Strategic Management of BHP Billiton: Analysis using PESTEL, Porter's Five Forces and SWOT Frameworks

This report analyses the strategic management of BHP Billiton using PESTEL, Porter's Five Forces and SWOT frameworks. It examines the company's vision, mission, core competencies, growth strategies, Porter's generic strategy, controversies, and organizational culture. The report also provides a general environment analysis and a SWOT analysis of BHP Billiton.

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STRATEGIC MANAGEMENT
Name of the Student
Name of the University
Author Note

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Executive Summary
The report is built on the study of the vision mission and the approaches which have been
implemented by an organization named BHP Billiton which has its origins in Australia. The
company has been able to operate in a profitable manner with the help of its resources and
strategies. The major issues which were previously faced by the company have been analysed
in the report. The strategic position of the company has been analysed with the help of
PESTLE framework. The industry of the company has also been analysed with the help of
Porter’s five forces framework. The internal environment has been analysed by using SWOT
framework. The analysis has been able to depict that BHP Billiton is thereby able to depict
that the company will be able to maintain its place with the help of effective strategies.

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Table of Contents
Task 1.............................................................................................................................3
Introduction....................................................................................................................3
Strategies deployed by the company..........................................................................3
Mission, vision and core competencies......................................................................3
Successful strategies employed in the past................................................................3
Current strategies which are used..............................................................................3
Types of strategies employed in the company...............................................................3
Growth strategies employed by BHP Billiton............................................................3
Porter’s generic strategy used by BHP Billiton.........................................................4
Task 2.............................................................................................................................4
Two controversies faced 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......................................................................................................................7
References......................................................................................................................8

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Task 1
Introduction
BHP which was previously known as BHP Billiton is considered to be a major trading
based entity of the organization named BHP Billiton Limited. This is an Anglo-Australian
multinational organization which mainly operates in the mining based industry. The
organization has its headquarters in Melbourne Australia and was established in the year
1885. BHP had also been able to acquire the rank of the biggest mining organization with
respect to the total market capitalization (Bhp.com, 2018). BHP Billiton was developed in the
year 2001 with the merger of companies like, Anglo-Dutch Billiton Plc. and Australia Broken
Hill Proprietary Company Limited.
Strategies deployed by the company
Mission, vision and core competencies
The mission statement of BHP Billiton is based on the proper development of
methods that can be used for achieving the objectives. The sustainable value which has been
developed by the organization for its shareholders, contractors, customers, employees,
suppliers and the business partners is also a significant part of the mission of the firm. The
vision statement of the company on the other hand is based on the ways by which it aims at
creating value for long term operations of the company with the help of proper discovery,
effective development and further conversion of the natural resources. The market based
solutions and innovative customers are also considered with the help of the long term based
strategies which have been developed by the company. The organization is also known in the
market for sustainable solutions which are provided to the customers.
Successful strategies employed in the past
The strategies which have been employed by BHP in the past were mainly based on
the effective growth of the company by providing the highest levels of value to the
customers. The company had implemented these strategies in order to increase the growth
and attract customers towards its operations as well (Barros, Hernangómez and Martin-Cruz,
2016).
Current strategies which are used
BHP Billiton has implemented new growth based strategies in the current business
scenario in order to operate in an effective and profitable manner. The new strategy is thereby
aimed at increasing the returns of the shareholders and their value as well. The major
expectation of the organization from implementation of new growth strategy is related to the
generation of higher profitability and increasing the levels of productivity as well. The
organization has also aimed at increasing the shale and copper based assets in order to grow
in the top line and bottom line based areas. The dividend policy which has been developed by
the company is also quite effective in nature and is able to reflect the growth of commitment
based levels (Daspit et al., 2017).
Types of strategies employed in the company
Growth strategies employed by BHP Billiton
The growth strategy which is employed by BHP Billiton in the industry is built on
increasing the value. The creation of value is thereby considered to be the most important

