Transformational Corporate Strategy

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Sandvik is well positioned for future growth in africa. Its focus, strategy, business processes and leadership, together with its commitment to research and development will place it ahead of the competition.

- INTRODUCTION

Sandvik Mining and Construction RSA (PTY) LTD is part of the swedish-based Sandvik Group, a global industrial concern specializing in the marketing and supply of underground mechanized mining products.

In respect of the construction side of the business, various solutions are provided for surface rock excavation, tunnelling, demolition, recycling and road rehabilitation. The mining industry benefit from a range of equipment focusing on rock tools, drilling rigs, loaders and trucks, crushing and screening machinery and bulk materials handling.

All products are developed based on extensive research and development, backed-up by specialized training and superb after sales service and technical support. The focus is on providing top quality products, while at the same time making it cheaper for our customers to run their businesses.

The company employs around 14 000 people in south africa, and invest time and money in developing people and communities through various skills programmes. Annual growth is around 6%, with a 17% return on investment. The target is to double this growth within the next five years, focusing on south africa and africa, where a market explosion is expected, due to large investments in mining and construction.

The company believes that through continued research and development, it can continue to bring high quality products to the market, that will not only cut operating costs for its customers, but will increase profit, while also creating a safer environment for workers.

In this paper, the author will attempt to critically reflect on the business practices followed by Sandvik RSA (PTY) LTD, and show the company's value creation.

- PROBLEMS AND CAUSES

- Sandvik Competitive Environment

The company has a vision to set the industry standard for others to follow. The company operates in south africa and africa. Globally, africa is seen as the last continent with the potential for real development and growth. It is the same in respect of the market that Sandvik operates in. Potential for growth is huge, but competition is even tougher!

Africa will undergo massive infrastructure development within the next decade. A total of 43% of all africans will live in urbanized cities or metropolitan areas. This will increase the demand for mining and construction equipment. (Frost and Sullivan, 2016)

Within africa, the demand for construction and mining equipment already increased six fold over the last few years. Rapid urbanization and increased investment in infrastructure development, will continue to push-up the demand for equipment, with basic construction equipment being the most sought after by 2022, followed with heavy construction equipment. South Africa will remain the largest market, followed by countries like algeria, angola, egypt, kenya and the middle east. (Frost and Sullivan, 2016)

Competition in this market is fierce, with large competitors such as volvo, komatsu, holland, caterpillar and bell to name only a few. These companies also offer top quality products at reasonable prices to the market and are well established brands. The chinese are also heavily involved in africa and bring with them cheap imitations of well branded equipment.

The possibilities for Sandvik within the african market is thus endless, with huge growth forecast in respect of infrastructure development, growth far above the average. Continues research and development, cost reduction and after sales services will make the difference in this market.

- Sandvik Basic Strategic Environment

The author conducted a basic environmental scan of Sandvik, collected relevant data, and then conducted a basic strength, weaknesses, opportunity and threat (SWOT) assessment.

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Figure 1: SWOT ANALYSIS

Strengths

Weaknesses

Opportunities

Threats

Strong brand

Less diversified portfolio

increasing competitive advantage through innovation

Competitors

High quality products

High lost time injury frequency rate

Focus on developing new small compact construction equipment

Political stability

Innovative culture

Adaptation to technology

Improve company footprint in Africa

Intense competitive pressures

Unique products

High Supply chain cost and hence two units were closed

Acquisition of cheap raw material in Africa

Environmental regulations

Superior technology

Poor reputation

Trade deals with African Union

Rising cost of raw material

Skilled workforce

Diversifying through mergers and acquisitions

Price changes

Through the environmental scan, it was clear that Sandvik's strategy is focused on improving customers’ operational efficiencies and profitability, through the development of high-tech engineering products to suit customer’s needs. The company is service orientated and dedicated to listening to clients and delivering on the needs of those clients. Emphasis is placed on research, development and innovation. Employee development and strategy implementation go hand in hand and the company relies on scenario planning. It's a caring company, caring for