Preparing a comprehensive business plan ensures we consider a business from all angles, however businesses don’t have time to refer to a 50 page plan on a daily basis. As a start-up company with a platform technology or a small business that wants to grow, there are lots of opportunities and directions one could take.

How to stay focused

My former Strategy lecturer at the University of Wollongong,  Dr Lee Styger (an extremely practical and practicing entrepreneur) outlined a Strategy on a Page which he called the Genghis Kkan Approach. We all know Genghis Khan from history as being completely ruthless, but did you know he was also a brilliant tactician in his approach to victory.

The Genghis Khan Approach involves answering 5 key questions to keep businesses focused on the end game. This distills your business strategy into a page of how you’ll get to what you define your success as and how to keep it there.

  • What does success look like?
  • How can we deliver an advantage to our customers?
  • How can we go where no one else can go?
  • How can we get there with ruthless efficiency?
  • How do we secure where we have got to? – Securing position

gemaker uses this Strategy on a Page to guide what meetings/conferences we attend, which clients we take, what we sponsor and what networks we join.

How do you put this into practice?

As most companies may be sensitive to providing their competitors with their strategy on a platter, we’ve prepared a Strategy on a Page from our experience in the mining sector on the way the Chinese have strategically approached the rare earth market over the last 28+ years. China now produces over 90% of the world’s rare earths and controls their export. Manufacturing of products (reliant on rare earths) in China is encouraged to provide employment for millions across the full value chain.

Why would this example be relevant to you?

Modern high technology companies all rely on rare earths to manufacture many products that we use every day including, mobile phones, tablets, TV/computer screens, fluorescent lights, medical imaging equipment, and many of the components in new cars. Rare earths are also essential for the production of clean energy technologies (wind turbines, solar cells, electric motors, hybrid cars), emissions minimisation (catalytic converters in all modern car exhausts), and national security (guided missiles, lasers and new generation radar).


Chinese Rare Earths Strategy

“There is oil in the Middle East. There is Rare Earth in China”, Chinese President Deng Xiaoping (1992)[1]

“Improve the development and applications of rare earth, and change the resource advantage into economic superiority.” Chinese President Jiang Zemin (1999) [1]

1) What does success look like?….. (Where do you want to be in 5 years?)

  • Economic and political global superiority through the global control of the price and distribution of rare earths and downstream products.

2) How can we deliver an advantage to our customers?… (Value of work to clients)

  • Access to large quantities of refined light and heavy rare earths.
  • Provision of a low cost workforce for manufacture of downstream products

3) How can we go where no one else can go? …(Point of differentiation/competitive advantage)

  • China is the country with the largest reserves of rare earths (between 35-45%) [2]
  • China offers customers access to cheap light and heavy rare earths (only producer of heavy rare earths currently) through low cost production (labour and lower quality environmental regulation) and extraction and superior refinement knowledge

4) How can we get there with ruthless efficiency? … resourcing

  • Purchase international patents for rare earth processing and downstream products in the high tech, green tech and defence applications.
  • Take advantage of the significant economies of scale, low labor costs and minimal regulatory impediments to build in country expertise.
  • Introduce export quotas and tariffs for rare earths which ensure companies outside of China pay premium price with limited supply. Encourages foreign companies to build their downstream product application plants in China – ie solar cells, electronic devices, cars.

5) How do we secure where we have got to? – Securing position

  • Consolidate rare earth mining in China and improve production efficiencies and environmental conditions.
  • Ignore the WTO on its ruling on the illegality of export tariffs. Decrease export quantities further citing growing in-country demand as a priority over export needs to minimise export of rare earths and continue to increase downstream manufacturing industry investment in China
  • Form a strategic partnership with Russia which has the largest reserves after China – about 20% of the world’s known reserves for deeper trade penetration toward Western Europe [2]
  • Invest in new deposits (especially those struggling to get investment) outside of China with rare earth processing directed back into China.

[1] http://www.unc.edu/depts/diplomat/item/2013/0912/ca/dobransky_rareearth.html

[2] http://investorintel.com/rare-earth-intel/ukraine-ciris-pushing-russia-form-rare-earths-alliance-china/

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