Business Model Deconstruction of BHP Billiton: MGMT20143 Assessment 1

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THINK BIG: MGMT20143
ASSESSMENT 1
BUSINESS MODEL DECONSTRUCTION
COMPANY NAME: SANTANA MINERALS LIMITED

Abstract
In the following report, the business model canvas of BHP Billiton had been discussed. The
business model had been comprehended in a nine-building block business canvas. These
blocks helped me in getting a quick overview of the company. It was revealed that the
customer segment of the company comprised, petrochemical, mining sector, electrical
appliances, etc. Furthermore, value propositions were also outlined. The revenue generation
and the interrelationship of the companies. In addition to this, the report highlighted the key
success factors. The first and foremost is the implementation of the Due Diligence Process
that brings confidence in the investors. In addition to this, it was also highlighted that the
company is subjected to many risks like the changing cost of technology and market
variables. Based on the risks identified, some recommendations were also provided for the
company. They are:-
 The company should put more funds on technological advancement, especially in the
field of operations. The firm must make use of GPS, GIS, and REID technology to get
information about the site of exploration and avoid any mishap
 In order to formulate smarter plans, the company should employ one of a kind business
analytics and evaluation techniques.
 The company should make efforts to streamline the supply chain by coordination and
collaboration with other departments downstream and upstream.

Contents
Abstract......................................................................................................................................2
Introduction................................................................................................................................4
Company’s Background.............................................................................................................4
Business Model..........................................................................................................................4
Key Interrelationships................................................................................................................5
Critical Success Factors.............................................................................................................6
Downside Risks..........................................................................................................................6
Business Model Changes...........................................................................................................7
Conclusion..................................................................................................................................7
Recommendations......................................................................................................................7
References..................................................................................................................................9

Introduction
A business model is a description of how a business operates and makes money. It is about
delivering value to the customers and clients at an appropriate cost. The following company
talks about BHP Billiton and makes use of the data provided by the ASX. The business
canvas model of the company is provided here that comprises financial, economic conditions,
key values, customer base, financial model, and channels of the business. Furthermore, the
interrelationships of the company and their impacts over the company have been discussed
along with the critical success factor of the company. In addition to this, the report also
highlights the suggested changes in the business model. The report ends after providing some
recommendations for the company.
Company’s Background
BHP Billiton (now called BHP) is one of the leading mining organisations of Australia. It
deals in metal exploration, mining, and petroleum sector. It was founded in the year 1860.
The company currently provides employment to over 62,000 people worldwide. The revenue
and net income of the company are US$43.636 billion and US$4.823 billion, respectively.
The company sells its product in almost every country with marketing and sales operations
taking place in Singapore, US, and Houston. It has two parent companies, namely BHP
Group Ltd and BHP Group Plc. It aims at creating shareholder value by making
discoveries, development, marketing, acquisition, and extraction of natural resources.
Business Model
BHP Billiton aims at owning and operating a large, low-cost, long-life, expandable assets that
are diversified by geography, market, and commodity (Wang & Feng, 2012). Its business
model is based on the value of leveraging its expertise and resources across the company to
share world-class practices. The business plan is focused on six crucial aspects:-
Cost efficiencies: Focused on high returns with minimum efforts.
Major Projects: timed for high returns and values.
Onshore operations: These have to be flexibility and value generating
Exploration: Positive results that would minimise risks for future projects
Latent Capacity: Limited challenges and attractive returns
Technology: Improving safety, lowering costs, and unlocking resources

Key Partners
 Government
 Investors
 The
partnership of
CSIRO and
Conservation
International
 Technology
Providers
 Contractors
Key Activities
 Prospection
 Exploration
 Transport and
exploitation
 Marketing and
Sales
 Refining and
Processing
Value Proposition
To carry out
responsible mining
and exploration
process.
Forming a
partnership with
other players in the
same field in order
to gain a better
position in the
market.
Customer
Relationships
 Customer Service
 Trust building
 Quasi-
monopolistic
bonds
 Account
management
Customer
Segments
electrical
appliances,
petroleum,
chemical
industries,
dentistry,
Key Resources
 Mineral and
Oil reserves
 Technology
and
Infrastructure
 Over 62000
employees
 Upstream
Assets and
Commodities
 Long-term
bonds and
contracts
Channels
 Website
 Account
Management Team
 Global Project
Teams
 Corporate offices
and regional
premises,
 BHP Billiton
Foundation
Cost Structure
 Taxes
 Government fees
 Contract signing and licensing fees
 Cost of Exploration
 Salaries
 Marketing and sales
 CSR projects
Revenue Streams
 Trading
 Services Fees
 Selling minerals and petroleum
extracted
 Long-term contracts for services
Key Interrelationships
BHP Billiton is aiming at improving productivity by forming a partnership or acquiring those
industries in the same market. It is leveraging all of its assets and pieces of machinery in
exploration and mining. The company is operating with integrity and following code of
conduct that prohibits any kind of unethical and illegal activities (Shen, et.al, 2015). The BHP

