MNGT3011: BHP Billiton Change Management Analysis Report

This report provides a comprehensive analysis of BHP Billiton's change management initiatives, focusing on the strategic demerger of the company. The analysis begins with a background of BHP Billiton, its merger with Billiton, and the subsequent drivers for change, including economic, legal, and political factors. The report then applies Kurt Lewin's three-step model (unfreezing, change, refreezing) and McKinsey's 7-S model to understand the change process. It examines the strategy, structure, systems, shared values, skills, style, and staff within the context of the demerger. The report also discusses the balanced scorecard from financial, customer, internal processes, and learning and growth perspectives. Furthermore, it includes recommendations for training, reintroducing engineers, formalizing procedures, and fostering a change management culture. The report also references the assignment brief and the provided table of contents.

CHANGE MANAGEMENT IN BHP
Change Management Analysis of BHP Billiton
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Author Note

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Background
The BHP Billiton is one of the Australia’s most reputed mining companies that is known
throughout the world for its discoveries, production, acquisition as well as market products. The
products by the company are mainly obtained from the natural resources. Among the various
operations by the company, the most notable ones are the mining of ores like copper, uranium,
iron, aluminium and others (Hubbard et al. 2019). The company, finally formed in 2001 was a
result of the merger of Australian firm BHP and the British firm Billiton. BHP was actually
formed in 1885, came into prominence as a global natural resource company because of their
diversified commodity and the natural resources including steel, gas and oil. Billiton was a
global British mining company that had a portfolio of mining as well as metal assets. In 2001,
the two companies merged themselves in order to attain the strategic goal of proper management
and resource exploitation. This change was initiated by BHP in order to create themselves the
world’s leading diversified resource group. BHP and Billiton both agreed upon this change since
it helped in developing their strategies for sustainable benefits for future aspects. Since BHP was
involved with oil, gas, copper, energy coal and others the margin with Billiton helped them in
gaining resources of petroleum and steel (Dawson, 2019).
Current state
The success of the merger between BHP and Billiton called for a proficient and successful
management of the merger strategies at end of the merger firm. The portfolio that was inserted in
both the companies after merger was the main driving factor that led to this strategic change.
After the merger between BHP and Billiton companies, the newly appointed CEO was Brian

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Gilbertson who ushered in a new ray of leadership where he changed several managerial
positions. After his resignation, the new CEO Mr. Chip Goodyear filled up the position and the
management was successful in spearheading various operations. After the primary margin of
BHP an Billiton the company made acquisition and merger as their main operational strategy.
Following this tradition, they acquired WMC Resource in 2005, Athabasca potash in 2010 and
made a joint venture with Rio Tinto in 2009 (Dawson, 2019). However, the BHP Billiton
Company decided for a strategical change to demerge in 2014 with the aim of creating a new
venture called New Co. The main reason behind this demerging was increment of the value of
the shareholder of the company to facilitate effective management. The report will analyse this
strategic change of the company in the light of change theory and will duly recommend the
following course of action plans.
Drivers for change
The economical as well as the social forces are the main components that drive the need for
change in any organization.
Economic:
Due to the large size of BHP Billiton as a result of margin strategy the labour cost increased
drastically and the company also started facing problems like greenhouse effect financial issues
and other economical destabilisations in the global economy (Lynch, 2017). The main source of
energy for the operation of the BHP Billiton was primarily the non-renewable sources. The
operations that were required for generating this kind of energy enhance the chances of
greenhouse effect that resulted in global warming and thus causing a major change in climate.

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Legal Cause:
Various governments stipulated certain regulations and rules that prohibited the companies to
make excessive use of fossil fuels for generating the energy source. In lieu with this, the
Australian government also introduced certain laws that govern the environmental conservation.
These practices acted as a great thread for the operations of the BHP Billiton. The reduced use of
energy sources created a reduction in the operations of the company and thereby affecting the
value of the shareholders. The company thought that with the demerging of the two companies
the chances of attracting more shareholders and customers will arise. According to the BHP
Billiton chairman, Jac Nasser, “the demerging will simplify BHP Billiton and will have the
potential to unlock shareholder values” (Tyagi, 2016).
Political Drivers:
Since 2008 various companies from across the globe like China, Brazil, Russia etc have started
investing a significant amount for consuming the natural resources. The political intolerances in
various countries also contributed to the low performing of BHP Billiton in recent years. The
instabilities along with the social corruptions led to heavy penalty for the company. All these
issues were negatively affecting the economic growth of the company. The Mozal Aluminium
smelter in an example of the sufferings that the BHP Billiton had to face the problems of
choosing an unstable and war torn country as a location of a long term as well as the high
expenditure project. The country at that time was looking for rebuilding itself post independence
and was embracing an open market attitude as a result of the collapse of communism
(Kapranov,2017).

