Overview of the organization
The following report deals with the factors that arise within the context of the business expansion for the various international companies. There are many scopes for the organizations to discover the various regions to which they can expand and be successful for the quest of the profits. it is the duty of the higher management of the company to analyze the various issues within the company to determine whether they can expand into the concerned markets or not. In this paper, the organization that has been chosen is BHP Billiton, a very successful organization in the mining industry. The countries to which the organization will expand into are United Kingdom of Europe and China of Asia. The important issues in the expansion of the concerned organization will be discussed here in this report. They will look to extract more copper from the mines of these countries as a part of their new service.
The organization chosen for this paper is BHP Billiton. It is considered as the largest organization in the mining industry within the country (Bhp.com 2018). The headquarters of this organization is located at Melbourne in Australia (Bhp.com 2018). The organization serves its customers all around the world (Ang, Benischke and Doh 2015). The various kinds of products that the company provides to its customers are coal, petroleum, copper, iron ore, nickel, uranium and natural gas. The chairman of the company is Ken Mackenzie and the name of the CEO is Andrew Mackenzie (Bhp.com 2018). They use supreme strategies to provide their customers with the best service. This helps them to build the customer loyalty and the trust of the customers. They go through the needs of the customers very well and are very active towards solving the issues and problems of the customers effectively. The supply chain management of the organization is very strong indeed and this is very important for them to meet the requirements of their customers (Bhp.com 2018). They want to retain the sustainable business environment they have already developed. This will increase their benefits as well. The equipment performance of the company is quite strong as well (Ang, Benischke and Doh 2015).
The two countries that have been selected here for the market expansion of BHP Billiton are China of Asia and United Kingdom of Europe. These two countries are very strong in trade and commerce all over the world (Raff, Ryan and Stähler 2012). China has a huge population and it is very evident that BHP Billiton will have a large customer base over there. Millions of customers will be benefitted by their sincere services indeed. As China is trying to lift more copper from the miones this will be a huge benefit for the country through the efforts of BHP Billiton.The expansion of the company to United Kingdom will also be a big boost for the company as well since UK has a large customer base for almost all the industries as well. The expansion strategy has already been very much popular for the organization indeed (Raff, Ryan and Stähler 2012). The cost efficient services of the company will make them more affordable to the customers as well. The organization will likely to grow within the premises of the overall oil, gas and mining industry. The new technologies will help the copper extraction process in the best ways as well. The use of the technology within the company will improve the effectiveness of their services indeed. The organization will look to increase its effectiveness in the countries as there is a huge opportunity for making such a profitable business over there. The opportunities will have to be utilized in the proper manner as well (Triandis 2017).
Identification of the two countries for the market entry
China is considered as one of the most powerful countries in the world. It is both from the aspects of the population and the political powers. It is the permanent member of the Security Council of the United Nations. BHP Billiton will need a strong infrastructure to engage the cheap labor force for their services which they will be able to get in China. This will surely be helpful for them indeed (Triandis 2017). The infrastructure will be improved with the help of the technology properly. The political environment of the country is quite stable and that will really be helpful for the company as well. The investment in China by BHP Billiton will really be helpful for them as well.
China is considered to be the second largest economic force in the world. The GDP of the country is very high and the economic growth of the country is very rapid and fast as well. Many economic reforms have been made in the country and that has helped the country to gain the investments from the foreign countries (Gorodnichenko and Roland 2012). The company will be benefitted because of the rapid urbanization in the country as this will open the door for the country as per the customer growth is concerned. Thus BHP Billiton will be able to gain the competitive advantage indeed.
The total population of the country is over 1 billion. The people who belong to this country believe in the collectivism rather than individualism. This is why the company must be able to cope up with these issues since the people in Australian companies believe in the individualism (Gorodnichenko and Roland 2012). The rate of poverty is very high in China. This is why they will look to eradicate this social evil. The expanding companies will look for the cheap labor in the China but the aging population will be barrier for them.