has its regional offices across the world. The company carries out its operation from
headquarter in Melbourne and marketing operations are conducted in the USA and
Singapore. Since the company has distributed its key operations to different remote locations
other than Australia, it needs special communication, coordination, and management
(Miranda & Lazo, 2017). BHP Billiton aims at improving leadership, relationships, and
communication, both collectively and individually. It has partnered with JMJ in order to
maintain the interrelationships within and across the business. JMJ helped various teams to
have a better understanding and relationships through proper and regular communication. It
carries out one-on-one coaching, rather than generic coaching. The company is providing a
large number of digital solutions to the company to keep a connection between different
organisations and BHP. In addition to this, it is keeping contact between different
departments within the company. Furthermore, the association with some technical
organisations is helping the company in promoting the mining and exploration products.
Ultimately, the interrelationship between different subsidiaries is helping the company in
capturing the market value in the mining industry.
Critical Success Factors
Being one of the leading mining company, BHP should focus on following the Due Diligence
Process (DDP) as required by the investment principles. It would help in attracting more
funds while signing an agreement with other business partners. The diligence process focused
on environmental, social, and governance (ESG) (Wang & Feng, 2012). By focusing on these
ESG factors in the company's investment decision is managing risks and producing long-term
values ensuring sustainable for every stakeholder. The organisation takes complete
responsibility for the consequences. In addition to this, there are certain factors too
contributing to the growth of the company, such as IRRs, controlled operations, tailored
structure, non-delusiveness, etc., (Shen, et.al, 2015).
Downside Risks
For the top performing company like BHP Billiton, there are some significant risks related to
the mining sector. The first and foremost is the operational efficiency and the fluctuation in
the demand of the ore and mineral. In addition to this, the market price is another risk that can
bring hiccups in the company’s growth (Rytkönen & Nenonen, 2014). Another risk is the
mining market which is very volatile. The organisation must emphasis on fund preservation
and bringing new funds. Many a time it happens that cost increases when the mining industry
booms. As the prices start coming down, the company must ensure that it takes cost reduction

measures. Furthermore, it should extract high values from the limited amount of resources.
Another risk is limited resource access.
Business Model Changes
In order to become a leading mining company, BHP Billiton should tackle the current as well
as future issues while keeping a focus on the entire mining industry. It is important for the
company to portray as an ideal company that employs the latest techniques and technology
and also accept the ideas from the entire mining field (Miranda & Lazo, 2017). Hence, it is
advised to the company to have a conventional business model. At present, BHP is in the
mining and petroleum industry and extracting natural minerals. The company is putting extra
emphasis on increasing its productivity and capacity and reducing the cost of carrying out
operations at each stage and managing its supply chain (Rytkönen & Nenonen, 2014).
It is suggested for the company that its business model should be relating to customer
demand and value-focused. In the conventional type of business model, the operations are
locally affected and focused by geography. However, new models are quite independent of
the geographical aspects. In addition to this, the supply chain should be well-optimised like
an intrinsic process. In addition to this, the management has to be a bit lean and should be
aligned with the streamlined structure. Furthermore, it is required by the company to have
centralised governance. Teams should coordinate and collaborate with the other groups. to
streamline the supply chain
Conclusion
The report outlined various characteristics of the company as was highlighted in the business
canvas model. The business channel, value propositions, key features, partners, etc., were
highlighted. In addition to this, the relationships of the company with other business partners
have highlighted and their significance was elaborated. In addition to this, risks and critical
success factors were enlisted and their impacts were also outlined.
Recommendations
 The BHP should invest on its Research and Development processes by either internal or
external vendors in order to carry out to have a better insight of the exploration sites and
other procedures (Wang & Feng, 2012). In addition to this, the company can also form
the joint venture and mergers to carry out the R&D work.

 The Stockholders, suppliers, customers, and business partners should come together to
collaborate so as to curb the common issues and risk factors. It is also important to
understand the demands of the stakeholders in order to grow faster (Avanti Mining Inc,
2012).
 The company should put more funds on technological advancement, especially in the
field of operations (Shen, et.al, 2015). The firm must make use of GPS, GIS, and REID
technology to get information about the site of exploration and avoid any mishap
 In order to formulate smarter plans, the company should employ one of a kind business
analytics and evaluation techniques.
 The company should make efforts to streamline the supply chain by coordination and
collaboration with other departments downstream and upstream (Ediger and Ersoy, 2015).

References
 Avanti Mining Inc. Updates Kitsault Resource Statement and By-Product Silver
Metallurgical Results. (2012, April 30). Marketwire, p. Marketwire, Apr 30, 2012.
 Ediger, V., Berk, I., & Ersoy, M. (2015). An assessment of mining efficiency in Turkish
lignite industry. Resources Policy, 45, 44
 Global Mining Equipment Industry Report 2014. (2014, September 19). PR Newswire, p.
19
 Gomes, C. M., Kneipp, J. M., Kruglianskas, I., da Rosa, L. A. B., & Bichueti, R. S.
(2014). Management for sustainability in companies of the mining sector: an analysis of
the main factors related to business performance. Journal of Cleaner Production, 84, 84-
93.
 Miranda, Brandão, & Lazo Lazo. (2017). A dynamic model for valuing flexible mining
exploration projects under uncertainty. Resources Policy, 52, 393-404.
 Rytkönen, E., & Nenonen, S. (2014). The Business Model Canvas in university campus
management. Intelligent Buildings International, 6(3), 138-154.
 Shen, L., Muduli, K., & Barve, A. (2015). Developing a sustainable development
framework in the context of mining industries: AHP approach. Resources Policy, 46, 15-
26.
 Wang, Y., & Feng, H. (2012). Customer relationship management
capabilities. Management Decision, 50(1), 115-129.