Case Study: Strategic Management Capstone - Northern Star Analysis

This case study provides a comprehensive strategic analysis of Northern Star Resources Limited, an Australian gold producer. It includes an environmental analysis using the PESTLE framework, examining political, economic, socio-cultural, technological, legal, and environmental factors impacting the company. An organizational analysis is conducted using SWOT and VRIO frameworks to assess the company's strengths, weaknesses, opportunities, and threats, as well as its resources and capabilities. The analysis identifies areas where Northern Star Resources can improve its competitive advantage and enhance revenue generation, particularly in the face of increasing competition within the gold production industry. The report concludes with recommendations aimed at addressing identified loopholes and fostering sustainable growth.

Running head: STRATEGIC MANAGEMENT CAPSTONE
Strategic Management Capstone
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction:....................................................................................................................................2
Discussion:.......................................................................................................................................2
Environmental analysis................................................................................................................2
PESTLE Analysis....................................................................................................................2
Recommendation...........................................................................................................................10
Conclusion.....................................................................................................................................10
Reference List................................................................................................................................12

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Introduction:
The northern star resources limited is referred to an Australian gold producing
organization that possesses world-class projects situated in highly perspective as well as low
sovereign risk regions of the Northern Territory and Western Australia. The company has a
portfolio of high grade yet low-cost gold mines and the chief focus of the company includes
maximizing the shareholder returns. The company is a well-known global gold producing
company. However, due to enhanced completion in the gold producing industry, the Northern
star is suffering from decrement in the competitive advantage. In this report, both environmental,
as well as organizational analysis of the company, will be performed in order to detect the
loophole of the company which is hindering its further enhancement of revenue. Apart from that,
the recommendation to eradicate the detected loopholes will also be provided in this report.
Discussion:
Environmental analysis
The environmental analysis is considered to be a strategic tool that helps an organization to
access its external as well as internal environment. Both external, as well as the internal
environment, has the potential to affect the performance of an organization. Therefore, in the
following paragraph, environmental analysis of the northern star resources has been conducted in
order to assess the level of threat as well as opportunities that can be availed by the mentioned
company.

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PESTLE Analysis
PESTLE analysis is a strategic tool that will help the management of the mentioned
company to analyze its macro environment. The term PESTLE stands for Political, Economic,
Socio-cultural, Technological, Legal and Environmental factors that impose an impact on the
business of the Northern Star Resources.
Political
The political condition of Australia is stable and this has imposed a positive impact on
the long-term profitability of Northern Star. The Australian government provides immense
support to the gold mining industry through an effective legal framework and the bureaucracy as
well as interference of the government in the gold industry is much less compared to other
developed countries (Ferguson, Feigin & Kean, 2013). Moreover, the risk of military invasion is
also low in Australia. However, the taxation of Australia over the Australian gold industry is
high. The government peruses policies of hoarding gold for encouraging miners to mine new
gold.
Economic
In spite of being a developed country, the recent recession has shaken the financial stability
of the Australians. However, this fact has affected the gold industry of Australia positively.
Considering the fact that the price of gold is inversely proportional to the economic stability of a
country, the temporary instability of Australia has enhanced the demand for gold in the country.
Due to stock market fail, investors had invested heavily in gold that has resulted in the rise of
revenue of Northern Star Resources. Hence, the recession in Australia has positively affected the
company.

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Socio-cultural
Considering the fact that there exists a multi-diverse culture in Australia, gold is a metal
of high demand in Australia. Like other countries, in Australia, the chief consumption of gold
includes making of jewelry (Schembri et al., 2015). The demand for gold jewelry is high in
Australian women especially in social and cultural occasions like wedding, religious festivals.
However, compared to the Asia countries like China and India, the demand for gold is Australia
is presumably low.
Technological
Australia being a developed country is highly advanced in technology. Australian
government fund more than 60 percent of all the researches (Lam, 2014). Moreover, the
communication networks, 24*7 availability of electricity as well as the internet are the major
factors that impose a positive impact on the gold industry of the nation. Advanced technology
helps gold producers like the Northern Star Resources to communicate and delivers Gold to a
wide range of industry like the Bio-Medical, Catalysis, Dental, Environmental, Fuel Cells,
Electronics, Nanotechnology and Photography companies. Moreover, internet availability makes
it easier for the organizations to promote their products online through eminent social media
platforms and keep in direct touch with the suppliers and consumers.
Legal
Like any other country, Australian gold producers require the permission of the government
before mining gold. In Australia, all the gold mining companies are controlled by the General
Mining Act 1872 (Giurco & Cooper, 2012). Considering the fact that the gold industry is a major

