Corporate Strategies of BHP Billiton

BHP Billiton is a multinational organization which operates in the mining and metals based industry of Australia. The headquarter of the organization is located in Melbourne, Australia. The company has been able to make total revenues of 38.385 Billion US Dollars in 2017. The total employees who are a part of the company as calculated in the year 2017 was around 65000. The company provides its services to the customers present all over the world (Bhp.com, 2018).

Mission, vision and core competencies

The major mission which has thereby been set by the company in order to operate in the industry is based on the choice of different types of customers. The company has also developed an aim to provide sustainable levels of value to the customers, the shareholders, business partners and the employees as well. The vision which has been followed by the company is related to the zero harm which BHP wants to provide to the individuals within the community of its operations in Australia. The core competencies of the organization are based on the ways by which it is able to outline different strategies in order to develop value of the company. The competitive advantage can also be gained in the market with the proper execution of the vision which has been set by BHP. The long term based expertise of the company is thereby leveraged with the proper development of BHP with the help of its practices (Sakas, Vlachos and Nasiopoulos, 2014).

The different strategies that have been applied by the company in the past are based on the methods by which the company has been able to sustain the position in the industry in an effective way. The company has always been dedicated in such a manner so that it is able to create effective levels of value for the shareholders. The major focus of the strategies and operations of BHP was on the environment in which it had its operations. The innovative strategies which have thereby been applied by the company were helpful in attracting customers in a highly competitive industry (Barros, Hernangómez and Martin-Cruz, 2016).

The current strategies that are thereby used by the company for the purpose of operating in the industry in an effective and profitable manner are based on their long term sustainability. The company has thereby aimed its resources at the proper enhancement of the strategy which had already been implemented in its operations. The returns which were provided by the company to its shareholders has been a significant part of its processes in the industry. The major aim of the organization has thereby been on increasing the assets of the company based on shale and copper. This was further able to increase the growth, efficiency and revenues of the company in the industry. The improvement of commodity prices in a positive manner was an important part of the proper strategy implementation (Daspit et al., 2017).

BHP Billiton has implemented many different types of strategies which have helped the company to gain success in the industry. The different growth based strategies which have been implemented by the company are as follows,

Environmental Analysis for BHP Billiton

The growth based strategy that has been implemented by the organization was mainly related to the increase of revenues in the market in an effective manner. The innovative types of strategies which have been implemented by the firm have thereby been able to enhance its value in the industry. The company further aimed at increasing the value of the customers and shareholders who are considered to be a major part of its operations in the market. The major motive of the organization is thereby to increase the levels of productivity of the company and further proper maintenance of the growth levels as well. The analysis has further been able to depict that the major aim of the company has been to increase the levels of productivity in an effective way. The portfolio of the company is thereby based on the ways by which it is able to maintain its assets (Demir, Wennberg and McKelvie, 2017). The company is thereby able to receive the growth based options effectively in order to sustain in the industry.

The generic strategy which has been implemented by BHP is termed as the cost leadership strategy. The cost leadership based strategy is thereby based on the methods by which the company is able to offer the products to consumers at lower prices as compared to other organizations. The external factors have been able to influence the company in a negative manner in spite of the huge profits which have been earned. The company has thereby aimed at decreasing the cost levels in such a manner which is helpful in attracting the effective levels of customers in an easier way (Dobbs, 2014).

BHP Billiton has faced some major issues based on its operations in the mining industry for so many years. The company had faced a major issue in the year 2015 when they were alleged of keeping the unreported documents. The documents were thereby able to depict that the organization was aware of different threats that can be faced by them which had further led to huge levels of environmental damage. The company however failed to take specific actions in order to prevent the incidents which had taken place due to high levels of ignorance. The safety levels of individuals had been compromised by the company and this had affected its reputation in a negative manner (Theguardian.com, 2018).

Another major incident which had been faced by the company was thereby based on the disputes which occurred in the proper management of the trade unions. The employees who were a part of these unions has been in strike for quite a long time which had further led to huge losses of the company in the market. The employees were also benefitted in an effective manner from the lower costs after the strike had taken place (Ft.com, 2018).

The external environment based factors of the area in which BHP Billiton has its operations can be analysed in an effective way with the help of PESTLE framework,

Political factors – The political condition of different countries are able to impact the proper processes of BHP. The company thereby needs to operate in different areas in a neutral manner without showing any special interest in the political parties. The different officials of these parties also should not be treated in a different manner.

Criticisms of Business Practices of BHP Billiton

Economic factors – The prices of oil based products of the company will be affected in a huge manner by the economic condition. The major reason behind the fluctuation based levels of the prices is thereby based on the economic instability and the levels of uncertainty in the market as well (Hill, Jones and Schilling, 2014).

Social factors – The third major aspect of the external environment which is able to affect the processes of BHP Billiton is based on the different social issues which can occur in the country of its operations. The organization thereby needs to improve effective types of remedies in order to improve its operations in the industry in an effective way.

