against tax reductions. Moreover,

some argue that some companies do not pay the correct amount of tax, so a cut would make it worse.

Over the next years there will be a 27.5% tax for business with profit margins below 50 million

dollars (ABC News, 2018). It is still uncertain if the cut will go through yet. The Liberal Party has in

2017-18 had many different scandals within the party and its political actors. Most of the criticism

ended at Turnbull’s desk, even though, it was his colleagues mistakes. Combined with political

opposition against tax cut, this can result in a further delaying of corporate tax changes while

Australia is getting closer to re-election period (Reuters, 2018). Therefore, it is still uncertain whether

the external driving factor on short-term is moving in either directions. However, if the tax cut go

through, it would lead Rio Tinto production toincrease. Moreover, it could create a solid foundation

for technological advancement and more employees, giving a better reputation in the local

communities.

31

Workforce

While there is disagreement between senators and tax cut, Australia has a external driving force in

their moderate educational infrastructure. As some of Rio Tinto’s key forces rely on innovation and

local environment, university collaborations is needed. But the communication between the

government and the industry is lacking. "A survey by Austrade in the five years leading up to 2013

shows those companies made three and a half times the value of discoveries outside of Australia than

inside Australia" (McHugh, 2018). It has over time enhanced, and even if the government has not

interfered, the industry has, by emphasizing an improvement for more sustainable development

projects (Rio Tinto, 2018).

Chinese government

The Chinese government has been ruled by the Communist Party of China (CPC) for 60 years. They

are currently in a strong position, with 70 million members, to stay leading party. It governs without

democratic decision-makings, but is in involved in all legislative work and enforcement. The 18th of

October 2017, Xi Jinping was re-elected for 5 additional year (Marketline, 2017). Most notable

external driving factor that can impact key forces, is China's new vision for reaching new emission

goals for climate changes, by implementing a new emission trading scheme (ETS). Furthermore,

China has shown more interest in investing in the European market, while protecistic forces is set

between US and China’s export and import resources (Pwc.com, 2018).

Emission policies

The government of China had earlier estimated their rivers and lakes to be 70% polluted and 50%

undrinkable (Ibid). New data has shown, in 2017, Beijing’s concentration of fine particles has drop

from 58% in 2013, to 23% (Xinhuanet.com, 2018). In 2016, China changed its climate policies to

support the Paris climate change agreement. They were interested in saving the earth, but also national

interest such as urbanization and agriculture (Marketline, 2017). To counter the climate change issue

they have in 2017 confirmed a US and China joint venture. Additionally, China has formulated an

emissions trading scheme (ETS), to aim to “raise the share of non-fossil fuels to 20 percent of its total

energy mix by 2020 from 13 percent in 2016. As part of the Paris Agreement in December 2015 it

pledged to cap carbon emissions at a peak by around 2030” (Reuters, 2018). Earlier plans was to

include firms using more than 10.000 tonnes of coal, industry like i.e. construction, iron, steel,

chemicals. But, they decided to focus on the power sector to begin with. They will look at power

plants who produce 26,000 tonnes of emission per year. If ETS is a success, it could result in an

32

‘emission tax’ on iron ore. This means, key forces regarding high capital and innovative equipment,

would be highly affected by the new trading scheme.

China will in 2020 attempt to spend 363 billion dollars on renewables projects as it tries to decrease

use of coal, diesel for other more efficient and environmental friendly substitutes (Carbon Brief,

2018). A rate-based system for ETS will be implemented. The emission will be per unit of out, where

each company will earn credits for how much electricity they can produce from it. If they go below

equilibrium other firms can become their potential buyers. On the other hand, companies who increase

power production can potentially end up paying more (Ibid). As Rio Tinto has won a reward together

with Kitimat community for lowering emission output, their key force for good relation with the local

environment is an advantage that can potentially gain even more strength over time.

Us-China tariffs

March 1 2018, USA President Trump, implemented new tariffs on the American steel and aluminum

imports. The USA is the largest importer of steel and imports 90% of its total demand of aluminum

(Pwc.com, 2018). He argued that American producers of the materials have a competitive

disadvantage against importers of commodities with lower price. The import tariffs was set at 25% for

steel and 10% for aluminum. Nations like Canada and Mexico were not included, but China was

(Ibid). The global reaction is unclear, but the disruption can create further problems between the two

nations. “Trump’s behavior is a challenge to the global steel industry and will definitely encounter

opposition from more countries,” (Reuters, 2018). Trade liberalization can be in danger, which could

lead to an economic trade war. Higher tariffs on goods can affect the amount of capital generated by

exporting companies. The decline in income would impact and decrease Rio Tinto’s production

output, and thereby reduce their workforce, impacting a key force like the relation to the local

community. While the possible outcomes is uncertain, China has already shown signs of foreign

investment outside US by influxing the European markets for steel and aluminum (Pwc.com 2018).

Other tactics could include China to draw on their coal options. As China has imported US coal over

the past years for cheaper foreign fuel opportunities, is has also helped the american coal industry.

Additionally, China is the biggest importer of US goods of soybeans from agriculture (Reuters, 2018).

33

Economic factors

The economy is a never-ending fluctuation, a spiral that has potential to affect every company in any

industry. The economy is built by belief, extorted from every consumer and producer on the market.

In recessive times, uncertainty on the market arise and influencers tend to save their funds to reduce

their risk (Issa, Chang and Issa, 2010). Companies tend to experience, either a decrease in production

or in number of employees to sustain their profit (Issa, Chang and Issa, 2010). These techniques

applied by influencers have more or less an affect on all key forcers of Rio Tinto’s operations. A

general approach to measure market fluctuations, are the GDP.

Australia are the largest exporter, contributing to Chinese steel production. Most of the output coming

out of Australia is mining, making commodity fluctuations a central part of their GDP growth

(marketline 2018). The continued increase in production of steel is a factor with a positive impact on

Australia and their mining industry. Australia hsas registered 23 years of continued growth caused by

the mining industry, but recent years with fluctuations in commodity prices have shown concern

(marketline, 2018).

World GDP

Macroeconomists are detecting the economic factors to establish decisions for government, public and

private companies. The total output, also referred to as the GDP, is a measurement calculated by

production, net income and spending (Segal, 2018). Global indexes are available, but national

measurements are a more comprehensive analytic foundation of empirical data. The global output has

accelerated since the early 1960’s, being fueled by countries and companies with massive growth

(table GDP world). The business cycle, along with industry and uncertainty of external driving factors

are making the economy fluctuate (Picardo, 2018). A factor is economic growth as it makes the

demand for most commodities, including raw materials, increase exponentially. Another aspect is the

minor economic downturns, those have just as much an affect on the key forcers (table GDP). Various

techniques have been applied by states and companies to obtain this growth. giving rise to Many

products and services, once made by western producers, was in 1990’s outsourced to China to reduce

own cost. This resulted in an exponential increase, making the GDP growth of China hit numbers as

high as 14 percent in 2007. The annual growth has from 2012 declined from 7,8, down to 6,6 in 2016,

making 2016 the year with the least growth since the early 1990 (statista, 2018).