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Theory:
The change management of BHP Billiton can be viewed in the light of two theories
namely Kurt Lewin’s three step model and McKinsey’s 7s model. The three-step model
forwarded by Lewin involves unfreezing, change and refreezing.
Step 1
The process of unfreezing refers to the understanding of the need that a change is required and a
destabilisation of the equilibrium has to be done in order to create the change. This process will
involve the breaking down of the established status quo in order to make way for a new opening.
The key to this process is to develop a compelling message urging upon the cause why the
existing way cannot be continued. The declining figure slowed down financial records and the
negative aspects coming from customer surveys will act as a catalyst for bringing in a change
(Hussain et al. 2017). The ongoing values, believes and attitudes is required to be challenged in
the process of examining the readiness and the competencies of the employees.
Step 2
The creation of the uncertainty in this process will lead to the state of change where the actual
change will begin. In this process the employees are made aware of the benefits that the change
will bring in. This will help them in taking this act positively. The main key for success in this
stage is time and communication.
Step 3
After people have embraced the change and are gradually understanding the benefits of the same,
the organization will be ready to refreeze to stabilize the condition again.

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Justification of the usage of this theory:
It is generally argued that people who are accustomed with a particular style of workings
are often resistant toward the process of change. Thus, a sudden change appears to the as
imposition and that makes them more resistant. The there step model as proposed by Lewin will
not only make them aware of the change that is going to occur, but at the same time will let them
know why is it necessary for their well being. Moreover, this model will also help them to adjust
slowly in the changed process and thus in turn, they will have the time to know what is lacking in
them, how the management can help them
McKinsey 7s model
Justification:
BHP Billiton has claimed that their main strategy is the maximization of value and returns. The
diverse portfolio of tier one assets that they have are low cost, long life and expandable. In order
to extract the highest value and most of the returns from the assets the company make use of the
values and cultures and operate them productively. This cost cutting approach with which BHP
Billiton works is the core culture of the company and forms the centre of the McKinsey 7s
model.
Profit maximisation in Soft Elements:
This profit maximization stance further influences the other six factors of the model. The change
management will be helpful in simplifying the operations of the company and increasing the
capability of the workforce. The demerging and the foundation of the New Co. will according to
Jac Nasser “benefit the south 32’s portfolio from the focus of a dedicated board and a

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management team”. The new company will be instrumental in England for reducing the tax
issues and enhance the value of the shareholder. The soft elements of style staff and skill will be
affected by this shared goal of cost reduction (Alshaher, 2013)..
Ways of Profit maximisation in Hard elements:
If employees are not been trained enough for dealing with the potential problems that the
internal as well as the external environment posses there are chances of causing an explosion.
The hard elements including the structure system and strategy also need to be integrated with
these share value.
Strategy:
The main strategy that governs the operation of BHP Billiton is the value maximization through
the acquisitions and joint ventures and thereby increasing the revenue. The revenue stream of the
company has been made diversified according to the business lines and geographies. The
company had made sure that it guarantees a leading position all through. They make their pricing
strategy according to their global market. This diversified business line helps them in generating
a competitive advantage over its competitors. The decision of demerging will allegedly help in
the wholesome growth by equally distributing technology strategies, trademark and
implementation of goals (Lewis, Cantore & Passmore, 2016). In focussing only on the copper,
coal, iron ore and potash as result of demerging the company will be able to keep a focus on
those areas that resulted in higher profits. Another advantage of demerging BHP Billiton is that
the process will ensure effective management. While most companies have to tackle a series of
problems while dealing at a global level on account of core implementation strategies, BHP
Billiton assumed to overcome these issues by means of demerging.

