About the company
The global business environment has become highly complex. Any organization operating in the environment, needs to ensure that it is successfully being able to formulate strategies which will allow it to achieve success in the long run. However, the strategies thus formed need to align with the internal capabilities of the firm as well as the domain of its external environment. The aim of the report is to analyze the business environment of one such company named BHP Billiton based in Australia (Ginter, Duncan and Swayne, 2018). The company primarily trades in mining and petroleum. The report will be analyzing the strategies as applied by the organization, the vision and mission along with the core competencies. Moreover, the controversies and certain unfavorable strategies will be analyzed which will then be followed by the analysis of the external as well as the internal environment and lastly the organizational culture shall be examined.
The company BHP Billiton is a multinational Anglo Australian mining, metals and petroleum company which is a listed public organization which is headquartered in Melbourne. The company was found in the year 1885 and since then it has expanded substantially thereby becoming the globe`s largest mining firm with respect to the market value in the year 2015 (Bhp.com., 2018). The organization is the result of a merger which took place between two companies the Australian Broken hill Proprietary Company limited popularly known as the BHP and the Anglo Dutch firm Billiton. The firm is one among the list of 90 firms who are involved in the extract fossil fuel and largely responsible for the two thirds of the globe`s greenhouse gas. The firm also holds the position for the 19th largest polluter around the globe.
The mission of a company can be rightful determined as the short term objectives that the company sets for itself in order to achieve long term goals (Williamson et al., 2013). The missions of the company pave path for it to achieve its vision. The organizations need to ensure that they form adequate strategies in the long run in order to ensure that they are able to become successful. The mission of the organization will be defined as follows:
- To ensure cost efficiencies in order to enable further gains in the organization.
- To ensure that it makes safe use of technology which lowers the cost, improves safety as well as unlocks the different resources
- To ensure that the different projects which have been invested in provide timely and adequate returns (Hahn, 2013).
- To ensure it explores into various sectors which allows the organization achieve positive results and reduces organizational risks for the future.
- To ensure Zero harm to the people and environment
The vision of an organization can be rightfully determined as the long term goal for which the organization functions (Rothaermel, 2015). Achieving the different missions that the firm sets for itself allows the organization to achieve its vision. The vision of the organization have been stated as follows:
To create a long term value for the shareholders through the acquisition, discovery as well as development and marketing of natural resources.
The core competencies of an organization can be rightfully defined as the key resources and capabilities of the organization which goes a long way in assisting the organization to achieve its set of missions as well as visions. The core competencies of the organization, BHP Billiton are as follows:
- Asset Portfolio- The BHP Billiton firm has an access to a large number of portfolios and investments. These assets assist the organization in gaining natural resources. The asset portfolio has the capability to help the firm in earning substantial revenue (Wheelen et al., 2017).
- Size: The size of the company is one of the largest in terms of market capitalization in Australia.
- Experience in the industry: The organization has been operating in the industry since a long period of time and for this purpose, it is a rather well experienced firm.
The organization makes extensive use of the Ansoff`s Diversification strategy whereby the firm aims to diversify its products in terms of market, geography and commodity. The firm has divided its operations into nine different customer segments and has applied a tactic of horizontal integration in the domain of potash as well as shale (Zott and Amit, 2013).
1. Mission
It is also noted that in order to be successful even in those periods which are of low income, the organization halts the expansion plans and cuts down the costs of the organization.
The generic strategy which is used by the organization is the Cost leadership strategy. The cost leadership strategy of an organization can be described as a strategy which aims to provide good diverse range of products at comparatively low prices (Harrison and John, 2013). The organization is able to apply this cost leadership strategy with the help of sharing the knowledge and skills, halting of the investments, strategic focus on attaining profits and switching the focus on profitable operations.
2. BHP Billiton is involved in a rather controversial segment whereby due to the interference of the firm with the environment, the various strategies as well as moves of the organization have been interfering with the environment and for this purpose, the given sections will be discussing the different strategies and practices which were criticized of the Organization BHP Billiton are as follows:
The strategy of BHP Billiton of building a grand potash mine in Canada has been criticized by various investors like the activists investor named Elliot. The investor states that the given plan of the organization will be disastrous in nature as it plans to foray into the US shale (Barrons.com., 2018). The Elliott Advisors had been protesting against the company`s expansion strategy and has slammed its strategy of setting aside around $2.8 billion to develop the mined.
However, BHP spoke against the blame and has stated that it is applying its strategy of Thinking Big which is stated to be dubious by the activists and planning to expand the organization (Seekingalpha.com., 2018). Hence, the activists stated that they are highly concerned about the different shareholders and stated that the strategy to expand into the given sector shall be a strategic misstep. However, the analysists of the organization state that this expansion shall lead to an intersection of the mega trends and range across different demographics economics, environment and the diet and for this reason this move will be a preferable one for any shareholder. This move was highly criticized by the activists and BHP had no comment in response to it.
Secondly, the BHP Billiton organization had planned to build a copper mine in Arizona which had been given by the US Senate to the organization in lieu of a Christmas present. This land however, originally belonged to the Apache people and for this purpose, the organization was denied local support as they were taking over the land of the origins of the land (Telegraph.co.uk., 2018). Moreover, for this purpose around 50 protesters gathered around the office of the Senator John McCain`s office to end the deal of the controversial land. Although the deal had been passed by the Congress. Hence, the organization received a large extent of backslash for its move (Londonminingnetwork.org., 2018).
