Overview of the Company
The report includes the analyses related to the strategic decision and objective of the organisation in the competitive environment. The company that has been selected for the report of the strategic management is BHP Billiton in Australia. The report will include the strategies that will help the company in accomplishing the growth and development. These strategies might lead to the business practices and there might be a criticism of those business practices that have been pursued by the company over the years. In addition to this, the discussion related to the environmental factors has been included in the report which will reflect the factors that can influence the working of the company. BHP Billiton opportunities and threats are discussed which will give away to the company to grab the same and to attain the goals of the company.
BHP Billiton is a well-known Anglo-Australian multinational mining, metals and petroleum dual-listed public company with the headquarters in Melbourne, Victoria, Australia (Encyclopaedia, 2018). BHP Billiton came into the existence in the year 1885 as a world-leading company. The company perform the operations in which they extract and process oil, minerals and gas with over than 60,000 employees and contractors mainly in Australia (BHP, 2018).
Mission: – BHP Billiton mission is to be a company of choice for creating the sustainable value for the employees, shareholders, contractors, suppliers and the host communities (Tipler, 2011).
Vision: – BHP vision is to approach things a bit differently and wants to become the leading mining company across the world (BHP, 2018).
BHP Billiton has numerous core competencies in the market of Australia which mainly includes: –
- Expertise workforce which leads to the business growth
- Experience of the BHP Billiton in the industry is one of the success factors of the company
- Size of BHP Billiton is one of the biggest company in terms of the market capitalization in Australia (BHP, 2018).
The company past strategies also offered the success in the competitive environment. BHP Billion was able to maintain the position in the market of Australia because of its past strategy. The past strategy of the company is dedicated to prepare long-term shareholder value, corporate governance and with their extra focus on the environment (BHP, 2016). One of the major strategies of BHP Billiton was the selection of the place where they operate their business activities. Comparing the company with the other companies, BHP Billion was focused towards the technology they are making use in the current environment. To maintain the same, the company decided to make a team of employees who mainly focus on the innovation and technology so that they can maintain the current situation of the company in the future. The diversification strategy of the company also contributed for achieving the success.
Core Competencies
The current strategy of the company is to own and operate the large, low-cost, long-life, expandable, upstream assets that are diversified by commodity, geography and market. BHP Billiton follows the simple and diverse portfolio that tier of assets across the world with the low-cost options for the effective value creation and the growth of the future (BHP, 2018). This strategy permits the values and culture that mainly focuses on the productivity and safety. The company strategy is to deploy the technology and exert the capital discipline which is essential to extract the value from the company and the maximum returns from the assets of the company. Moreover, the operating model strategy of the company allows the company to leverage our experience across the business with the multifunctional teams that play a vital role to connect the organisation with the help of which they share their best practice.
The business practice of BHP Billiton is to offer the resources like oil, petroleum and gas in Australian market which will lead to the better living standard to the people of the country. Moreover, it will contribute to the betterment of the economy of Australia and also for the communities. In the current era, the different people in the country have different needs which are one of the reasons due to which the company is offering the 5 division to its customers. The stakeholders of the BHP Billiton contribute in an effective manner.
The company has the range of the channels with the mechanism that support the company in gathering and monitoring this feedback within the business. Stakeholders share their feedbacks and issues which contribute to develop the policy. The criticism is clear from the negative feedback of the shareholders towards the practice of business. In the current era, the BHP Billiton faced the criticism from Investment Partners for the overseen destruction of approx. 30 billion in the shareholder capital in the current years for the shale acquisition, failed deals, investment in the potash and scrapped projects (Reuters, 2017). This shows the loophole in the past strategy of the company in which they didn’t focus towards the decision they made for the investment. This shows that decisions which were formed by the company were not accurate due to which the investors raise the criticism against the company.
