Northern Drilling Inc.: The Mond Nickel Contract Decision - A Tactical Dilemma in a Growth Strategy
(6 pages of text)
Northern Drilling Inc., an exploration diamond-drilling contractor, has been asked to tender a bid for a lucrative, highly complex contract with Mond Nickel. Northern has no drills or crew currently available to work on the contract, which requires experienced drillers. Compounding the issue is a shortage of skilled labour in the industry. At the same time, Northern's biggest client, Noranda Nickel, is seeing poor geological results on a job in the same area. Northern's management needs to decide whether to incur additional costs and leave a capacity cushion in an effort to maintain its excellent relationship with its current client, or whether it should instead utilize the drills on the new job. The primary issue facing Northern's management is whether Northern can handle the new contract, both financially and technically, without compromising the current job.
The case provides sufficient information for students to analyze the following: (a) The financial implications of the various options. (b) The customer relationship sensitivities. (c) The operational constraints of fulfilling the contract. (d) The strategic implications of not bidding, not winning, or winning and delivering poor performance. (e) The strategic initiatives that might be put in place to mitigate risk.
Mining, Quarrying, and Oil and Gas Extraction
Canada, Medium, 2011
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