Strategic Capstone: Analysis of Northern Star Resources Limited

This report analyses the strategic issues faced by Northern Star Resources Limited, a global scale ASX 100 gold producer. The report includes an assessment of the organisational context, environmental analysis, PESTLE analysis, Porter's five forces, SWOT analysis, and recommendations for improving the company's performance.

Strategic Capstone
Northern Star Resources Limited
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Executive summary
Strategic management involves the formulation and implementation of the important goals and
initiatives that are taken by the top level management on the behalf of the owners of the
company. In the current era, this is the fact that every company need to analyse the strategies that
are incorporated by the companies. The company on which the analysis has been done in
Northern Star Resources Limited. The findings of the report show that there are different issues
which are faced by the company such as technological risk, political risk, environmental risk and
many other factors. These factors influence the working of the company and also made them
bring the changes within the working of an organisation. Along with this, the analysis related to
the organisational internal working has been done which reflects the strategic issues that are
required to be removed. The recommendations for the same has been discussed which will help
in improving the performance of the company.

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Contents
Introduction......................................................................................................................................4
Overview of company..................................................................................................................4
Strategic issues faced by company..................................................................................................5
Issues related to the performance................................................................................................5
Issues related to the prices...........................................................................................................5
Assessment of organisational context..............................................................................................6
Environmental analysis................................................................................................................6
PESTLE Analysis....................................................................................................................6
Industry environment...................................................................................................................9
Porter’s five forces...................................................................................................................9
SWOT analysis......................................................................................................................10
Analysis of strategic issues............................................................................................................12
Strategy......................................................................................................................................12
Performance...............................................................................................................................12
Value chain analysis..................................................................................................................12
Primary activities...................................................................................................................13
Support activities...................................................................................................................14
VRIO analysis............................................................................................................................15
Recommendations..........................................................................................................................17

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Conclusion.....................................................................................................................................18
References......................................................................................................................................19

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Introduction
The aim of the academic report is to present the recommendation or consultant to the company
after analysing the organisation issues. The organisation that has been selected for this report is
Northern Star Resources Limited. The strategic management theory applied to the company is
done to identify and analyse the strategic issues faced by the company. Along with this, the
organisational strengths and limitations are assessed which will help the company in improving
the working or operations of the business. The analysis related to the organisational context is
done with the help of the PESTLE, SWOT and five forces model. In addition, the analysis of the
strategic issues which is faced by the company is done with the help of the value chain and
VRIO analysis which shows the operations and competitive advantage of the company. These
two models show the working of the Northern Star Resources Limited. In the end, some of the
suggestions are given to the company which helps them in improving the operations.
Overview of company
Northern Star Resources Limited is a global scale ASX 100 gold producer with the world-class
projects that are located in highly prospective and low sovereign risk regions of Western
Australia and the Northern Territory. The company is considered the third largest Australian gold
producer and the company produces approx. 514,735 ounces of gold in the year 2017 from its
West Australian operating business units. The core values of the company are STARR which
stands for safety, teamwork, accountability, respect and results (Northern Star resources limited,
2018).

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Vision: - The vision of the company is to continue building a safe, quality mining and
exploration company that mainly focuses on creating the value for the stakeholders (Northern
Star resources limited, 2018).
Mission: - The mission of the company is to form the earning accretive value for the
stakeholders through the effectiveness of operational, growth opportunities and the exploration
with a prime focus on the success to deliver on the targets.
Strategic issues faced by the company
The company face the numerous issues whole managing the operations and these issues vary
according to the activities, processes and working of the company.
Issues related to the performance
 Achievement of the performance hurdles at the end of the three years
 Employment within the company continuously
 Personal performance reviews are not satisfactory in the three years
Issues related to the prices
The company found the issues related to the market prices as there is an opportunity that the
market prices of the gold and silver that are currently produced might take place. These issues
can affect the profit and loss of the company.
The details related to the strategic issues faced by the company are discussed further with the
help of the organisational analysis.

