François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

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François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz

Transcript of François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

Page 1: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

François PerrotWalter RhaAdrian Wozniakiewicz

Walter Rha, François Perrot, Adrian Wozniakiewicz

Page 2: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

AUSTRALIA Capital City

Canberra named capital city in 1908 Population

22 million 60% concentrate in Sydney, Melbourne, Brisbane, Perth and

Adelaide. Free-Market Economy

High GDP per capita Low rate of poverty

13th largest economy in the world Recognized for its human development, quality of life,

health care, public education & economic freedom International Presence

Member of the UN, G-20, Commonwealth of Nations, OECD, APEC, WTO

Industries Agriculture, Dairy, Banking, Mining, Wool & Cotton, Wine,

Fisheries

Page 3: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

HISTORY

The Commonwealth of Australia First discovered by Dutch explorers in 1606

North Western Australia Captain James Cook discovers eastern Australia in 1770

Establishes a new penal colony for Britain Since the European settlements in the late 18th century

Australia experiences significant population growth Victorian Gold Rush 1851-1860’s (population tripled) Convict labor System 1787-1852

Continent was set up into parliamentary governing crown colonies

Six colonies Western Australia, Northern Territory, South- Australia, Queensland, New

South Wales

In 1901 the six colonies unite and become the federation Commonwealth of Australia

In 1908 Canberra is named the capital city of Australia As a compromise between rivals Melbourne and Sydney

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MINING

Worlds Largest Producer of Leads, Diamonds Uranium

Worlds largest Uranium reserves 23% 3rd larges producer Exports valued at $1.1 billion annually

Coal Worlds largest net exporter of coal accounting for 29% Dubbed the “Saudi Arabia of Coal!”

Bauxite Worlds largest producer of Bauxite 33% of global production Highest grade deposits of Alumina

Aluminum 5th largest aluminum producer

Zinc Large reserves

Nickel Large reserves

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AGRICULTURE & FISHING Agriculture:

12% share of GDP $155 billion a year industry 134,996 farms covering - 61% of countries

landmass Dry-land farming & Irrigation Mix

Due to the dry and infertile soil Horticulture & Viticulture

Fishing: $2.3 billion a year industry Aqua farming sector

Accounts for 32% of the total industry Fish exports roughly $1.84 bullion a year

Page 6: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

WOOL AND DAIRY

Wool Export oriented

90% of production is exported Accounts for 9% of world production Market Leader in fine quality wool sector

Producing 50% of worlds Merino wool

Dairy Fourth most valuable agricultural export $3.4 billion a year industry Employs over 40 000 people 1.6 million cows producing on average 9023

million liters of milk per year

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WINE & TOURISM Wine

Over 2000 wine companies Employs roughly 31 000 people $2.8 billion industry Exports over 722 million liters a year Tradition

Rich tradition of winemaking dating back to 1788

Tourism 3.9% of Australia’s GDP $32 billion a year industry 5.7 million visitors in 2010 Decline in Tourism between 2001- 2003

Due to external events (Ex 9/11, SARS)

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BANKING & STOCK EXCHANGE

Banking 2009: Total banking sector assets $2.59 trillion Government regulated

Prohibits merger between two major (AUS) banks in order to preserve competitiveness

Stock Exchange: 1861 First Exchange – Melbourne ASX (Australian Securities Exchange)

Formed in 2006 Merger of ASK and Sydney Futures Exchange

Diverse international and Domestic Customer base

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ECONOMIC PERFORMANCE Services: main component of GDP Constant Real GDP growth

Doubled in last 20 years

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INTERNATIONAL TRADE & REGION

China: Australia’s major business partnerTop exporting destination (20%)Top import origin (15%)

US: use to be the major one in 2007 with $47bnRegional trade

Exports: Japan 2nd, India 3rd. East Asia (incl. ASEAN) = 67%

Imports: US 2nd, Japan 3rd. East Asia = 52%

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NO “TWIN-DEFICIT”

