Strategic Management of BHP Billiton in Australia

This report analyses the strategic management of BHP Billiton in Australia, including past and current strategies, environmental analysis, and core values. The report includes a SWOT analysis and Porter's five forces analysis, as well as a discussion of the company's core competencies and leadership style. The report also addresses criticisms of the company's business practices and offers recommendations for improvement.

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BHP Billiton
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Executive summary
Strategic management is related to the strategic decision that is formed by the managers of the
company in the competitive environment to generate the better and effective performance. In the
current era, most of the companies are willing to expand their business operations in other
market or to grow more in the global market. The purpose of the report is to through the light on
the strategic management of the BHP Billiton Company in the Australia market. The strategic
analysis of the company is supported by the strategies that are formed by the company in the
current as well as in the past environment. The rise in the competition is enforcing the company
to bring the changes in the strategies as it is essential for them to survive in the market. The
analysis of the environment is required to conduct by the company for which the company make
use of the Porter’s analysis and SWOT analysis. These strategic tools are effective tools which
are used by the company for analysing the external factors that can affect the working. In the
end, the details related to the values and leadership style is reflected in the report. The outcomes
of the report include the evaluation of the business practices or strategic decisions of the
company.

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Contents
Introduction......................................................................................................................................3
Overview of the company............................................................................................................3
Core Competencies......................................................................................................................3
Successful Strategies deployed in the past..................................................................................4
The current strategy of company.................................................................................................4
Criticism of business practice..........................................................................................................5
Environmental analysis....................................................................................................................6
Porter’s five forces.......................................................................................................................6
SWOT analysis............................................................................................................................8
Core values of company..................................................................................................................9
BHP Billiton organisational leadership.........................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

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Introduction
The report includes the analyses related to the strategic decision and objective of the organisation
in the competitive environment. The company that has been selected for the report of the
strategic management is BHP Billiton in Australia. The report will include the strategies that will
help the company in accomplishing the growth and development. These strategies might lead to
the business practices and there might be a criticism of those business practices that have been
pursued by the company over the years. In addition to this, the discussion related to the
environmental factors has been included in the report which will reflect the factors that can
influence the working of the company. BHP Billiton opportunities and threats are discussed
which will give away to the company to grab the same and to attain the goals of the company.
Overview of the company
BHP Billiton is a well-known Anglo-Australian multinational mining, metals and petroleum
dual-listed public company with the headquarters in Melbourne, Victoria, Australia
(Encyclopaedia, 2018). BHP Billiton came into the existence in the year 1885 as a world-leading
company. The company perform the operations in which they extract and process oil, minerals
and gas with over than 60,000 employees and contractors mainly in Australia (BHP, 2018).
Mission: - BHP Billiton mission is to be a company of choice for creating the sustainable value
for the employees, shareholders, contractors, suppliers and the host communities (Tipler, 2011).
Vision: - BHP vision is to approach things a bit differently and wants to become the leading
mining company across the world (BHP, 2018).

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Core competencies
BHP Billiton has numerous core competencies in the market of Australia which mainly includes:
-
 Expertise workforce which leads to the business growth
 Experience of the BHP Billiton in the industry is one of the success factors of the
company
 Size of BHP Billiton is one of the biggest company in terms of the market capitalization
in Australia (BHP, 2018).
Successful Strategies deployed in the past
The company past strategies also offered the success in the competitive environment. BHP
Billion was able to maintain the position in the market of Australia because of its past strategy.
The past strategy of the company is dedicated to prepare long-term shareholder value, corporate
governance and with their extra focus on the environment (BHP, 2016). One of the major
strategies of BHP Billiton was the selection of the place where they operate their business
activities. Comparing the company with the other companies, BHP Billion was focused towards
the technology they are making use in the current environment. To maintain the same, the
company decided to make a team of employees who mainly focus on the innovation and
technology so that they can maintain the current situation of the company in the future. The
diversification strategy of the company also contributed for achieving the success.
The current strategy of the company
The current strategy of the company is to own and operate the large, low-cost, long-life,
expandable, upstream assets that are diversified by commodity, geography and market. BHP

