Strategic Management: Analysis of Sustainable, Stakeholder, and Dynamic Capabilities Approaches in BHP Billiton

This report analyses the sustainable, stakeholder, and dynamic capabilities approaches in BHP Billiton's strategic management. It discusses the history, benefits, and limitations of each approach and provides examples of how BHP Billiton has implemented them. The report also includes an executive summary, introduction, and conclusion.

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Strategic Management
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Executive summary
This report changes the business environment that the organization's strategy has to do to
understand the strategy of the affected. This report has affected several strategies for
changing the strategy of mining companies in Australia. This report focuses on strategic
changes affecting the operations of the organization. The following information is included in
this report:
 To discuss the purpose of the report
 Analysis of the changing business environment
 Discuss the impact of various schemes in the strategy
 Model different strategies to analyse
 Strategic decisions to address changing business needs
This report describes the changes made by the organization in the context of strategic
management. Provide tips and suggestions to help you make decisions. This report analyses
BHP and its strategy. BHP is one of the most successful mining companies in the world in
extraction of mineral resources and oil and gas products.
Contents

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Introduction................................................................................................................................3
Sustainable approach..................................................................................................................4
Benefits...................................................................................................................................4
Limitations..............................................................................................................................5
Stakeholder approach.................................................................................................................5
History....................................................................................................................................6
Benefits...................................................................................................................................6
Limitations..............................................................................................................................6
Dynamic capabilities..................................................................................................................7
History....................................................................................................................................7
Benefits...................................................................................................................................8
Limitations..............................................................................................................................8
Conclusion..................................................................................................................................9
Bibliography.............................................................................................................................10

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Introduction
BHP is a processing company that extracts and processes products related to minerals, gas,
and oil. The purpose of this report is to conduct a strategic analysis to understand the
changing business environment. This report provides information about the company's
structure, vision, and history for better understanding. Strategic planning is the root of any
organizational success (Varadarajan, 2010). It is important that companies are updated by
changing the business environment to create a successful strategy. This strategy is influenced
by new technology, competitive prices, and changing needs of customers (Jo, et al., 2016).
This factor causes changes in organizational products and processes.
BHP Billiton was established on 29 June 2001 with the merger of BHP Limited and Billiton
PLC. It operates as a single economic entity with two holding companies (BHP Group
Limited and BHP Group plc.) under a dual economic company structure in the form of BHP.
BHP's corporate headquarters are located in Melbourne, Australia. The company's core
business is categorized into the following operations including petroleum which describes gas
and oil exploration, coal-related to coal extraction units and the third division is iron ore
which includes iron ore mining and finally copper which Includes copper mining (BHP,
2019).
It can be seen that the standards of the metals and mining industry are strict so that new
competitors will always face entry into the market; Therefore BHP, being the market leader
in the mining industry, is in a strong position with extensive infrastructure and latest
technology.
In the report, the aim is to discuss different strategic approaches to understand the
management of BHP Billiton. The history, benefits, and weakness of different approaches are
discussed and analysed with organizational examples.

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Sustainable approach
Sustainable approach can be defined as the approach accepted by the companies to produce
the products or services that meet customer needs but also prove to be responsible
management of the business. The aim is to seek improvement in the quality of the business
processes and products. This approach can also be explained as the approach, which meets
the present needs of the customer without compromising the future. The sustainable approach
in business organizations refers to the idea of utilization of resources in an optimum way
without disturbing the need of the upcoming generation. The sustainable approach states that
the utilization of resources should be in a manner that the needs of present generation should
be met and there shall be enough resources for the future.
History
The sustainable approach as a perspective is present in history from a very long time.
However, this phrase and concept sustainable development came in existence with the
Brundtland Commission‘s report, our common future in late 90s (Sollish & Semanik, 2011).
The report not only given the theory and definition of sustainability in corporate world but it
also helped in developing the concept of Triple Bottom line which gives equal importance to
social and environmental performance with comparison to financial performance of the
company.
Benefits
The sustainable approach helps the organization to proactively evolve the strategy as this
strategy helps an organization to forecast the broader view of the company’s goals and
objectives (Ayuso, 2014). The company major benefits in applying this strategic approach are
providing transparency within the organization. As the major element in the approach is to
engage environment within the company in order to improve performance, which can be
achieved by open and transparent communication with stakeholders in context of
information, accuracy, and clarity.
As discussed above this approach helps in improving stakeholder engagement and which
helps in defining the goals and lead to customer as well as employee satisfaction. The
customer satisfaction leads to high profits and the employee satisfaction leads to retention of
talented employees which has a huge strategic importance in changing business environment.