China has the largest online population in the world over 700 million people. This is why it will be a great advantage for BHP Billiton to create awareness about their presence in the country properly (Baden-Fuller and Haefliger 2013). These things will work very effectively for the growth of the company indeed. They have aimed to become the global leaders in implementing the science and technology properly for the benefit of the common people. The internationally expanding countries will be benefitted by the use of science and online technology and attract the customers.
As BHP Billiton deals with the oil, gas and mining products they will need to focus more on the environmental issues in China. Some issues like the air and water pollution, increase in the industrial waste, change of climate, loss or biodiversity and other issues have been emerging in the country (Baden-Fuller and Haefliger 2013). This might create a negative impact on the environmental balance as well. This is why BHP Billiton should look forward to save the natural environment of China amidst the rapid development of their economy. They should take green initiatives to reduce the industrial wastes and use eco-friendly materials indeed.
Macro-environmental and geopolitical forces for China
There are a number of laws and regulations that should be maintained in this country by BHP Billiton. The remuneration and benefits of the local Chinese employees, the labor standards and other serious issues should be mitigated properly for retaining the brand reputation of the company (Jurevicius 2013).
Political
One of the greatest strengths of the country is its political stability. However some political debates have arisen because of the Brexit issue. The political chaos has been created in some of the regions indeed (Camisón and Villar-López 2014). This can be a problem for the expansion for BHP Billiton in UK. Apart from that, the company has a very bright future in this country indeed. The legislations and the foreign policy of the country can affect the business opportunities to some level.
Economic
The economic growth of the country in the last few years has not been that much and the growth of the GDP is not that much as well. These are the direct effects of the Brexit. This is why these things will have to be dealt with proper seriousness. The British government is taking the necessary steps to improve the GDP of the country. BHP Billiton can also be benefitted by the large customer’s base. The inflation rate will have to be managed by the government to provide the best and efficient services (Camisón and Villar-López 2014). If the copper extraction project gets the success in United Kingdom this might do very good for the overall improvement of the
Social
The consumer market in the United Kingdom is huge. The labor market and the health care system will have to be utilized by BHP Billiton in order to engage the employees and maintain their health standards properly (Lu 2018). The population of the country is multicultural. The organizations can explore these opportunities effectively as well.
Technological
UK is generally considered as one of the fastest improving countries on terms of technological innovation process (Jurevicius 2013). The people are much dependent on the economy. This will surely cater to the development of the country and BHP Billiton will also be able to use the fast graded technology for their benefit.
Environmental
The environmental issues should be looked after properly by BHP Billiton. As UK is a fast progressing country, the negative effects on the environment should be decreased as well. The weather conditions are challenging and this might create a barrier for BHP Billiton to prepare their products (Rugman and Verbeke 2017).
Legal
All the legislations and legal regulations related to payment, working hours, anti- discrimination policies among the people and other issues should be dealt with properly by the organization as per the British Government (Wagner and Hollenbeck 2014). The Employment Act of the country should be obeyed by the country. Minimum wages should be provided to the labor force there indeed (Cremona 2017).
- The import substitution strategy will be followed by China for the development of the trades.
- The FDI policies will have to be discussed according to the several parameters as per the WTO (Alfaro and Johnson 2012).
- The Trade Balance of the country had turned to deficit from the surplus.
- They wanted to stabilize the external demand for the opportunities of the trades.
- The stimulation of the internal demand will have to be given the priority as well.
- The financial crisis due to the global recession has been a prime factor in determining the trade policies (Wagner and Hollenbeck 2014).
- The protection for the importing trades will have to be given as well.
- Some trade remedy measures have been launched in this scenario as well.
- The exit from the European Union will have a long issue regarding determining the trade policy of the country (MacKenzie 2015).
- The trade of the United Kingdom will prosper in the best ways for the benefit of the new emerging organizations and the organizations that are expanding into the country.