This has been found in the analyses that the company is frequently the target of the criticism in the past. One of the past criticisms which were faced by the company was related to the treatment of the communities affected due to its mining operations (Mattera, 2015). This shows that the company was not able to meet its obligations related to the welfare of the communities which is one of the major downfalls of the strategies that was formed by the company. The outcome of the failure leads to the changes in the strategies on which the company can focus on the communities.
Successful Strategies deployed in the past
Porter’s five forces
The Porter’s five forces provide the strategic view related to the competitive external environment which is required to be analysed by the BHP Billiton (David, 2011).
The bargaining power of buyer is low as the company can offer the products due to the strong demand and limited supply of the natural resources in the Australian market (Dawson, 2014). This has been found that there is less number of substitutes due to which the buyers can’t make the purchase from other suppliers. Along with this, the company is focused towards the customer relationship which leads to the loyalty of customers towards the company.
BHP Billiton finds the high bargaining power of suppliers for labour, energy, materials, shipping and energy cost. In the market of Australia, this is hard to find the substitute for the suppliers for the raw material. This is the reason due to which the suppliers of the company have enhanced the overall cost of the operations.
The threat of substitutes is moderate in the market because there is a lack of the substitutes in the market for the raw material. The company has a good market reputation and position in the market which is enough to counter any threats of substitutes. In addition, the company offers the broad and diversified portfolio which will reduce the threat of substitutes because the customer gets loyal to the company. Though the company face the tough competition from the Rio Tinto strong customer relationship is the key for the success of BHP Billiton.
The rivalry among the competition is tough in the market of Australia. There are numerous natural resource companies that are competing in the market and they give tough competition to each other. The competition is faced not only in the market but also in procuring the resources such as attracting and retaining the qualified and trained employees (Armstrong, Adam, Denize and Kotler, 2014). The major competitor of the company is Rio Tinto who is giving tough competition. Both the companies are the mining titans in the market and are generating about $20 billion.
The threat to the new entrants in the market of Australia is relatively low because the availability of the natural resources in the market is very limited. This is one of the barriers for the new companies who are willing to enter the Australian market. Along with this, BHP Billiton Company has upgraded their infrastructure and latest technologies with the help of which they can offer the quality products in the market. This will affect the new entrants as they won’t be able to compete with the BHP Billiton at this upgraded level. In addition, they will require more of the capital to upgrade their business.
The current strategy of the company
SWOT analysis reflects the analysis of the external and internal factors due to which this method has been opted by the BHP Billiton Company for the analysis. This analysis will translate the conclusion into the strategic actions so that the company can grab the opportunities and can defend against the threats (Hitt, Ireland & Hoskisson, 2012).
- The company is the largest seller of the diverse resources which include copper, silver, lead and many others.
- The company is known is the market because it has delivered the superior financial returns from the past few years by returning the capital with the help of the buyback program.
- The company ensures that they are offering the delight services with the quality products to its customers (Fern Fort University, 2018).
- It is found that the company is facing the issues due to the lack of the effective communication. The staffs of the company are not proactive enough to respond to corporate enquiries.
- The need for the improvement in the decision making is very essential for the company because this is the reason due to which the company faces the criticism (Frynas, and Mellahi, 2015).
- After the Kyoto Protocol become necessary to abide the company brought a 5% reduction in greenhouse gas emission. The company has the opportunity to reduce the greenhouse gas emissions with the effective management of the program which will help the company to meet the obligation related to the sustainable development.
- BHP Billiton has the opportunity for the numerous projects which they can execute as they will become the source of the revenue and to manage the projects in a cost-effective manner.
- BHP Billiton faces the threat from the consistently rising cost from the suppliers related to the labour cost, shipping cost and many others. This leads to the barrier for the development and growth (Kotler, 2015).
- In Australia, the company has the threat from the political because of the unfavourable ruling from the government.
