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BS4104 - Business Strategy, BHP Billiton Strategic Analysis

   

Added on  2020-03-07

16 Pages2987 Words149 Views
1BHP Billiton Strategic AnalysisStudent’s Name

2Table of ContentsIntroduction3a)Purpose of the Report..........................................................................3b)Company Snapshot.............................................................................3c)Current Trends in the Australian Steel Manufacturing Industry....................3Internal Analysis of BHP Billiton4a)Assets..............................................................................................4b)Competencies....................................................................................4c)BHP Billiton Share price trend...............................................................4d)BHP Billiton Sales-Five Year Trend........................................................5e)BHP Billiton Profits: Five Year Trend.....................................................6f)Strengths .........................................................................................7g)Weaknesses.......................................................................................8External Analysis of BHP Billiton........................................................................8a)Macro Analysis - PESTLE analysis ........................................................8b)Micro Analysis – Competitors and Strategic Advantage over Rival Companies10c)Opportunities..................................................................................11d)Threats..........................................................................................11Conclusion12

3IntroductionPurpose of the reportThe report has been prepared to carry out a study on the internal and external environmental evaluation of the Australian conglomerate BHP Billiton.Company SnapshotBHP Billiton is an Anglo-Australian multinational metal, mining, and petroleum Dual-listed Company that was floated in the year 2001 by a merger between Anglo-Dutch Billiton plc., and Broken Hill Proprietary Company Limited (BHP). The Australian-registered BHP Billiton Ltd. isregistered on the ASE or the Australian Stock Exchange and the English BHP Billiton plc. is registered on the LSE that is the London Stock Exchange. Both the companies continue to exist as separate legal entities but carry out their operations as a combined group under the name of BHP Billiton. The central headquarters of the conglomerate BHP Billiton is based in Melbourne, Australia (BHP Billiton, 2015).Current Trends in the Australian Steel Manufacturing IndustryThe Australian Iron Smelting and Steel Manufacturing Industry have shown a considerable decline in the last five years. Industry sources predict that the revenue from the industry is expected to decline at the annualized rate of 8.5% over the coming five years. The IVA or industry value-added index which measures the overall contribution of the industry to the national economy is also being expected to shrink by an annual rate of 1.9% in the next five years. A reduction in demand for steel from the downstream markets, lower prices of steel, increased competition from the substitute products and import markets have been the major

4cause of this decline in the recent years (Iron Smelting and Steel Manufacturing in Australia Market Research, 2016).Internal Analysis of BHP BillitonAssetsThe BHP operates a large variety of oil and natural gas, mining, and processing operations in more than 25 countries across the world. BHP Billiton is the biggest company in terms of marketcapitalisation in Australia. This enhances the stakeholders and investors confidence in the company (BHP Billiton, 2015).CompetenciesThe BHP Billiton is the world’s biggest diversified natural resources company and is engaged in mineral production and exploration. BHP is one of the largest producers of base metals, petroleum, specialty products, aluminium, diamonds, iron ore, energy coal, stainless steel, metallurgical coal, manganese, etc. in the world (BHP Billiton, 2015).BHP Billiton Share price trendThe following figure shows the ten year share price trend for BHP Billiton. It is seen that BHP Billiton has seen a sharp rise in its share price from 2009 to 2013, and the share price being highest in 2011, when the profits were highest. However, a decrease in share price is seen from 2014 to 2016. A drop in share price is witnessed in 2016, due to decrease in profits and the share price is forecasted to be rising by 5% in 2017 (Stockopedia, 2015).

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