34

Table source: worldbank, 2018

Chinese Economy

The national Chinese economy are fueled by external driving factors such as competitiveness and

demand, combined with country specific key forces such as cheap access to labor and economy of

scale. After the economic crisis China has invested in energy and infrastructural development, giving

a boost to their industrial sector (Marketline, 2018). This was a necessity due to decrease of global

demand that has slowed down the GDP (Ibid). As a result, the Chinese government has made it a

priority to increase its domestic consumption. One of the external driving factors is the change in the

industrial sector from industry towards service (Ibid). China has 39,8 percent population employed in

the industrial sector, while they have 51,6 percent workforce in the service sector. Their service sector

has increased by 11% since 2006, making it the largest in the world (statista, 2018). In comparison to

the US who has 78,8 percent employed in the service sector, China can potentially further increase the

proportion of workforce in their service sector (marketline, 2018). Furthermore, the decrease in 2017

in global demand has led to a production overcapacity in the low-end Chinese steel and coal

production, making the profits earned by these commodities decrease significantly (Ibid). The steel

production has increased since the 1990, however the fluctuations are leaving uncertainties among

stakeholders (Tradingeconomics.com, 2018).

35

Table source: statista, 2018

Economical factors

● GDP

● Chinese economic circumstances, affected by;

■ Industry tendency in China - service

■ Manufacturing of steel in china

Social factors

China

A central theme in this section is demography, factors such as size of population, age of population

and income inequality are considered to have the utmost importance. Minor changes in the

demographic factors will potentially determine different scenarios for the company (Walsh, 2005).

Countries with aging populations will have industries going into recession due to a change in demand.

Values, norms and the overall culture within the country cannot be ignored, and might alter over time.

Values and norms do however tend to be stable and cultural specific, just like in organizations

(Schein, 1996).

China currently has a population at 1.42 billion people, where 10 percent of the population earn 1%

pr. day (Worldpopulationreview.com, 2018). The inequality of income based on the Gini index in

36

2016, hit a level of 0.465 points. In Comparison Europe has an average at 0.3 (Ibid). A Gini score of

zero points means that income is equal divided. In the same year Beijing decided not to release the

gini results in the annual report of economic performance (South China Morning Post, 2018). The

inequality is caused by slow growth in pension for poor urban families, expected to “increase at an

annual rate above 5.3 per cent, we can achieve the goal of doubled incomes” (Ibid). This is a big issue

for the state, as the ageing of more elderly in the population increase. China needs to reallocate some

fundings to give elderly a fixed earning and public pension for employees in on contracts. Since the

middle class is still in the early stages, it is expected that the government will change policies. The

proportion of elderly will in 20 years double from 10 to 20 percent, in comparison it took Japan 23

and Germany 65 years (Forbes.com, 2018).

Australia

In Australia: Social factors can influence companies such as Rio Tinto and it is fundamental to

establish and develop a beneficial relationship for both sides aiming to a sustainable future.

Social impacts of mining include: shortages in affordable housing, increased local costs of living,

psychological impacts on mine workers (particularly fly-in, fly-out workers), skills shortages in

trades, pressure on local community services, and localised inequality and disadvantage between

mining and non-mining communities.

Australia current population is 24,77 million people, where “the top 20% have an income that is 8.3

times as high as those in the bottom 20%” (The Conversation, 2018). The income distribution is

spread geographically, with densely divided rich and poor neighbourhoods. The politicians is trying to

break the cycle, but increasingly house prices disturb it (Ibid). Like China, Australia's proportion of

elderly citizens above 65 is increasing. However it is first expected to be 22 percent of the population

by 2056 (Australian Institute of Health and Welfare, 2018).

In the global mining industry wealth, health & safety (WHS) has improved over the years, a reduction

in fatalities, but they still have one of the highest rates (Industry.gov.au, 2018). Over 12 years the rate

has decreased by 65 percent, down to 4.4 per 100.00 workers (Ibid). In Australia each state has their

own management for WHS. The legislation require a working environment of safe equipment,

competent staff and integrated risk management (Industry.gov.au, 2018).

According to the report published by the Australian government in regards to the indigenous local

communities affiliates to the mining industry, Rio Tinto has been closely working with many of this

communities in order to prevent and minimize the impacts of the industry.

37

Sustainable development has become a part of the daily operation, to protect the local environment.

The mining industry has to incorporate economic and environmental impact to their practices

(Milman and Evershed, 2018). The ‘Environment Protection and Biodiversity Conservation (EPBC)

act, has from 2000 till today, 96,2% of projects accepted (Ibid).

When local community become more and more aware of their demand power they can develop

sophisticated negotiations with mining companies. Furthermore, other conceivable social elements

that could have an impact over the industry are the psychological impacts on mine workers, income

inequality. Health and safety expectations of local communities and mine workers are to be

considered as influential external driving factors from social.

Social factor:

● Wealth, Health & Safety legislations

● Ageing In China

● Growth in China’s Population

● Growth in inequality

● Sustainable development

Technological factors

The impact of technological development, affects each industry different. The new trends can either

harm or optimize their operation, by streamlining activities with new advancements, or alter their

entire vision.

Scrap metal as substitute

A factor in substitutes for minerals, can be scrap metal. Over the years China had an increase in

number of aged constructions such as bridges, buildings, and cars. Analysis from ‘Credit Lyonnais

Securities Asia’ (CLSA) in Hong Kong believes “In the medium to long term, scrap is the real threat

to iron ore, for sure,” (Reuters.com, 2018). China is only using 11% of scrap to produce metal,

whereas US, has over 70%. There has been a shutdown for blast furnaces producing steel, instead, the

government has increased production of electric arc furnaces (EAFs) mini-mills, who only use scrap

material. The mini-mills conceive less carbon and do not use coal as a fuel resource (Ibid). As one Rio

Tinto’s key forces, is collaboration to create innovative lower emission output, the direction can be a

38

positive outcome. However if use of scrap metal increases, it also means that the level of demand for

iron ore would be a menace.

Automation of operation

As mentioned in barriers to entry, the mining industry requires heavy capital and technological

capabilities, to be a competitor. The automation of operation is a short- and long-term coccern,

currently in development, creating new benefits and uncertainties for the future of mining and

employees. It is expected to peak in 10-15 years (Balch, 2018). In the mining industry, many

companies have already taken the first steps. BHP Billiton, third largest mining company, has applied

driverless trucks and drills. Additionally, Rio Tinto introduced new jobs to their autonomous trucks,

by using staff members, controlling the trucks in a control center, 750 miles away (Simonite, 2018).

The advantage of automation can be measured on by different parameters. A study conducted by

leading trade journal, found the primary gain to be cost reduction, safety, productivity, reliability and

performance (Helpsystems.com, 2018). However implementing the technology still cause a lot of

difficulties. IT projects can take years to execute and finish, and the results can vary a lot. The

problem is usually related to process and work practices. Companies who have been used to a

different working environment, can experience difficulty implementing and getting used to the new

system. Currently, this is not a problem for the mining industry, as they have been used to apply

complex IT-systems to their operations (McKinsey & Company, 2018).

While implementation of IT-systems is not an issue for the mining industry, the aftereffect on local

and national communities, is a uncertainty to take serious. Governmental tax agencies and local

suppliers, have raised skepticism, as the result of automations. This points towards a future of less

need for low-skilled workers, local collaboration and mine tax receipts (Simonite, 2018). The research

conducted by ‘International Institute for Sustainable Development’, expect the rich resource countries

in the developing world, to be hit the hardest. They predict, national GDP, could potentially be

reduced by 4%. But these numbers is only a forecast of what could happen (Balch, 2018).