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Billiton follows the simple and diverse portfolio that tier of assets across the world with the low-
cost options for the effective value creation and the growth of the future (BHP, 2018). This
strategy permits the values and culture that mainly focuses on the productivity and safety. The
company strategy is to deploy the technology and exert the capital discipline which is essential to
extract the value from the company and the maximum returns from the assets of the company.
Moreover, the operating model strategy of the company allows the company to leverage our
experience across the business with the multifunctional teams that play a vital role to connect the
organisation with the help of which they share their best practice.
Criticism of business practice
The business practice of BHP Billiton is to offer the resources like oil, petroleum and gas in
Australian market which will lead to the better living standard to the people of the country.
Moreover, it will contribute to the betterment of the economy of Australia and also for the
communities. In the current era, the different people in the country have different needs which
are one of the reasons due to which the company is offering the 5 division to its customers. The
stakeholders of the BHP Billiton contribute in an effective manner.
The company has the range of the channels with the mechanism that support the company in
gathering and monitoring this feedback within the business. Stakeholders share their feedbacks
and issues which contribute to develop the policy. The criticism is clear from the negative
feedback of the shareholders towards the practice of business. In the current era, the BHP
Billiton faced the criticism from Investment Partners for the overseen destruction of approx. 30
billion in the shareholder capital in the current years for the shale acquisition, failed deals,
investment in the potash and scrapped projects (Reuters, 2017). This shows the loophole in the

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past strategy of the company in which they didn't focus towards the decision they made for the
investment. This shows that decisions which were formed by the company were not accurate due
to which the investors raise the criticism against the company.
This has been found in the analyses that the company is frequently the target of the criticism in
the past. One of the past criticisms which were faced by the company was related to the
treatment of the communities affected due to its mining operations (Mattera, 2015). This shows
that the company was not able to meet its obligations related to the welfare of the communities
which is one of the major downfalls of the strategies that was formed by the company. The
outcome of the failure leads to the changes in the strategies on which the company can focus on
the communities.
Environmental analysis
Porter’s five forces
The Porter's five forces provide the strategic view related to the competitive external
environment which is required to be analysed by the BHP Billiton (David, 2011).
Bargaining power of buyers
The bargaining power of buyer is low as the company can offer the products due to the strong
demand and limited supply of the natural resources in the Australian market (Dawson, 2014).
This has been found that there is less number of substitutes due to which the buyers can’t make
the purchase from other suppliers. Along with this, the company is focused towards the customer
relationship which leads to the loyalty of customers towards the company.
Bargaining power of suppliers

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BHP Billiton finds the high bargaining power of suppliers for labour, energy, materials, shipping
and energy cost. In the market of Australia, this is hard to find the substitute for the suppliers for
the raw material. This is the reason due to which the suppliers of the company have enhanced the
overall cost of the operations.
Threat of substitutes
The threat of substitutes is moderate in the market because there is a lack of the substitutes in the
market for the raw material. The company has a good market reputation and position in the
market which is enough to counter any threats of substitutes. In addition, the company offers the
broad and diversified portfolio which will reduce the threat of substitutes because the customer
gets loyal to the company. Though the company face the tough competition from the Rio Tinto
strong customer relationship is the key for the success of BHP Billiton.
The intensity of Existing Rivalry
The rivalry among the competition is tough in the market of Australia. There are numerous
natural resource companies that are competing in the market and they give tough competition to
each other. The competition is faced not only in the market but also in procuring the resources
such as attracting and retaining the qualified and trained employees (Armstrong, Adam, Denize
and Kotler, 2014). The major competitor of the company is Rio Tinto who is giving tough
competition. Both the companies are the mining titans in the market and are generating about
$20 billion.
The threat to New Entrants

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The threat to the new entrants in the market of Australia is relatively low because the availability
of the natural resources in the market is very limited. This is one of the barriers for the new
companies who are willing to enter the Australian market. Along with this, BHP Billiton
Company has upgraded their infrastructure and latest technologies with the help of which they
can offer the quality products in the market. This will affect the new entrants as they won’t be
able to compete with the BHP Billiton at this upgraded level. In addition, they will require more
of the capital to upgrade their business.
SWOT analysis
SWOT analysis reflects the analysis of the external and internal factors due to which this method
has been opted by the BHP Billiton Company for the analysis. This analysis will translate the
conclusion into the strategic actions so that the company can grab the opportunities and can
defend against the threats (Hitt, Ireland & Hoskisson, 2012).
Strengths
 The company is the largest seller of the diverse resources which include copper, silver,
lead and many others.
 The company is known is the market because it has delivered the superior financial
returns from the past few years by returning the capital with the help of the buyback
program.
 The company ensures that they are offering the delight services with the quality products
to its customers (Fern Fort University, 2018).
Weakness

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 It is found that the company is facing the issues due to the lack of the effective
communication. The staffs of the company are not proactive enough to respond to
corporate enquiries.
 The need for the improvement in the decision making is very essential for the company
because this is the reason due to which the company faces the criticism (Frynas, and
Mellahi, 2015).
Opportunities
 After the Kyoto Protocol become necessary to abide the company brought a 5% reduction
in greenhouse gas emission. The company has the opportunity to reduce the greenhouse
gas emissions with the effective management of the program which will help the
company to meet the obligation related to the sustainable development.
 BHP Billiton has the opportunity for the numerous projects which they can execute as
they will become the source of the revenue and to manage the projects in a cost-effective
manner.
Threats
 BHP Billiton faces the threat from the consistently rising cost from the suppliers related
to the labour cost, shipping cost and many others. This leads to the barrier for the
development and growth (Kotler, 2015).
 In Australia, the company has the threat from the political because of the unfavourable
ruling from the government.