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source of revenue of the mentioned country, the legal framework of Australia is highly effective
when it comes to the gold industry.
Environmental
Since Gold mining includes the production of highly toxic waste products, environment
and the gold industry does not go well with each other. The government of Australia has
imposed a good number of environmental laws like Biodiversity Conservation Act 1999. Since a
good amount of revenue of the Australian government comes from the gold industry, the
government have imposed several relaxations on environmental laws.
Porter’s five forces analysis
The Porter’s five forces analysis can be considered as a framework that helps the
management of an organization to assess the microenvironment with the help of five forces that
influences the industry. In order to understand the strength and weakness of the Northern Star
resources, Porter's five forces analysis of the company has been performed below:
The threat of New Entrants: In Australia, the chief barrier to the new entrance is financing.
Gold along with all precious metal industry is highly capital intensive. High investment is
required to establish a gold producing company even before the first production. However, in
order to enhance its revenue, the government of Australia encourages the global organization to
open their branches in Australia (Ranängen & Zobel, 2014). Overall, it can be said that the threat
of new entrance is low for the Northern Star Resource-limited in Australia.
Power of Suppliers: The primary resource that is needed for the production of the gold island.
Australia has several gold rushes that make it easier for gold producing organization to flourish.

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Hence, the only problem associated with supply is the permission of the government to mine a
specific land. Since several environmental issues are associated with mining of gold, it is
difficult for organizations to access the permission for mining land from the government. Hence
the power of supplier is moderate in the Australian gold industry.
Power of Buyer:
The chief buyers of the gold-producing organizations in Australia including Gold jewelry
manufacturing companies along with Bio-Medical, Catalysis, Dental, Environmental, Fuel Cells,
Electronics, Nanotechnology and Photography companies (Rouillon, Gore & Taylor, 2013).
Since gold is a commodity-based product, the power of the buyers is high in the Australian gold
industry. Gold mined by one company is almost similar to the one mined by another company.
Hence, in Australia, buyers prefer gold producing organizations that offer them high-quality gold
at a lower price or at favorable contract terms.
Availability of Substitute
In Australia, the acceptance level of gold to the consumers are much higher compared to
its substitutes. Hence, the power of the substitute in Australian metal producing industry is low.
Chief substitute of the mentioned industry includes platinum, silver and diamond. Moreover,
currently gold holds the advantage of being a world currency all over the world and hence is seen
by the consumers as an investment. However, since diamond is slowly gaining popularity in the
Australian market, there prevails a risk for the gold industry to lose it a competitive advantage in
the near future.
Competition Rivalry

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The major competitors of the Northern Star Resource-limited in Australia include Barrick
Gold, Newmont Mining, AngloGold Ashanti, Kinross Gold and Goldcorp. Since extensive
competition happens between the companies, the power of competitive revelry in the mentioned
industry is high (E. Dobbs, 2014). All the mentioned companies are well established and are
more mature than Northern Star Resource Limited. Unlike other industries, gold producing
organizations does not compete over the price of gold as it is already being determined by the
marketing forces. The chief competition between the companies happens with respect to the
possession of land. The prolonged survival of a gold producing organization depends upon its
reserved amount. Therefore gold producing organizations invest heavily on exploration since the
first one to discover is given first preference when it comes to mine by the governments.
Organizational analysis
Organizational analysis refers the process of reviewing the work environment, personnel
and operations of a business by assessing its strategy, performance and capabilities. In order to
assess the development of the Northern Star Resources Limited organization analysis of the same
has been performed below.
SWOT analysis
Strengths
 Brand equity of the organization is high
 The organizational structure of the
company is strong.
 The demand of gold in the Australian
industry is increasing.
Weaknesses
 Lack of presence in the international
market.
 Lack of shareholders (Mathooko &
Ogutu, 2015)