Furthermore, local procurement can be affected too. From data of two multinational mining

companies, it was “calculate that large mine operators in low-income countries spend about one fifth

(21%) of their procurement locally. For OECD countries, that figure is closer to 91%.” (Ibid). The

mining companies own the land and the advantages of the resources, usually government has

approached this issue by taxes and royalties, but it is expected in the coming years that it may need to

be redefined (Ibid).

39

Resource scarcity

A controversial topic, that has gained emphasis over the year. Resource scarcity has been ranked as a

highly uncertainty and important consideration for business and governments in the future (Futures

Centre, 2018). It can be hard to allocate, whether it is a current factor today, but it is acknowledge as a

future issue. The growth in population, economic and environmental damage, is putting a pressure on

non-renewable resources like fossil fuels and minerals, creating a limited amount of resource

availability (Global Agenda Survey 2012, 2018). There has already been sign of resource scarcity,

examples can be the issues of gaining rare earth minerals, needed for green technology, lithium

batteries or electronic manufacturers (Ibid). As the world show no indication of decreasing global

population, food demand is expected to increase by 35% by 2030. Additionally, food like vegetable

oils, meat and sugar, will impact the environment in regard to energy and water (PwC, 2018).

Furthermore, if climate change becomes a reality, is will only enhance the concerns of resource

scarcity. Demand for water and energy will increase by 40-50%, while agricultural productivity, could

potentially be reduced by 33% over the next 60 years (Ibid). All these future limitations to resource

usage, could over time, result in new taxation and regulations for businesses.

Technological factors:

● Scrap metal as a substitute

● New use of material aluminium

● Automated of operation

● Technological Innovation

● Environmental regulation in China

● Resource scarcity

Environmental factors

Governments regulations play a massive role in the mining industry as a whole. Being the main

consumer of iron ore and one of the main producers in the world until 2014 makes China one of the

most influences over the industry. According to the Financial Times, China’s Ministry of

Environmental protection together with local authorities seek to cut on steel-production. After the

country analysis over its overcapacity and pollution related to the mining industry, new anti-pollution

regulations and targets have been developed (Feng, 2018). Their long-term plan is due to end in 2020

and consists in the reduction of 150 Mtpa of capacity (Zhang, 2018). In 2016 the government

40

launched the first rounds of strict environmental inspections aiming to cut 100m-150m tonnes of steel

production by 2020 (Zhang, 2018). The statistics on Iron ore production of the past five years

indicated that China has been reducing the national index of Iron production about ⅔ (Ibid).

Because of the massive relevance and influence of China over the iron ore industry, Rio Tinto has

been closely working the University of Tsinghua from 2012 with their sustainable development

partnership (Rio Tinto, 2017). The chief executive of Rio Tinto explained the importance and

commitment on developing long-term strategic partnership with China “At Rio Tinto, we strive to add

value to the communities in which we operate. As China is attaching increasing importance to the

quality of development in the New Era, the research projects conducted by the Tsinghua-Rio Tinto

Centre will become even more relevant to China’s long-term strategic goals.”(Rio Tinto, 2017).

According to Rio Tinto report, China accounts for more than 40 per cent of their revenue. Rio Tinto

has supplied China with 2 billion tonnes from 1973 of Iron Ore. They strongly believe that Chinese

suppliers through their equipment, machinery and services play a significant role across Rio Tinto

global value chain development (Riotinto.com, 2017). Rio Tinto’s future plan is to support the key

industries abroad such as China. They define one of their focal points to be the quality of the iron ore

exported to China in order to helping them to achieve their sustainable goals, reducing the production

pollution and the lasting time of products. “As the Chinese economy matures, Rio Tinto minerals such

as borates, titanium dioxide and diamonds are helping China satisfy growing demand for consumer

products from a population whose wealth is on the rise”. Over the past years, Rio Tinto has joint

ventures and established partnerships with China's State-owned Assets Supervision and

Administration Commission and in mineral exploration with China's Minmetals and China's Sinosteel

(Rio Tinto, 2017).

41

Constructing scenarios

From our surface analysis of recurring patterns in NVivo, Porter’s and PEST, we have seen common

uncertainties among our external driving factors. We have examine 2 overall themes who point

towards a specific outcome, but the uncertainty of the impact is the differentiator. In political we saw

mostly global uncertainty, between US and China, but we did not see any repeating elements of

uncertainties leading to a political factors. Moreover, social factors showed certain factors such as

ageing population and income inequality. However it is was concluded that the uncertainty of how

China will change regulations for pension funds, is a long-term change, that needs additional research

on it owns term. Innovation of automation is already happening, same can be said for legislation, but

they can also be traced long-term. Tariff is the only short-term uncertainty, that also has an impact on

all the other factors examined. Therefore the starting point in each scenario will be one of the outcome

of tariff.

42

Uncertainties for each scenario This gives us two final scenarios divided as uncertain patterns following the same coherent story. One

is an environment in economic growth, and the other economic downturn. Below we have divided the

uncertainties for each of the two scenarios.

Strategic planning of scenarios

Scenario - Deep sea

The Chinese response to the American tariffs introduced by the US president Trump, created a

short-term trade war with long-term consequences. Due to a decreasing in demand from nations

involved in the conflict, the rate of economic growth diminished. As a result, the Chinese

competitiveness on the international market reached a temporary peak, impacting other nations.

During the disagreements commodity prices have fluctuated with more drastic measures, because of

the uncertainty associated with the situation outcome. The events have affected to a great extent the

amount of steel being produced. The combination of Chinese construction work reduction and rise in

usage of scrap metal has decreased demand for iron ores. The Chinese long term plan regarding

renewable energy solutions have been delayed, as profits have the utmost importance, making the

environment for companies dealing and trading coal more attractive.

The change in the environment may lead to different types of risks, either willingly or unwillingly.

China is trading many commodities with Australia, Making their GDP affect each other. A decrease of

43

Chinese demand results in a decrease of Australian supply. This has affected the Australian job

market and national GDP. The total output has been weakened and the Australian investments have

been decreased, making minor impact to the infrastructural and educational sector. These impacts, in

the short-term, would result in no tax modification, nonetheless it would reduce the number of

qualified workers in the long-term. Agreements and partnerships with universities are a powerful

instrument for Australian companies, as the demand for for their substitutes and capital placed in the

educational sector has suffered a minor impact. Technological development can always occur, but the

R&D used for this purpose varies according to the certainty of industry and strength of their balance

sheet.

Deep sea impact on key forces

The key forcers for the mining industry are affected by the decrease of Chinese demand, caused by

increase usage of scrap and American tariffs. There has been a decrease in export to the Chinese

continent and the foundation for innovative development in Rio Tinto’s operation. In short term

restricted economic growth creates unstable partnerships with public institutions, making Rio Tinto’s

speed of technological advancement decline. Furthermore less investments in the Australian

educational system, would result in limited amount of qualified workers in the future. The low

economic growth has limited demand for steel in the global society, creating a solid advantage for

companies to use economies of scale. This results among an amount of small competitors, because

they will have a hard time competing with Rio Tinto, BHP and Fortescue. There will be good

implications for more M&A in Rio Tinto, as smaller companies who experience financial trouble can

get acquired with a discount rate(Petroff, 2018).

