BHP Billiton: Business Strategy, Industry Trends, and Analysis Report

This report provides a comprehensive analysis of BHP Billiton's business strategy, competitive advantages, and the trends within the Australian steel manufacturing industry. It examines BHP Billiton's strong brand name, workforce, financial position, and CSR policies, highlighting how these factors contribute to its success. The report also delves into the fluctuations in Australian steel production, analyzing the highest and lowest production periods. Furthermore, it explores BHP Billiton's current business strategy, including its new dividend policy and business model, and conducts an internal analysis of the company, focusing on management talent and resource capabilities. External factors, both micro (suppliers, competitors) and macro (political, economic, social, and technological), impacting BHP Billiton are also thoroughly examined. The report concludes with an overview of the company's performance and strategic direction, offering valuable insights into BHP Billiton's operations and market position.

Business Strategy 1
Business Strategy

Business Strategy 2
Executive Summary:
In this report it has been analyzed that BHP Billiton have some competitive advantages such as;
Strong brand name, Strong workforce, Strong financial position and Best implementation of CSR
Policies and these competitive advantages help this company to perform better than competitors.
Along with this, it has been analyzed that there were many up and downfall in the trends of
Australian steel manufacturing industry. It is analyzed that the highest steel production in
Australia was 819 thousand tones in March 1998 and the lowest steel production was 238
thousand tones in March 2009. The current business strategy of BHP Billiton has been also
analyzed in this report. It is analyzed that the BHP Billiton has developed new dividend policy
and new business model to perform better. In addition to this, the internal analysis of BHP is also
done in this report. Along with this, it has been analyzed that the BHP Billiton is hiring talented
graduates from different countries and with the help of its resources the production capability of
BHP is high. The external factors such as; micro and macro, which affecting the BHP Billiton
are also analyzed in this report. Micro factors include suppliers, competitors etc. and macro
factors include political, economical, social, and technological factors that effecting the
operations of BHP Billiton.

Business Strategy 3
Table of Contents
Executive Summary:...................................................................................................................................2
Introduction.................................................................................................................................................3
Competitive advantages of BHP Billiton.....................................................................................................4
Trends in the Australian steel manufacturing industry:...............................................................................7
Current business strategy of BHP Billiton in Australia...............................................................................9
Internal Analysis of BHP Billiton..............................................................................................................10
External Analysis:.....................................................................................................................................11
Conclusion.................................................................................................................................................12
References.................................................................................................................................................13

Business Strategy 4
Introduction
This report is based on the environmental analysis of BHP Billiton. This report will provide
details about the different competitive advantages of BHP Billiton which help this company to
outperform than its competitors. Along with this, trends in the Australian steel manufacturing
industry will be discussed in this report. This report will also provide information about the
current strategy of BHP Billiton. This report will also provide details about the analysis of
internal factors such as; management talent and resources and capabilities of BHP Billiton.
Along with this, this report will also provide information about the micro and macro external
factors of BHP Billiton that effecting the operations of BHP Billiton.

Business Strategy 5
Competitive advantages of BHP Billiton
BHP Billiton is a largest company of Australia. It was formed in 2001. BHP Billiton Company
is a merger of Anglo dutch Billiton Plc and Australian Broken Hill Proprietary company Ltd.
BHP Billiton processes the oil, gas and minerals. It was the world’s 3rd largest company in 2011
(BHP, 2017). There are some competitive advantages which make this company stronger than
others and following are the competitive advantages of BHP Billiton:
Strong workforce:
BHP Billiton has a large work force, it has over 45,000 employees. Strong workforce helps an
organization to increase the productivity and competitive advantage. Large work force means a
large number of employees, so these employees can offer new ideas and suggestion to the
organization (Dickie and Dwyer, 2011). Along with this, with large number of employees
organization can work faster.
One of the largest Mining and Petroleum Company:
BHP Billiton is the largest diversified resource company of the world. This is the big
competitive advantage of BHP because this company has a large infrastructure and working on
large level. No other company is working on this large level that’s why BHP have this
advantage.
Strong brand name:
BHP Billiton is a multinational company and working in many countries. In international market
BHP Billiton has a strong brand position and most of the customer likely to choose famous
brands. Strong brand name provides many advantages to a company like; customers prefer to
buy branded products, company can easily introduce new products etc (Robbins, et al., 2014). So

