BHP Growth and Development
The purpose of this report is to explain the business functions of the company BHP in the external environment. The report elaborates about the growth and development opportunities of the company along with the corporate practices initiated by the company in the environment. Further, it also explains organizational culture and leadership style used by the company. BHP is involved in the mining industry and is working excellently well in the market. The company was formerly known as BHP Billiton. Further, the company was initially found in the year 1885 in Australia. More details about the report are discussed below:
BHP is an Anglo-Australian organization that is present in metals, mining and petroleum industry. The company was initially found in the 1885 and Billiton an individual organization was formed in the year 1860. Later in the year 2001, both the companies merged and formed BHP Billiton. In the year 2017, BHP was marked as world’s largest mining organization based on the market capitalization. The company is third largest organization present in Melbourne in terms of revenue. Further, the fact should be noted that BHP has shown great increase in the sales between the years 2004 to 2012 (BHP 2018).
The mission statement of BHP states that want to become the company of choice by creating sustainable value from the stakeholders, suppliers, customers, host communities, business partners etc. The company also aims to provide zero harm to the people and the environment as well. Vision statement of the company states that they want to own and operate long term shareholder value in the company through the discovery, development, acquisition and marketing of natural resources. Further, talking about the core competency of the company, it should be noted that the company has evolved from a small scale organization into a huge organization earning well in the market by initiating continuous productivity improvements in their work (BHP 2018).
The above mentioned model clearly explain the growth and development aspects of the company along with its core competencies as well. Coming upto the aspect of strategies that helped the business to grow, it should be noted that the company utilized the cost leadership strategy in the market to succeed and attain a reputable growth as well. Cost leadership strategy of the company helped them in increasing the productivity at low cost. Low cost strategies subsequently helped the company to increase the revenue and provide benefits to the shareholders as well (Haque, and Deegan 2010). Cost efficient strategies helped the company to cut various expenses and increase the productivity as well. Resulting in which, the company gained attractive returns with limited risks as well. Further, the company also utilized the operating model to succeed in the market. This model helped the company to leverage the expertise of the employees in the business and connect with the whole organization to share the best practices and solve the problems safely as well (Bice 2014).
Apart from successful strategies used by the company to grow, the current strategies of the organization involves the expansion by the way of major projects. The company is aiming to expand its business functions by working on diverse projects that are timed for value and returns as well. These projects are also conducted with the aim to provide positive results to the environment and help the community in future growth prospects as well. BHP has also started using technology to increase the safety measures for the employees and the community as well. Technology also helps the organization in unlocking resources and lowering risks and increase value and flexibility. The current strategy of BHP is helping them to eliminating the risks present in the mining industry and attaining value returns from the market and for the market (Pini, Mayes, and McDonald 2010).
Mission, Vision and Core Competencies
Being present in a mining industry, it is really hard for an organization to work a white collar image in the target market. The mining and petroleum industry itself is the industry that requires high degree of risk and losses in initiating the business functions. Resulting in which, it can be said that the activities initiated by the organization BHP has several impacts on the environment that comes back to the organization in the name of criticism. Many actions implemented by BHP have failed or badly criticised by the employees, communities or other stakeholders. Two of these criticisms presented towards the company BHP are discussed below:
Bento Rodrigues Dam disaster occurred in the year 2015 when the iron ore tailing dam present in Mariana, Minas was attracted with a catastrophic failure that ultimately resulted in flooding and destroyed the whole village of Bento Rodrigues by killing more than 17 people. This act resulted in one of the biggest environmental catastrophic event occurred in the history of Brazil. Toxic brown mud was flowed in the river to pollute the environment and beaches near to the mouth. This disaster changed the lives of people living in Brazil by shattering their homes and all the wealth that they had (Smith, Armour, and Betts 2014). The communities criticised the executives of BHP for the event and an official investigation was initiated against them. One of the new article of The Guardian stated that the firm (BHP) already knew about the upcoming event and its consequences months before the event actually occurred (Drysdale, et. al., 2014). According to the source, an unreported documents stated that the mining company was aware of the threat before the country’s worst environmental disaster but they took no action to mitigate the cause. The dam that collapsed had millions of litres of mining waste that killed several people and severely polluted the environment as well. The joint venture of BHP with Vale certainly failed due to the occurrence of such catastrophic event. The company aimed to cut the costs of their actions and prioritized their profits instead of safety resulting in which the event occurred. The communities and the government held the companies liable for the event that occurred in the environment however, until today no organization has taken the responsibility of the event. The companies were majorly criticized for the event because if they would have taken care of the lives of the people and wildlife then they would have not initiated such actions against the environment (Beer, and Clower 2014).
In the year 2008, BHP was exploring the Guatemaala land for the extraction of nickel. The company also held numerous leases in the lake Izabal region for the extraction. However, this action of the company was highly criticized by the community as they believed that the organization would pollute the lake and livelihood of people living there (Pitman, Roberts, Bennett, and Richardson 2017). Oppositions were being made against the company based on the destructive history of nickel mining and processing activities initiated by the company. The stakeholders criticized the activities stating that the company destruct the land that is later not left for any use. Livelihood of several people living in that area depended upon the fishing, poultry, agriculture etc. activities that the commoners cannot perform after the extraction of nickel. Also, this lake is the largest lake present in the town that provides unique natural resources to the people. The community also promotes eco-tourism and solar energy projects that cannot be performed by aligning large scale resource extraction projects with it. Thus, it can be said that, this was another criticism laid on the company for the activities that they implement in the external environment (Mayer 2014).
