Integration Of Social, Environmental, And Economic Performance In BHP Billiton

Strategies of the past

BHP Billiton is an Anglo-Australian multinational mining, metals and petroleum dual listed public company. With its headquarters in Melbourne, Victoria, Australia, the company is ASX listed. As per the results of 30^th June 2018, the company recorded a downward price of 33.21, which is -1.69%. In terms of LSE exchange, the company’s position was downmarket, as the price was 16.55, reflecting -1.34% loss (Bhp.com, 2018). In NYSE, the situation was worse, as the price was 48.08, -1.33% loss. NYSE (Plc ADR) projected the price of 42.82, which is a downmarket scenario of -1.29%. The JSE reflected the price of 315.02, the loss of -1.32%.

Since 1851, the company has focused on the development of the industry, communities around the world. The mission of the company is to create long term shareholder value through discovery, acquisition, development and marketing of the natural resources. For this mission, the company employs the strategy of own and operate large, long life, low cost and expandable upstream assets, which reflects diversity in the commodities within the geographical proximity of the market (Bhp.com, 2018). This is done through compliance to the values of sustainability, integrity, respect, performance, simplicity and accountability.

Disclosures had been developed, in order to enhance the awareness of the shareholders regarding the Consolidated Financial Statements. This awareness is assistance in terms of understanding the standards of the financial accounts. Apart from this, the alternative performance strategies have been used for raising the standards of performance. These measures are not to be considered as an indicator for the actual performance or substitute for the measures or liquidity. The strategic report reveals that the company’s compliance to the standards and protocols of UK Companies Act 2006 and Operating and Financial Review, which is required by the Australian Corporations Act of 2002 (Bhp.com, 2018). Reduction of cash flow was the main focus of the financial year of 2017. Along with this, stress was laid on the capital discipline and value. Safety was the top priority, where the total recordable injury frequency (TRIF) was recorded as down by 1%. In the financial year of 2016, the value for TRIF was 4.3 and it reduced to 4.2 in the following financial year.

One of the other strategies was the reduction in the emissions of the greenhouse gases. Adjustments to the 2006 baselines reflect 21% reduction in the emissions. Since the year of 2013, 975000 tonnes of C0₂have been tracked. Along with this, the same amount of abatements has been finalized as a part of the continuing operations (Bhp.com, 2018). Since the year of 2012, reduction has been done in the business units. The value for this has been recorded as more than 40%. This has provided assistance towards securing the accumulated productivity gains of US$12 billion. 83 US cents is the value, which has been created for the shareholders. The basic earnings is 110.7 US cents. Social value of US$ 80 million has been made for enhancing the parameter of corporate social responsibility.

Current strategies

In the last decade, US$ 62 million has been paid to the shareholders in the form of dividends and buy backs. The portfolio of petroleum has been spread to the markets of Queensland, New South Wales, Western Australia and others. This portfolio includes coal, copper, iron ore, petroleum and potash (Bhp.com, 2018). Currently, BHP Billiton is one of the largest mining companies in terms of market capitalization. The value is US$90 billion.

The corporate strategy of BHP Billiton is to create long term value for the shareholders. This is through the means of acquisition, discovery, development and marketing of the natural resources. The strategies are formulated in three aspects: own and operate; large, long life, low cost and expandable upstream, assets and diversified commodities in the geographical markets. The Company prefers to exert the ownership of the assets, so that the expertise is leveraged. This also helps in exercising the risk assessment according to the standards. Quality assessments help in creating long term value for the stakeholders and shareholders (Bhp.com, 2018). Diversity in the commodities helps in keeping high investment returns for the clients. This improves the stability within the public relations.

Diverse portfolio of the tier one assets includes low cost option for future growth and value creation. Strategic approach towards this direction is assistance in terms of applying the values and culture into the workplace operations. Along with this, the strategy also includes emphasizing safety and productivity. Within this, focus is laid on the technology and capital discipline for extracting highest value from the assets.

Contingency approach relates to the management setting, which negates the need for management principles for regulating the performance of the companies and organizations. On the contrary, there are different situations, which develop different types of managing ways and means (Hislop, Bosua. and Helms, 2018). Changes in the management approaches are less likely to occur. Review is carried out for the constructed strategies, which proves beneficial in terms of tracking the altering nature of the external environment. This review helps in managing the emerging risks and ensuring the wellbeing of the clients and the customers. Long term planning helps in evaluation of the asset portfolio, broadening the pictures of the avenues, which can be availed for achieving expansion. Signals are used for tracking the near term trends and events, which warn the personnel about the threats and the opportunities. This signals are supportive in terms of mitigating the threats and benefitting from the opportunities. Maintaining consistency in the execution of the reviews helps in gaining awareness regarding the decisions, which are productive for the portfolio investments (Bhp.com, 2018).

