Strategic Management Analysis of BHP Billiton

This report provides a strategic management analysis of BHP Billiton, a multinational mining organization in Australia. It covers the company's past and current strategies, controversies, PESTEL and Porter's five forces analysis, SWOT analysis, and organizational culture and leadership style.

Running head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
Name of the Student
Name of the University
Author Note

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Executive Summary
The analysis which has been made in the report is built on the external and internal
environment based analysis of a firm. The company which has thereby been considered for
the analysis is BHP Billiton which is an Australian mining organization. The strategies which
have been implemented by the company in the past and its current strategies have been
analysed in the report. The issues which had been faced by BHP are also a part of the
analysis. The strategic position of the company has been analysed with the help of external
analysis, internal environment based analysis and the analysis of the industry. The culture
which has been developed by the firm is a significant part of the entire analysis which has
been made in the report.

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Table of Contents
Task 1.............................................................................................................................3
Introduction....................................................................................................................3
Strategies used by the firm.........................................................................................3
Mission, vision and core competencies......................................................................3
Effective strategies employed in the past...................................................................3
Current strategies that are used..................................................................................3
Types of strategies implemented in the company..........................................................3
Growth strategies implemented by BHP Billiton.......................................................4
Porter’s generic strategy used by BHP Billiton.........................................................4
Task 2.............................................................................................................................4
Two controversies confronted by the organization....................................................4
Task 3.............................................................................................................................4
General environment analysis using PESTEL framework.........................................4
Porter’s five forces analysis of BHP..........................................................................5
SWOT analysis of BHP.............................................................................................6
Task 4.............................................................................................................................6
Organizational culture and leadership style of BHP..................................................6
Conclusion......................................................................................................................6
References......................................................................................................................7

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Task 1
Introduction
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).
Strategies used by the firm
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).
Effective strategies employed in the past
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).
Current strategies that are used
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).
Types of strategies implemented in the company
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,

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Growth strategies implemented by 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.
Porter’s generic strategy used by BHP Billiton
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).
Task 2
Two controversies confronted by the organization
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).
Task 3
General environment analysis using PESTEL framework
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.

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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 of BHP
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

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different countries are able to put immense levels of pressure on BHP Billiton (Morschett,
Schramm-Klein and Zentes, 2015).
SWOT analysis of BHP
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).
Task 4
Organizational culture and leadership style of BHP
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.

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References
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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-
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