The CAD is growing fast but is of no concern Fiscal deficit only during the 2008 global

crisis

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FOREIGN DIRECT INVESTMENT

Strongly growing net FDI inflows since 2000

2010 Dun&Bradstreet top rank fors safe FDI

A.T. Kearney FDI Confidence index: 6th

Mining accounts for 25% of the FDI inflows

Page 13: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

STIMULATE FDI

Government Eliminate distortions: Strong financial and regulatory enforcement Corruption perception index: 8th least corrupted country

(=Switzerland) Social context: social security, unemployment benefits,

educational Skilled migration program: point based system, adjustable to

the needs Macroeconomics stability:

RBA stabilizes inflation around 2-3% by keeping interest rates high in “normal” times

2008 Global finance economic crisis: Monetary policy: RBA sharp cut on rates (from 7.5% to 3% in 6

months) Ease financial pressure on indebted households and businesses Stimulate consumption RBA guaranteed bank deposits and wholesale’s funding of

Australian banks Fiscal policy:

US$8bn stimulus package (1% GDP): pensioners and low-income families (bonuses), housing construction, trainings

Feb 2009: US$26bn package for nation-building (education, infrastructure, tax break for SME, $ for workers, farmers, students)

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MACROECONOMIC COMPETITIVENESS:SOCIAL INFRASTRUCTURE

Basic Education: Overview Education is compulsory from 6 to 16 years of age Literacy rate is 99% for men and women Government expenditure on education as a percentage of GDP

was 4.8% in 2009 Government initiated the Building the Education Revolution (BER)

program in 2009 BER Proposes to provide infrastructure funding worth $14.7 billion

to Australia’s 9,540 schools

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MACROECONOMIC COMPETITIVENESS:SOCIAL INFRASTRUCTURE

Healthcare: Overview In 2009, Healthcare expenditure of Australia stood

at around $51.6 billion, representing 5.5% of GDP OECD average of 8.4%

70% of Australia’s healthcare expenditure is funded by the government

Page 16: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

MACROECONOMIC COMPETITIVENESS:POLITICAL INFRASTRUCTURE

Legal Landscape: Performance Australia ranks in the 96.7 percentile on the government

effectiveness parameter. measures quality of public services, civil service and degree of

independence Australia ranks in the 95.2 percentile on the rule of law

parameter. measures extent to which agents have confidence in the rules of the

society and particularly at the quality of contract enforcement, the police and the courts.

Australia ranks in the 96.1 percentile in the control of corruption parameter.

measures the extent to which public power is exercised for private gain, especially corruption, as well as the private and elite influence over the state

Page 17: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

BUILDING THE DIAMOND:FACTOR CONDITIONS

Assimilating Foreign Technology: India-Australia Strategic Research Fund in

science and technology China-Australia Special Fund for advanced

science and technology development. Australia also entered into scientific bilateral

collaborations with the US, Canada, South Korea and Japan.

Administrative Infrastructure 1st: OECD listed Australia as most open economy 2nd lowest levels of red tape in terms of

business procedures

Page 18: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

BUILDING THE DIAMOND:FACTOR CONDITIONS

Improving Efficiencies: The Australian government has funded

projects supporting: telecommunication and IT infrastructure broadband services for local and rural areas the development of green

telecommunications carbon trading.

The government has also been successful in setting up Tele-education in remote areas

Page 19: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

BUILDING THE DIAMOND:CONTEXT FOR FIRM STRATEGY AND RIVALRY

Reducing Impediments to Competition: Australia has transformed itself from an inward-

looking, highly protected and regulated economy to an open and export-oriented economy

Australia is a member of various international

organizations including: Asia Pacific Economic Cooperation (APEC) ANZ Certa (1983 FTA with New Zealand) Common Wealth Cairns Group International Monetary Fund (IMF) Organization for Economic Co-Operation and

Development

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Effective Competition Policy: The Australian government will take measures

targeted at promoting competition and cracking down on anticompetitive practices

Trade Practices Act (TP Act) 1974 include moves to further defend small business from predatory pricing

Effective Intellectual Property Protection Mechanisms: Australian patent law prohibits double

patenting. It does not prohibit two patents for the same

invention but of differing claim scope.

