Executive Summary The external and internal environment of Fortescue Metal Group has been analyzed in this report. The external environment presents several threats, which include high competition, tariff barriers to foreign market entry, high bargaining power of buyers of iron, and high suppliers’ bargaining power. The main opportunity that is available to FMG is the expected increase in demand for iron in China and other emerging markets. Moreover, the company has the opportunity to increase its market share because of the low threat of new entrants and substitutes. FMG’s strengths include access to huge iron ore deposits, extensive railroad networks, and a talented workforce. However, its overdependence on the Chinese market is a threat to its long-term profitability. Overall, the company’s resources and capabilities will improve its long-term success. Case Study Report: Strategic Management Introduction Fortescue Metal Group (FMG) is a leading producer of iron in Australia. Since its inception in 2003, the company has achieved rapid growth through cost reduction and expansion of production capacity. The aim of the company is to become the lowest cost producer of iron in Australia (FMG 2014). This paper will provide a detailed analysis of the internal and the external environment of the company to determine its competitiveness. The aim of the analysis is to identify the internal and external factors that are likely to influence the company’s ability to succeed in the long-term. External Environment PESTEL Analysis International trade policies are the main political factors that influence the performance of firms in the iron industry. Protectionist trade policies such as subsidizing domestic iron producers prevent competition in major markets such as China (Hau, Chatterjee & Jingliang 2011, pp. 68-81). In emerging markets in Africa and the Middle East, high import duties reduce the competitiveness of imported iron. Economic growth and exchange rate are the main economic factors that affect iron producers and exporters. Strong economic growth in China and emerging markets in Asia and the Middles East will continue to increase the demand for iron in the next five years (KPMG 2014). Exchange rate fluctuations have both positive and negative effects on export revenues. An appreciation of the Australian dollar against major currencies such as the yuan and euro makes iron exports from Australia to be more expensive in international markets. The reverse effect occurs when the Australian dollar depreciates. The major social factors that influence the competitiveness of iron producers include increased population growth and urbanization in emerging market economies, as well as, lack of experienced personnel in Australia’s iron industry. High population growth and increased urbanization will increase the demand for housing, which in turn will increase the demand for iron in the international market (KPMG 2014). However, lack of experienced personnel means that Australian iron producers must incur high staff development costs. Production and transportation technologies have a significant effect on the competitiveness of iron producers. Companies that lack access to efficient third par