Analysis of Rio Tinto's Strategic Management Amidst COVID-19

This analysis explores the impact of COVID-19 on Rio Tinto's strategic management and financial performance. It discusses the firm's actions and the significance of the issue.

Anlaysis of hot topic
relating to corporate
strategic management

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Analysis of the firm................................................................................................................1
Analysis of an issue and its significance for the firm.............................................................2
Evaluation of the firm’s action...............................................................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Corporate strategic management is refers to setting the objectives and analyzing the
competitive environment, and then evaluate the strategies that make sure that management rolls
out the strategies across an organization. Further, the current study is based upon Rio Tinto
which is a top mining and construction firm of Australia who also suffer negatively due to
Corona Virus i.e COVID-19. Study will present the market position in which a firm is operate
and then explain the strategic significance of a firm and the action which is taken by the
company.
MAIN BODY
Analysis of the firm
Rio Tinto is a top global leading mining firm whose headquarter is in Australia and the
company is serve at worldwide and also provide its best product and services to their customers
through global level. The company is standing in third position under mining company in the
terms of largest revenue earn. But the company is also affected in negative manner due to
pandemic disease Corona Virus i.e. COVID- 19. As per the current situation, around 1 lac 80
thousand people are suffer from the disease and that is why, government of every country take a
strict action to lock down every country and all the business. As a result, Khan, Fahad, Faisal
and Naushad (2020) in order to comply laws and regulation, Rio Tinto also turn off its
operations and manufacturing process for unspecified period and as a result, the company faces
lots of issue
As the firm is a Dual listed company that is traded on both the London Stock Exchange
and as a result, it sustain the brand image at international level. But due to this Corona virus
Epidemic, the company faces net loss of around 41% but in future they will definitely recover
the same. Moreover, the company also stop its production and as a result, most of the employees
did not get their daily wages and on the other side, company faces issue in its financial
performance.
From the secondary research it has been analyzed that Rio Tinto has a strong rise in 2018
but at the end of 2019, the company suddenly falls due to corona virus and as company also took
billion of money of impairment due to Oyu Tolgoi and Yarwun Alumin refinery projects. But
due to this pandemic virus Koshle, Kaur and Basista (2020) .The dividends are also cut by 19%
and this is the biggest issue which currently the firm face. Moreover, the net debt to $39 billion

and reflect to $11.9 of cash returned to the shareholders in 2019. But this cause affect the overall
company in negative manner. But forecasting shows that there will be proper recovery after
controlling of Corona Virus in a world.
Even the research also state that due to continuous increase in the number of patients, it
is essential to shut down all the top factories so that it will not cause death of entire world.
Analysis of an issue and its significance for the firm.
Rio Tinto also suffered a lot from Corona Virus and it also create negative impact upon
the firm financial position. Further the company has a good financial performance in 2019 and
also supported by the higher iron ore prices and a strong dollar. Ayittey, Ayittey, Chiwero,
Kamasah and Dzuvor (2020) also state that due to the pandemic disease, the GDP of the country
is fall and as a result, the entire world got affected in negative manner. Also, there is a need to
get rid from the issue and apply positive action so that it will not affect the overall health of an
employees in opposite mode.
As a result, due to this disease, major project of Rio Tinto delayed such that It work for
Koodaideri, in which $55bn are invested and $749mn invested at its Greater Tom Price hub.
But due to COVID-19, there is a need to find alternative supply source for an equipment and
consumables at its operating mines. Thus, it consider one of the greatest loss in the company and
that is why, the financial position of the firm is also got affected from it. On the other side, Li,
Yang, Zhao, Zhi, Wang, Liu Bi and Zhao (2020, 7) explore that it did not affect only company
but it also leads to higher salaries, fuel prices and consumable price offset which further leads to
weaker Australian dollar and it usually drives cost down. Therefore, it is a peak time to take a
strict action in order to fight against this disease and get back on track.
Evaluation of the firm’s action
In order to fight against COVID- 19, Rio Tinto takes an action i.e. pause all the remote
operations. Also, company reduce the supply of its key commodities in order to spread the
corona virus that affect the operations at mines across the globe. Also, Li, Wang, Xue, Zhao and
Zhu (2020, 2032) stated that it announced to delay the production and development projects due
to travel and other restrictions against this deadly global pandemic. But on the other side,
secondary research also state that reduce in supplies could also become a problem when the
demand in other countries of a world started to recover. But still company stick on its decision
and also delay and pause the operations of entire company.

Moreover, it is also analysed that Rio Tinto also concern for their employees or workers
who often live thousands of kilometre away from a big city and also fly in for shifts. That is
why, company take an action to close all its operations in order to fight against this deadly issue
(Fernandes 2020). As per the financial times report, most of the mining firms including Rio
Tinto shut down their business for the safety of workers and themselves.
CONCLUSION
By summing up above report, it has been concluded that this deadly Corona Virus got
affected the entire mining groups and world at opposite manner. Such that report concluded that
there are lacs of people who suffered and thousands of people also died. Thus, report concluded
that Rio Tinto is also affected with the same and as a result, it delay all the operations and
relieve all the employees from a company so that they will also be secured from it.

REFERENCES
Books and Journals
Ayittey, F. K., Ayittey, M. K., Chiwero, N. B., Kamasah, J. S. and Dzuvor, C., 2020. Economic
impacts of Wuhan 2019‐nCoV on China and the world. Journal of Medical Virology.
Fernandes, N., 2020. Economic Effects of Coronavirus Outbreak (COVID-19) on the World
Economy. Available at SSRN 3557504.
Khan, N., Fahad, S., Faisal, S. and Naushad, M., 2020. Quarantine Role in the Control of Corona
Virus in the World and Its Impact on the World Economy. Available at SSRN 3556940.
Koshle, H., Kaur, R. and Basista, R., 2020. Breakdown of Business and Workers in India:
Impact of Corona Virus.
Li, B., Yang, J., Zhao, F., Zhi, L., Wang, X., Liu, L., Bi, Z. and Zhao, Y., 2020. Prevalence and
impact of cardiovascular metabolic diseases on COVID-19 in China. Clinical Research
in Cardiology, pp.1-8.
Li, S., Wang, Y., Xue, J., Zhao, N. and Zhu, T., 2020. The Impact of COVID-19 Epidemic
Declaration on Psychological Consequences: A Study on Active Weibo
Users. International Journal of Environmental Research and Public Health.17(6).
p.2032.
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