Competitive Environment and Business Level Strategy Assignment PDF

Competitive Environment and Business
Level Strategy
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Executive Summary
In the current report the organisation BHP Billiton has been taken for the analysis of business
strategy by investigating the external environment. Here the ‘Mineral Australia’ strategic
business unit of the organisation is selected for the current analysis. This is one of the largest
and important units of the organisation where the Iron ore is the highest revenue centre for
the business unit. The political and economic situation of the business shows that the excess
dependence on the China export market is creating difficult situation under the global
commodity market crash. The environment and the social factor are showing that the
corporate social responsibilities and appropriate talent nurturing would be important for the
competitive advantage development. The organisation has developed low cost and asset
diversification as their competitive advantage. In making the advantage sustainable the
organisational management approach introduced continuous improvement approach in the
focused manner to the core areas like the marketing, supply, equipment, capital and people.
This approach has helped the organisation to transform the competitive advantage into
sustainable one. But here the over dependence on the China market remains and there market
diversification needs to be properly implemented. The fast growing Indian market needs to be
better targeted through the balance the lower demand of the China market.
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Table of Contents
Executive summery....................................................................................................................2
Introduction................................................................................................................................4
Corporate identity.......................................................................................................................4
Business unit..............................................................................................................................5
Revenue analysis of business unit..............................................................................................5
Business external environment..................................................................................................6
Sustainable competitive advantage..........................................................................................11
Conclusion................................................................................................................................21
Reference..................................................................................................................................22
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Introduction
In the current report the business external environment would be analysed to identify the
competitive advantage of the business which are sustainable in nature (Verbeke, 2013). In
the current business report the company BHP Billiton would be discussed through the
business strategic evaluation models in the following sections. BHP Billiton is public listed
resource based company based in Melbourne, Australia with total market capitalisation of
$98.3 bn (forbes, 2017).
Corporate identity
The corporate identity is the representation done by the business organisation to develop their
image in the market. Here the legal structure of the business is important. The definition of
the corporation status of the business can be done through its legal status exploration. This is
the business organisation that has a separate legal entity with its own liabilities and rights that
are different from the founder or the owner of the organisation (Gevurtz, 2010). The owners
of the business are the shareholders.
An example of this type of organisation is the BHP Billiton which has different business units
in their operation. The businesses are the Petroleum, Mineral America, marketing, Mineral
Australia, China and Japan business unit. These multiple unit of business operate as
autonomous business unit. BHP Billiton is mainly a resource company which is one of the
largest in the world (bhp, 2018). In the current report the Mineral Australia would be the
main business unit that would be the focus of discussion.
The business in its operation can operate through one of number of products or services. Here
the concept of product or the service portfolio becomes important. The definition of products
or the service portfolio is the total number of products that the organisation offers to its
customers (Eggers, 2012). In the portfolio of the product different lines or the category of
products can be seen. The benefit of these types of product portfolio is the risk minimisation
and revenue maximisation. The diverse product portfolio helps the business to minimise the
risk of one product failure. On the other hand it also enables the company to tap into different
potential product market to maximise the revenue (Verbeke, 2013). The business of BHP
Billiton has different products and services. For example the energy category products are
managed through ‘Petroleum’ business unit whereas the ‘marketing’ is the service oriented
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independent business which does the supply and marketing jobs for the customers, global
operation of the business, global or the local suppliers as this business part is associated with
the different asset group businesses (bhp, 2018). Then there is mineral resource based mining
businesses like the ‘Mineral Australia’ or ‘Mineral America’.
Business unit
The business of BHP Billiton is speeded on different resources based business and also
related services. The core capability of the business is in the resource sector. Here the
strategic business unit of the business is the autonomous business unit which is managed
independently in a large or diverse area based company (Resumption, 2016). The section of
the business has its own business strategy and vision. These business strategies or the vision
of this unit could be totally different from the parent company but must have the resonance
with the long term goals and objective of the parent company. In BHP Billiton there are
different business unit of this nature. The different division that were mentioned in the earlier
section of this report are the example of the strategic business unit. In the current report the
‘Mineral Australia’ is the selected independently operated strategic business unit for the BHP
Billiton Company (bhp, 2018).
There could be different product of the service line in a strategic business unit. A product or
the service line is the related products which are related associated by their consumer group
or function of channel of distribution and so on (Michalek et al., 2011). In the BHP Billiton,
the ‘Mineral Australia’ is a strategic business unit which has its own product lines which are
of mineral resource type (bhp, 2018). In the product line copper ore, iron ore, nickel ore and
the coal are the mined resources that are developed by this business unit to deliver around the
world.
Revenue analysis of business unit
The revenue for a business can be defined in terms of entire received money within a time
period by selling the services and goods to the consumer. The revenue is a broad term and
would include the exchange of asset, total received from the net sales, interest gained and so
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on. On the other hand the revenue centres are the unit that is operating distinctly in the
business (Lorna Wang, and Bowie, 2009). This revenue centre generates a particular sales
proportion to the overall revenue of the business.
In the current discussion of BHP Billiton, the strategic business unit of ‘Mineral Australia’
has different revenue centres. For example the copper ore, iron ore, nickel ore and the coal
are the different revenue centre for the business unit. Here the largest revenue centre for the
business is the Iron ore which contributes around 38% of its total revenue (statista, 2017).
[Source: statista, 2017]
Business external environment
Business external environment is also called the operating environment. Independent
existence of the business is not possible. A business is affected by the external environments
like the social, political, economical, environmental, technological and legal environment of
the market where the business is in operation. The external environment are the external
factors that is not under the control of the business but the internal factors better management
would help the business to overcome the challenges or capitalises on the opportunity
provided by the business external environment (Makos, 2015). The business external
environment analysis of ‘Mineral Australia’ unit of BHP Billiton would be done through the
PESTLE model in the following section of this report.
Political and legal factor
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