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strategy which has been implemented by the organization in an effective manner. The
company further aims at five different areas which are based on its growth in the industry.
BHP aims at improving the levels of productivity and maintaining their momentum (Demir,
Wennberg and McKelvie, 2017). The investment in different products is also based on the
ways by which the company is able to unlock latent capacity of the assets. The quality
portfolio of the organization based on its assets is able to offer the medium levels of growth
related options. The exploration related activities of the company is based on the ways by
which it can advantage of the falling costs. The global technology based function is
implemented in order to unlock the resources effectively (Durand, Grant and Madsen, 2017).
Porter’s generic strategy used by BHP Billiton
The generic strategy which has been implemented by BHP Billiton in the industry is
based on the development of broad differentiation with the proper development of value
which has been discussed in the growth based activities.
Task 2
Two controversies faced by the organization
BHP Billiton had faced a huge issue based on a disastrous dam disaster which had
occurred in the year 2015. The bursting of dam was based on the ways by which waste
related to different operations were spread out in various areas. The organization had thereby
changed the ways by which it operated so that failure which had occurred in its co-owned
organization named did not take place again. The history related to issues and failures is quite
long in case of the operations of BHP Billiton (Theguardian.com, 2018). The company was
thereby not able to maintain the promise that had been made related to the ways by which it
can avoid the dumping of tailings of the production in different rivers. This had further led to
the fall in prices of the stock market based values of different commodities of the
organization like iron ore and coal.
Another major issue which was thereby faced by the organization was based on the
dispute which the management of the company had with the trade unions based on benefits
and pay. The workers thereby went on a strike of six weeks in Chile which is also considered
to be the biggest mining based industry from the year 1973. The strike had ended in the
month of March and the company had also aimed at the cutting through the costs with the
help of lower benefits and costs which can be provided to the employees (Ft.com, 2018).
Task 3
General environment analysis using PESTEL framework
The PESTEL analysis framework is used for the purpose of analysing the external
environment in which the BHP has its operations. The changes which can thereby take place
in the external factors are able to influence the operations of BHP Billiton in an effective
manner.
Political factors – The political situation of Australia is able to affect the operations
of BHP Billiton in the country. The company mainly operates in the industry which is able to
provide the basic resources. The political risks are thereby able to affect the prices of these
products which are thereby offered to the consumers in an effective manner The stable
political environment on the other hand is able to provide effective levels of opportunities of
growth to the organization (Ethiraj, Gambardella and Helfat, 2018).

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Economic factors – The macro-economic factors which are able to affect the
operations of profitability of the company in Australia mainly includes, the savings rate,
inflation rate and the foreign exchange based rates as well. The revenues of BHP Billiton are
thereby based on the ways by which it is able to offer the product and services to the
consumers. The economic condition of the country is thereby able to affect the prices which
have been decided by the firm for different products. The stability and health of the economy
is thereby considered to be an important factor which is able to affect the company (Frynas
and Mellahi, 2015).
Social factors – The social condition and demographics of the customers in Australia
are significant factors which are able to influence the operations of BHP Billiton. The skill
based levels of the population thereby acts as an important factor which can have an
influence on the products that are chosen by the customers.
Technological factors – The levels of disruption which have taken place in Australia
have affected the products that are designed and the processes which are used as well. The
effective technological analysis thereby needs to be made by the company in order to operate
in the country and in other areas of its operations in a profitable manner. The implementation
of modern technologies within organizational processes is thereby effective for the
improvement of BHP Billiton in the industry (Dyer et al., 2015).
Legal factors – The robust nature of the legal systems of different countries where
the company operates can influence the policies which have been developed by BHP Billiton.
The company thereby needs to analyse these factors in order to improve its operations in the
industry. The major legal factors which can be considered by BHP mainly include, the Anti-
trust law, Discrimination based law and employment based laws as well (Engert, Rauter and
Baumgartner, 2016).
Environmental factors – The environmental standards which have been developed in
different countries has been able to play a key part in the formation of the policies of BHP
Billiton. The company has already faced some major environmental disasters in the past
which have been able to cause huge issues for its operations in the industry. The management
of the organization thereby needs to consider the environmental standards in an effective
manner while operating in any country (Hill, Jones and Schilling, 2014).
The analysis of external environment has been able to depict that the operations of
BHP Billiton has been affected in an immense manner due to the changes which can take
place in different countries.
Porter’s five forces analysis of BHP
The industry in which BHP Billiton operates can be analysed in a strategic manner
with the help of Porter’s five forces framework. The different competitive forces which can
affect the company can be analysed with the help of this framework.
Bargaining power of the buyers – The power of the buyers is moderate to low and
the prices of products that are provided to them can vary with respect to the demands. The
long term based customer relationships are thereby based on the impact related increase in
prices (Dobbs, 2014).
Bargaining power of the suppliers – The company is impacted by the powerful
suppliers who are present in the industry. This power is thereby based on the materials,

