BHP Billiton Strategic Information System Analysis

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STRATEGIC INFORMATION SYSTEM
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Contents
Introduction......................................................................................................................................3
Part 1................................................................................................................................................4
1. Business Background and Industry.........................................................................................4
2. General Environmental factors................................................................................................5
3. Industry Environment..............................................................................................................8
4. Competitive Environment......................................................................................................10
5. Opportunities and Threats for BHP.......................................................................................11
Part 2..............................................................................................................................................13
1. Tangible and intangible resources of BHP Billiton...............................................................13
2. Capabilities of BHP Billiton-.................................................................................................15
3. Core Competencies................................................................................................................16
4. Suitable Information System solution that meets the chosen company needs......................17
5. Evaluation of the proposed system and recommendation.....................................................18
Conclusion.....................................................................................................................................19
References......................................................................................................................................20
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Introduction
This project is about the strategic information system in BHP group limited. In this project, the
analysis is done of the general environment involving economic, social, technological factors.
Industry environment has also been described, explaining the supply power, buyer power,
substitute products, and rivalry competitors. There are various competitors of BHP whose
strategic analysis has been done. Various opportunities and threats to BHP is also mentioned.
Capabilities of BHP, its resources including tangible and intangible has also been described.
Core competency analysis is also done and proposed suitable information system solution
meeting the company needs is evaluated and at the end, recommendations are also made.
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Part 1
1. Business Background and Industry
In Asia Pacific region, BHP group limited (BHP) is known as one of the largest mners and
mineral resource providers. It has a history in Australia of over one hundred years. It has its
operations in six countries which include New Zealand, Fiji, Australia, Papua New Guinea, and
Samoa. It is a local manufacturer with a focus on manufacturing heavy mining machinery across
all these six countries.
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2. General Environmental factors
The environmental analysis of BHP Billiton limited is a significant tool which helps in analyzing
the macro environment of the organization. It includes the following factors-
Political Factor-
This factor helps the company in analyzing some of the political factors which the company is
required to consider before making investment or entrance in a particular market. Company
should make the detailed analysis of the stability of politics, and mining and construction
importance in the economy of country, anti-trust laws, regulatory mechanism of pricing for such
industry, Taxation policies, legal framework for enforcement of contracts, military invasion risk,
government interference and bureaucracy in mining and construction industry (Nordmeyer,
2018).
Economic Factors-
The economic factors of the country such as inflation, foreign exchange rates, the growth rate of
mining and construction industry, buying the power of consumers should be used by BHP in
order to forecast the growth of the organization. Economy’s education level, the stability of the
type of economic system, stability and host country currency’s exchange rate, financial
efficiency of markets, etc. should be studied well by BHP before starting operations in any
country.
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Social Factors and demographics-
The culture of the organization is affected by the culture of society. Before designing the
marketing strategies and marketing messages BHP should understand the attitude and shared
belief of population. Skill level and demographics of the population, society's hierarchy, class
and power structure, the spirit of entrepreneurship, gender roles are required to be analyzed by
BHP.
Global and Technological Factors-
Various industries are being disrupted in the world by rapid changes of technology. Diffusion
rate of technology, Impact of technology in product offerings, cost structure, value chain
structure in the mining and construction industry should be understood. The examination should
be done by BHP so that it can get to know where it stands in the global market.
Legal factors-
Copyright, employment law, law of health and safety, data protection, e-commerce and
consumer protection, intellectual and patents property law are some of the legal factors which
affect the working of every organization so it is important for BHP also to consider them while
making entrance in new markets and always be updated about the legal frameworks of the
domestic market also.
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Environmental factors-
The profitability of the organization is impacted by different environmental standards and norms
in different markets. There are different environmental and liability laws even in states within a
country. Healthy tax brackets are given by a lot of European countries to the renewable sector
companies. Regulating laws of environmental pollution, attitudes towards ecological products,
endangered species and regulations of air and water in mining industry should be analyzed by
BHP.