Summary of new industry conditions

1. Lowered geographical access to China

2. Worse foundation for impressive financial ratios

3. Reduced financial options (Government and company)

a. Decreasing the level of local fellowship

b. Less partnerships with institutions

c. Less technological development

d. Worse access to qualified labour

4. Decreased concentration of competition

a. Making good M&A opportunities

44

Prioritization of strategic objectives

In the annual report of Rio Tinto in 2017, they state that the value drivers leading to competitive

advantage are ‘portfolio management, performance management, people and partners’. These

objectives will still be the focal issue, but all the factors will not be equally treated as the environment

is shaped by short- and long term. Therefore the strategy created around the scenario “Deep-sea” is a

prioritization of Rio Tinto’s current strategic objectives.

Portfolio management

The environment would over time reduce the space for smaller competitors. They usually have a hard

time competing with large companies due to lack of economic scale, which means a low threat for

new entrants to enter. The excess to liability is harder than in an environment driven by high demand

(Petroff, 2018). Rio Tinto should focus upon green and brownfield investments in periods of recessive

economy. Smaller competitors with growth potential will still have a hard time maintaining

cost-efficiency in this environment. Even in short-term it can be hard to maintain a positive cash flow,

especially when decreasing demand is pressuring the prices of commodities. The stronger companies

like Rio Tinto and BHP have the ability to make brownfield investments in such competitors. With

their asset strength and industry expertise, this could be a profitable investment in the long term.

Buying in deep-sea conditions can end up becoming a great discount on assets with high value

potential (Petroff, 2018). An increase in company portfolio are therefore a top priority if

environmental conditions are moving towards the deep sea.

Performance management

The development of automatization in the mining industry, makes significant changes to Rio Tinto’s

operations (Rio Tinto, 2017). Industrial conditions have reached a point in time where further

technological development require a large R&D budget. One could argue that technology will always

develop, but it happens more rapidly in certain industries (Friedmand, 2018). Technology has been

optimized over the years, as investments in basic advancements is already a major value driver due to

reduced operational cost. R&D investments give Rio Tinto a long-term strength, as they reduce the

number of staff needed for their operation (Rio Tinto, 2017). This diminish the risk associated with

demographic change. In contrast investments in R&D would only be profitable in long term, making

portfolio advancements a more suitable option.

45

People

Various initiatives regarding Human resource development (HRD) have proven to increase company

capabilities (Wilton, 2016). In 2017, Rio Tinto “Enabled 1,500 leaders to improve their leadership

skills through a six-month development programme called Leading for Success” (Rio Tinto, 2017).

They have already taken part in this new way of more efficient workforce. Such initiatives increase

the internal efficiency of performance and the external attraction towards the company (Wilton, 2016).

In the beginning of the 21th century, companies with innovative technology became the preferred

employers. This made the attractiveness of labour industry decline, especially among millennials

(Beechler, S. and Woodward, I.C., 2009). The emphasis on employer branding by visible HRD are

enabling Rio Tinto to attract talents, while also increase their value chain efficiency. The competitive

advantage of HR techniques makes perfect conditions for internal competition and development.

However this approach has less significance in this environment, as a smaller amount of companies

are competing over the group of high-skilled workers.

Partners

The service is essential for the reputation Rio Tinto because they have a lot of current and possible

future partners.. In 2017 China was responsible for 40 percent of the revenue generated by Rio Tinto

assets. The management of the company expects this number to increase, but usage of scrap and

restriction of steel production is a threat. Like the management of portfolios, a diversified focus on

partners would be recommended. Good relationships with companies in China, Japan, South Korea

and Taiwan are better than just laying all their eggs in one basket. However, making initiatives in

service towards all their business partners, is always a preferred short-term high potential approach.

The involvement in local community using CSR techniques could also provide the company with

long-term benefits, because is can better the bound between the actors.

Sub-conclusion on the Deep sea strategy

The deep-sea environment is creating environmental conditions, where a prioritization of current

strategic objectives is needed. Being an industry leader in R&D is an expensive task with no guarantee

for an increased revenue. Initiatives on HR approaches would give a solid foundation for growth as it

makes the company seem more attractive among high-skilled individuals. But the demand for workers

are not as high, as the demand for company subsidiaries are lowered. The emphasis on brownfield

investments would be a preferable option, if the capabilities of potential investment looks amusing.

46

However this is only an option if the balance sheet of Rio Tinto allows it in times of low economic

growth. Service and close connections with all the partners should be taken very seriously. Therefore

brownfield along with service should be the preferred objectives in this environment.

Scenario - Coral reef The effect of the tariffs implemented by the US President Trump had no further impact on the Chinese

economy, as their response made an end to such regulations. This made no further complications

between the two nations regarding trade. The demand from surrounding nations have once again

continued their climb, assisting Chinese economy in continuing its growth. There has been an increase

in Chinese competitiveness on the international market, giving a responsive effect on nations with

related trade connections. This has made the demand for steel increase and prices to continue its

fluctuations with a tendency of growth. The manufacturing of steel has potential to decline, because

the increasing demand from car manufacturers and construction sites made commodity-demand

continue in growth. As the Chinese steel production increases, the manufacture of scrap materials has

stayed at the same percentage as their total production. The emphasis on high quality metals has been

profitable to the Australian mining industry. Profits are considered the most important aspect, but

general growth tendencies have allowed initial investments in other sectors. The Chinese plans

regarding renewable energy solutions is in motion, causing long-term consequences on other

industries. The effect of such an initiative has for instance affected the demand on coal negatively.

The increasing level of global import and export are affecting all countries including the nation

Australia. China is trading many subsidiaries with Australia, increasing demand and additional supply

for Australia. This has a long-term positive effect on the national GDP and their public investments.

The extend of public investments can usually be traced in the infrastructural, technological and

educational sector, which make long-term benefits for companies with productions located in

Australia. National increase of operating cash-flow is resulting in a reduction of corporate tax in the

country.

Coral-reef impact on key forces

The environment is thriving on economic growth. Rio Tinto’s geographical access to their key market

China has increase, as the demand for raw materials grows. As the export to China has increased, so

has the foundation for technical expertise in Rio Tinto and Australia. In short term a greater

foundation for partnerships with public institutions has been established. In long term educational

investments would supply Rio Tinto with a more qualified workforce. The capital acquired from the

47

increased demand for raw materials, have created a solid foundation for more innovation within the

operation of Rio Tinto. An increased amount of smaller competitors could potentially enter the

market, intensifying the concentration in the industry. The financial measures would thrive in this

environment, as the emphasis on M&A would not dictate their path. Buying smaller competitors in

this environment would most likely be characterized with a premium rate. The market concentration

would make more employer competition in regards to attracting more high skilled workforce.

