Comprehensive PESTEL Analysis of BHP Billiton for Business Strategy

This report presents a PESTEL analysis of BHP Billiton, a major Australian multinational mining, metals, and petroleum firm. The analysis examines the impact of political factors, including government regulations and taxation policies, and the potential influence of upcoming elections. Economic factors such as labor skills, financial markets, exchange rate volatility, and consumer sentiment are also considered. Social factors, including media influence, income inequality, migration attitudes, and health and safety concerns, are evaluated. The report also explores technological advancements impacting the supply chain, technology transfer issues, and the role of mobile technology. Environmental factors, such as extreme weather, environmental awareness, waste management, and renewable energy adoption, are assessed. Finally, the analysis addresses legal factors, including employment, health and safety, intellectual property, and business laws. The report uses credible sources to support its findings, providing a comprehensive overview of the external factors influencing BHP Billiton's business operations and strategies.

Running head: MANAGEMENT THEORY AND PRACTICE
Management Theory and Practice
Name of the Student
Name of the University
Author’s Note

1MANAGEMENT THEORY AND PRACTICE
Table of Contents
PESTEL Analysis of BHP Billiton............................................................................................2
References..................................................................................................................................6

2MANAGEMENT THEORY AND PRACTICE
PESTEL Analysis of BHP Billiton
PESTEL analysis is considered as a crucial tool for the managements of the
companies to assess the impact of macro-environmental factors on the businesses. The
following discussion shows the PESTEL analysis of BHP Billiton that is an Australian
multinational mining, metals and petroleum firm.
POLITICAL FACTORS – There is increasing pressure on the Government of Australia to
comply with the regulations of the World Trade Organizations on the metal mining industry.
The current trend indicates that the existing government of Australia can be changed in the
coming election and thus, BHP Billiton must be prepared since change in government can
also change the governance priorities of the basic material sector (theguardian.com, 2019).
Lowe taxation policies have been majorly beneficial for BHP Billiton throughout the western
region and the company has enjoyed higher profit as well as increased spending on R&D.
However, there can be changes in the existing taxation policies due to increase inequality that
can affect the prodigality of BHP Billiton (treasury.gov.au, 2019). In addition, the local
governments are in search of specific taxation for Metal Mining for containing the carbon
footprints of the basic material industry. BHP Billiton has operations in many countries all
over the world and thus, the company has developed their policies based on the specific
requirements of metal mining industries of those countries. Since, the local governments of
Australia play crucial roles in policy-making, BHP Billiton is needed to consider the
governmental policies of the states and territories in which they operate. Effective
consideration of these aspects determine the business success of the company in the mining
material sector.

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ECONOMIC FACTORS – The level of skills of the labours and employees in Australia is
moderate to high in the material sector and BHP Billiton can take advantage from this for not
only improving the business in Australia but also creating the global business opportunities.
BHP Billiton has key access to the energetic financial markets of Australia and gets the easy
availability of liquidity in the Australian equity market for further global expansion. The
financial performance of BHP Billiton has close correlation with the Australian economic
performance. The growth of the company in last two decades is due to the increase in
globalization as well as effective use of local resources for catering to the global needs
(imf.org, 2019). BHP Billiton is needed to take into consideration the high volatility in the
Australian exchange rate as it can impact in the business operation of the firm both in long-
term and short-term basis (smh.com.au, 2019). In spite of the presence of stability in
consumer disposal income, the increasing inequality in Australian societies can negatively
impact the consumer sentiment that can create negative impact on the consumer spending
behaviour. This can impact the profitability of BHP Billiton.
SOCIAL FACTORS – Media channels play a crucial role to influence the public opinions in
Australia and thus, major growth can be seen in both the traditional and social media in the
country. BHP Billiton can take advantage of this trend for marketing as well as positioning of
their products. In the recent years, an increasing trend in income inequality can be seen in
Australia and this has major impact on the business of BHP Billiton (acoss.org.au, 2019).
While considering migration, the border attitude is negative in Australia towards migration
and this is hurting the ability of BHP Billiton in brining international mangers as well as
leaders for managing their operation in the country. High level of education can be seen in
Australian, especially in the metal mining sector. This provides major benefit to BHP Billiton
to hire educated and skilled employees for their business expansion. In the recent years, there
is increased attention towards the health and safety issues in workplace and thus, BHP

