Oyu Tolgoi copper mine project case study Essay Example

Executive Summary

This report presents the manner in which different external environmental factors have an impact on the performance of Oyu Tolgoi copper mine and the manner the management has to deal with it so that better strategies can be formulated for the future. This is followed by the analysis of the different stakeholders and the duties Oyu Tolgoi copper mine has towards it. Finally, the report presents the full disclosure which will look to highlight the manner in which the organization has to provide complete information and ensure transparency in carrying out the different activities.

Table of Contents

Introduction 3

External Environment analysis 3

Identification of different stakeholder 5

Disclosure Information 6

Recommendations 7

Conclusion 7

References 8

Introduction

This report will analyze different environmental factors which includes political, economical, environmental and social for Oyu Tolgoi copper mine. The analysis will help to understand the manner in which the external environment impacts the working of Oyu Tolgoi copper mine. The report then analyzes the different stakeholders associated with Oyu Tolgoi copper mine and identifies the different relationship which will develop in the future. This is supported by the linkage to the stakeholder theory. Lastly, the report looks into the disclosure objective by identifying the different information which should be disclosed to the stakeholders to ensure better transparency. The report will thereby help to understand the entire working style for Oyu Tolgoi copper mine and the future direction and steps than can are taken.

External Environment Analysis

This analysis will focus on the external environment and will help to understand the manner in which external environment influences all organization in the particular sector. The external analysis concentrates on political, economical, social and environmental issues and is as follows

Political: Oyu Tolgoi copper mine future and present projects depend heavily on the political state of the economy. Changes in the government rules and regulations can have an impact on their performance as witnessed by Oyu Tolgoi copper mine whose Mongolian operations was shut down by the government due to lack of approval from the government. The government further looks to ensure that all section of the society is properly compensated as it was seen that the proposal lacked depth to represent the locals which also made the government to take stern actions and forced the unit to shut down production (Brassingto and Pettitt, 2006). Thus, political factor has an impact on the copper industry and results in changes in the working style.

Economical: Oyu Tolgoi copper mine style of working gets affected due to changes in the economic conditions. Presently the economy is performing well which has helped to keep a check on inflation, labor cost, material cost and operation cost. Changes in the economic condition due to shut down of the plant will result in 1700 people losing job which will impact the employment level and the economic condition (Fletcher and Crawford, 2011).

Social: Oyu Tolgoi copper mine is susceptible to the social needs and requires having a proper balance between stakeholders and the management. The organization hasn’t look to represent the society adequately as the government also states that the organization hasn’t adequately represented the society (Czinkota & Ronkainen, 2004). This thereby results in having an impact on the social outlook of the organization and will create a long term impact which will make it difficult for the organization to deal with the issue. This will have an impact on the social aspect and will have an impact on the development and profitability of the organization.

Environmental: Extraction of copper from the earth results in natural resources exploitation and is closely linked with matters of national importance. This is an aspect which Oyu Tolgoi copper mine needs to consider while looking to formulate strategy to dig the different resources and have to ensure an ecological balance so that wastage and harmful effects to the soil and the society is marginalized (Gooderham & Nordhaug, 2003). This will help to create a positive impression and will bring the required changes through which better reforms can be developed. Oyu Tolgoi copper mine is already facing issues related to environmental concerns and needs to look at dealing with those.

Identification of different stakeholder

Oyu Tolgoi copper mine has raised several issues pertaining to the environment, society and governmental issues which have been ignored. These have affected the degree of relationship which exist between the management and powerful stakeholders like the environmentalist, society and government. The different powerful stakeholders that are present or likely to arise in the future while Oyu Tolgoi copper mine continues with its operations are as

  • Society: Oyu Tolgoi copper mine which looks to take out natural resources belonging to the society has to take measures to return something to the society. The managerial branch of stakeholder theory requires proper disclosure of material facts to the society so that they understand the manner in which the organization treats them. Oyu Tolgoi copper mine has to ensure more participation from the society and increase their share and take steps which will improve the societal condition through establishment of hospitals, medical aid and other facilities so that the society is able to gain through it.