The company is being consistent with the strategy which is possible due to the value of the BHP with this the company is willing to grow the value (BHP, 2018). The plan mainly focuses on these areas: –
- Cost efficiencies- Becoming more focused towards the further gains
- Latent capacity- BHP is willing to reduce the risk with the attractive returns
- Major projects- Timed for the returns and value
- Exploration- Effective results that bring down the risk for the future walls
- Technology- Improvement in the safety, reducing the cost and unlocking the resources
- Onshore US- Flexibility and value
The leadership model reflects the attributes that the company look for their leaders and forms the basis which shows the ways through which the company reward and develop its people. BHP Billiton accepts the fact that they require the leader who can visibly gold themselves and others that are accountable for the living the values of the company outlines in the Charter. The leader of the company ensures that they follow the values which are put the safety on first and making the people important for them which is essential for the excellent and discipline earning (BHP, 2016). The leadership style that is encouraged by the company is designed so that they can bring the best in others by making them influence the self-interest and to engage the people on an individual or personal level. In addition, the company way is to highlight in the program with the name “Foundations for Graduates”. The company is willing to complement the Graduates technical skills by bringing leadership capabilities, people skills and communication techniques.
Conclusion
In the end, it can be concluded that BHP Billiton is performing effectively in the market of Australia. Along with this, the company has the moderate competitive environment at the current position because they have already established their good position in the market. The report includes the analysis of the company values, strategies, vision and mission. In addition, the criticism for the business practice is also discussed which shows that the company need to be careful with the activities and decision. In fact, the discussion related to the factors that can lead to the competitiveness in the market shows that the company needs to specific for their decisions. The model of leadership is also discussed at the end which shows the leaders role.
References
Armstrong, G., Adam, S., Denize, S. and Kotler, P. (2014). Principles of marketing. 6th edition. Welbourne: Pearson Australia.
BHP. (2016). BHP Billiton outlines strategy to grow value. Retrieved from: https://www.bhp.com/media-and-insights/news-releases/2016/05/bhp-billiton-outlines-strategy-to-grow-value
BHP. (2018). Leadership Team. Retrieved from: https://www.bhp.com/our-approach/our-company/leadership-team
BHP. (2018). Our Charter. Retrieved from: https://www.bhp.com/our-approach/our-company/our-charter
BHP. (2018). Our Company. Retrieved from: https://www.bhp.com/our-approach/our-company
BHP. (2018). Structure and strategy. Retrieved from: https://www.bhp.com/our-approach/our-company/strategy
David, F.R. (2011). Strategic management: Concepts and cases. India: Pearson/Prentice Hall.
Dawson, J.A. (2014). The Marketing Environment (RLE Marketing). New York: Routledge.
Encyclopaedia. (2018). BHP Billiton. Retrieved from: https://www.britannica.com/topic/BHP-Billiton
Fern Fort University. (2018). BHP Billiton SWOT Analysis / Matrix. Retrieved from: https://fernfortuniversity.com/term-papers/swot/1433/1229-bhp-billiton.php
Frynas, J.G. and Mellahi, K. (2015). Global strategic management. USA: Oxford University Press.
Hitt, M., Ireland, R. D., & Hoskisson, R. (2012). Strategic management cases: competitiveness and globalization. Chicago: Cengage Learning.
Kotler, P. (2015). Framework for marketing management. India: Pearson Education.
Lovelock, C. and Patterson, P. (2015). Services marketing. Australia: Pearson.
Mattera, P. (2015). BHP Billiton. Retrieved from: https://www.corp-research.org/BHP-Billiton
Reuters. (2017). BHP investor Tribeca calls for sale of US shale assets, board shake-up. Retrieved from: https://www.financialexpress.com/industry/bhp-investor-tribeca-calls-for-sale-of-us-shale-assets-board-shake-up/654983/
Tipler, C.J. (2011). Mission statement: Impossible. Retrieved from: https://www.theaustralian.com.au/business/business-spectator/mission-statement-impossible/news-story/5e67be80bf5c253c6a5ba0fecdc535f9
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