BUILDING THE DIAMOND:CONTEXT FOR FIRM STRATEGY AND RIVALRY

Page 21: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

MARKET OVERVIEW Market value

The Australian metals & mining industry shrank by 5.6% in 2009 to reach a value of $63,613.2 million.

Market value forecast In 2014, the Australian metals & mining industry is forecast to

have a value of $96,280.9 million an increase of 51.4% since 2009.

Market segmentation Coal is the largest segment of the metals & mining Accounts for 52.9% of the industry's total value.

Page 22: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

MAPPING THE CLUSTER Buyer Power

Average buyer is large company > Boosts Power Low level of product differentiation > Boosts Power Large number of customers > Reduces Power Mining necessity for many buyer’s business > Reduces Power

OVERALL ASSESMENT = MODERATE LEVEL OF POWER

Supplier Power Mining companies are vertically integrated > Boosts Power Mining equipment specialized and specific > Reduces Power Availability concerns of future commodities > Boosts Power

OVERALL ASSESSMENT = MEDIUM - HIGH LEVEL OF POWER

Page 23: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

MAPPING THE CLUSTER

Threat of New Entrants Very high initial investment costs > Reduces Threat Increasingly stringent environmental regulations

> Reduces Threat Resource Super Profit Tax > Reduces Threat Criminal Penalties for violating environmental laws

> Reduces ThreatOVERALL ASSESSMENT = WEAK THREAT

Threat of Substitutes No direct substitutes for metals and minerals

> Reduces Threat Indirect Substitutes require changing technologies

> Reduces Threat Very High Switching Costs > Reduces Threat

OVERALL ASSESSMENT = LOW THREAT

Page 24: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

MAPPING THE CLUSTER

Rivalry Scale economies favor large companies Mergers and acquisitions are expected to increase

competitiveness > Boosts Rivalry Exit barriers are high thus major players are

strongly motivated to remain in industry > Boosts Rivalry

Industry margins are susceptible to changes in prices and growth is hard to sustain> Boosts Rivalry

OVERALL ASSESSMENT = STRONG LEVEL OF RIVALRY

Page 25: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

KEY COMPANIES

BHP Billiton Group BHP Billiton is a diversified natural

resources group. The group exports coal, iron ore, copper,

nickel, manganese ore, primary aluminums, and manganese and chrome ferroalloys.

The group has a global presence with more than 100 operations in 25 countries.

Market Capitalization of $249 Billion USD

Page 26: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.
Page 27: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

MINING CLUSTER: HISTORY OF DEMAND

History of major mining booms 1850 gold rush Late 19th mineral 1960s mineral & energy boom Late 1970s, early 1980s energy boom

Today: commodity boom Strong growth of developing countries: growing demand for

commodities Australia: coal, iron & steel, aluminum, copper, etc. Strong world demand: minerals and ores China: top destination for Australia’s exports Growing demand for uranium until January 2011 World trend

Page 28: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

MINING CLUSTER: PERFORMANCE

Employment and InvestmentWorld growing demand for metals, previous

metals and ore (China, India) – growing investments

Growing technology requiring less man-laborMining booms: investment, value added

Page 29: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

GOVERNMENT SUBSIDIES?

Subsidies in 2006 (research by Institute for Sustainable Futures for Greenpeace Australia):Electricity: US$ 2bnTransport: US$ 7.5bnStrong Aluminum subsidies too

Page 30: François Perrot Walter Rha Adrian Wozniakiewicz Walter Rha, François Perrot, Adrian Wozniakiewicz.

COMPARISON WITH INDONESIA

Indonesia has a similar profile in mineral resources: coal, precious metals, uranium, iron, etc.

What is different?Barriers to trade, political instability,

corruption, lack of financial and regulatory laws enforcement, >750 dialects, thousands of islands

Indonesian boat people seeking asylum in Australia