  • Government: Oyu Tolgoi copper mine has to fully disclose the different requirements and has to obtain the necessary permission from the government before looking to take any steps as required by the managerial branch of stakeholder theory. This will help to develop a positive and conducive environment and will ensure that all the legal requirements of the business are achieved (Dicke & Ott, 2002). This will also act as cushion in obtaining the necessary permission and ensuring that the business acts according to legal aspect.

  • Environmentalist: Oyu Tolgoi copper mine needs to look after the environment by ensuring that steps are taken which will aim towards protecting the environment. This can be achieved to a large degree by planting trees and ensuring that the process of using the natural resources doesn’t result in acute shortage (Cateora, Mary & Graham, 2009). An ecological balance thereby has to be established which will look into the different needs of the society and ensure better operations.

Aiming and disclosing information according to the stakeholder theory will help Oyu Tolgoi copper mine to receive the support of the different powerful groups and will provide an opportunity to carry out the different activities effectively.

Disclosure Information

Oyu Tolgoi copper mine to ensure transparency and to work according to the need and requirements of an ethical framework has to provide complete information to its shareholders. Despite, the fact that there are no regulations in this regard it is the moral responsibility of Oyu Tolgoi copper mine to ensure transparency and provide complete information (Integrated Reporting, 2013). This will help the stakeholder the manner in which the society has looked into their expectation and will help to deliver superior performance in the future.

Oyu Tolgoi copper mine needs to provide complete information regarding the use of natural resources, the manner in which the organization looks after the society, employees and all the stakeholders (Muir, 2013). This should be accompanied by complete description of the different strategies and process which has been implemented so that maximum transparency is ensured and the stakeholders are able to understand the manner in Oyu Tolgoi copper mine works.

Recommendations

Oyu Tolgoi copper mine needs to ensure the following

  • Provide complete disclosure so that the powerful stakeholders understand the complete situation and are able to help the organization to carry out the activities

  • Care and precaution has to be taken while using the natural resources as objectivity has to be ensured and steps need to be taken to protect the environment as well as benefit the mankind

  • Need to address and follow the different governmental and legal requirements so that business can be carried out freely

Conclusion

The report thereby analyzes the different external environmental factors and the manner it impact Oyu Tolgoi copper mine. This is supported by analyzing the different stakeholder and complete disclosure so that the organization is able to look into the different areas and ensure proper transparency in carrying out the different activities.

References

Brassingto, F. and Pettitt, S. 2006. Principles Of Marketing, Fourth Edition. Essex: Pearson Education Limited

Corfield, A. 2008. The Stakeholder Theory and its Future in Australian Corporate Governance. Bond Law Review, 10 (2), 213

Czinkota, M.R. & Ronkainen, I. A. 2004. International Marketing, 7th edn. South-WesternPublishing:Australia.

Cateora, P.R. & Mary, C. G. & Graham, J.L. 2009. International Marketing, 14th edn. Irwin: McGraw-Hill.

Donaldson, L. & Davis, J. 2001. Stewardship Theory or Agency Theory: CEO Governance & Shareholder Return. Australian Journal of Management, 16 (1), 49-64

Dicke, L. & Ott, S. 2002. Can Stewardship theory serve a second conceptual for accountability in human resource functions. International Journal of Public Administration, 25 (4), 463-487

Fletcher, R. and Crawford, H. 2011. International Marketing: An Asia-Pacific Perspective, PearsonAustralia.

Gooderham, P. & Nordhaug, O. 2003. International Management Cross-Boundary Challenges.Blackwell Publishing

Muir, J. 2013. Integrated Reporting: Catalyst for Good Financial Reporting. Retrieved on August 18, 2013 from http://economia.icaew.com/opinion/may-2013/integrated-reporting-catalyst-for-good-financial-reporting

Integrated Reporting. 2013. Integrated Reporting. Retrieved on August 18, 2013 from https://www.globalreporting.org/information/current-priorities/integrated-reporting/Pages/default.aspx