Business Strategy Report: BHP Billiton's Australian Market Analysis

This report undertakes a comprehensive environmental and strategic analysis of BHP Billiton within the Australian market, specifically focusing on the steel industry. It begins with an executive summary and an introduction outlining the importance of environmental analysis for sustainable business growth. The report identifies BHP Billiton's competitive advantages, analyzes current trends in the Australian steel manufacturing industry, and details the company's current strategies. An internal analysis examines BHP Billiton's resources and capabilities, including management talent, while the external analysis employs both macro (PEST) and micro (SWOT) analyses to assess the market environment. The report concludes by summarizing the key findings and providing a detailed overview of BHP Billiton's position and strategies within the Australian steel market, highlighting the factors influencing its operations and future prospects.

Running Head: Business Strategy 1
Business Strategy of BHP Billiton

Business Strategy 2
Executive summary
Environmental analysis is crucial for the sustainability and growth of any business. There
are various environmental factors that impact on the various business activities. This report will
analyze the environment of the Australian market in the perspective of steel industry. The report
will focus on the famous steel and mining company BHP Billiton. This is the global listed
company and currently operating in the Australia having strong position in the industry. This
report will identify the competitive advantage of BHP Billiton in the market. Along with this, the
report will analyze the current trends of Australian steel industry. The adopted strategies of BHP
Billiton would also be identified in this report. At last, the report will focus on the external and
internal environment analysis of the Australian market that affects the business operation of BHP
Billiton.

Business Strategy 3
Contents
Executive summary.........................................................................................................................2
Introduction......................................................................................................................................4
Billiton’s competitive advantage.....................................................................................................4
Trends in Australian steel manufacturing industry..........................................................................4
Current strategy of BHP Billiton.....................................................................................................5
Internal analysis...............................................................................................................................6
Resources and capabilities...........................................................................................................6
Management talent.......................................................................................................................6
External analysis..............................................................................................................................7
Macro analysis.............................................................................................................................7
Micro analysis..............................................................................................................................8
Conclusion.....................................................................................................................................10
References......................................................................................................................................11
Appendix........................................................................................................................................12
List of figures
Figure 1: Market of Steel products in Australia............................................................................12

Business Strategy 4
Introduction
To achieve the sustainable growth in the competitive growth, it is important for the
companies to adopt some effective marketing strategies. The strategies adopted by the company
depend upon the internal and external environment in which the company is operating. It
becomes really important to analyze the trends and environment in the market for the effective
strategic plans. This report is based on the strategic and environmental analysis of BHP Billiton.
The analysis is done on the basis of the evaluation of resources, capabilities and management
talent of the company. Along with this, report also analyzes the trends of the Australian steel
industry and the current strategies of BHP Billiton in the operating market. By the internal and
external analysis, the report describes the position of BHP Billiton in the Australian market.
Company BHP Billiton is a global listed company and operating in the diversified in the mineral
resources in many countries. The company is engaged in the mining of various commodities
including energy coal, copper, iron ore, aluminum, silver and titanium minerals, oil, gas,
diamonds, natural gases, and titanium minerals (BHP Billiton, 2017). This report analyzes the
environment of the operating market that impacts the business operations of the BHP Billiton.
Billiton’s competitive advantage
BHP Billiton is the leading resource company in all over the world. This is an Australian
company operating in the mining and petroleum products. The company is operating in the
diverse market along with the quality asset portfolio. The company has competitive advantage in
the overall mining industry due to its effective operations in conventional and non-conventional
resources such as uranium and coal, natural gases and oil etc (Walker, 2015). This is the core
competency of the company in the operating market. Along with this, company has diverse
nature of the business with the low expenditures that is helpful to keep the financial position
strong in the market. This is one of the big advantages of BHP Billiton that the company takes
benefit (Chambers, 2016).
Trends in Australian steel manufacturing industry
Australian steel industry is the major sector of Australian economy. The Australian
upstream steel industry (steel manufacturing) employs around 18,500 people every year and pays