Summary of industry conditions

1. Increased geographical access to China

2. Better foundation for financial ratios

3. Increased financial options (Government and company)

a. Increased level of local fellowship

b. Better foundation for partnerships with institutions

c. Better foundation for technological development

d. More competition for qualified labour

4. Higher concentration of competition

a. Making expensive M&A opportunities

Prioritization of strategic objectives

If the external environment is moving towards this possible scenario of a future world. Rio Tinto

should continue to sharp their focus on the four strategic objectives ‘Portfolio management,

performance management, people and partners’. These objectives have been major value drivers for

their current operation, making a high growth environment a good time to take further initiatives. Like

the strategic analysis of the first scenario, no objectives would be added, but an emphasis on a

categorization would be conducted.

Portfolio management

The expansion of company portfolio can happen in the Deep-sea and the Coral-reef. However there

need a clear differentiation between green and brownfield investments. Brownfield investments

should wait till the economy has turned around, as it can be more profitable to buy smaller

competitors with a discount instead of a premium. A larger emphasis on greenfield investments can

48

prove to be profitable, as inspections of new territory and construction of new facility is made by the

company itself. The cost of such investment can of course vary, but one might argue that it is

potentially cheaper than buying another competitor at a premium. The increase of the portfolio should

be a short-term decision proving to generate long-term revenue (Petroff, 2018).

Performance management

A wise choice in the environment is investments in innovative performance regulators. Rio Tinto has

already implemented new equipment making operations more streamlined. (Rio Tinto, 2017). The

technological development follows the global economy, making advancements happen faster if capital

is supporting the activities. The automatization of more functionalities would reduce workforce, the

cost of labor in short and long-term. All investments in this objective are giving long term strengths,

for instance it reduce cost and diminish risk associated with demographic challenges. Without the

usage of CSR, Rio Tinto could in time be considered a crook in the local community, if the entire

workforce got replaced by machinery. Performance measurements is recommended as it can

streamline their operation, but they are located in the wrong industry for large budgets in R&D.

People & Partners

Rio Tinto is not the only company experiencing growth. The amount of smaller competitors is

thriving and there is an increase of demand for high-skilled labour in Australia. Rio Tinto cannot

capture all the talent if they do not manage to brand their company properly. In this specific

environment a larger emphasis should be on this objective, as the human resources are the essence in

developing their operation. Attention should be on further HRD initiatives and employer branding, as

the benefits provided by these techniques are beneficial across the whole value chain of the company.

HR techniques would be an ideal initiative in this environment, as performance is partly dictated by

the staff of the company. This approach is strongly recommended in this environment.

The importance of having good relations with customers, suppliers, investors, governments and local

communities, as they lay the foundation to achieve the rest of the objectives. If these objectives are

not under control, an increase in uncertainty will occur among the rest of the objectives. It can never

be argued to adopt all resources towards a single partner in a single country, as the risk is not

diversified in that way. This aspect are ensuring their geographical access to China and their

technological development.

49

Sub conclusion on the Deep sea strategy This environment made another kind of obstacle towards the operation of Rio Tinto. The initiative of

M&A with smaller competitors, should not be their first choice as other strategic motives are

available. The emphasis on making own discoveries by greenfield investments could be a potential

strategic move, as it does not require a premium to be paid by Rio Tinto. The technology develops

faster on a global scale, but this industry is an exception. There is not the same need for massive

investments in R&D, as the process already have been streamlined by advancements from this

department. Along with greenfield investments, the primary focus should rely on the HR initiatives

and partners. Focus in these areas mean that the company has availability of high-skilled labour and

certainty among partners.

Conclusion

In this paper we have have examined to what extent the short- and long-term uncertainties from

external driving forces, can change and impact Rio Tinto’s business strategy. From the empirical data

of NVivo, Porter’s Five Forces and PESTEL-analysis, we constructed two scenario - Deep sea and

Coral leaf.

NVivo allowed us not to misuse the limited time we had to conduct the research. It guided us to focus

and research on main themes and focal points around the analyzed topic. It provided us with factors

and directions which turned out to be correct among the process when implementing other datasets

and sources. NVivo, as explained below, is an analytical instrument upon which scenarios can be

constructed. It led to a solid foundation made of meticulous and accurate qualitative results. We can

conclude that this tool can be beneficial in scenario planning if wisely and carefully utilized.

In Porter’s Five forces we saw geographical access to China, innovation, foundation for M&A and a

need for good relation with local community, key forces ensuring the success of Rio Tinto. By

conducting a PESTEL analysis it was discovered that key forces were limited by driving forces with

uncertain outcomes. A coherent pattern between the uncertainties were identified and used to build the

the foundation of the scenarios.

The first scenario was grouped together by uncertainties such as; more tariffs, low growth and low

technological development. In general, the environmental condition made key forces worse, except

50

‘foundation for M&A’. If the future environment follow the direction of the scenario, Rio Tinto

should focus upon their strategic objective ‘Portfolio management’.

The second scenario was grouped together by uncertainties including; Less tariff, high growth and

high technological advancement. This scenario has had less impact on the key forces ensuring the

success of Rio Tinto. However the scenario created a higher concentration of competition among

competitors, making it harder to maintain and attract qualified employees. If the environment is

moving towards this scenario, it is recommended that Rio Tinto are expanding its operation by the use

of greenfield investments, HR activities and performance operations.

From our findings we have not seen any new strategic options, but we did find important uncertainties

in the future of Rio Tinto’s competitive positioning. It can be concluded from this project and its

material, our version of scenario planning had a limited impact to Rio Tinto’s current business

strategy. However the methodology has shown uncertainties in the companies external & internal

environment, especially in regards to workforce & local communities. For further researcher it would

be feasible to narrow down scenario planning even further, by emphasizing uncertainties related to

workforce.

(De)Limitation & Reflections

Through our reading and implementation of our chosen theories scenario planning & Nvivo, we were

faced with many choices from start till end.

NVivo is an accessible tool for qualitative data science. However we have noticed in the process that a

high level of attention over the choice of documents and sources is fundamental. A lack of enough

consideration over the sources could mislead the research into a focus in the wrong direction. This

tool has to be employed after a modest and prudent level of research over the data to implement.

Scenario planning is a very processual analysis, where uncertainty already interfere in the choice of

company and methodological framework. Where analytical tools such as benchmark and PLC-model

can be applied to a brought range of companies, scenario planning as a common instrument limited by

its findings of uncertainties. The analytical tool should not be measured upon it universal feasibility,

rather the question is whether the empirical data can be useful. To get closer to a conclusion upon this

question mark, we can first take a look at our choice of external analysis ‘Porter’s Five Forces and

PESTE. The empirical data we utilized in the analysis was from 2017-18, as scenario planning argue

for data and starting points close to present time. To begin with this seems like a rational way of

51

approaching the data, but we experience that short-term uncertainties was very much dependent upon

the time frame. As we progressed in the analysis and arrived at the construction of scenarios, we were

met by new limitations to the method. The short-term uncertainties gave the opportunity to create a

coherent story. However in the process of constructing scenarios we discovered, that our

decision-making was impacted by the predictability in contrast to long-term uncertainties. Because the

consequences of the long-term uncertainties was too difficult to decide, we had to rely more on our

short-term findings. However we explored that long-term uncertainties, while nothing certain be said

about the future, it can be used to create a strong foundation for decisions and reflections of a

company's future direction. Additionally, is should be noticed that other companies analysed, would

derive other uncertainties due to their key forces & external driving factors. This also makes it very

difficult for scenario planning, to be a more common method, as time and preparation to decide what

uncertainties is important to a company 10 years in the future. Moreover, if the scenario planning has

to be unique for each company, choices of more easy applicable tools, would probably be favoured

over an uncertain analysis.

