The external environment

Our business does not exist in isolation. As we compete in the world semi-fabricated aluminium market with more than 50% of our goods exported, we are exposed to market forces and developments both within and outside of our borders.

In this context it is important that we understand:

The drivers behind these dynamics and how they interact,
Their implications for our business, and
How we can best navigate them in the short, medium and long term.

Scenario planning methodology described in the Risk management section is used to analyse the external and internal environment.

Hulamin five year scenarios

In order to derive five-year scenarios, Hulamin analysed all the driving forces impacting its business. By clustering the

drivers and looking at correlations and impact between them, eight underlying forces have been identified as shown in this picture.

In the two to five-year time frame, the two most uncertain forces with the biggest impact on Hulamin formed the two axes that were used to describe possible future scenarios:

Global macro geo-politics influencing differential access for Hulamin to global markets
South African economic and manufacturing performance

Click or tap for a larger version of this image

From the above analysis Hulamin then identified the following four scenarios (see below) as relevant to Hulamin over the two to five year timeframe:

During 2018, the SA economy remained sluggish and polarisation worldwide increased, moving us to “Most favoured nation”. Pricing pressure in SA increased whilst opportunities for Hulamin in the USA improved. Depending on the results of the South African elections and traction of a possible “new dawn”, we could move to “Best of times” in 2019/2020, but should be ready for potential slide to “Proudly African” or even “Things fall apart” if we lose differential access to global markets. We regard the four scenarios as possible futures and have developed a strategy incorporating “no regret” capability build enablers and specific strategic options, to be triggered by future events.

The main purpose of describing the scenarios is to identify the likely characteristics of each scenario (i.e. review all the key driving forces and trends in the risk register under each scenario) and how this will impact Hulamin so that strategic actions and options can be developed.

Refer here for strategic enablers, capabilities and options. These were used to inform the strategic response (here).

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