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Assessment of organisational context
Environmental analysis
PESTLE Analysis
PESTLE framework is a strategic tool that is used by most of the companies for evaluating the
environment in which they are performing their business operations (Hollensen, 2015). Northern
Star Resources Limited Company need to analyse the market so that they can identify the forces
that affect the working and can take the required steps to overcome the issues faced by the
company.
Political factors
The political factors include the tax, interest, changes in policy, rule and regulations by the
government. The Australian government have some criteria for the taxes on the gold producers.
Northern Star Resources Limited which is a wholly owned Australian controlled entity has
implemented the tax consolidation legislation of tax (IBIS World, 2017). Along with this, the
company has the political risk because there is the possibility of the changes in the policy of the
government related to the tax or for the dealing of gold that can affect the working and profit of
the company. Though, this has been found that the government is also getting the benefit of the
gold sales as it will contribute to the development of the nation.
Economic factors
The economic factors of the country include the interest rate, GDP of the country, inflation rates
and some other factors. These factors directly affect the working of the Northern Star Resources
Limited Company. The Australian treasury predicts the growth in the GDP by 3% as it expects

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the household consumption to rebound. This has been found that the agriculture and mining
sector are one of the most essential elements for the exports. Moreover, in the year 2016-2017
gold was Western Australia’s second most valuable mineral sector with the 10.8 billion in sales
which represent approx. 12.3% of the total mineral sales. According to the report, this has been
found that more than 75% of the state’s gold sales come from just ten producers (Santander
trade, 2018). Though, this is also the fact that the producer of gold gets affected due to the
change in the purchasing power of the customers. The customer purchasing power can reduce the
consumption of the gold in the market because there is a rise in the expenditure of the people.
Social factors
The social factors include the social environment of the market, current trends, patterns,
demographics and population analytics towards the goods and services that are offered to them.
Northern Star Resources Limited gold is consumed by numerous numbers of people in the
Australian market due to quality products. Along with this, the company export the gold to other
nations which help them in increasing the profit (Jamasmie, 2011). Northern Star Resources
Limited builds on our commitment to engage the aboriginal people through employment and
business opportunities. The company do have the risk of change in the buying behaviour of the
Australian people which might make them shift from one seller to another.
Technological factors
The technological factors include the update or advancement of the technology that can affect the
working of the company. Northern Star Company does have the technical team who continue to
stay at the leading edge of underground mining. The company make use of the technology for
the mining purpose and the change in technology affects the working of the company.

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Technology change includes the new machinery and equipment that can be used by the company
for the purpose of mining this will reduce the time as well as the efforts of the workers.
Legal factors
The legal regulation includes the rules and laws that can affect the working of the company.
Northern Star Resources Limited Company is legally obliged to take the permission from the law
for the place where they are willing to perform their operations related to the mining. All the
places where the mining process takes place are approved through law so that company doesn’t
face the major challenges (Northern Star resources limited, 2016). Northern Star Resources
Limited Company needs to take the licence from the Australian government for the activity of
mining. The government doesn’t give the approval to each and every company for the mining
because will leads to many issues. This is the reason Northern Star Resources Limited Company
need to follow the obligations of the law. The company might face the risk of changes in the
laws and regulations of the government.
Environmental factors
The environment factors include the aspects that are related to the atmosphere, surroundings and
other determinants. Northern Star Resources Limited understand that a primary area of the
stakeholder's interest rest with the ability to identify responsible environmental stewardship
(Northern Star resources limited, 2017). Northern Star Resources Limited Company is
committed to releasing a sustainability report for the financial year 2017. This is done by the
company in order to improve the environmental, social and the governance performance
disclosure and transparency (Northern Star resources limited, 2018). The company might face

