Change Management Analysis of BHP Billiton

CHANGE MANAGEMENT IN BHP
Change Management Analysis of BHP Billiton
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Background
The BHP Billiton is one of the Australia’s most reputed mining companies that is known
throughout the world for its discoveries, production, acquisition as well as market products. The
products by the company are mainly obtained from the natural resources. Among the various
operations by the company, the most notable ones are the mining of ores like copper, uranium,
iron, aluminium and others (Hubbard et al. 2019). The company, finally formed in 2001 was a
result of the merger of Australian firm BHP and the British firm Billiton. BHP was actually
formed in 1885, came into prominence as a global natural resource company because of their
diversified commodity and the natural resources including steel, gas and oil. Billiton was a
global British mining company that had a portfolio of mining as well as metal assets. In 2001,
the two companies merged themselves in order to attain the strategic goal of proper management
and resource exploitation. This change was initiated by BHP in order to create themselves the
world’s leading diversified resource group. BHP and Billiton both agreed upon this change since
it helped in developing their strategies for sustainable benefits for future aspects. Since BHP was
involved with oil, gas, copper, energy coal and others the margin with Billiton helped them in
gaining resources of petroleum and steel (Dawson, 2019).
Current state
The success of the merger between BHP and Billiton called for a proficient and successful
management of the merger strategies at end of the merger firm. The portfolio that was inserted in
both the companies after merger was the main driving factor that led to this strategic change.
After the merger between BHP and Billiton companies, the newly appointed CEO was Brian

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Gilbertson who ushered in a new ray of leadership where he changed several managerial
positions. After his resignation, the new CEO Mr. Chip Goodyear filled up the position and the
management was successful in spearheading various operations. After the primary margin of
BHP an Billiton the company made acquisition and merger as their main operational strategy.
Following this tradition, they acquired WMC Resource in 2005, Athabasca potash in 2010 and
made a joint venture with Rio Tinto in 2009 (Dawson, 2019). However, the BHP Billiton
Company decided for a strategical change to demerge in 2014 with the aim of creating a new
venture called New Co. The main reason behind this demerging was increment of the value of
the shareholder of the company to facilitate effective management. The report will analyse this
strategic change of the company in the light of change theory and will duly recommend the
following course of action plans.
Drivers for change
The economical as well as the social forces are the main components that drive the need for
change in any organization.
Economic:
Due to the large size of BHP Billiton as a result of margin strategy the labour cost increased
drastically and the company also started facing problems like greenhouse effect financial issues
and other economical destabilisations in the global economy (Lynch, 2017). The main source of
energy for the operation of the BHP Billiton was primarily the non-renewable sources. The
operations that were required for generating this kind of energy enhance the chances of
greenhouse effect that resulted in global warming and thus causing a major change in climate.

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Legal Cause:
Various governments stipulated certain regulations and rules that prohibited the companies to
make excessive use of fossil fuels for generating the energy source. In lieu with this, the
Australian government also introduced certain laws that govern the environmental conservation.
These practices acted as a great thread for the operations of the BHP Billiton. The reduced use of
energy sources created a reduction in the operations of the company and thereby affecting the
value of the shareholders. The company thought that with the demerging of the two companies
the chances of attracting more shareholders and customers will arise. According to the BHP
Billiton chairman, Jac Nasser, “the demerging will simplify BHP Billiton and will have the
potential to unlock shareholder values” (Tyagi, 2016).
Political Drivers:
Since 2008 various companies from across the globe like China, Brazil, Russia etc have started
investing a significant amount for consuming the natural resources. The political intolerances in
various countries also contributed to the low performing of BHP Billiton in recent years. The
instabilities along with the social corruptions led to heavy penalty for the company. All these
issues were negatively affecting the economic growth of the company. The Mozal Aluminium
smelter in an example of the sufferings that the BHP Billiton had to face the problems of
choosing an unstable and war torn country as a location of a long term as well as the high
expenditure project. The country at that time was looking for rebuilding itself post independence
and was embracing an open market attitude as a result of the collapse of communism
(Kapranov,2017).