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Opportunities
Considering the fact the UK and USA gold market
is less saturated compared to the Australian gold
market, the company can expand its branches in the
mentioned nations.
Threats
 High labor cost in the Australian Gold
industry.
 High competition in the industry
Table 1: SWOT of Northern Star Resources
Source (created by the Author)
Strategy
The vision of Northern Star Resource-limited is to continue building safe, quality mining
and Exploration Company which is focused on creating value for the shareholders. The mission
of the company is to generate value for the shareholders with the help of operational
effectiveness, growth opportunities primarily focusing on the success of meeting the targets.
The strategic goal of the company is to attract global investors by developing a responsible
company. For this the chief strategies followed by the company are as follows:
1. Sustain of critical mass: The company have to maintain its annual gold production by
525,000 ounces per annum (Mathooko & Ogutu, 2015).
2. The management maintains a diversified asset base with the help of the company's
portfolio of world-class operating mines.
3. The management ensures that the employees have significant mine lives. Aggressive in-
mine and near-mint are explorations are being conducted by targeting total group
Resources of 20 million ounces along with Reserves of 10 million ounces.

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4. In order to maintain low-cost operations, the management of the company is constantly
driving productivity and efficiencies in order to achieve sustaining cost less than 1, 1000
Australian dollar (Northern Star, 2018).
5. In order to uphold strong financial discipline, the company maintains a track record of
paying full-franked dividends to the shareholders.
VRIO Analysis
Resources Valuable Rarity Imitability Organization
Gold mines Yes No No No
Ability to raise
capital
No Yes No No
Employee
compensation
No No Yes No
Employee benefits No No No Yes
Table 2: VRIO Analysis of Northern Star Resources
Source (Created by the Author)
Valuable: Considering the fact there exist high competition between the gold producers when it
comes to gold mines, the Northern Star Resources posses a commendable number of mines
which can be considered as a valuable asset for the company (Prior et al., 2012).
Ability to raise capital: The organizational structure and the management of the company are
considered to be the chief reason behind gradual enhancement in the revenue of the company.
Considering the fact that majority of gold mines in Australia lack appropriate organizational
structure that supports it enhancement of revenue, this factor can be considered as rarity.

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Employee compensation: The compensation provide by the company is much higher than its
competitors and hence cannot be replicated by the competitors easily. The mentioned factor
helps the company to enhance its performance by attracting and retaining highly skilled
employees.
Employee benefits: In order to retain employees a good number benefits associate with the health
and safety measures are being provide to the employees (Mathooko & Ogutu, 2015). The work
satisfaction of the employees thus demonstrates that the firm is organized, ready, and able to
exploit the resource appropriately.
Performance
Financial performance
The financial performance margin of the northern Star Limited Company has increased since
2013. The chief reason for that is the enhancement of Return On Investment (ROI) due to the
appropriate balance between cash inflow and cash outflow. In the following table, the financial
report of the Northern Star Resource Limited has been given in order to demonstrate its gradual
enhancement in revenue.
2017 2016 2015 2014

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Cash & Short
Term
Investments
403,060.0 315,341.0 167,443.0 82,387.0
Total Accounts
Receivable
23,594.0 9,932.0 23,325.0 13,665.0
Inventories 58,851.0 59,986.0 70,982.0 63,104.0
Total Current
Assets
486,165.0 440,415.0 263,086.0 170,781.0
Total
Investments and
Advances
35,319.0 8,779.0 7,537.0 2,906.0
Total Assets 965,548.0 804,933.0 632,919.0 422,234.0
Table 1: Financial report 2017-2013
Source (Northern Star, 2018)
Customer performance
It can be understood from the financial report that the performance of the company is
improving and so does its consumer base. The company has seen significant share price volatility
over the past couple of months rising to as high as A$6.96 and falling to them as low as A$6.16.
Being a moderately recognized gold manufacturing company; the company is able to provide