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the numerous risk related to the environment because mining includes certain factors that can
affect the environment.
Industry environment
Porter’s five forces
Porter’s five forces framework is a tool for analysing competition that is present within the
business market. Northern Star Resources Limited needs to analyse the industry competitors that
can affect the working of the business (Kotler, 2015). The analysis related to Porter's five forces
is given below: -
Bargaining power of customers: - In the Australian market, there is a different gold producer is
available due to which the bargaining power of the customers is high. The gold mined by the one
company is not very different from the other companies due to which the buyers can get the
different options in the industry. This is the reason that the buyers will always favour the
company who can provide the lower prices or favourable contract terms. Northern Star
Resources Limited needs to keep the best and affordable price as this is the only way through
which they can retain the customers that are present within the market.
Bargaining power of suppliers: - The gold miner like Northern Star Resources Limited needs
the land on which they can perform the activity of mining. The sourcing of the land needs the
huge amount as the capital which is difficult for the owner to pay. Hence, they need to source the
same from banks o borrowing. Along with this, the permit by the government for the land is also
must as this is the only way through which they can start working on the land. In addition, issues
related to the environmental risk possess tough challenges in securing the approval of the
government.

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The threat of substitutes: - The threat of the substitutes is low for the Northern Star Resources
Limited because there is the availability of very less substitute of the product which includes
silver, diamonds, platinum and some others. Though, the acceptance of these products by the
customers is less comparing it with the gold. Currently, Gold is acquiring the benefit of the world
currency as all over the world because it is used as an investment. Thus, the threat of the
substitutes is reducing day by day across the world.
The threat of New Entrants: - The threat of new entrants is less in the market of Australia
because this kind of business requires huge amount which is not possible for the newcomer to
expand (Lovelock and Patterson, 2015). Along with this, the market of Australia includes many
gold producers which leads to the difficulty for the new entrant as they won’t be able to deal with
the competitors who are present within the market.
Competitive rivalry: - Northern Star Resources Limited found intense competitive rivals as
there are numerous rivals are present in the market that is performing their business operations in
the same industry. The major rival of the company is Newcrest Mining Limited as the company
is an Australia based corporation which engages in the exploration, development, mining and
sales of the gold-copper corporation (Motley Fool, 2017). The company can give the tough
competition to the Northern Star Resources Limited which becomes tough for the company
while dealing with the customers at times.
SWOT analysis
Strengths Weaknesses
 Northern Star Resources Limited mainly
focus on the increasing the returns of the
 The debt took by the high as compared to
the other companies because the company

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stakeholders as they play a vital role in the
business operations of the company.
 The company is an Australian mid-cap gold
miner that has acquired the position among
the top 25 gold mines across the globe with
the low quartile cost of its peer group
(Seeking Alpha, 2018).
 The company has formed the record of the
net profit after tax of A$215.3 m up 42%
from the previous corresponding period
(PCP)
is offering the good returns to its
stakeholders.
 The high in debt create the problems in the
decision making of the company which is
considered as one of the biggest weakness
of the company. This shows that the
company is not able to make its investment
decisions properly (Mayes, 2018).
Opportunities Threats
 The company has the opportunity to
expand their business operations in the
other markets.
 In addition, the company can acquire other
companies who are dealing in the market as
this will help the company in earning the
high returns and expanding the business
(Government of Western Australia, 2018).
 The threats related to the change in the
legal and political aspect is one of the
major threats.
 In addition, the industry in which the
company is operating its business is full of
threats related to the environmental factors.

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Analysis of strategic issues
Strategy
The company is following the growth strategy in which they are willing to invest the amount in
either acquiring the other companies or by opening the new mining station in the near future. The
company is enacting and delivering on its organic growth strategy which includes the creation of
new concentrated centres. Though, the company is not able to effectively implement the strategy
within the organisation due to which the issues are increasing. This is possible with the new
strategy of retaining the employees within the organisation. This has been found that the
employees in the mining are not only difficult to recruit but also to retain as most of the people
don't retain in the industry.
Performance
The performance of the organisation is one of the major criteria which lead to the success of the
company. The performance is categorized into the four categories which include financial,
customer, internal and internal long-term development. The performance for the year 2017 has
been generated by the company from the Jundee, Kundana, Kanowna Belle, Paulsen and
Plutonic gold mines. According to the report, this has been found that a total of 526,515 ounces
of gold was sold at an average price of A$1,675. This shows that the company is able to manage
its performance effectively (Government of Western Australia, 2018).
Value chain analysis
A value chain is the set of activities that are performed by the firm while operating in a specific
industry performs in relation to deliver a valuable product or service within the market (Luca and