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Core values of the company
The company is being consistent with the strategy which is possible due to the value of the BHP
with this the company is willing to grow the value (BHP, 2018). The plan mainly focuses on
these areas: -
 Cost efficiencies- Becoming more focused towards the further gains
 Latent capacity- BHP is willing to reduce the risk with the attractive returns
 Major projects- Timed for the returns and value
 Exploration- Effective results that bring down the risk for the future walls
 Technology- Improvement in the safety, reducing the cost and unlocking the resources
 Onshore US- Flexibility and value
BHP Billiton organisational leadership
The leadership model reflects the attributes that the company look for their leaders and forms the
basis which shows the ways through which the company reward and develop its people. BHP
Billiton accepts the fact that they require the leader who can visibly gold themselves and others
that are accountable for the living the values of the company outlines in the Charter. The leader
of the company ensures that they follow the values which are put the safety on first and making
the people important for them which is essential for the excellent and discipline earning (BHP,
2016). The leadership style that is encouraged by the company is designed so that they can bring
the best in others by making them influence the self-interest and to engage the people on an
individual or personal level. In addition, the company way is to highlight in the program with the
name “Foundations for Graduates”. The company is willing to complement the Graduates
technical skills by bringing leadership capabilities, people skills and communication techniques.

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Conclusion
In the end, it can be concluded that BHP Billiton is performing effectively in the market of
Australia. Along with this, the company has the moderate competitive environment at the current
position because they have already established their good position in the market. The report
includes the analysis of the company values, strategies, vision and mission. In addition, the
criticism for the business practice is also discussed which shows that the company need to be
careful with the activities and decision. In fact, the discussion related to the factors that can lead
to the competitiveness in the market shows that the company needs to specific for their decisions.
The model of leadership is also discussed at the end which shows the leaders role.

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References
Armstrong, G., Adam, S., Denize, S. and Kotler, P. (2014). Principles of marketing. 6th edition.
Welbourne: Pearson Australia.
BHP. (2016). BHP Billiton outlines strategy to grow value. Retrieved from:
https://www.bhp.com/media-and-insights/news-releases/2016/05/bhp-billiton-outlines-
strategy-to-grow-value
BHP. (2018). Leadership Team. Retrieved from: https://www.bhp.com/our-approach/our-
company/leadership-team
BHP. (2018). Our Charter. Retrieved from:
https://www.bhp.com/our-approach/our-company/our-charter
BHP. (2018). Our Company. Retrieved from: https://www.bhp.com/our-approach/our-company
BHP. (2018). Structure and strategy. Retrieved from: https://www.bhp.com/our-approach/our-
company/strategy
David, F.R. (2011). Strategic management: Concepts and cases. India: Pearson/Prentice Hall.
Dawson, J.A. (2014). The Marketing Environment (RLE Marketing). New York: Routledge.
Encyclopaedia. (2018). BHP Billiton. Retrieved from: https://www.britannica.com/topic/BHP-
Billiton
Fern Fort University. (2018). BHP Billiton SWOT Analysis / Matrix. Retrieved from:
http://fernfortuniversity.com/term-papers/swot/1433/1229-bhp-billiton.php

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Frynas, J.G. and Mellahi, K. (2015). Global strategic management. USA: Oxford University
Press.
Hitt, M., Ireland, R. D., & Hoskisson, R. (2012). Strategic management cases: competitiveness
and globalization. Chicago: Cengage Learning.
Kotler, P. (2015). Framework for marketing management. India: Pearson Education.
Lovelock, C. and Patterson, P. (2015). Services marketing. Australia: Pearson.
Mattera, P. (2015). BHP Billiton. Retrieved from: https://www.corp-research.org/BHP-Billiton
Reuters. (2017). BHP investor Tribeca calls for sale of US shale assets, board shake-up.
Retrieved from: https://www.financialexpress.com/industry/bhp-investor-tribeca-calls-
for-sale-of-us-shale-assets-board-shake-up/654983/
Tipler, C.J. (2011). Mission statement: Impossible. Retrieved from:
https://www.theaustralian.com.au/business/business-spectator/mission-statement-
impossible/news-story/5e67be80bf5c253c6a5ba0fecdc535f9