Furthermore we believe that the ‘uncertainties of uncertainties’ is one of the reason for why we were

not able to find scenario planning methods usable in the daily decision-making process. The material

chosen to understand and explain Rio Tinto, we saw in scenario litteratur that the word uncertainty

was frequently used in the different methods. However uncertainty was never explicitly defined.

Usually the reachers or companies like Shell in 1991, distinguish between high and low impact &

uncertainty, but never further discuss the arbitrary meaning attached to the term. Still from the use of

critical realism and our chosen analytical theories, we were able to find coherent pattern of long-term

uncertainties. By using Porters as building blocks for PEST-analysis, we end up with the same

concerns raised by the mining industry. Whether this reflection of reality can be a sign of scenario

planning succeeding to a certain extent, it could also be argued to be the limitation of the theory. If the

end goal is to challenge current belief and decision-making, the theoretical framework of the science

has a problem, explaining how data related to the company will show alternative approaches. In our

project we build our scientific findings on critical realistic concept of truth, here the philosophy of

science shares parallels to scenario planning. The theory attempt to make nohometic conclusion from

recurring patterns and elements, but criticism from post-strutalistic authors, has been the subjective

influence to create normative statements. When scenario planning use experts in the field, we believe

there also is a similar idea to what uncertainties to be expected. It can be a sign that the direction will

move toward the predicted outcome, but it could also be, that some uncertainties categorized as

certain, is taken for given in certain organizational cultures or industries. From our research we have

52

concluded that scenario planning can challenge current strategy, but it should however be treated as an

contribution to discussion, and be careful not to end up us a discussion of uncertainties.

This bring us to the last next point of (de)limitation to our researcher. Scenario planning can be an

interesting tool to ‘stress test’ and re-evaluate priorities, but there is also a possibility it can make

more damage than help. In the strategic implementation we experienced that very few changes to

scenario planning would change the strategy. Although we never applied it to a company, we can take

departure in our own project. Uncertainties create opportunities for interpreting and discussion, as the

definition of driving forces has to be established. Managers and employees deal with uncertainties

everyday, and as we see it, these uncertainties would potentially bring more stuff to discuss and

uncertainty to decision-making. However as we also discovered in our analysis, long-term

uncertainties, while nothing can be stated about the future of their outcome, it can give an indication

and guideline for where one is going. Although people and groups like Michael Godet and Shell has

managed to implement it successfully, we believe that it requires a very strict code of conduct, where

only top-managers who is a part of strategic management, should be included in the process. If this

was included into the daily operations of the employees, it could create more uncertainty in quick

decision-making therefore delaying efficiency.

53

Bibliography ABC News. (2018). Chinese investment in Australia at highest point since GFC. [online] Available at: http://www.abc.net.au/news/2017-05-01/chinese-investment-in-australia-at-highest-point-since-gfc/8485828 [Accessed 19 May 2018]. ABC News. (2018). What are the key arguments in the corporate tax cut debate?. [online] Available at: http://www.abc.net.au/news/2018-03-29/corporate-tax-cuts-explained/9600004 [Accessed 19 May 2018].

Australia, G. (2018). Iron Ore - Mineral Fact Sheets - Australian Mines Atlas. [online]

Australianminesatlas.gov.au. Available at:

http://www.australianminesatlas.gov.au/education/fact_sheets/iron.html [Accessed 24 May 2018].

Amer, M., Daim, T. and Jetter, A. (2013). A review of scenario planning. Futures, 46, pp.23-40.

Australian Institute of Health and Welfare. (2018). Older Australia at a glance, Australia’s changing

age and gender profile - Australian Institute of Health and Welfare. [online] Available at:

https://www.aihw.gov.au/reports/older-people/older-australia-at-a-glance/contents/demographics-of-ol

der-australians/australia-s-changing-age-and-gender-profile [Accessed 25 May 2018].

Balch, O. (2018). Automated mining will cost jobs and tax income: it's time for governments to act.

[online] the Guardian. Available at:

https://www.theguardian.com/sustainable-business/2017/jan/20/autonomous-mining-will-cost-jobs-an

d-tax-income-its-time-for-governments-to-act [Accessed 23 May 2018].

Beechler, S. and Woodward, I.C., 2009, The global “war for talent”, Journal of International

Management 15: 273–285

Bloomberg.com. (2018). How China Is Buying Its Way Into Europe. [online] Available at:

https://www.bloomberg.com/graphics/2018-china-business-in-europe/ [Accessed 19 May 2018].

54

Cabinet, D. (2018). Media Statements - WA companies benefit from Pilbara iron ore projects. [online]

Mediastatements.wa.gov.au. Available at:

https://www.mediastatements.wa.gov.au/Pages/Barnett/2013/01/WA-companies-benefit-from-Pilbara-

iron-ore-projects-.aspx [Accessed 17 May 2018].

Carbon Brief. (2018). Q&A: How will China’s new carbon trading scheme work? | Carbon Brief.

[online] Available at:

https://www.carbonbrief.org/qa-how-will-chinas-new-carbon-trading-scheme-work [Accessed 19 May

2018].

Cornelius, P., Van de Putte, A. and Romani, M. (2005). Three Decades of Scenario Planning in Shell.

California Management Review, 48(1), pp.92-109.

Chermack, T., A. Lynham, S. and E. A. Ruona, W. (2001). A Review of Scenario Planning Literature.

Futures Research Quarterly, pp.7-32.

Chermack, T. (2005). Studying scenario planning: Theory, research suggestions, and hypotheses.

Technological Forecasting and Social Change, 72(1), pp.59-73.

Day, G. (1981). The Product Life Cycle: Analysis and Applications Issues. Journal of Marketing,

[online] 45(4), p.60. Available at:

http://www.jstor.org/stable/1251472?seq=1#page_scan_tab_contents [Accessed 27 Mar. 2018].

Dyson, R. (2004). Strategic development and SWOT analysis at the University of Warwick. [online]

ScienceDirect. Available at:

https://www.sciencedirect.com/science/article/abs/pii/S0377221703000626 [Accessed 24 Mar. 2018].

Industry.gov.au. (2018). 2.1 WHS law for mines in Australia. [online] Available at:

https://industry.gov.au/resource/Programs/LPSD/Community-health-and-safety-handbook/Health-and

-safety/Pages/WHS-law-for-mines-in-Australia.aspx [Accessed 25 May 2018].

Investopedia. (2018). Cyclical Industry. [online] Available at:

https://www.investopedia.com/terms/c/cyclical_industry.asp [Accessed 27 May 2018].

55

Engineering.com, (2018). The Battle of the Bodies: Steel vs. Aluminum in Automotive Production

[online] Available at:

https://www.engineering.com/AdvancedManufacturing/ArticleID/16437/The-Battle-of-the-Bodies-Ste

el-vs-Aluminum-in-Automotive-Production.aspx [Accessed 17 May 2018].

Elvis Picardo, C. (2018). Business Cycle. [online] Investopedia. Available at:

https://www.investopedia.com/terms/b/businesscycle.asp [Accessed 21 May 2018].