Business Strategy 5
annually wages of $ 1.5 billion. Along with this, the industry has annual sales are service income
of $11.1 billion. The overall steel industry of Australia including iron and steel manufacturing by
the downstream has provided employment to over 100,000 people and generated around $36
billion in the service income and sales. So, the steel industry and the supply chain have
contributed for 10.4% values from all the manufacturing (Department of Industry, Innovation
and science, 2016).
The Australian steel industry has strong reputation and image in terms of producing high
level of quality products and services by investing in the technology, skill development and
innovations. The steel products in the Australian steel industry is highly sophisticated including
lightweight steel and flexible applications that are sued for the cars and transport equipment.
Australia is operating in the global steel market having significant capacity and capability. Based
on the research of World Steel Association, Australia is producing 4.9 million tons of steel and
has ranked 36th among all the top 66 steel producer countries. The Australian market is
dominated by the steel business and industry which can be seen in the given graph (Appendix).
Current strategy of BHP Billiton
BHP Billiton has the strategy to achieve the organizational goals and objectives in the
business operations. Current strategy of BHP Billiton in the business is as follows:
 Strategy of BHP Billiton is to ensure the employees regarding safe and protected during
the business operations. This includes ensuring the health status of the employees is
good. The wellbeing of the employees is the important strategy for BHP Billiton to
improve the performance in the market (Hesterly & Barney, 2015).
 Next strategy of BHP Billiton is low-cost provider strategy to create customer strategy.
Company is delivering value to the customers as compared to the competitors for the
business profit.
 Next strategy of the company is to expand the business in more countries for improving
its business area. BHP Billiton is expanding its global footprints to be more scalable,
more specialized in terms of business functions. By transferring the resources and
capabilities, BHP Billiton is seeking for getting competitive advantage in the
geographical markets (Ackermann & Eden, 2010).

Business Strategy 6
Internal analysis
Resources and capabilities
In case of BHP Billiton, there are two types of resources i.e. tangible and intangible. The
concept of resources and capabilities are inter-related. Resources are helpful in business in
gaining core-competencies for the success and growth in the market. The management of BHP
Billiton has understanding of the resources in the business operations. There are various types of
resources in the organization on which the organizational activities depend. The key resources of
BHP are assets that include branding, loyalty, human resources, goods, equipments, and financial
capabilities of the company. Management of the company uses tangible and intangible resources
so that the company can create capabilities in the business operations (Dobrzykowski, Hong &
Soon Park, 2012).
Tangible resources of BHP are financial resources including borrowing capacity of the
company and ability to collect the fund. Along with this, controlling, planning, and coordination
system of the company are the most important resources in the business. Physical resources of
the company are equipments, plants and location of the company. Physical resources also include
raw material for the production. Intangible resources include the stock of the technology such as
trademarks, trade secrets and copyrights (Slack, 2015).
Capabilities-
Among many of the resources, the management of the company has appropriate
resources for the business operations which are helpful in achieving the organizational goals and
objectives. With the help of right and proper interaction, communication and integration, BHP is
able to achieve the ultimate success in the Australian market. With the combination of tangible
and intangible resources, the capabilities of the company can be determined easily in terms of
achieving the organizational objectives in the operating market (Hartmann, 2016).
Management talent
Management of the company has the important role in the business operations.
Management is helpful in determining the position of the company in the competitive
environment of business. There are many layers of management in the company. Management of
the company is focused on the effective business operations to gain high level of profit. In the

Business Strategy 7
BHP Billiton, the managers of the company are also focused on maintaining the culture i.e.
normative and Academy culture. High authority of the company has managed the effective
procedures in the company so that the business operations can be done by the existing guidelines.
BHP is the renowned company and there is many knowledgeable and skilled staff to operate the
business (Lestari, Ismail & Mansur, 2014).
External analysis
Macro analysis
Change in the environmental factors can have the direct impact on the BHP Billiton
Limited and it is important to analyze the impact of environmental factors for the effective
business operations. PEST analysis provides important details about the operating challenges in
BHP Billiton.
Political factors-  Different political environment and
political risks,
 Legal frameworks for the enforcement,
 Political stability of the Australian
market,
 Tariffs and trade regulations related to
the raw material,
 Pricing regulations for the basic
materials
Economic factors-  Economic factors of the country such as
inflation, growth rate, and economic
indicators of the industry,
 Growth rate of the metals and minerals
industry,
 Labor cost and productivity,
 Economic growth rate,
 Exchange rates of the country’s
currency, and

Business Strategy 8
 Unemployment rate and inflation rate
Social factors-  Demographic and knowledgeable
population,
 Share beliefs and attitude of people in
Australian market,
 Environmental conscious population,
 Societies encouraging entrepreneurship,
and
 Class and power structure in the society
Technological factors-  Technological development by BHP
Billiton,
 Technology impact of on product
offering,
 Impact on value chain structure, and
 Impact on cots structure in industry
(Kemp, 2010)
Micro analysis
BHP Billiton is an Anglo-American mining company operating in the Australian market.
The company is the merger of the two companies i.e. BHP and Billiton. To analyze the market
position of the company, it is important to understand the external; environment of the market in
which the company is operating. For this, SWOT analysis of BHP Billiton would be suitable.
SWOT analysis of the company is given below:
Strength-
In case of the portfolio of the natural resources, BHP Billiton is one of the famous
companies in the Australian and other markets. Company has its operations in all over the world
and has strong position in the global market. Further, the company has strong financial position
and financial returns to the stakeholders by the aggressive capital buy back campaigns. BHP
Billiton has its presence at the global level i.e. it has the operations in eight countries including