Technological factors – The technological environment of different countries is also able to impact the proper operations of the firm. The technology based park which has been developed by the organization in Australia is the most important part of the operations of the company. The technological capabilities have been able to provide the company a competitive advantage over the other organizations (McDonald and Wilson, 2016).

Legal factors – The legal condition of different countries is able to affect the processes of the company and the policies which have been developed as well. The safety and health related laws have also played a key part in the development of proper standards of the organization in the industry. The organization has been able to gain huge amounts of success with the help of its effective policies.

Environmental factors – The sustainable operations of BHP Billiton are also an important part of the proper environmental factors that are able to affect the company. The company was thereby provided high levels of benefits which were long lasting in nature and have brought success to the company (McDONALD, 2016).

Porter’s five forces analysis can be used by BHP Billiton in order to analyse the ways by which the company is able to function in the industry and the levels of different powers which are a part of this industry.

Bargaining power of the buyers – The power which has been gained by the buyers of BHP in the industry is moderate in nature and it varies based on the demands of different products. The customer relationships which have been maintained by the company have been able to reduce their power.

Bargaining power of the suppliers – BHP has been able to have an impact on the industry with the help of the powerful suppliers who are a part of its effective operations. The power of the suppliers is thereby related to different sources like energy, materials, shipping costs (Meyer, Neck and Meeks, 2017).

Threats of the new entrants – The organization has also faced threats from the new organizations which have entered the industry. The fall which has been experienced in the prices of different commodities is thereby considered to be an important part of the operations.

Threats of the substitutes – BHP has faced low levels of threats from the substitute products which are available in the market. The diverse levels of portfolio of the company has been able to reduce the effect of this force (Michael, Storey and Thomas, 2017).

Levels of the rivalry – The rivalry based levels which have been faced by the company in the industry is high. The different companies which are already operating in different countries are able to put immense levels of pressure on BHP Billiton (Morschett, Schramm-Klein and Zentes, 2015).

Strengths – The asset based portfolio that has been maintained by BHP Billiton is effective and diverse in nature. This acts as a major strength which the firm has been able to develop in the industry. The products are further offered to customers of BHP all over the world.

Weaknesses – The lack of proper financial assets is a major weakness in the proper operations of the company. The corporate levels of communication are also quite weak in nature (Banumathi and Nadarajan, 2016).

Opportunities – The various projects that have been held by the company are considered to be major opportunities for the growth of BHP in the industry. The improvement of the position of the company is also possible with the help of these opportunities.

Threats – BHP has also faced major levels of threats from the companies due to the rise which has been experienced in the costs. This has been able to act as a major threat and obstacle to the operations of the company in an effective manner (Dalal and Malik, 2015).

The organizational culture of BHP Billiton is mainly based on the proper management of talent in the company. The demands for efficient employees have been fulfilled with the help of talent management based plans which have been introduced by the company. The programmes have been able to play a major role in the growth of employees and formation of leaders as well. The diversity levels of the workforce are also an important part of the outstanding and effective performance which has been shown by BHP in the industry. The diverse culture has thereby been able to improve the levels of talent which are present in the organization. The forward approach of the company has also been facilitated in a huge manner by the ways by which it has been able to maintain its position in the industry (Ft.com, 2018).

Conclusion

The report can be settled by stating that BHP Billiton has been able to grow effective strategies in order to operate in the mining industry. The company has however faced some major issues based on its operations. The external factors and position of the firm in the industry have been able to affect its profitability in the industry. The strong leadership based position which has been developed by the company in the market is related to the internal factors and the ways by which it has been able to use its strengths in an effective manner. The supportive and diverse culture of the firm has also been able to play a key part in the proper development of the talented employees and leaders within the proper organizational operations.

References

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Dalal, G. and Malik, S., 2015. Online Marketing: A Swot Analysis. The International Journal of Business & Management, 3(7), p.12.

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Dobbs, ME 2014, ‘Guidelines for applying Porter’s five forces framework: a set of industry analysis templates’, Competitiveness Review, vol. 24, no. 1, pp. 32–45.

Ft.com 2018. BHP Billiton has no regrets over $1bn fight with Chile workers | Financial Times. [online] Ft.com. Available at: https://www.ft.com/content/5a767dc2-2a90-11e7-bc4b-5528796fe35c [Accessed 7 Sep. 2018].

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Meyer, G.D., Neck, H.M. and Meeks, M.D., 2017. The entrepreneurship?strategic management interface. Strategic entrepreneurship: Creating a new mindset, pp.17-44.

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Theguardian.com 2018. BHP faces billions in compensation after mine dam collapse, say protesters. [online] the Guardian. Available at: https://www.theguardian.com/business/2015/nov/19/bhp-faces-billions-in-compensation-after-mine-dam-collapse-say-protesters [Accessed 7 Sep. 2018].