Facts, I. (2018). Topic: Iron ore. [online] www.statista.com. Available at:

https://www.statista.com/topics/1919/iron-ore/ [Accessed 20 May 2018].

Feng, E. (2018). China steel production cuts set to take effect. Financial Times.

Financials.morningstar.com. (2018). Growth, Profitability, and Financial Ratios for Rio Tinto PLC

ADR (RIO) from Morningstar.com. [online] Available at:

http://financials.morningstar.com/ratios/r.html?t=RIO [Accessed 17 May 2018].

Financials.morningstar.com. (2018). Growth, Profitability, and Financial Ratios for BHP Billiton Ltd

ADR from Morningstar.com. [online] Available at:

http://financials.morningstar.com/ratios/r.html?t=0P0000C6ZH&culture=en-US&platform=sal

[Accessed 17 May 2018].

Financials.morningstar.com. (2018). Growth, Profitability, and Financial Ratios for Fortescue Metals

Group Ltd from Morningstar.com. [online] Available at:

http://financials.morningstar.com/ratios/r.html?t=0P000000NF&culture=en-US&platform=sal

[Accessed 17 May 2018].

Forbes.com. (2018). [online] Available at:

https://www.forbes.com/sites/kenrapoza/2017/02/21/chinas-aging-population-becoming-more-of-a-pr

oblem/#6d5ab8c4140f [Accessed 25 May 2018].

Futures Centre. (2018). Resource scarcity. [online] Available at:

https://thefuturescentre.org/trend-card/resource-scarcity [Accessed 23 May 2018].

56

Global Agenda Survey 2012. (2018). Scarcity of Resources. [online] Available at:

http://reports.weforum.org/global-agenda-survey-2012/trends/scarcity-of-resources/ [Accessed 23

May 2018].

Giga-hamburg.de. (2018). Corporate Social Responsibility and the Agenda 2030 | GIGA. [online]

Available at:

https://www.giga-hamburg.de/en/news/corporate-social-responsibility-and-the-agenda-2030

[Accessed 25 May 2018].

Government of Western Australia (2017). Western Australia iron ore industry profile. Government of

Western Australia, pp.1-4.

Griffin, A. (1997). PDMA Research on New Product Development Practices: Updating Trends and

Benchmarking Best Practices. Journal of Product Innovation Management, [online] 14(6),

pp.429-458. Available at: https://onlinelibrary.wiley.com/doi/abs/10.1111/1540-5885.1460429

[Accessed 27 Mar. 2018].

Government of Western Australia (2017). Western Australia iron ore industry profile. Government of

Western Australia, pp.1-4.

Helpsystems.com. (2018). Automated Operations: 5 Benefits of Automation | HelpSystems. [online]

Available at:

https://www.helpsystems.com/resources/guides/automated-operations-5-benefits-your-organization

[Accessed 23 May 2018].

Industry.gov.au. (2018). 2.1 WHS law for mines in Australia. [online] Available at:

https://industry.gov.au/resource/Programs/LPSD/Community-health-and-safety-handbook/Health-and

-safety/Pages/WHS-law-for-mines-in-Australia.aspx [Accessed 25 May 2018].

Ironorefacts.com. (2017). Iron Ore & Global Markets.. [online] Available at:

http://www.ironorefacts.com/the-facts/iron-ore-global-markets/ [Accessed 17 May 2018].

Issa, D., Chang, A. and Issa, D. (2010). Sustainable Business Strategies and PESTEL Framework.

GSTF INTERNATIONAL JOURNAL ON COMPUTING, [online] 1(1). Available at:

https://espace.curtin.edu.au/handle/20.500.11937/45566 [Accessed 27 Mar. 2018].

57

Jackson, S., Joshi, A. and Erhardt, N. (2003). Recent Research on Team and Organizational Diversity:

SWOT Analysis and Implications. Journal of Management, [online] 29(6), pp.801-830. Available at:

https://www.sciencedirect.com/science/article/pii/S0149206303000801 [Accessed 24 Mar. 2018].

Johnson, G., Wittington, R., Scholes, K., Angwin, D. and Regner, P. (2016). Fundamentals of

Strategy. 3rd ed. Harlow: Pearson Education Limited,

Jørgensen, Marianne W., and Louise J. Phillips. 2002. Discourse Analysis as Theory and Method.

SAGE; chp 1: The Field of Discourse analysis

Korte, R. and Chermack, T. (2007). Changing organizational culture with scenario planning. Futures,

39(6), pp.645-656.

Kureer, H. (2010). International økonomi - A-niveau. 2nd ed. Viborg: Systime.

Lexicon.ft.com. (2018). Corporate Social Responsibility (Csr) Definition from Financial Times

Lexicon. [online] Available at:

http://lexicon.ft.com/Term?term=corporate-social-responsibility--(CSR) [Accessed 25 May 2018].

Letts, S. (2018). 50,000 more mining jobs set for the axe as boom ends: NAB. [online] ABC News.

Available at:

http://www.abc.net.au/news/2016-06-10/mining-boom-halfway-down-the-mining-cliff/7500700

[Accessed 17 May 2018].

Marketline (2017). PESTLE Country Analysis Report: Australia.

Marketline (2017). PESTLE Country Analysis Report: China

McKinsey & Company. (2018). A better way to automate service operations. [online] Available at:

https://www.mckinsey.com/business-functions/operations/our-insights/a-better-way-to-automate-servi

ce-operations [Accessed 23 May 2018].

McHugh, B. (2018). Global mining report highlights lack of government and investor recognition for

Australian miners. [online] ABC Rural. Available at:

58

http://www.abc.net.au/news/rural/2016-08-10/recognition-needed-of-australian-global-mining-efforts/

7712930 [Accessed 19 May 2018].

Milman, O. and Evershed, N. (2018). Australia has denied environmental approval to just 18 projects

since 2000. [online] the Guardian. Available at:

https://www.theguardian.com/environment/2015/aug/12/australia-has-denied-environmental-approval

-to-just-11-projects-since-2000 [Accessed 25 May 2018].

Mining Technology. (2018). Australia’s mining tax regime: is it too tough? - Mining Technology.

[online] Available at:

https://www.mining-technology.com/features/featureaustralias-mining-tax-regime-is-it-too-tough-580

5991/ [Accessed 19 May 2018].

Neate, R. (2018). Rio Tinto accused of environmental and human rights breaches. [online] the

Guardian. Available at:

https://www.theguardian.com/business/2013/apr/18/rio-tinto-environmental-human-rights-breaches

[Accessed 17 May 2018].

Normann, R. (1995). Designing interactive strategy: From value chain to value constellation. Long

Range Planning, 28(5), p.119.

Perera, J. (2018). Performing a Five Force Analysis The Australian Iron Ore Market. [online]

Academia.edu. Available at:

http://www.academia.edu/16285751/Performing_a_Five_Force_Analysis_The_Australian_Iron_Ore_

Market [Accessed 17 May 2018].

Petroff, E. (2018). Investment Portfolio Strategy in Recession. [online] Investopedia. Available at:

https://www.investopedia.com/articles/08/recession.asp [Accessed 27 May 2018].

Phelps, R., Chan, C. and Kapsalis, S. (2001). Does scenario planning affect performance? Two

exploratory studies. Journal of Business Research, 51(3), pp.223-232.

