The Research On Competitive Strategy For SD Gold Mining Co., Ltd

SD Gold Mining Co., Ltd. is a large state-owned gold mining company which was established in2000with a registered capital of160million RMB. After a decade of progressive development, it has made satisfactory achievements with the total assets of318.2711million RMB. However, because of the non-renewable nature of gold resources and the sharp decline of reserves, productions and operation have experienced difficulty and its production costs has significantly increased, posing a severe challenge to the survival and development of SD Gold Mining Co., Ltd. Therefore, SD Gold Mining Company must develop practical competitive strategies in order to maintain the sustainable development of the company.The external environment SD Gold Mining Co., Ltd. faces:influenced by the global economic integration, gold production and development is no longer subject to the limitations of the country of origin, bringing each country the opportunities of gold enterprise development. The state is vigorously developing policy support for the gold industry and the VAT on gold products are exempted by the state. The state has made adjustments to the policy of state monopoly over purchase and marketing, and companies can sell the finished gold by themselves. Strong demand for gold continues and gold prices are rising. The gold industry barrier is relatively high and the industry production technology is relatively mature. Localization of production equipment is somewhat high and there is little threat of alternatives etc.Major threats that SD Gold Mining Co., Ltd. faces:the geological exploration of gold resources is a high-input and high-risk industry. Newly discovered domestic gold resources are few in number and the difficulty of exploitation is gradually increasing. Domestic local protectionism prevails and after China’s accession to the WTO, foreign-invested gold companies have been directly entering China, making the competition for gold resources more intense.Internal advantages of SD Gold Mining Co., Ltd.:the company has a relatively complete industrial chain, integrating geological exploration, mining, dressing, and smelting, and the deep processing of gold products. It enjoys a good corporate reputation and high popularity in the industry and possesses an outstanding production management capability, with excellent production equipment and advanced dressing, smelting and refining technology. Its financial position is favorable and has a strong operation management capability. It has a competitive workforce and management team with an efficient implementation culture. It enjoys evident local resource advantages with more dependent gold deposits and a comparatively high overall ore grade. Internal disadvantages of SD Gold Mining Co., Ltd. at the same time are mainly reflected by its unbalanced regional development, over-reliance on the existing resources of Shandong Peninsula, a relatively homogeneous industrial layout and types of resources, lack of technical and management personnel for the development of other metal mines. Besides, R&D capability is weak, level of external resources development is relatively low, production and operation costs are slightly high, parent-subsidiary control system is imperfect and the traditional state-owned enterprise system has left it with a relatively heavy burden.This paper has come to the following conclusions through comparative analysis: SD Gold Mining Co., Ltd. should take the overall cost leadership strategy, forming a comprehensive and strategic low-cost system so as to remain invincible amongst fierce competition. SD Gold Mining Co., Ltd. should take the following measures to ensure the effective implementation of the overall cost leadership competitive strategy:1. Improve the quality of project investments and try to achieve low-cost resource expansion.2. Optimize the financing channels and trying to achieve low-cost financing.3. Diligently strengthen technological innovations and improve the technical content of mine productions in order to obtain low-cost production technologies.4. Focus on improving operating concept and implement excellent production management so as to reduce operating costs.5. Further optimize human resource management and improve the training and incentive mechanism.6. Establish a top-down control system and ensure the effective implementation of the overall cost leadership strategy.Not only does this paper help SD Gold Mining Co., Ltd. develop its own core competitiveness and enable the company to establish barriers to compete in the fierce competition and form a persistent strategic advantage, but the conclusions reached here can also provide in the process a certain reference guide for other gold mining enterprises on making competitive strategies.