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Suggs, 2010). The value chain analysis of the Northern Star resources limited company is given
below: -
Primary activities
These activities include the functions that are directly related with the conversion of input into
output along with the activities related to the distribution of the product.
Inbound logistics: - These activities include receiving, storing and distributing the products and
services. Northern Star resources limited company need to search for the ground on which they
can perform the operations of searching for raw gold. The gold is mined by the worker on the
site from the mud and then they store the pieces of gold in the container which is further
distributed. Though, this takes time which is a big issue for the company.
Operations: - The activity shows the transformation of input raw material to final product. The
equipment is used by Northern Star resources limited to clean the muddy water on which they

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find the pieces of gold. This process includes the processing of the rock and ore into a metallic
alloy of the substantial purity (South Australia, 2018). The purity of the gold is one of the
essential processes that are performed by Northern Star resources limited.
Marketing and sales: - The marketing and sales activity is performed by the Northern Star
resources limited as this is the way through which they can grab the attention of people. In
addition, this helps the company in dealing with the competitors present within the market
(Business Jargons, 2018). Along with this, the company has appointed the sales executive who
helps in performing the functions of sales.
Service: - Service is offered to the customers to improve or maintain the value related to the
product. Northern Star resources limited company ensure that they are offering the quality
products to their customers with the assurance and guarantee because generally the people who
make the purchase of the gold ensure that they are getting a guarantee of products.
Support activities
These activities provide the support to the primary activities in accomplishing the objectives of
the company.
Procurement: - Company needs to procure the machinery and equipment with the help of which
the gold is produced. These equipment include large machinery which helps in extracting the
gold from mud and then cleaning it. Along with this, sometimes there is a need for the traditional
tools as well which include shovels, pickaxes, hammers, chisels which becomes difficult for the
company to arrange it.
Technology development: - Technology development also plays a vital role for Northern Star
resources limited company as they keep tracking or checking the activities with the help of the

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software and the computer devices. Though, the company face the issues when they bring the
change in technology because they need to provide the training to their employees for new
technology.
Human resource management: - Northern Star resources limited company finds one of the
major issues in sourcing for the skilled employees who can handle the machinery effectively.
Infrastructure: - Company ensures that the infrastructure doesn’t create an impact on the
working but somehow the planning for the product remains ineffective which affects the
company.
VRIO analysis
VRIO analysis is an analytical technique brilliant for the evaluation of the company resources
and the competitive advantage. VRIO stands for value, rareness, imitability, and organisation
(Knott, 2015).
Northern Star resources limited VRIO analysis
Value chain
analysis
Is it valuable? Is it rare? Difficult to
imitate?
Is the
organization
capable?
Competitive
consequences
Inbound
Logistics
Yes No No Yes Competitive
Operations Yes Yes No Yes Sustainable
Outbound
logistics
Yes No Yes Yes Temporary

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Marketing
and sales
Yes No No No Competitive
Services Yes Yes No Yes Sustainable
Procurement Yes No No Yes Temporary
Technology
development
Yes Yes Yes Yes Sustainable
Human
resource
management
Yes Yes No Yes Sustainable
Infrastructure Yes Yes No Yes Sustainable
This framework shows that the competitive advantage of the company is its quality of the
products with the marketing activities that are performed by the Northern Star resources limited.
Northern Star resources limited are acknowledged in the market of Australia because of its
quality product and the assurance that they offer to their customers. The operations that are
performed by the company are very rare that is difficult to be performed by the other companies
in the same market.

