FIN1FSA Financial Statement Analysis - Assignment Help on Financial Statement Analysis of Reedy Lagoon Corporation

Introduction

The company that has been chosen for the assignment is Reedy Lagoon Corporation Limited. The company headquartered in Melbourne is involved in the business of mineral exploration. The Reedy Lagoon Corporation Limited, which is generally referred to as RLC; has projects of exploration currently in the United States of America (Reedy Lagoon Corporation Limited, 2019). The company is in the project of lithium exploration in the area of Nevada; the company has currently undertaken four projects. The four projects are namely: Alkali Lake North, Big Smoky South, Clayton Valley and Columbus Salt Marsh. Along with its core business the company is also involved in the non-core businesses of iron-ore in Western Australia and uranium in South Australia.

Industry Analysis

In order to carry out industry analysis it is important to analyze the position of the organization from the perspective of Porter’s five forces model. The model is a strategic management tool to analyze the available opportunities of profit making in the industry and getting a better understanding of them. The managers of Reedy Lagoon Corporation Limited can use this industry analysis to impact the potential profitability of the firm and be able to develop the strategy for enhancing their business (Reedy Lagoon Corporation Limited Porter Five (5) Forces & Industry Analysis, 2019). 

Rivalry Among Firms 

Rivalry among firms is a key part of industry analysis, as it tells the potential risks and opportunities that lie in the industry for any one player in particular and all players in general. The Reedy Lagoon Corporation Limited needs to act very smartly in order to deal with this rivalry, one way it can keep an upper hand on its competitors is by constantly bringing innovation in its way of doing business as this way it can keep itself from being over the edge.

Threats of New Entrants

The threat of new entrants in the industry of mining exploration is a source of innovation for the entire industry. The companies are always under the pressure to look for innovative ways of carrying out business activities to keep the costs intact. This is the challenge that Reedy Lagoon Corporation Limited has to bear up to, and it can do so by exploring new business arenas. Another way to carry out and deal with such risks is to be able to build economies of scale for itself. The company also needs to invest heavily on the innovative technologies to perform exploration activities so that it can protect itself from costs pressures, thus keeping an upper hand on the new entrants.

Threat of Substitutes 

The threat of substitute products is a key concern for industries in general, however this threat is quite under control for the mining exploration companies like Reedy Lagoon Corporation Limited, unless a new natural resource or any other product is discovered that can replace the use of lithium as in this case. Another way the company can keep its consumers loyal to itself is by ensuring that the switching cost remains high.