Transforming the logistics services in Mongolia

Abstract

As a frontier market, Mongolia has achieved a double digit Gross Domestic Growth (GDP) growth since 2003 and it is set to grow 10 times to US$60 billion by 2025. This growth is fueled by its vast mining resources and an accelerated pace can be expected as she enters into large-scale production. This will greatly improve the prospects for prosperity and poverty reduction. Mongolia provides an untapped niche of potential business opportunities.

Nevertheless, these business opportunities exist in an environment of volatility, uncertainty, complexity and ambiguity (VUCA), arising from the internal political/legal instability and the over dependency on mining and external countries for import/export or foreign direct investment (FDI), amidst other typical operational business risk from human capital, social support, and technological efficiency.

CWT Commodities Mongolia (CCM) is our case company in Mongolia. We have conducted our Political, Economic, Social, Technological (PEST) analysis at the national level and Strength and Weakness, Opportunities and Threats (SWO'T) analysis of CCM, also referred to as the secondary case analysis, through online researches and our primary case analysis through direct interviews. We juxtaposed the PEST and SWOT analysis to distil the growth and risk mitigation strategies adopted by CCM in response to their strategic and operational challenges. We further discuss how CCM maintains agility and neutralises their threats while developing competitive advantages in their industry.

Extending from their core theory of success for CCM, we recommend entrepreneurs who are eager to venture into Mongolia (or any other frontier markets) to (1) dream yet be realistic, (2) secure foothold and strengthen network, (3) diversify or divest decisively, and (4) maintain strict business policy.