Types of strategies implemented by BHP Billiton

One of the recent trends of BHP Billiton is the implementation of a new strategy, which would enhance high returns for the stakeholders. The personnel expect that the strategy would be flexible towards generating high productivity. Within this, the focus would be on increasing the copper and shale asset base. This is for improving the prices of the products and services. There are new explorations, which would support top and bottom line growth rates. The dividend policy reflects the commitment to increase the wealth of the stakeholders. This would be supported by a superior capital management system. For this, the company invested in high investment returns for deploying capital through buybacks and dividend return programs for the shareholders (Bhp.com, 2018).

Mention can also be made of the business model, which brings stability within the volatile conditions of mining. Along with this, the company would concentrate on three other aspects: safety, cost and volume. The company personnel are of the view that the profit margin would expand in the upcoming quarters. This can be done only through thorough evaluation and assessment of the overall performance.

Four mills Wuhan Iron and Steel Corp, Maashan Iron and Steel Company, Jiangsu Shagang Group and Tangshan Iron and Steel Group Co is to take 40% stake in the sublease of BHP Billiton’s Jimblebar mine near Newman. This would be done in the form of an undisclosed commercial arrangement. The sublease covers 175 million tonnes of Jimblebar resources, which are demarcated as Wheelara(Bhp.com, 2018). BHP Billiton’s partners in Japan in the Newman joint venture are CL Minerals Australia and Mitsubishi. These brands would hold stake of 4.8 and 4.2% stakes of the sublease. After this, BHP Billiton would still be able to exert control of 51% of the sales contracts.

The main aim of this strategy is to ensure long term security of the supplies, so that stability of the relationship improves with the partners. As one of the main strategies of BHP Billiton is to increase the market share of iron ore, there this partnership proves apt in terms of expanding the scope and arena of the business horizons. Within the strategic approach, BHP Billiton personnel ensure that proper alignment is maintained with the growth and development strategy of China (Bhp.com, 2018). Developing long terms goals in this direction would result in the achievement of positive outcomes. In terms of market development, BHP Billiton possesses flexibility to acquire greater share in the Chinese market in terms of the growing demand of iron ore.

Contingency approach

Mention can be made of Cambodia, where the BHP projects related to bauxite (aluminium ore) faced issues of bribery and corruption. The case claimed that numerous payments were made to the locals officials, which amounted to $US3.5 million. Legal experts from UK, Australia and European Union were called for investigations, which resulted in the discovery of complicated business operations and high temptations towards working overtime. Anti-graft laws were applied on the import and export activities, which stained the brand image of the company (Theguardian.com, 2018). The culprits were jailed in China followed by regulatory approval for $116 million joint venture with Australia. Cooperation with US Securities and Exchange Commission proved beneficial in exploring the internal probes.

When the Cambodian Prime Minister was interrogated, he simply denied BHP Billiton paying bribes for expansion contract. The media reported that authorities in US were exposing inquisitive approach towards BHP Billiton’s $US 2.5 million for the project. On the contrary, the Cambodian leader is of the view that the fund resulted in an agreement between Australia and Cambodia, supporting in building hydroelectricity dam, schools and hospitals. He also opines that these days BHP is involved in making illegal payments to Cambodian locals. He considers the investments as “social funds” (Theguardian.com, 2018).

US environmentalists claim that BHP Billiton is involved in the issue of contaminated groundwater, which are flowing into the neighbouring areas. Sierra Club filed the documents against the company. These documents accuse San Juan of threatening the health and property of the members, holding the company’s grants. As a matter of specification, the charges are against the Coalmine near Farmington, where the discharges of arsenic, lead, chromium and sulphates are degrading the quality and standards of water. These contaminants proved disastrous for the health of the people residing in the nearby areas (Theguardian.com, 2018). According to the Sierra club allegations, the operations adversely affected the supplies of water. The data revealed the lack of support in the regulations. The period of 1973 to 2010 proved disastrous, as 40 million tonnes of waste was generated in the San Juan coalmine. In the investigations, Sierra Club found breaches towards the standards and protocols of environmental directives. This was during the investigations of the mine. When the water quality was investigated, it reflected rise and high levels of pollutants. Damage in the hydraulic balance of the water heavily impacted the agricultural activities (Theguardian.com, 2018).

