MGMT6011 Strategic Management: Northern Star Resources Analysis

This case study provides a strategic analysis of Northern Star Resources Limited, a global-scale ASX 100 gold producer. It identifies strategic issues faced by the company, including performance hurdles, price volatility, technological advancements, political risks, and environmental concerns. The analysis incorporates PESTLE, Porter's Five Forces, SWOT, Value Chain, and VRIO frameworks to assess the organizational context and competitive advantages. Recommendations are provided to improve the company's performance and address the identified issues, focusing on operational improvements and strategic alignment. The report emphasizes the importance of ethical and social considerations in strategic decision-making, aiming to provide valuable insights for stakeholders and enhance the company's long-term sustainability. Desklib is a platform where students can find similar solved assignments and past papers.

Strategic Capstone
Northern Star Resources Limited
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Strategic Capstone 1
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.

Strategic Capstone 2
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

Strategic Capstone 3
Conclusion.....................................................................................................................................18
References......................................................................................................................................19

Strategic Capstone 4
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).

Strategic Capstone 5
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.

Strategic Capstone 6
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

Strategic Capstone 7
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.

Strategic Capstone 8
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

Strategic Capstone 9
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.

Strategic Capstone 10
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

Strategic Capstone 11
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.