Successful company analysis Essay Example

Lecturer:

Success behind Fortescue

1. RISK MANAGEMENT PROCESS.

Fortescue is very keen when it comes to risk management. The company has a Risk Management Committee that is in charge of risk assessment for the enterprise. The committee is controlled by a member of the Board of Directors, and its role is evaluating and analysing risk for the company. The committee analyses risk for investments today and future investment to ensure they are sustainable and able to reap profits for the company and its shareholders (Fortescue, 2015).

2. LEADERSHIP

Like always excellent leadership skills will always be reflected in a company’s books of accounts. Andrew Forest founded the company in 2003. He is now the chairperson of the Board of Governors. The Board consists of twelve people with extensive and varied knowledge of the business world (Fortescue, 2015). It becomes an enormous contributing factor since diverse opinions come from the leadership.

The CEO also has extensive experience in business and has been able to steer the company to the top and keep it there as well. Top management of the company consists of highly skilled individuals ready and willing to stick to the company’s objective and drive the company to be an industry leader.

3. STRATEGY.

The company believes in the following principles to keep it at the top.

a. Safety.

Mining is risky to everyone involved. The company has a program known as Life Saving Choices where employees and contractors are encouraged to speak up on potentially risky areas.

B. PRODUCTION

The company has been acquiring state of the art infrastructure and mining equipment over the last few years. Today it boasts the fastest, heaviest haul line in the globe and also the world’s best and most advanced iron ore port (Fortescue, 2015). All these are in achieving the company’s objective of maximizing production and in an effort of boosting its ability to deliver to its clients. This kind of investments is aimed at cutting down the production costs since the cost of iron ore is not stable. This will ensure continued profits in the future.

C. FINANCIAL PERFORMANCE

Fortescue has succeeded to be a leader in the iron ore industry by being able to bring down its production costs. It makes sure that the firm competes in the global market. Of key interest is the company’s desire to ensure sustainability of its programs. The company has a program called Fortescue Advanced Business Drivers Program in which it can identify rank, access and provide visibility to significant cost out initiatives (Fortescue, 2015). The company issued secured bonds at 9.75% to gain more capital to invest in future projects and clear outstanding debts.

D. MARKET.

Fortescue has been able to capture one of the largest iron ore markets in the world, China. The company enjoys close to 18% of the total Chinese imported iron ore market share (Fortescue, 2015). Despite market volatility driven by various factors, Fortescue has enjoyed strong support from its customers due to its ability to deliver quality products and offer high quality services to its clients.

The company’s “FMG Iron Bridge” venture with Baosteel and Taiwanese steel group is bound to grow magnetite exports and the second stage is bound to build a 20million tonne plant. Magnetite is a high quality product that is short in supply hence presenting future opportunities for the company.

CONCLUSION

Fortescue’s future lies in its excellent management, its acquisition of world class infrastructure to cut production costs, the bonds issue and the acquisition of new markets and products. All these are bound to propel the company to become a world class leader in the iron ore and production industry.

Works Cited.

Fortescue: The new force in iron Ore Working Together. Delivering Results. Fortescue Metals Group Ltd 2015 Annual.