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Recommendations
It is suggested to the company to take the actions which will help them in resolving the issues
faced by the company. The major issue which is faced by the company is related to the political
aspect but this is the fact that the company can't take any steps to stop the changes in the political
elements. The change in the purchasing power of the customers is one of the issues which might
be faced by the company for which it is suggested to bring the fluctuations in the prices
according to purchasing power. The company find the major issues due to the management of the
environment as the risk related to the environment can affect the working. The company should
follow all the required laws and regulations that can help the company to maintain the
sustainable environment. The company is not clear about the strategy which they are willing to
implement within the organisation. Northern Star resources limited needs to form the strategy
that supports them for expanding the business. It is suggested to the company to follow the
market development strategy in which is a growth strategy that determines and develops the new
market for the available products (David, 2011).

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Conclusion
In the end, it can be concluded that the Northern Star resources limited is facing some of the
strategic issues but the solution for the same has suggested to the company which will help them
in improving the performance of the company. The analysis of the strategic issues has been done
with the help of some of the frameworks which include PESTLE analysis, Porter’s five forces
and SWOT analysis. This analysis reflects the issues which are faced by the company due to the
external factors. Along with this, the internal analysis shows the organisational issues that can
affect the working and operations of the business. The internal analysis is supported by the value
chain analyses and the VRIO analysis. Northern Star resources limited needs to plan the strategy
according to the goals and objectives of the company.

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References
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https://businessjargons.com/value-chain-analysis.html
David, F.R. (2011). Strategic management: Concepts and cases. India: Pearson/Prentice Hall.
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http://www.dmp.wa.gov.au/Investors/Gold-1480.aspx
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http://www.dmp.wa.gov.au/About-Us-Careers/Latest-Statistics-Release-4081.aspx
Hollensen, S. (2015). Marketing management: A relationship approach. India: Pearson
Education Limited.
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https://www.ibisworld.com.au/australian-company-research-reports/mining/northern-star-
resources-limited-company.html
Jamasmie. C. (2011). Mining industry affected by escalating social, economic and political
issues: Deloitte. Retrieved from: http://www.mining.com/mining-industry-affected-by-
escalating-social-economic-and-political-issues-deloitte/
Knott, P. J. (2015). Does VRIO help managers evaluate a firm’s resources?. Management
Decision, 53(8), 1806-1822.
Kotler, P. (2015). Framework for marketing management. India: Pearson Education.

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Lovelock, C. and Patterson, P. (2015). Services marketing. Australia: Pearson.
Luca, N.R. and Suggs, L.S. (2010). Strategies for the social marketing mix: A systematic review.
Social Marketing Quarterly, 16(4), 122-149.
Mayes, B. (2018). With An ROE Of 27.13%, Has Northern Star Resources Limited’s (ASX:NST)
Management Done A Good Job?. Retrieved from:
https://simplywall.st/stocks/au/materials/asx-nst/northern-star-resources-shares/news/
with-an-roe-of-27-13-has-northern-star-resources-limiteds-asxnst-management-done-a-
good-job/
Motley Fool. (2017). The Northern Star Resources Ltd share price just hit a 52-week high.
Retrieved from: https://www.fool.com.au/2017/09/05/the-northern-star-resources-ltd-
share-price-just-hit-a-52-week-high/
Northern Star resources limited. (2016). Northern Star Resources. Retrieved from:
https://www.nsrltd.com/wp-content/uploads/2016/08/5.-Results-Presentation-Full-Year-
Report-for-Period-Ended-30-June-2016-22-8-2016.pdf
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Final-22-08-2017.pdf
Northern Star resources limited. (2018). Corporate Governance. Retrieved from:
https://www.nsrltd.com/about/corporate-governance/
Northern Star resources limited. (2018). Home. Retrieved from: https://www.nsrltd.com/

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Northern Star resources limited. (2018). Vision & Strategy. Retrieved from:
https://www.nsrltd.com/about/vision-strategy/
Santander trade. (2018). Australia: Economic And Political Outline. Retrieved from:
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northern-star-resources-exciting-pipeline-growth-opportunities
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