Business Strategy 9
USA, South Africa, Australia and South America. Along with this, the market position of the
company is also very strong in terms of market capitalization that is improving the trust of the
stakeholders towards the company (BHP, 2015).
Weakness-
One of the weaknesses of BHP Billiton is that there is the lack of skilled human resources
in the company. In the mining sector, the company is facing efficiency problems because of the
lack of the skilled human resources. Due to some incidents, company is facing lots of restrictions
by the law of the operating country. This is reducing the efficiency of the operational activities of
the company significantly. Further, the communication department of the company is not up to
the mark and is the obstacles in the growth of the company.
Opportunities-
There can be various opportunities for BHP Billiton in the global market. The financial
position and overall capacity of the company can be improved by expanding the business in
more countries. Merger and acquisition with various companies can be a huge opportunity for
BHP Billiton to grow in size of the business. Company can acquire small business and can gain
competitive advantage. BHP Billiton is B2B Company and by the proper marketing with the
effective channels would be helpful to sustain and grow (Ragin, 2014).
Threats-
One of the big threats for BHP Billiton is fluctuations in demand. Developing economies
like India and China are increasing the rate by manufacturing in-house and demand of BHP
Billiton is fluctuating. Further, the competition is increasing in the manufacturing industry and
there are many companies like Anglo American plc, ExxonMobil Corporation, and Nippon Steel
Corporation etc. This is also a big threat for the company while operating in global market.
Further, raw material for the company is increasing at the high rate and this would increase the
cost of production and affect the level of profitability.

Business Strategy 10
Conclusion
This report provides the environmental analysis of the Australian market in which BHP
Billiton is operating. From the above analysis, it is observed that BHP Billiton is operating well
in the Australian market. The company has effective business strategy to improve the financial
position in more countries. It is observed from the above analysis that company has competitive
advantage in the steel industry of Australia due to the diverse nature of the business. By the
environmental analysis, it is analyzed that company is providing high financial returns to the
stakeholders so they have full trust on the company. There are various opportunities for BHP
Billiton in the global market such as joint venture and merger and acquisition for achieving the
growth in the size of the business. In conclusion, it can be said that Australian market is suitable
for BHP Billiton to grow and company can also expand in other countries as it has effective
business strategies.

Business Strategy 11
References
Ackermann, F., & Eden, C., (2010), Strategic options development and analysis, In Systems
approaches to managing change: A practical guide, pp. 135-190, Springer London
Hartmann, A. M., (2016), Strategic Options for MNEs Operating in Emerging Markets, In
Multinational Enterprise Management Strategies in Developing Countries, pp. 34-49, IGI Global
Department of Industry, Innovation and science, (2016), Analysis of steel and aluminum markets
report to the commissioner of the anti-dumping commission, accessed on 21st September 2017
from http://www.adcommission.gov.au/adsystem/referencematerial/Documents/MASTER%20-
%20Steel%20aluminium%20report%20%20-%2031%20August%202016%20-%20for
%20public%20release.pdf
Chambers, M., (2016), BHP Billiton to focus on strategy and development, accessed on 21st
September 2017 from http://www.theaustralian.com.au/business/mining-energy/bhp-billiton-to-
focus-on-strategy-and-development/news-story/6218fc52b8eb9f415fe26564202d10fc
Kemp, D. (2010), Community relations in the global mining industry: exploring the internal
dimensions of externally orientated work: Corporate Social Responsibility and Environmental
Management, 17(1), 1-14.
Hesterly, W., and Barney, J. B., (2015), Strategic Management and Competitive Advantage
Concepts and Cases, Pearson Higher Ed.
Walker, G., (2015), Modern competitive strategy. McGraw-Hill Higher Education
BHP, (2015), Sustaining Australia’s competitive advantage, accessed on 21st September 2017
from http://www.bhp.com/media-and-insights/reports-and-presentations/2015/06/sustaining-
australias-competitive-advantage
Lestari, H., Ismail, R., & Mansur, A., (2014), Organizational Culture in Manufacturing
Company: Study Case of Small and Medium Sized Enterprises in Central Java: In Applied
Mechanics and Materials, 493, pp. 486-491
Ragin, C. C., (2014), The comparative method: Moving beyond qualitative and quantitative
strategies, Univ of California Press
BHP Billiton, (2017), A leading global resources company, accessed on 21st September 2017
from https://www.bhpbilliton.com/
Slack, N., (2015), Operations strategy, John Wiley & Sons, Ltd.
Dobrzykowski, D. D., Hong, P. C., & Soon Park, J., (2012), Building procurement capability for
firm performance: A service-dominant logic view: Benchmarking: An International Journal,
19(4/5), 567-584

Business Strategy 12
Appendix
Figure 1: Market of Steel products in Australia
(Source: Department of Industry, Innovation and science, 2016)