Philip R. Walsh, (2005) "Dealing with the uncertainties of environmental change by adding scenario

planning to the strategy reformulation equation", Management Decision, Vol. 43 Issue: 1, pp.113-122

59

Porter, M. (1979). How competitive forces shape strategy. Harvard Business Review, 57(2).

Pwc.com. (2018). Global Metals Deals Insights Q1 2018 [online] Available at:

https://www.pwc.com/us/en/industrial-products/publications/assets/pwc-metals-industry-mergers-acq

uisitions-q1-2018.pdf [Accessed 19 May 2018].

PwC. (2018). Megatrends Climate change and resource scarcity. [online] Available at:

https://www.pwc.co.uk/issues/megatrends/climate-change-and-resource-scarcity.html [Accessed 23

May 2018].

Ratcliffe, J. (2000). Scenario building: a suitable method for strategic property planning?. Property

Management, 18(2), pp.127-144.

Reuters (2018). Embattled Australian PM Turnbull forced to delay tax cut. [online] Available at:

https://www.reuters.com/article/us-australia-politics-tax/embattled-australian-pm-turnbull-forced-to-d

elay-tax-cut-idUSKBN1H40IB [Accessed 19 May 2018].

Reuters (2018). China aims for emission trading scheme in big step vs. global warming. [online]

Available at:

https://www.reuters.com/article/us-china-carbon/china-aims-for-emission-trading-scheme-in-big-step-

vs-global-warming-idUSKBN1ED0R6?feedType=RSS&feedName=environmentNews [Accessed 19

May 2018].

Reuters (2018). China metal producers urge Beijing to retaliate on U.S. tariffs. [online] Available at:

https://www.reuters.com/article/us-china-trade-steel/china-metal-producers-urge-beijing-to-retaliate-o

n-u-s-tariffs-idUSKCN1GL01O [Accessed 19 May 2018].

Reuters (2018). Getting scrappy: China iron ore demand may falter as steel.... [online]

Available at: https://www.reuters.com/article/us-china-steel-idUSKBN19Q0U3 [Accessed 17

May 2018].

Ringland, G. (1998). Scenario planning. Chichester, England: Wiley.

Rio Tinto (2017). Annual report 2017.

60

Riotinto.com. (2018). Environment. [online] Available at:

http://www.riotinto.com/ourcommitment/environment-24290.aspx [Accessed 17 May 2018].

Riotinto.com. (2018). Land agreements. [online] Available at:

http://www.riotinto.com/australia/pilbara/land-agreements-9619.aspx [Accessed 17 May 2018].

Riotinto.com. (2018). People and partnerships. [online] Available at:

http://www.riotinto.com/ourcommitment/people-and-partnerships-24280.aspx [Accessed 16 May

2018].

Riotinto.com. (2018). Protecting the environment. [online] Available at:

http://www.riotinto.com/ourcommitment/protecting-the-environment-21468.aspx [Accessed 17 May

2018].

Riotinto.com. (2018). Rio Tinto completes first fully autonomous rail journey in Western Australia.

[online] Available at: http://www.riotinto.com/media/media-releases-237_23264.aspx [Accessed 17

May 2018].

Rio Tinto (2017). Rio Tinto extends sustainable development partnership with Tsinghua University.

Riotinto.com. (2018). Rio Tinto to almost double its autonomous drilling fleet in a drive to further

improve safety and productivity. [online] Available at:

http://www.riotinto.com/media/media-releases-237_25303.aspx [Accessed 17 May 2018].

Riotinto.com. (2018). Rio Tinto and Shire of Ashburton further strengthen Pilbara communities

through renewal of long term partnership. [online] Available at:

http://www.riotinto.com/media/media-releases-237_22513.aspx [Accessed 16 May 2018].

Riotinto.com. (2018). Smart mining. [online] Available at:

http://www.riotinto.com/ourcommitment/smart-mining-24273.aspx [Accessed 17 May 2018].

Riotinto.com. (2018). WA business eager to partner with Rio Tinto in new approach to procurement.

[online] Available at: http://www.riotinto.com/media/media-releases-237_22895.aspx [Accessed 17

May 2018].

61

Roman, A. (2018). An Integrated Strategy Framework (ISF) for Combining Porter's 5-Forces,

Diamond, PESTEL, and SWOT Analysis - Munich Personal RePEc Archive. [online]

Mpra.ub.uni-muenchen.de. Available at: https://mpra.ub.uni-muenchen.de/72507/ [Accessed

27 Mar. 2018].

Schein, E. (1996). Culture: The Missing Concept in Organization Studies. Administrative

Science Quarterly, [online] 41(2), p.229. Available at:

http://www.jstor.org/stable/2393715?seq=1#page_scan_tab_contents [Accessed 26 Mar.

2018].

Shrestha, R., Alavalapati, J. and Kalmbacher, R. (2004). Exploring the potential for

silvopasture adoption in south-central Florida: an application of SWOT–AHP method.

Agricultural Systems, [online] 81(3), pp.185-199. Available at:

https://www.sciencedirect.com/science/article/pii/S0308521X03001963 [Accessed 27 Mar.

2018].

Satell, G. (2018). The Evolution Of Strategy. [online] Forbes.com. Available at:

https://www.forbes.com/sites/gregsatell/2013/09/14/the-evolution-of-strategy/#2b264d91a75

6 [Accessed 25 Apr. 2018].

Segal, T. (2018). Gross Domestic Product - GDP. [online] Investopedia. Available at:

https://www.investopedia.com/terms/g/gdp.asp [Accessed 21 May 2018].

Simonite, T. (2018). This truck is the size of a house and doesn’t have a driver. [online] MIT

Technology Review. Available at:

https://www.technologyreview.com/s/603170/mining-24-hours-a-day-with-robots/ [Accessed

23 May 2018].

South China Morning Post. (2018). China’s dirty little secret: its growing wealth gap.

[online] Available at:

http://www.scmp.com/news/china/economy/article/2101775/chinas-rich-grabbing-bigger-slic

e-pie-ever [Accessed 25 May 2018].

62

The Conversation. (2018). What income inequality looks like across Australia. [online]

Available at:

https://theconversation.com/what-income-inequality-looks-like-across-australia-80069

[Accessed 25 May 2018].

Tradingeconomics.com. (2018). GINI index in Australia. [online] Available at:

https://tradingeconomics.com/australia/gini-index-wb-data.html [Accessed 25 May 2018].

Worldpopulationreview.com. (2018). [online] Available at:

http://worldpopulationreview.com/countries/china-population/ [Accessed 25 May 2018].

Www-statista-com.ep.fjernadgang.kb.dk. (2018). Statista. [online] Available at:

https://www-statista-com.ep.fjernadgang.kb.dk/statistics/270325/distribution-of-gross-domest

ic-product-gdp-across-economic-sectors-in-china/ [Accessed 21 May 2018].

Varum, C. and Melo, C. (2009). Directions in scenario planning literature – A review of the

past decades. Futures, 42(4), pp.355-369.

Xinhuanet.com. (2018). China's war on pollution winning: report - Xinhua | English.news.cn.

[online] Available at: http://www.xinhuanet.com/english/2018-03/13/c_137036088.htm

[Accessed 19 May 2018].

Zhang, F. (2018). China to hike anti-pollution targets. ICIS Chemical Business.

63