Successful Strategies Deployed in Past
Strength
BHP Billiton is considered the renowned natural resource extracting company with a diversified portfolio of assets. The company is considered the largest in supplying uranium, lead, copper, silver, etc. The company has the strong financial performance in its recent years due to the diversification did in its portfolio. The company has made its presence in the international market too (BHP 2017).
Weakness
BHP Billiton needs to improve the gross margin of the company in the long term to get the high financial return. The company is currently facing the several human resource issues, which are affecting the operations and activities. The company is found weak in liaison with the outside world and staff. The staffs in BHP are not active in responding to the corporate inquiries using the new media. BHP should focus on improving the communication with the investors and stakeholders.
Opportunities
BHP Billiton has numerous numbers of opportunities available to them in the international market. The company has several projects in the pipeline to execute. The company can work on improving the strengthening their brand by introducing the new and innovative solutions. The company also find involve into the reduction of greenhouse emission by 5% improving its corporate image in the market (Mbachu and Frei 2011). The other opportunities available with the BHP Billiton are making the ventures in the global market and can collaborate with the local players top grow and expand themselves.
Threats
BHP Billiton is facing the threat of continuously rising cost from the suppliers. The cost of energy, shipping, and labor is rising in the market, which affects the working and stability of the company. Another threat that the company is facing in its home country that is Australia, is the political instability. This affects the company infrastructure and dynamics (Digital Journal 2018).
Political Factors
The political environment in Australia is found to be stable in nature. This favorable environment gives huge support to BHP. The company is considered the biggest in terms of market capitalization; the government always supports the company as it leads to developing the country (Nordea 2018).
Economic Factors
The GDP of Australia is found to be high in recent years. The prices of raw material are found to be cheap due to this they are available easily in the country. The macro environment factors in Australia include inflation rate, savings, interest rate, and foreign exchange rate. The capital market in Australia is found to be stable inactive in nature, which gives the high return to the economy as well as to the company (Nordea 2018).
Social Factors
Social factors in the Australian environment are found to be favorable in response. The culture and attitudes of the people living in the country depict the social factors of the country. In Australia, people are found to be educated and skilled which makes them more productive. The individuals working in BHP Billiton are sharing the beliefs and attitudes that play a great role in building the image in the market (Islam and Mamun 2017).
Current Business Strategies
Technological Factors
The company is found to have the technological advancement in its production, which makes the company competitive in the market. Due to this advancement in technology, BHP is enjoying the edge over its competitors in the market. This enhancement in technology by BHP makes an impact on the product offerings and sales of the company too (BHP 2017).
Legal Factors
The legal factors in every country differ from each other. In a country like Australia, a legal framework and institution are not robust enough to protect the company from the intellectual rights. BHP is considering and following all the legal laws while operating in the environment so that it can remain free from the legal obligations.
Environmental Factors
Different markets have the different condition to operate. Similarly, the BHP is coordinating with norms and standards made in the Australian environment. This norms and standards have to follow for each company working in the environment. This will not only affect the profitability of the company but also ruined image of the company (Fern Fort University 2018).
BHP operates under Dual Listed Company structure that means the company has two parent organizations that are BHP Billiton Limited and BHP Billiton Plc. However, the company has a unified board and management to operate its functions. The strategy with which BHP operates is that they want a lifelong and low-cost diversification of commodity, geography and market. The culture of the company is simple yet diverse because the organization aims to train the employees on a regular basis so as to ensure that safety is aligned along with the profitability for the organization (Bloomberg 2018). The core values that the company provide to the customers in the target market are autonomous technology, integrated management system, internal flexible environment. Autonomous technology used by the company helps them in increasing the productivity by the way of adopting technology and regular activities that they perform. This type of technology increases the efficiency of the business, along with safety, reliability and consistency of business strategy as well. Further, the integrated management system helps the company to benchmark its own performance and aim to improve more. Lastly, internal flexible environment also helps the company to initiate change management effectively at workplace (Afiah 2017).
The CEO of the company Andrew Stewart Mackenzie continuously aims to help the employees to achieve a work life balance while working in the organization. He himself takes actions and becomes the part of business strategies so as to help the employees to lead on the same path. He also aims to increase the safety of his employees and align their interest in the activities of the organization as well. The leader of the company plays an important role in motivating the employees to achieve the organizational objectives. Especially in companies like BHP, the leaders have to repeatedly motivate the employees, keep their interest aligned and take care of their safety as well. Thus, in this way, the CEO of the company plays the lead role in creating unique environment for the employees (Hassan, Saad, and Yusof 2014).
BHP Business Practices
Conclusion
Thus, in the limelight of above mentioned events, the fact should be noted that the company BHP Billiton is working efficiently in the target market. As the company is present in mining industry due to which its faces criticism from the stakeholders in the environment. However, the organization is aiming high to improve the internal as well as external culture an increase the safety measures as well. The competencies of the company help them to grow and increase its productivity in the market. The report evaluates values, competencies and growth of the company. The paper satisfies the requirement of the assessment.
References
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