- The free trade policy is thereby followed in the UK. The experts have raised their concern over the use of this free trade policy as well (Saviotti 2018).
- The trade will look upon to be much innovative in structure and the experts will surely make the strategies much innovative and competitive for the betterment of the organization like BHP Billiton (Cremona 2017).
- The cultural difference will be a major factor for BHP Billiton to do business in China since the people in the country believe in collectivism approach. The Chinese leaders always believe in the obedience of the employees without raising any questions. This is not the proper approach of the Western based organizations.
- The operating costs in China are higher than the other Asian countries. This might create a financial problem as well (Saviotti 2018).
- The living standards of the people will surely increase with the growth of the people within the country for using the technology within the operations of BHP Billiton.
- There is a huge opportunity for the company to make capital investment indeed.
- The economic downfall because of the Brexit issue and global recession has led to a negative impact on the business operations China.
- The climate change can be a huge potential risk for doing business in China since the company BHP Billiton operates in the climate industry (Gillespie and Riddle 2015).
- The corruption in the social and political levels is also an issue relating to the business expansion of BHP Billiton.
- The growing population can be a big opening for BHP Billiton to make a successful business in UK.
- The commitment of United Kingdom to emit low carbon in the environment will help the company to build an eco-friendly business in the country (Gillespie and Riddle 2015).
Conclusion
As discussed in the above discussion, it can be said that the company BHP Billiton will have great opportunities for higher profits in the Asian country China because of the vast resources available with a cheap labor market. The macro environment and geopolitical issues in the organization have been discussed. The solution can be drawn that China could be the best suitable marketplace for BHP Billiton to provide the above mentioned new services. As China has a huge population, they will need to have that service to be provided with. This will increase the growth of the entire Asian economy positively.
References
Alfaro, L. and Johnson, M.S., 2012. Foreign direct investment and growth. In The evidence and impact of financial globalization (pp. 299-309).
Ang, S.H., Benischke, M.H. and Doh, J.P., 2015. The interactions of institutions on foreign market entry mode. Strategic Management Journal, 36(10), pp.1536-1553.
Baden-Fuller, C. and Haefliger, S., 2013. Business models and technological innovation. Long range planning, 46(6), pp.419-426.
Bhp.com (2018). BHP | A leading global resources company. [online] BHP. Available at: https://www.bhp.com/ [Accessed 7 Aug. 2018].
Camisón, C. and Villar-López, A., 2014. Organizational innovation as an enabler of technological innovation capabilities and firm performance. Journal of business research, 67(1), pp.2891-2902.
CREMONA, M., 2017. UK trade policy.
Gillespie, K. and Riddle, L., 2015. Global marketing. Routledge.
Gorodnichenko, Y. and Roland, G., 2012. Understanding the individualism-collectivism cleavage and its effects: Lessons from cultural psychology. In Institutions and comparative economic development (pp. 213-236). Palgrave Macmillan, London.
Jurevicius, O., 2013. Pest & pestel analysis. Strategic Management Insight, 13, p.2013.
Lu, N., 2018. The dynamics of foreign-policy decisionmaking in China. Routledge.
MacKenzie, D.W., 2015. Gross Domestic Product. Wiley Encyclopedia of Management, pp.1-4.
Raff, H., Ryan, M. and Stähler, F., 2012. Firm productivity and the foreign?market entry decision. Journal of Economics & Management Strategy, 21(3), pp.849-871.
Rugman, A. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.
Saviotti, P.P., 2018. The role of variety in economic and technological development. In Evolutionary theories of economic and technological change (pp. 172-208). Routledge.
Triandis, H.C., 2017. Generic individualism and collectivism. The Blackwell handbook of cross?cultural management, pp.16-45.
Wagner III, J.A. and Hollenbeck, J.R., 2014. Organizational behavior: Securing competitive advantage. Routledge.
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