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Case Analysis
Submitted by Carlos and Sagar
The Challenge
Competition - CVRD was positioning globally, and bridging the gap (in China)
RTIO produces only 133 MM MT of ore, and China alone is expected to import 320 MM MT of ore in 2006. High market consolidation leaves very less opportunity for organic growth Exploration is resource consuming and comes with high risk
Organic Growth
Human Resource
Shortage of skilled labor Culture transferability across geographies Impact: Increasing processing cost (replicating processes in Australia to Brazil, India and Africa)
Technology
External Environment: Opportunity, Threats, Competition Internal Organization: Resources, Capabilities, Core Competencies, Competitive Advantage
Sustainability
Which business model to adopt - FOB or CFR Suppliers demand deliveries to mills Immature Inland logistics
Spot prices skyrocketed Small-scale ore companies making advantage Impact on profitability: 45% higher than benchmark price
External Environment: Opportunity, Threats, Competition Internal Organization: Resources, Capabilities, Core Competencies, Competitive Advantage
RTIO Whiteboard
Current Fields
Improve Efficiency
Add value to low-grade ore, especially high phosphorous / alumina based iron ore
Benchmark Price
Offer Spoke Network
SPOT Trading
Use HIsmelt
RTIO produces only 133 MM MT of ore, and China alone is expected to import 320 MM MT of ore in 2006. High market consolidation leaves very less opportunity for organic growth Exploration is resource consuming and comes with high risk
Competition - CVRD was positioning globally, and bridging the gap (in China) Irregularities and disruptions in port operations Mines operated in 60-70% capacity