Using the VRIO analysis model, analyse the SMC Ltd competitive advantage that will impact their business performance in South Africa in the below extract. SMC ltd is a subsidiary of the Swedish-based Andvik Group, which operates in 130 countries. SMC is a major supplier and marketer of underground mechanized mining products to the mining and major infrastructure sector. Locally,SMC is run strategically by a board that is mainly non-executive and includes managing director and country manager, Jim Tolley.SMC’s outstanding performance over the last six years is based on a strategy of improving customers’ operational efficiencies and profitability through the development of high-tech engineering products. SMC boasts a global increase of 6% sales growth and a 17% return on capital employed. SMC plans to double in size over the next five years. ‘We make it possible’, is SMC’s slogan.SMC is a service-orientated organization that prioritizes listening to clients’ to ensure that products contribute to long-term success for its clients.Inherent value is seen in all staff expertise.South Africa needs technical expertise and knowledge with regard to mechanization and high-end technology. A constant challenge is to find new opportunities in the industry to ensure sustainable growth. SMC works together closely with global mining companies to develop new products and invests nearly 4% of sales in research and development, employing more than 1400 people in this function internationally. ‘Unless we can mine cheaper than the rest of the world, we will not have a sustainable industry. Mining is a commodity sold on a world currency of American dollars, and global economics suggest that companies move to where it is the most profitable to operate,’ says Tolley. ‘South Africa has fantastic potential and we are only now starting to tap the surface. Long-term, mechanization will be what creates the sustainability of the mining industry.’An important focus of SMC’s strategy is to remove people from danger – most mining accidents happen within five metres of the rock face. Tolley says that mechanization will drive growth, working across boundaries and into the global community. ‘Continuous improvements in training and skills transfer are essential to the success of the organization. South Africa has some of the best possibilities in the world,’ suggests Tolley. ‘We have continuous breakthroughs in technology and unmanned machinery and a history of being able to do it! The more we can do to improve customer performance, the more we will be assisting the sustainability of the business and the issue of whether the product be mined in South Africa or overseas will become less important. It is imperative that we look at it from the customer’s perspective.South Africa is a fantastic place for entrepreneurs. The government is supportive of business and the people have a good work ethic.An essential component of SMC’s policy is a focus on quality. SMC South Africa implemented ISO 9000 standards and was first operation to implement ISO 14001 standards globally within the group. A customer survey is implemented every 18 months to get feedback on areas of improvement. Community programs are managed with local schools, technikons and universities. SMC believes in getting involved in education; the company currently has more than 130 apprentices (three years ago,there were none). Over 70% of the apprentices are black and the intention is to grow this number to 250. A partnership with the Red Cross Foundation has been established to assist the group implement its policies and values and creating channels for communication.Audit and risk committee takes place bi-annually, ensuring that remedial steps are immediately implemented. Knowledge management is largely system-driven.Tolley says, ‘Information needs to be recorded and shared. Power doesn’t come from what you know, but what you give,This is the best way to protect intellectual capital when people are measured on what they leave behind.We are the market leaders in innovation, and this is one way that we retain our clients.’ Understanding the value of staff and ongoing skills development is key to the business. Tolley affirms, ‘We try to make employment equity a way of life rather than an intervention.’ Employees are paid well for what they do. Tolley believes, ‘Recognition, opportunities and creating a fun place to work add huge value to staff.’SMC plans to plant its footprint firmly in the mining world in future.success will depend on how effective the company is in designing unique solutions for customers. International staff rotation is a critical success factor that ensures focus on more global ideas and a movement deeper into customer operations in the future. Tolley says, ‘The future is dictated by the ability to reduce customer costs of productivity. That is the only limiting factor to growth. The more technological breakthroughs we have, the more effectively businesses will run.
Using the VRIO analysis model, analyse the SMC Ltd competitive advantage that will impact their business performance in South Africa in the below extract.
SMC ltd is a subsidiary of the Swedish-based Andvik Group, which operates in 130 countries. SMC is a major supplier and marketer of underground mechanized mining products to the mining and major infrastructure sector. Locally,SMC is run strategically by a board that is mainly non-executive and includes managing director and country manager, Jim Tolley.SMC’s outstanding performance over the last six years is based on a strategy of improving customers’ operational efficiencies and profitability through the development of high-tech engineering products. SMC boasts a global increase of 6% sales growth and a 17% return on capital employed. SMC plans to double in size over the next five years. ‘We make it possible’, is SMC’s slogan.SMC is a service-orientated organization that prioritizes listening to clients’ to ensure that products contribute to long-term success for its clients.Inherent value is seen in all staff expertise.South Africa needs technical expertise and knowledge with regard to mechanization and high-end technology. A constant challenge is to find new opportunities in the industry to ensure sustainable growth. SMC works together closely with global mining companies to develop new products and invests nearly 4% of sales in research and development, employing more than 1400 people in this function internationally. ‘Unless we can mine cheaper than the rest of the world, we will not have a sustainable industry. Mining is a commodity sold on a world currency of American dollars, and global economics suggest that companies move to where it is the most profitable to operate,’ says Tolley. ‘South Africa has fantastic potential and we are only now starting to tap the surface. Long-term, mechanization will be what creates the sustainability of the mining industry.’An important focus of SMC’s strategy is to remove people from danger – most mining accidents happen within five metres of the rock face. Tolley says that mechanization will drive growth, working across boundaries and into the global community. ‘Continuous improvements in training and skills transfer are essential to the success of the organization. South Africa has some of the best possibilities in the world,’ suggests Tolley. ‘We have continuous breakthroughs in technology and unmanned machinery and a history of being able to do it! The more we can do to improve customer performance, the more we will be assisting the sustainability of the business and the issue of whether the product be mined in South Africa or overseas will become less important. It is imperative that we look at it from the customer’s perspective.South Africa is a fantastic place for entrepreneurs. The government is supportive of business and the people have a good work ethic.An essential component of SMC’s policy is a focus on quality. SMC South Africa implemented ISO 9000 standards and was first operation to implement ISO 14001 standards globally within the group. A customer survey is implemented every 18 months to get feedback on areas of improvement. Community programs are managed with local schools, technikons and universities. SMC believes in getting involved in education; the company currently has more than 130 apprentices (three years ago,there were none). Over 70% of the apprentices are black and the intention is to grow this number to 250. A partnership with the Red Cross Foundation has been established to assist the group implement its policies and values and creating channels for communication.Audit and risk committee takes place bi-annually, ensuring that remedial steps are immediately implemented. Knowledge management is largely system-driven.Tolley says, ‘Information needs to be recorded and shared. Power doesn’t come from what you know, but what you give,This is the best way to protect intellectual capital when people are measured on what they leave behind.We are the market leaders in innovation, and this is one way that we retain our clients.’ Understanding the value of staff and ongoing skills development is key to the business. Tolley affirms, ‘We try to make employment equity a way of life rather than an intervention.’ Employees are paid well for what they do. Tolley believes, ‘Recognition, opportunities and creating a fun place to work add huge value to staff.’SMC plans to plant its footprint firmly in the mining world in future.success will depend on how effective the company is in designing unique solutions for customers. International staff rotation is a critical success factor that ensures focus on more global ideas and a movement deeper into customer operations in the future. Tolley says, ‘The future is dictated by the ability to reduce customer costs of productivity. That is the only limiting factor to growth. The more technological breakthroughs we have, the more effectively businesses will run.
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