Business Strategy 6
it can be said that Strong brand name is also a factor which provide competitive advantage to
BHP Billiton.
Strong financial position:
One of the competitive advantages of BHP Billiton is strong financial position. BHP is the
largest company of Australia it means its financial position is very strong as compare to its
competitors. In 2011 BHP’s record profit was US $23.6 billion. Every year its revenue is
increasing continuously which make this company more strong. BHP has strong financial
position it means in terms of finance it can offer more offers to customers and can improve
quality and can sell in cheap price to increase the customers (Lodia and Martin, 2014).
The increase in profit of BHP can be understood from the following table:
Profitability
2007-
06
2008-
06
2009-
06
2010-
06
2011-
06
2012-
06
2013-
06
2014-
06
2015-
06
2016-
06
TTM
Tax Rate % 25.07 32.03 45.44 33.53 23.39 32.53 38.03 31.53 45.51 47.57
Net Margin
%
33.97 25.88 11.7 24.1 32.96 21.35 16.49 20.58 4.28
-
20.66
7.32
Asset
Turnover
(Average)
0.74 0.89 0.65 0.63 0.75 0.62 0.49 0.46 0.32 0.25 0.29
Return on
Assets %
25.15 22.96 7.6 15.18 24.67 13.28 8.14 9.56 1.38 -5.24 2.09
Financial
Leverage
(Average)
1.96 1.98 1.97 1.83 1.81 1.96 1.95 1.91 1.92 2.19 2.11

Business Strategy 7
Return on
Equity %
49.79 45.26 15.01 28.76 44.92 25.14 15.93 18.47 2.65
-
10.73
4.43
Return on
Invested
Capital %
37.28 34.22 11.65 21.59 34.65 18.74 11.3 12.93 2.04 -6.19 3.36
Interest
Coverage
28.71 46.33 14.64 30.04 128.05 53.2 24.58 37.04 20.27 -7.56 6.84
Best implementation of CSR Policies:
BHP’s CSR policies are very good. BHP continuously working for its stakeholder and society
which increasing its brand value and these CSR activities are the reason why its customers trust
this company. So it can be said that CSR activity of BHP Billiton is providing competitive
advantage to it.
Trends in the Australian steel manufacturing industry:
To raise the living of standard of a nation productivity improvement is very important. The
federal government awarded $5 million in five years to provide fund for research and
development of Australian Steel industry in 2013. In the last five years of 2013 the steel
manufacturing industry’s growth declined. Steel manufacturing industry’s revenues is decreased
annually 8.5% in last five years. One of the reasons of industry declined is low demand of
downstream market. Competitors of import market and lower prices of steel are some reason
why the steel manufacturing industry’s growth is decline and many manufacturers reduced their
production (Yellishetty, et al., 2011). The main reason of decline growth of steel manufacturing
is competition of import market and introduction of new and cheap products. To understand the
trends of Australian steel manufacturing industry it is very important to know that steel

Business Strategy 8
manufacturing is a global business. About 60% of total steel production is manufacturing in
India, South Korea, Taiwan and China. Some of these countries’ businesses produce more steel
than the total steel manufactured in Australia. Many global businesses manufacture in mass this
provides them low cost facility and they also can provide products in low price but in this case
Australia’s manufacturers have problem. The main problem of Australian steel manufacturing
industry is that the competitors are increased and they are providing steel in cheap price (Mason,
et al., 2011). To eliminate the problem Australian steel manufacturers should established a steel
export market. There are another ways which can provide profit to Australian steel
manufacturing industries that industry can use most efficient work practice and can use the best
techniques to increase the value of products. In the duration of past years, as compared to 2013’s
data the steel production in Australia increased 448.77 thousand tones in June 2017 and this was
increased in July 2017 and the Steel production in July month was 458.89 thousand tones. The
lowest growth of Australian steel manufacturing was 238 thousand tones in 2009. This trend can
be understood from the following graph:
From this graph it is clearly shown that in October 2016 the steel production in Australia were
481.7 thousand tones it was declined in January 2017 with 45.4 thousand tones and in that year

Business Strategy 9
the production was 436.66 thousand tones. With the increment in July 2017 the steel production
was 458.89 thousand tones. The highest steel production in Australia was recorded in March
1998 and at that time the production was 819 thousand tones. 238 thousand tones is the lowest
steel production recorded in March 2009.
From the following table the trends in Australian steel manufacturing industry can be understood
with the comparison of other countries’ trends:
Countries
Last Production
(Thousand Tones
Monthly)
Previous
production
(Thousand
Tones Monthly)
Highest
Production
(Thousand
Tones
Monthly)
Lowest
Production
(Thousand
Tones
Monthly)
Australia 458.89 449 819 238
Brazil 2832 2649 3269 918
Canada 1100 970 1534 349
China 74021 73231 74021 4918
France 1150 1325 2466 643
Germany 3513.98 3605 4744 907
India 8362 7950 9000 713
Italy 2120 2085 3033 750
Japan 8588.4 8391 10775 1177
Mexico 1725 1685 1830 466
Netherlands 574.18 604 687 236
Russia 5585 5341 6804 3130
South Korea 6158.95 5906 6406 650
Spain 1000 1261 1980 555
Turkey 3344.53 3021 3345 152
United Kingdom 601 747 2848 131
United States 7071 6707 11951 3799
Current business strategy of BHP Billiton in Australia
BHP Billiton is a largest diversified resource firm and it is operating in many countries. BHP
Billiton operations mainly involve gas and oil exploration, mineral exploration, production and
processing and steel manufacturing, so these multiple activities are the reasons why many
external factors affect the business of BHP Billiton. According to its traditional strategy the BHP