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3. Industry Environment
The success of the industry is influenced by five forces that are established by Michael Porter. In
comparison with the other miners in Australia and south pacific region, BHP Billiton is on the
top industry’s list as it has 7% increase of market share. These five forces help the company in
explaining the strategy adopted by the companies for increasing its productivity.
Bargaining power of Suppliers-
There is no competitive pressure on the supplier of the mining and construction industry. Their
bargaining power is weak due to the cheaper costs of the raw material used in manufacturing the
mining and constructions. Manufacturers can easily shift to other suppliers as these raw-
materials can be available at ease to the producers. BHP should build with multiple suppliers and
effective supply chain.
Bargaining power of Consumers-
Bargaining power of consumers is high as they have varieties of options to purchase the products
considering the mining and construction price. So it is important for BHP that to retain its
customers, it should provide enticements and this can be done through contests like win tickets,
lucky draws, etc.
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Threats of New Entrants-
The pressure is placed on BHP through keeping pricing strategies at low, cost reduction and
availing customers with new value propositions, by the new entrants as they offer the innovated
product. To safeguard its competitiveness BHP has to build barriers for the new entrants by
lowering fixed cost per unit resulting from developing economies of scale, providing new
products and services and developing capacities and spending money on R&D.
Threats of substitute products or services-
The profitability of the industry suffers from substitute products or services. Example- Substitute
for storage hardware drives are Dropbox and Google Drive. BHP should focus on both service
and product oriented, the core needs of consumers and increasing the customer’s switching cost.
Rivalry among the existing competitors-
Prices are driven down and the profitability of the company is also affected by the intensity of
rivalry among the players already existed in an industry. The profitability of long term of BHP
can be affected by the competition prevailing in mining industry as it is a very competitive field.
BHP can tackle this rivalry by developing substantial differentiation and scale which will
increase its competitiveness and collaboration with competitors can also be done which will
increase the size of the market for the company.
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4. Competitive Environment
Anglo American and Exxon Mobil are the two major competitors of BHP Billiton. It has affected
mining and constructions sales in supermarkets especially in areas of lower socio-economic. Due
to big competitor discounting with Anglo, BHP has been forced to reduce its prices. The primary
generic competitive strategy used by Anglo American is Cost leadership. This strategy helps
Anglo American in focusing towards the cost minimization which results in improving financial
performance and competitiveness. Broad differentiation is another generic strategy used by
Anglo American. This results in reducing the operating costs of the company by automating the
production processes. The strategic objective of Anglo American for broad differentiation is to
develop innovative products considering its effect on health. It develops a threat to BHP to focus
on its pricing strategies and offering innovative products to customers. All these rival groups
have affected the profitability and growth of BHP and its market share also. Intensive strategies
of Anglo American include market penetration, product development, and market development
so as to attract more and more customers resulting in emerging as a high rivalry company to
BHP.
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5. Opportunities and Threats for BHP
There are various opportunities for BHP as described below-
1. New environment policies-BHP has good opportunities to gain an advantage by
increasing its market share through new product category and new technology.
2. The customers of BHP can grasp the credit at a low-interest rate and can bring stability in
the market by the low inflation rate.
3. The profitability of BHP can be increased as the new opportunities can be opened and the
way of doing business is impacted by the new taxation policies.
4. BHP has the opportunity to boost its profitability or gaining market share by passing on
the benefits to consumers as a result of decreasing transportation cost which also results
in bringing down the cost of the products of BHP (Godley, 2013).
5. The competitiveness of BHP can be increased due to dilution of the advantage of
competitors resulted because of market development.
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Threats for BHP-
1. Certain product categories of BHP can be threatened due to the new environmental
regulation under the Paris agreement (2016).
2. BHP can face lawsuits due to different laws in various markets and fluctuation in the
standards of products on a continuous basis.
3. In some markets, BHP has a threat of very slow profit growth due to the shortage of
skilled workers in those areas (Pfitzer, 2013).
4. The international sales of BHP can be negatively affected due to increasing isolationism
trends in the economy of America leading similar reactions from other governments.
5. The strength of local distributors is growing which is increasing threat to BHP in some
markets as the local distributors are gaining at higher margins there.
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