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The major benefit of this approach is that it helps the company to move forward as it is
earlier defined that planning for future growth and innovation makes the organization
proactive in introducing products which are more resource-oriented with better quality.
Hence this approach enables the companies to implement fresh ideas which can lead to
reduce in cost and create a better image of the company. The idea of using sustainable
approach in business may help an organization to improve the brand image at marketplace, it
helps in increasing the productivity and diminish the cost of manufacturing. Additionally, it
makes the shareholders exultant and satisfied, people these days are more concerned for the
issues related to environment.
Limitations
The sustainable approach is criticized on various elements; the major limitations of this
approach are cost. The aim of the approach is to reduce cost in long run but this approach
leads to carry huge cost due to research and development investments in the innovative
methods of production and services. The changing infrastructure, new processes, and the
whole change management can be very expensive (Fitzroy & M Herbert, 2017).
The efficiency also get compromised in order to achieve various requirements in achieving
sustainability in the business as it involves more requirements and the company should be
able to maintain balance between environment as well as social needs. It can be clearly
estimated that the entry requirements for small companies become really high.
BHP acceptance of sustainable approach can be described through its process development as
well as various programs for the welfare of the society as well as employees (Global Legal
Group Ltd, 2019). The BHP recently was appreciated for defining sustainable reporting in
their business as well as the company has invested huge amount in climate change funds to
acknowledge the importance of environmental protection for coming years (The West
Australian, 2019).
BHP has introduced a change in the strategy of climate change fund Investment in the
Company. To reduce the carbon emissions of the phases to be completed, the company
decided to invest US $ 400 million Climate Change Fund (The West Australian, 2019). The
change in strategy is influenced by the need to change climate change in the global economy.
BHP's motivation towards sustainable approach has led to the introduction of greener bonds
among employees (BHP, 2015). Remuneration has been combined with BHP targeted targets
and objective to achieve climate change goals in the long run (BHP, 2018).

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Stakeholder approach
The stakeholder approach can be described as the approach which should formulate the
products and processes which can satisfy shareholders (Ayuso, 2014). The aim is to ensure
the long term success of the company through growth achievement for all the stakeholders. I t
is really important for the organization to understand the importance of Win-Win strategy in
long run. The stakeholder approach is based on taking advantage from various market
imperfections. It is also analysed that the whole approach is based in the stakeholder theory
which explains the competitive edge a company can achieve by linking stakeholder’s
satisfaction with organization goals.
History
The stakeholder approach as a strategy evolved in mid-1980’s with the research paper of R.
Edward Freeman who linked strategic management to stakeholder approach (Taghian, 2015).
The stakeholder management manager, who is affected by unprecedented levels of
environmental disturbance and change, is responsible for the concerns behind the intent,
creating a framework for this. Developing direction to help the traditional strategy framework
is not a new strategy manager and not being able to help them understand how to create new
opportunities in the midst of such a change (Knight, 2009).
Benefits
The major benefits of stakeholder approach can be described as the achievement of
competitive advantage as the organizational values define the management goals and visions
and linking company’s vision with stakeholder’s satisfaction can lead to achievement of
brand recognition in long run (World Oil, 2019). The aim of this approach is to create core
competencies with time which overall leads to achievement of organized organizational
structure. The stakeholders approach helps on economical, ethical, organizational and
corporative grounds.
This approach also leads to achievement of value creation through innovation as the
companies, which manage stakeholders goals often lead to the higher quality workforce as
the employees are motivated to achieve innovation in day to day operations. The company
also put efforts to engage in long term goal setting to achieve new ways to satisfy the
stakeholders (Gottschalk, 2015).