Political

Growth strategies

Political stability is assistance for BHP Billiton in terms of dealing with the issues like military invasions. Along with this, governmental assistance enables the company to deal with the trade tariffs in the import and export activities. Corruption in the Basic Materials sector can also be dealt easily with the help of the governmental assistance. Governmental protection in terms of intellectual property is beneficial for BHP Billiton in terms of ensuring the safety of the resources (Bhp.com, 2018).

Economic

Studying the economic scenario proves beneficial for BHP Billiton in terms of achieving prospective placements. Here also governmental assistance is advantageous in terms of dealing with high exchange rates and interest rates. Infrastructure quality is an important issues in terms of venturing into the foreign markets. Skilled workforce is fruitful towards achieving growth and development of the Basic Resource Industry. Consideration of the labor cost and maintenance enhances the productivity of BHP Billiton, bringing stability in the economy (Bhp.com, 2018).

Social

Consideration of the class hierarchy, structure of the society is assistance for the brand in terms of gaining an insight into the lifestyle. This understanding is crucial in terms of the levying quality products and services. Conscious approach towards the specific tastes and preferences enhances the cultural diversity of the workplace. Ensuring community development expands the fame and glory of the parameter of corporate social responsibility (Bhp.com, 2018).

Technological

Technological innovation by the competitors of BHP Billiton has adversely impacted the product offerings. The cost structure has compelled the personnel to put on thinking hats in terms of fulfilling the needs, demands and requirements of the stakeholders and shareholders. This has strained the value chain, acting as an obstacle in the business operations. Moreover, technological diffusion has destroyed the balance between the supply and demand (Bhp.com, 2018).

Legal

Anti-Trust Law enables BHP Billiton to gain trust from the customers all over the world. This is through the means of levying quality resources. Copyrights, patents and intellectual property law ensure the safety and security of the resources. Compliance with the standards and protocols of Consumer Protection Act is assistance in terms of ensuring the wellbeing of the clients. Data Protection Act (1998) provides support towards maintaining confidentiality of the organizational data (Schaltegger, Burritt and Petersen, 2017).

Environmental

Climactic changes obstruct the activities of BHP Billiton. The directives controlling the environment are crucial in terms of contributing to the preservation of the ecological diversity. Recycling of the wastes proves beneficial in terms of bringing innovation within the products and services. This innovation is the prime factor in terms of luring the foreign clients and the customers. Waste management in Basic Materials Sector helps in controlling the emission of wastes (Bhp.com, 2018).

New Iron ore joint venture with China

The operations of BHP Billiton revolve around the values of sustainability, integrity, respect, performance, simplicity and accountability. Health and safety is the first priority of the company in terms of exerting the responsibility towards maintaining the ecological diversity of the environment. Ethics is the basic element in terms of acting and preaching the correct and authentic information. Transparency in the business activities helps in improving the stability in the relationship with the clients and the customers (Bhp.com, 2018). This transparency is vital in terms of enhancing the standards and quality of performance. Strategic approach towards the execution of business activities improves the focus on the business activities. Exposing commitment, perseverance and dedicated approach towards the business activities is assistance in terms of staying true to the duties and responsibilities.

According to the legal department, the managers are responsible for regulating the performance of the employees. Ethical Code of Conduct proves beneficial in terms of controlling the misconduct of the employees. This code of conduct is stricter in terms of creating a culture, where the leaders are diligent towards the allocated duties and responsibilities (Bhp.com, 2018). The main aim of the Code of Conduct is to regulate the workmanship behaviour within the premises of the workplace. Diversity is reflected in the partnership with China, UK among others. One of the mentionable facts is the external behaviours, which shape the behaviour of the employees. The employees are taught the importance of preserving the core values in the process of executing the business activities (Bhp.com, 2018).

Conclusion

BHP Billiton is one such company, which focuses on the achievement of sustainable development. This is achieved through the means of catering to the health and safety of the clients and the customers. Ethical Code of Conduct helps in governing the behaviour of the employees. Deals and transactions with the partners reflect diversity in the workplace operations. Strategic approach helps in overcoming the stains of issues like bribery and corruption. Governmental assistance proves fruitful in terms of coping up with the instances of trade tariffs on the import and export activities.

References

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