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Leadership:
BHP Billiton’s current leadership is influenced from the top down. Initially Brian Gilbertson
caused various changes in the managerial positions that brought in the leadership styles initially.
After the appointment of new CEO, the leadership mainly focussed on the creation of culture,
employee rewarding system and ethical standard. This was done in order to support the corporate
integrity among the employees. the leadership aspects of the BHP Billiton also exhibits a culture
that fosters strength, accountability and diversity. The leadership approach was implemented
primarily in order to gain their strategic mission of low cost operations that will be helpful in
expanding the upstream assets. The diverse culture also exhibits characteristics of diverse
commodities, geographical locations and market segments.
The balanced Score Card:
The balanced score card is generally used for measuring the financial as well the non
financial performance of an organisation. The measurement will eventually help in gaining an
insight of how effectively the changed process will align with the strategies of the organisation.
The updating model of BHP Billiton focuses on the maximisation of the interests of the share
holders by increasing the sales and cutting down the cost. The balance score card will look into
the factor as to how far the demerging will be contributing to the strategy.
The Financial perspective:
Seen from the financial perspective, it can be identified that the main financial strategy of the
company is the maximisation of .profit and the shareholder value. It is expected that the
demerging will help the company to focus on those areas that will yield more profit. As a result

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of these, effective management in the potential areas can be focused upon, thereby increasing the
chances of high revenues (Doppelt, 2017).
Human Resource Issues:
Working in a global expansion, the company faced a number of issues regarding the inclusion of
diversities in their company. The BHP Billiton is among the leading company that operates
worldwide. It is difficult to manage the workers from all the nook and corners of the world and
catering to their needs. Thus, the company has implemented the global standard culture. Within a
decentralised model of business, the total company is bound by a common culture (Sutherland,
2013).
Conclusion:
the reports aimed at the evaluation of the change management of BHP Billiton as well as ttheir
strategic choice of demerging and founding the new strategy of New Co. From the above
analysis, it can be concluded that the company has aimed at implementing this strategic change
for focusing on the long term development as well as effective marketing strategies for fostering
improved management. However, the changed strategies have some risks of disadvantages. The
company can face a stiff reduction in the prices of stocks as a result of an aggressive buy back of
the shares by the active investors. In addition to this, the company can face the accrued of debts
with and also minimum even sometimes no returns of the capital.
The report recommends the company to make ventures focusing on the strategies of
growth that will be well planned and particularly as per to the strategic visions.

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Reference List:
Alshaher, A. A. F. (2013). The McKinsey 7S model framework for e-learning system readiness
assessment. International Journal of Advances in Engineering & Technology, 6(5), 1948.
Dawson, P. (2019). Reshaping change: A processual perspective. Routledge
Doppelt, B. (2017). Leading change toward sustainability: A change-management guide for
business, government and civil society. Routledge.
Element, A. P. A. S., & Element, M. P. M. S. BHP Billiton Petroleum HSEC Controls
Accountabilities Table.
Hubbard, T. N., & Moore, M. J. (2017). Bhp billiton: Mining potash. Kellogg School of
Management Cases.

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Hussain, S. T., Lei, S., Akram, T., Haider, M. J., Hussain, S. H., & Ali, M. (2018). Kurt Lewin's
change model: A critical review of the role of leadership and employee involvement in
organizational change. Journal of Innovation & Knowledge, 3(3), 123-127.
Kapranov, O. (2017). Conceptual Metaphors Associated with Climate Change in Corporate
Reports in the Fossil Fuels Market: Two Perspectives from the United States and
Australia. In The Role of Language in the Climate Change Debate (pp. 106-126).
Routledge.
Lewis, S., Cantore, S., & Passmore, J. (2016). Appreciative inquiry for change management:
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Lynch, P. (2013). Organisational change management at Conzinc Riotinto Australia.
Sutherland, K. (2013). Applying Lewin's change management theory to the implementation of
bar-coded medication administration. Canadian Journal of Nursing Informatics, 8(1-2).
Tyagi, S. (2016). Managing the risks posed by climate change. AusIMM Bulletin, (Feb 2016),
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