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energy, shipping based costs and energy costs. The enhanced operations of these factors are
thereby able to affect the supplier based power of BHP.
Threats of the new entrants – Major threats are also faced by the company based on
the entry of new companies in the industry. The fall in prices of commodities and loss in
demands of iron ore has been able to affect the entry of the new companies. The enhanced
infrastructure of BHP has been able to reduce the effects of new organizations (Hitt and
Duane Ireland, 2017).
Threats of the substitutes – The threats based on the substitute products of the
company are quite low in case of an organization like BHP which has been able to develop a
leadership position in the industry. The diverse portfolio of the organization is also
considered to be a significant part of the processes of the firm (Sakas, Vlachos and
Nasiopoulos, 2014).
Levels of the rivalry – The rivalry levels between the sellers in the industry is quite
high. The natural resource based organizations provide tough competition for access to the
reserves. The industry is however highly lucrative in nature and has a strong potential related
to profits as well (Hubbard, Rice and Galvin, 2014).
SWOT analysis of BHP
Strengths – The portfolio of the assets of BHP Billiton is diverse in nature. The
organization is also considered to be a large supplier of copper, silver, aluminium and lead.
The products of the company are supplied to many different countries all over the world
including, Australia, South Africa, United States and Brazil. The financial returns provided
by the company are also high (Kasemsap, 2014).
Weaknesses – The organization has to improve financial assets and the gross margins
in order to operate in a profitable manner. The corporate communications of the company are
weak and this has led to the lack of response to the corporate enquiries (Meyer, Neck and
Meeks, 2017).
Opportunities – The different projects which are available for the company are major
opportunities which are provided to BHP Billiton. The organization thereby needs to improve
the position of the brand in the industry in which BHP operates (Michael, Storey and
Thomas, 2017).
Threats – BHP Billiton had faced huge threats due to the rise in costs based on the
suppliers of the company. The rise in costs are have become huge obstacles in the
development and growth of the organization in the industry. The high reliance of BHP
Billiton on the demands based on the natural resources is able to affect the revenues in an
adverse manner (Morschett, Schramm-Klein and Zentes, 2015).
Task 4
Organizational culture and leadership style of BHP
The talent management based activities in the organizations are based on the ways by
which the employees of BHP are managed and retained. The industry has experienced huge
demands for the efficient employees. The talent and succession management based
programmes are implemented by the company in order to retain the employees effectively.
The proper identification of talent has played an important part in the process of developing
the global network of employees. The programmes are thereby helpful in developing the

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skills and talent of the employees effectively. The company has always maintained a forward
looking approach in order to develop the talent which is appropriate for its operations all over
the world (Ethiraj, Gambardella and Helfat, 2018).
The culture of the company is effective in the proper development of leaders who are
able to lead the company effectively. BHP Billiton has been able to build a culture of
diversity and inclusion and has included different types of talent from all over the world. The
outstanding performance of the organization is thereby based on the diversity of the
workforce and the diversity of perspectives and thoughts as well. The talent management and
diversity based culture which has been developed by the firm has been based on the
capabilities and the needs of the employees and the organization as a whole (Bhp.com, 2018).
Conclusion
The report can be settled by stating that BHP Billiton has faced some major issues
based on its operations in Australia and many other countries of the world. The external
environment factors have affected the operations of BHP Billiton. The industry analysis of
the company has been able to depict that the company has developed its unique position with
respect to the other companies. The internal environment of company has been analysed and
it has depicted that BHP Billiton has a strong leadership position in the country. The
organizational culture of BHP has been able to support the effective leadership development
related activities of the company. This has provided the company with a talented pool of
employees who can provide the best levels of services in an effective way.

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