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Business Strategy Assignment - BHP Billiton

   

Added on  2020-04-07

22 Pages3134 Words743 Views
Running head: BUSINESS STRATEGYTopic: Business StrategyName of the Student:Name of the University:Author’s Note:

1BUSINESS STRATEGYExecutive Summary A report has been provided for BHP Billiton concentrating on its current operating situation. Ithas been found that the organization is extremely successful in managing its resources and it isfound to keep good relationship with stakeholders of global market. Competitive advantage isgained through average pricing and deeper market distribution channel. BHP Billiton has beenfound to successfully serve in the steel production of Australia but in future it will need to reducecarbon emission. The organization has successfully able to deal with market expansion because ithas concrete business strategy framework comprising of vision, purpose, objectives and keysuccess points.

2BUSINESS STRATEGYTable of Contents1.0 Introduction................................................................................................................................52.0 BHP Billiton’s Competitive Advantage....................................................................................52.1 Porter’s Generic strategy.......................................................................................................52.1.1 Cost Leadership..............................................................................................................52.1.2 Differentiation.................................................................................................................62.1.3 Focus Strategy................................................................................................................83.0 Trends in the Australian steel manufacturing industry..............................................................94.0 Current business strategy of BHP Billiton in Australia...........................................................114.1 Market Penetration...............................................................................................................114.2 Consistent Business Model..................................................................................................125.0 Internal Analysis of BHP Billiton............................................................................................135.1 VRIO Framework....................................................................................................................135.1.1 Management Talent......................................................................................................135.1.2 Resources and Capabilities...........................................................................................136.0 External Analysis.....................................................................................................................156.1 Macro Environment Analysis (PESTLE)............................................................................156.2 Micro Environment Analysis (Porter’s Five Force)............................................................167.0 Conclusion...............................................................................................................................17Reference List................................................................................................................................18

3BUSINESS STRATEGYAppendix........................................................................................................................................21A. BHP Billiton Expenditure.....................................................................................................21B. BHP Billiton Operating Markets...........................................................................................22C. Governance Structure............................................................................................................23

4BUSINESS STRATEGY1.0 IntroductionOne of the most successful multinational mining organizations is BHP Billiton, whichwas established through merger between BHP and Billiton in the year 2001. It is having itsheadquarter in Melbourne, Australia and London, UK. Through global market diversification ithas achieved A$30.9 billion revenue, US$6.2 billion operating income and US$6.2 billion profitin the year 2016. The organization is listed under metal and mining industry and is related tomining, petroleum and metal extraction and steel production in the last couple of years. Thisreport will discuss the BHP Billiton’s competitive advantage, trends in the Australian steelmanufacturing industry, current business strategy of BHP Billiton in Australia including internaland external analysis.2.0 BHP Billiton’s Competitive AdvantageThe competitive advantage of BHP Billiton can be analyzed through the Porter’s Genericstrategy. This theory suggests an organization towards gaining competitive edge through eitherof or combination of cost leadership, differentiation, and focus strategy. The competitiveadvantage of BHP Billiton has been shown through the Porter’s Generic strategy.2.1 Porter’s Generic strategy 2.1.1 Cost LeadershipCost leadership strategy suggest for being low cost producer within an industry for agiven minimum quality of products. While considering BHP Billiton, it can be said that theorganization offers its products at below the average industry prices for gaining enhanced marketshare in Australia. According to Price (2015), the organization offers lower prices to its clientsand customers for its products like minerals, petroleum, iron, gold, oil, natural gas and others. In

5BUSINESS STRATEGYthis way, the organization has grabbed huge clients and customers. Moreover, the cost leadershipstrategy encouraged several clients and customers towards taking its products. Pepper et al.(2015) pointed out that increasing customer and client base have increased the sales volume ofBHP Billiton, which in turn increased its market share. BHP Billiton has grabbed 53% marketshare in Australian market through its cost leadership strategy. Figure 1: Market Competition(Source: Pepper et al. 2015)2.1.2 DifferentiationDifferentiation strategy suggests for adding some unique factor to the product ranges oran organization. Such strategy facilitates in providing unique value to the customers over therival companies. In this way, differentiation through unique value helps an organization increating competitive edge over the rivals. In case of BHP Billiton, the competitive edge of theorganization lies in wide ranges of product portfolio. Moreover, Bellis (2016) opined that BHPBilliton is capable of providing wide ranges of mining products like Coal, Iron Ore, Copper,Nickel, Gold, Natural Gas, Petroleum, Uranium and many more. Moreover, the organizationalways maintains high quality of the products in all categories. The high quality copper

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