Fortescue Metal Group Strategic Analysis Essay

The figure obviously had not return to pre-crisis level. Moreover, recent commodity prices had fallen significantly which will affect Australia’s short and long term economy.

Australia has also experienced a rising terms of trade to 130.0 in late 2011 due to the commodities boom as a result of the industrialization of the BRICs, whereby Australia has experienced high export and national income, but has resulted in less competitiveness in other sectors due to the high AUD, causing the ‘Dutch disease’ whereby non-commodity sectors lose competitiveness. Similarly is can be seen in its narrow export base whereby in 2012-13 one third of export revenue came from coal and iron ore ($96 billion from 300 billion), furthermore 57% of Australian export revenue is made up of mineral and energy exports, whereby Australian growth has been largely fuelled by commodity exports and mining boom.

The Australian PMI has been mostly below 50 with an average of 47.98 in past 12 months and an average of 47.94 this year, which suggests a likely contraction in manufacturing. Fluctuation is expected due to its volatile nature but a large percentage change is likely to drive the economy. A 14.03% growth in July is expected to lead to an increase in the coming month but contraction may continue in 2015-2016. From these PMI figures, Australia’s economy might not be performing at its best. The industry might suffer

ExxonMobil is identified as one of the world’s leading oil and gas businesses. It manages market commodities and means countrywide. ExxonMobil is entail in “marketing, gas, and oil exploration, transportation and production in roughly 200 nations” (ExxonMobil, 2015). This company furnishes assistance and products under label names such as “Mobil, Esso, and Exxon. ExxonMobil is known as one of the biggest oil industrial installation where a substance is refined in the nation” (ExxonMobil, 2015). This essay discusses ExxonMobil’s strategic initiative from

Within Australia’s current economic climate, a lower exchange rate provides more economic advantages than a high exchange rate. However, some experts argue that a higher exchange rate is overall beneficial for the economy through having an increased purchasing power, whilst others disagree. By having a lower exchange rate, a country is able to accelerate its exports industry, making exports cheaper abroad, in turn increasing demand for their goods. This report will discuss the recent trends in Australia’s exchange rate, in addition to exploring factors that influence the exchange rate and its impact on the trade industry. The effects of a depreciating

Over the past decade, the Australian dollar has devaluated strongly against the US dollar. Especially in the second half year of 2014, the Australian currency losing around 14 per cent of its value against the US dollar and almost as much against the Chinese RMB (Dixon, J 2015). After the devaluation of Australian dollar, several results would both have positive and negative influences on Australian multinational corporations (Faff, R 2000). It would cause: reduce imports and increase exports, domestic employment opportunities, reduce unemployment, domestic consumer goods prices, stock prices and house prices fell, not conducive to go to study abroad and rising gold prices. More specifically, the impact would explain in the following:

When the supply of AUD is more in the market, the value AUD is decreasing as there is not sufficient export done during the year. As the major importer is china, and the economy of that country does not goes well, that will have direct impact on the Australian economy. The exports will decrease dramatically and there will be less inflow of AUD in the market. Likewise, when Australia imports more of goods, there will be more outflow of AUD to other counties and it will create less supply of AUD in the market and value of AUD will increase.

The Australian economy faces new challenges like the high exchange rate of Australian dollar that has impacted the international competitiveness of its trade activities, mainly manufacturing. Another long-run challenge the economy faces is the dependence of Chinese economy, as they are major trade partners. The future will depend on how the Australian economy prepares itself with corrective/reactive policy measures, trade agreements, and innovative strategies to keep Australia’s dream run of prosperity.

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Australia, the large Island continent, has been generously furnished with abundant natural resources. With these resources, not surprisingly the various kinds of industries utilizing these resources are emerged in Australia. One of the most important industries is mining. Australia has the world's largest reserves of several mineral commodities in both minerals and energy resources. The Mining sector includes all units mainly engaged in mining, including the mineral exploration, and the provision of a wide variety of services supporting mining and mineral exploration. The discovery of the gold in New South Wales and Victoria has forced Australia into the group leader in mining countries since 1851. This essay will focus on the mining in

Horizon 2 encompasses emerging fast rising business which eventually transform and become Horizon 1 business. Rio Tinto has three major growth projects (Silvergrass iron ore development, Oyu Tolgoi underground copper project and the Amrun bauxite project) which are operational by 2020. However, the three projects are the replacement of the existing mine operations for future delivery to the existing clients. As more competitors enter the market, it can threaten or decrease the market share and profitability of Rio Tinto which may result in changes to the existing product quality or price

Material cost is an important factor in every industry. Even in this industry, around 30% of the final cost is tied up in steel, which causes fluctuation in the product price. This in turn determines the industry profitability and growth. On one hand, the industry was facing shortage

The iron ore business unit in Western Australia mainly comprises of the Pilbara region which is the foremost Iron Ore production site of Rio Tinto. Rio Tinto’s business

The industry is marked by Low revenue volatility and medium regulation level. Although industry globalisation is a critical stage and poses a major threat. However over the last five year the industry has boomed due to increase in consumer expenditure , after the recovery of Australian economy in 2010 the industry has started to positive upturn. The industry is expected to grow at annualized 3.3% to a total of $771.3 million.

Thus such a mechanism helped create value for the shareholders as the profits of a Gold mine are dependent on fluctuation in gold prices and the difference between revenue and costs. Thus locking future prices, provided financial stability, enabling the organisation to avoids dips, and plan cash flows in a confident way, and in combination with the rising production, offered investors and shareholders a predictable , rising earnings profile in the future