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Limitations
The major limitations in stakeholder approach are that the company receives diversified and
divergent interests of different stakeholders which lead to difficulty in reaching to the goals
of the organization (Knight, 2009). Moreover to satisfy large number of compliances for the
welfare of stakeholders can lead to heavy losses for the organization. The authors also
suggest that the different price and opportunity cost for different stakeholders’ requirement
can impact the operability of this approach (Teece, 2012).
The company should understand that the cost should not be increased in providing benefits in
long run. This approach leads to poor calculation of stakeholder’s value. So it is difficult but
very important to decide the power and influence of stakeholder in the current business
model. It is seen that the stakeholders make huge investments in the company, therefore they
look towards having more authority and power in the company.
BHP Billiton defines the stakeholder approach as the people who have an interest and the
power to influence in day to day operations should be identified and respected. All the
operations of BHP identify their key stakeholders which are needed to be considered for the
expectations and concerns throughout the life cycle of the operations (Kajastie, 2019). The
most important aspect of BHP working approach is consideration of minority groups such as
indigenous groups and focus on various social and cultural factors which can impact the
stakeholder engagement globally. The company focused on major local issues which are
prevailing which can be quoted as social infrastructure, employment opportunities, schooling,
healthcare, and family care benefits to employees as well as contractors located in more than
25 countries (BHP, 2018).
BHP Billiton Foundation is a charitable organization which is established and funded by
BHP. The aim is to deal with the challenges of development of the generation with work and
to raise the bar in partnership with other solutions and setting new standards for the
stakeholders.
Dynamic capabilities
Dynamic capability is defined as the enterprise's ability to change, build, and reconfigure its
internal and external skills to cope with a rapidly changing environment (Teece, 2012). The

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key assumption of the dynamic capabilities framework that the market to react quickly and
innovate to rapidly changing business forces. This approach is the most accepted approach in
changing business environment where competition and technology are changing robustly
(Katsioloudes, 2012).
History
The dynamic capabilities framework was introduced in strategic management by David
Teece, Gary Pisano, Amy shuen in one of the famous paper quoted as Dynamic capabilities
and strategic management. The paper defined the importance of company’s ability to
integrate, configure and build the internal as well external competencies with changing
business environment. The major concern of dynamic capability theory is to develop various
strategies by innovating the traditional methods and concepts existing in the business
environment (Vanpoucke, 2014). The company’s focus is also on the technological
development of the company as well as strategically how the company can make decisions to
gain advantage even of any negative changing economic, environment legal or social factor.
The dynamic capabilities framework can be achieved through the different phases of the
process. The major phases in dynamic capabilities model can be described as learning,
acquiring new assets and most important is to distinguish between the existing and dynamic
capability of the company (Wroblewski, 2017).
Benefits
This approach is the most realistic approach as in changing business environment it is
important for any organization to be dynamic in nature. The major benefits of the approach
can be described as innovative environment (Noel Capon, 2016). This framework provides
innovation to all the departments of the organization. Its basic feature is quick and speedy
decision making which makes this framework attractive for employees who are expert in
their work.
This framework helps in identifying the internal strength of the organization which makes the
organization competitive in nature in relation to its products, policies, and process to reach
towards its goals. The other major benefit is that this framework provides flexibility to the
employees as well as to the senior peoples to innovate and explore innovation (Petersdorff,
2018).

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Limitations
The dynamic capability framework can be considered as the most difficult approach to
implement as there is no clear definition is available to implement the skillset or quality,
which can lead to achieve strategic edge over the competitors (Anders, 2019). The authors
also feel that this study needs more research for the implementation of this model on different
industries and market sector. The management of business in changing business conditions
need huge level of strategic thinking the author David emphasized the importance of looking
all the internal as well as external aspects to achieve the gain of the model. And it will always
have a high degree of uncertainty that this approach can lead to sustaining competitive edge
for the organization.
BHP Billiton is considered as the good example for showing dynamic capability framework
as the dynamic capability is defined as the quick decision making and it should be innovative.
BHP has developed itself into e-business development with the divestment of several
business research and capabilities BHP was able to achieve strategic edge over its
competitors (BHP, 2019). BHP Billiton has shown great efficiency in technical factors to
improve mining methods, which has led the company in achieving world-class assets and
projects in pipeline (BHP, 2019). The technological advancements has helped the
organization in achieving new heights in terms of generating revenue. The company has
made impressive efforts in making progress and reached milestones, the company will
manage to have a 50/50 gender ratio until the year 2025. The Anglo –Australian miner has
granted the organization a tag of aspirational goal to achieve this target.
Conclusion
The study revealed BHP with a changing business environment that has been analysed. Major
changes that can be invested in implementing green BHP investment strategy in bonds,
changes in recruitment and selection, can lead to sustainability goals that deal with changing
business needs.
BHP is the good example for understanding different strategic approaches to achieve
competitive gain over the market. BHP is one of the world's largest multinational companies
which provide the resources that a lot of change can be done to bring results in the right
direction. The research into sustainability approach, stakeholder approach, and dynamic

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liabilities, which is achieved by analysing the dominant strategy, research, is to understand
the changing landscape of BHP with the changing needs of the environment.

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