The environmental analysis forms an essential aspect of the organization for the purpose of examining the external environment of the organization. The following section will be analyzing both the external as well as internal environment of the organization. The strategic tools used for this purpose are the tools named PESTEL Analysis, Porters Five forces and the SWOT Analysis
Vision
The PESTEL analysis is a strategic external environmental analysis tool which assesses the macro environment of an organization. The PESTEL is an acronym for the Political, Economic, Social, Technological, Environmental as well as Legal factors governing the general environment of the firm.
The Political factors tend to play a major role in determining the different factors which impact the organization. The organization is primarily concerned in Basic resources in different companies which exposes it to a wide range of political risks. There exists political risks like risks related to corruption which is quite profound in the domain of Basic resources. Moreover, trade regulations as well as Tariffs also tend to have a major impact on the organization. Like stated in the previous section, there were various issues in Arizona related to the protected lend which lead to problems for the organization.
There are various economic factors as well like the exchange rates and activities of the host country currency, efficiency of the financial markets for expansion. Economic systems of the country, level of skill as present in the organization and the interests rates which have a huge impact on the firm.
The different social factors like that of the demographics, cultural roles, entrepreneurial spirit of the society, leisure interests and attitudes have a large impact on the organization.
Technology is considered to be a key factor present in the domain of BHP Billiton because there have been several advancements in the industry (Bhp.com., 2018). The organization is required to look out for basic developments in BHP Billiton Plc competitors, Impact on the cost structure of the firm and the rate of technological diffusion.
The environmental factors impacting the organization BHP Billiton are the different environmental norms and standards which might have an impact on the profitability of the firm in the given market. The laws in different parts of the world are different with respect to an environmental disaster and hence, with respect to this, the organization has to consider waste management in the Basic Materials sector, endangered species and attitude towards renewable energy (Johnson, 2016).
Lastly, there are factors like antitrust laws, employment laws, data protection as well as the health and safety laws which have to be considered by the organization.
The Porters five forces analysis offers a view of the industry and helps in the understanding of the impact of competitive forces on the business environment.
There are not many substitutes available for the product and hence, the company can increase the price and still get the designated consumers. Hence, the power of buyers is comparatively low.
The bargaining power of the suppliers is quite high with respect to labor, materials, shipping and energy costs (Stead and Stead, 2013). As there are no substitutes available, it enhances the bargaining power of the suppliers.
The industry is characterized by high investments and limited capacity. Moreover, there are various legislative aspects to abide by in the given segment which makes the threat of entrants comparatively low.
The threat of substitutes is very low as there are not many raw material substitutes available in the market.
Core competencies
The rivalry among the existing suppliers is very high and this is because each company is competing with respect to certain limited resources (Lasserre, 2017). Moreover, the strong competition also exists because of the high profit potential.
The SWOT Analysis is a useful tool which assists an organization to analyze its internal capabilities and on the basis of that understand the different opportunities and threats which can be faced by the organization.
The strengths of the company are as follows:
- The firm has a diversified portfolio of assets (Bhp.com., 2018).
- The organization has years of experience.
- Moreover, it has made commendable financial returns in the past few years.
The weaknesses of the organization are as follows:
- BHP Billiton needs to improve its financial measures
- It is being faced by various human resources issues
- The corporate communications of the organization is quite weak
There are several opportunities for BHP Billiton like the follows:
- The company can improve its brand positioning
- Reduce emission of greenhouse gases (Slack, 2015).
- Has a feasibility phase of 29 projects
The organization faces the following threats:
- Rising cost of suppliers including aspects like energy, suppliers, contract labors and shipping
- It is exposed to political threats even in the home country.
Core values
The core values of BHP Billiton have been stated as follows:
- Sustainability: The Company looks out to place health and safety aspect first and looks out to ensure that the firm is environmentally responsible and supports the different communities.
- Integrity: Taking the right path in the right manner
- Respect: Supporting diversity and development in a team thereby supporting relationships.
- Performance: Achieving business results which are superior in nature (Bhp.com., 2018).
- Simplicity: Maintaining the simplicity of the different operations
- Accountability: ensuring and accepting responsibility with respect to delivering commitments.
Andrew Mackenzie is the Chief Executive officer of the firm and has brought about huge changes in the system. The company supports training and development of the different employees and places weightage on the development of the workplace culture as well as stresses on the maintenance of a good work life balance (Bhp., 2018). The benefits which are provided to the employees are extensive in nature with focus on developing a team culture (Hubbard, Rice and Galvin, 2014). However, an aspect of the organization which needs consideration is that due to the uncertain nature of the industry, there exists widespread layoffs even though the economy has been rising considerably.
Conclusion
Therefore, from the given analysis, it can rightfully be stated that BHP Billiton is performing as a market leader in the designated market. The coal and shale market is a very complex industry and hence, the firm faces no threat from any new entrants but the existing competition in the chosen industry is very high which makes it quite difficult for the business to function well in the designated domain. The report highlighted the mission and vision of the organization which was then followed by an analysis of the controversies of the firm. The third task analyzed the external as well as internal market of the firm using various strategic tools and lastly, the organizational culture in form of its core values and work culture have been defined.
References
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