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Billiton is needed to keep compliance with the rules and regulations of health and safety
because of the high cost of failure in Australia (business.gov.au, 2019).
TELCHNOLOGICAL FACTORS – Technological advancements and innovation is fast
affecting the supply chain since it provides greater access to information to the supply chain
partners as well as the companies within the mining material industry. Technological
advancements is contributing towards lowering the production as well as service cost in the
mining metal sector. Thus, the need for BHP Billiton is to include technological innovation
for restructuring their supply chain for bringing more flexibility to cater to the needs of
customer and cost structure. BHP Billiton has to face issue related to technology transfer due
to the absence of any strong culture of technology transfer in this industry. Development as
well as distribution of mobile technology plays a crucial role in transforming customer
expectations in mining material industry. Thus, BHP Billiton is needed to ensure meeting and
managing these expectations and the need to being innovation in their business operations for
gaining the necessary competitive advantage. Lastly, in case Australia has higher standard of
intellectual property rights and patents protection, then more companies including BHP
Billiton in the mining material industry will be interested in investing in R&D (deloitte.com,
2019).
ENVIRONMENTAL FACTORS – The presence of extreme weather is adding to the
operations cost of BHP Billiton and the company is needed to ensure investing to make their
supply chain more flexible. In addition, the increase in awareness about the environmental
issues has forced BHP Billiton to include environment factors at the centre of their business
strategies. The expectations of the customers to BHP Billiton is to ensure not only complying
with the legal requirements, but also maintain compliance with the environmental regulations
for becoming a responsible stakeholder in the community (austrade.gov.au, 2019). For the
companies like BHP Billiton, waste management, especially for the business units near to the

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urban cities, has taken increased and thus, they are needed to comply with the strict
regulations of the Government of Australia for waste management in the urban areas.
Moreover, the importance of recycling is rapidly increasing in the mining metal industry of
Australia and thus, BHP Billiton is needed to comply with the regulations and laws of the
government. BHP Billiton has to face scrutiny of environmental agencies on regular basis
which is adding up cost for the company. BHP Billiton can also adopt the use of renewable
energy since Australia is giving subsidies for investing in the renewable energy sector
(business.gov.au, 2019).
LEGAL FACTOR – BHP Billiton is required to comply with the employment law of
Australia and needs to consider the impact of this law on their business model. Most
importantly, BHP Billiton must adhere to the Health and Safety laws of Australia irrespective
of the cost of adherence. It needs to be mentioned that BHP Billiton is needed to maintain
their compliance with the laws and regulations related to the legal protection of their
intellectual properties, patent, copyright and others; otherwise, non-compliance with these
regulations will affect the business of the company (australiaminerals.gov.au, 2019). In
addition, one major requirement for BHP Billiton is to adhere to various business laws
followed by Australia. It needs to be mentioned that these business laws of Australia are
consistent with the norms of World Trading Organizations, European Union and others.
Compliance with these legal requirements sometimes adds up cost to the business of BHP
Billiton (australiaminerals.gov.au, 2019).

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References
Australian business and environment laws - Austrade . (2019). Austrade.gov.au. Retrieved 16
April 2019, from https://www.austrade.gov.au/International/Invest/Guide-to-
investing/Running-a-business/Understanding-Australian-business-regulation/
Australian-business-and-environment-laws
Australian dollar's volatile run tipped to end. (2018). The Sydney Morning Herald. Retrieved
16 April 2019, from https://www.smh.com.au/business/markets/australian-dollar-s-
volatile-run-tipped-to-end-20180308-p4z3ex.html
Australia's Economic Outlook in Six Charts. (2019). IMF. Retrieved 16 April 2019, from
https://www.imf.org/en/News/Articles/2019/02/15/NA022119-australia-economic-
outlook-in-six-charts
Deloitte.com. (2019). Innovation in mining Australia 2016 Create. Change. Illuminate.
Retrieved 16 April 2019, from
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Energy-and-
Resources/gx-au-en-innovation-in-mining.pdf
Environmental legislation licences and permits. (2018). Business.gov.au. Retrieved 16 April
2019, from
https://www.business.gov.au/risk-management/environmental-impact/environmental-
management/environmental-legislation-licences-and-permits
Health & safety. (2018). Business.gov.au. Retrieved 16 April 2019, from
https://www.business.gov.au/risk-management/health-and-safety

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Income inequality in Australia | Treasury.gov.au. (2013). Treasury.gov.au. Retrieved 16
April 2019, from https://treasury.gov.au/publication/economic-roundup-issue-2-2013-
2/economic-roundup-issue-2-2013/income-inequality-in-australia
Inequality – ACOSS. (2018). Acoss.org.au. Retrieved 16 April 2019, from
https://www.acoss.org.au/inequality/
Legislation, regulations and guidelines | Australia Minerals.
(2019). Australiaminerals.gov.au. Retrieved 16 April 2019, from
http://www.australiaminerals.gov.au/legislation-regulations-and-guidelines
Murphy, K., Chan, G., Remeikis, A., & Karp, P. (2019). Who should I vote for? Policy guide
to the 2019 Australian election. the Guardian. Retrieved 16 April 2019, from
https://www.theguardian.com/australia-news/ng-interactive/2019/apr/15/who-should-
i-vote-for-policy-guide-to-the-2019-australian-election