ORG20002 - Business and Society Relationship


Added on  2020-03-01

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Leadership Management
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BUSINESS AND SOCIETY RELATIONSHIP 1INTRODUCTIONThe impact on society from business organizations have changed over the last few decades. Globalization has resulted in large organizations increasing their reach to almost every corner of the world. This expansion has caused the organizations to interact with more people and governments and face newer challenges from time to time. As any organization looks to expand in a sustainable and long-term business, it has to develop a harmony with its ecosystem of consumers, stakeholders, and regulators of the different regions where they operate. The stakeholders are no longer limited to the shareholders or the owners only, but nowadays they alsoinclude consumers, regulators, and the environment as a whole. This essay discusses the role of management at BHP Billiton, in managing the stakeholders associated with it and the evolution of relations that has developed between the organization and society during the course of its decades long existence to become a diversified resource behemoth.COMPANY OVERVIEWBHP Ltd. was established in the year 1885 with mining interests in zinc lead and silver. The company was quick to recognize the potential of these resources, which were abundantly available in the city named as Broken Hills.[ CITATION Bhp17 \l 1033 ] Those days mining companies were less regulated and had a free hand in investing and utilizing the resources. The management of large companies such as BHP went from strength to strength, based on acquisitions or new ventures while the management followed the task of planning the venture, organizing the resources and then leading the venture, after which they had to control the unit accordingly.[CITATION Fayol \l 1033 ]It merged with Billiton group to become BHP Billiton in the year 2001 .Where BHP was succeeding in its goal to become a diversified minerals and
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BUSINESS AND SOCIETY RELATIONSHIP 2petrochemical company , it had to involve in multiple communities and their sentiments. It has totake decisions responsibly and doing so may not result in pleasant results always. For example , the company started a AUD 2 Billion mine in western Australia , which bought a lot of progress to the local community , who had soon grown dependent on it[ CITATION DRR08 \l 1033 ].Shortly after its opening , the company had to close the mine after just 9 months of operations , leaving the community and workers in disarray. These kinds of incidences have increased the focus on the role of corporate entities about the society. Other factors, which are emerging, are also equally important; like the opportunities businesses bring to the communities, they operate in. When BHP had started the mine in West Australia, the place had transformed in ways never seenbefore. Job prospects were increasing, the place had, for the first time, witnessed significant economic activity, which resulted in indirect business opportunities as well. These sorts of effects, which a large organization invariably brings, are also a threat to the stability of a society. Like in case of the mine’s unexpected closure, the public had to face the consequences of the decision of a corporate entity. Many other such incidences such as the BP oil spill, the Volkswagen emission scandal, the Takata Air Bags problem, or the Global Financial Crisis have given rise to the concept of The Macro Social Environment.[CITATION ARC14 \p 6 \l 1033 ] This Macroeconomic environment analysis can be divided broadly into four categories, which are political, economic, social, and environmental factors.[ CITATION Ach83 \l 1033 ]MACRO ENVIRONMENT ANALYSISOrganizations as large as BHP Billiton often enjoy favorable political environment, as they are an important source of economic activity. The company , with its over 1,00,000 strong workforce,of whom about 13000 are from west Australia, is large enough to be politically important , helping it secure a goodwill among the governmental departments. The government sees it as a
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BUSINESS AND SOCIETY RELATIONSHIP 3flag bearer of economic development as it commands the highest market capitalization in Australia, and the long history of presence there has incorporated a sense of belonging among thelocal community. Economically, the company is well placed currently, with access to low cost capital owing to its reputation; BHP Billiton has an advantage over its competitors in raw materials as well. Moreover, with a cash flow of AUD 14.6 billion, BHP has little worry regarding large investments or near term difficulties. [ CITATION BHP17 \l 1033 ]Its major material,nickel, is sourced from its mines at Ravens Thorpe at a competitive cost, resulting in significant gains for the company. These factors and economies of scale have helped the organization develop a stable image and established it as a long-term player. BHP is also on a strong footing socially, as it has a long and fruitful history for the people of the region, it has become a part of life for many people as they are connected directly or indirectly to the company. Very few companies in the world achieve a patriotic identity among its people, like Tata Group in India; BHP Billiton is one such company .Even the name of the company is taken from broken hills, a local area where mining opportunities were first started by the organization. While mining activities traditionally invite more scrutiny from among environment groups and local communities, it helps that the company has a good rapport with the local population and knows the general principals and guidelines that need to be followed while dealing with them. Technologically, BHP Billiton has the resources to invest in R&D, and it has helped in developing techniques like the use of pressure acid leach in the extraction of Nickel has helped itto improve output, thereby improving cost benefits. Since the company has a large network of operations and has to follow rules and regulations which can change from time to time, BHP hasto maintain a strong legal team in order to sort out any issues arising from its operations to avoid any major penalties or hurdles. BHP inevitably has a large role to play in the pollution emissions
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