Business Strategy 10
have developed plan to grow the value of the company. This plan focused in the six main areas
and they are; Technology, Exploration, Onshore US, Latent capacity, Cost efficiencies and
Major projects. According to the report of 2016 the BHP announced that it will implement a new
strategy to enhance the values and returns of shareholders. The company is implementing the
new strategies to increase the profitability and the productivity as well. Along with this, the new
strategy of BHP Billiton will support the top and bottom line growth rates over time. BHP has
also made a progressive dividend policy which ensures its shareholders that the growth of the
shareholders’ wealth will increase (Benn, et al., 2014). But it should be noted that the company’s
dividend policy need support from a superior capital management system for successful
implementation. In addition to this, according to the new business strategy of BHP Billiton, the
company will invest in those opportunities from which it can get high return so that it can
provide benefits to its shareholders also. The new business strategy of BHP Billiton involves a
new business model which is going to make the business more stable in the negative situation of
mining. According to the new business model of BHP the business will mainly focus on three
aspects such as; volume, cost and safety. With the help of the new strategies the company can
grow in future time and the productivity can increase with new operation model. The present
situation in market is challenging for BHP because there is low market demand and prices are
also low but according to the new strategy of BHP Billiton the company will pursue its growth
without waiting for recovery of product’s price.
Internal Analysis of BHP Billiton
Management Talent:
Management talent is an internal factor which affects the BHP Billiton. BHP Billiton is
comprises two companies BHP Billiton Limited and BHP Billiton Plc. This group work in 25

Business Strategy 11
countries and have more than 100 operations. BHP believe that the employees should be talented
to perform better for this the HR department of the company doing great job. The BHP Billiton
foundation programs are for the graduates which provide facilities to them so they can inspired
from the leaders (Humphreys, 2011). The HR team of BHP Billiton provides support to the all
employees of BHP who are working on other countries also. According to the strategy the
capable specialist will be responsible for the group work. Currently, more than 1,100 graduates
from different universities are working in this company in different places and these are those
students who are talented and willing to work with BHP Billiton. With talented workforce BHP
can grow more efficiently.
Resources and capabilities:
Any elements that is productive and that can help in activity for an desired outcome are called
resources. There are four types of resources; Human resources, financial resources, material
resources and non-material resources. Human resources and material resources are very
important for BHP because these are the resources which mostly help in improving the the
performance. BHP Billiton has many mineral resources in many countries and these are the
assets of the company without these mineral resources company cannot survive. Human
resources are those people who work for this company. Financial resource includes capital of the
company and the financial position of the company is very good (Ireland, et al., 2014). All the
resources are very important because they directly impact on the performance of the company.
Along with this the capability of the company measured by the level of production of the
company. High production refers high capability and low production refers low capability of
company. The capability of BHP Billiton is high because it has many mineral resources in
different continents.

Business Strategy 12
External Analysis:
Outside factors of an organization that effect the business is called external factors of a business.
These factors are uncontrollable by the business. External factors are of two types:
Micro factors:
Micro factors are those factors which are in direct contact with business and these factors affect
the routine activities of business. BHP Billiton has some micro external factors that affect the
business such as; competitors of BHP Billion are part of micro factors. Thus BHP Billiton is the
largest company so small competitors cannot affect it easily and its brand value. Another micro
factor is suppliers, BHP Billiton is one of the largest company of the world so it has trusted
suppliers. Public is also a micro factor which can affect the business. BHP Billiton has a good
brand image and customers trust this company, its CSR activities are also a reason why it has so
many customers all over the world. Public is a strong micro factor that can affect business.
Macro Factors:
One of the macro factors which affect the BHP Billiton is political factor. The BHP Billiton’s
political aspiration remains same in every country because it never contributes in the funds of
any political party. Social factor is also a part of macro factor, BHP Billiton is well known with
the social issues that can arise at the time of construction in every country. For this company has
appropriate management which reduces the social risk and ensure the maximization of social
work (Marin, et al., 2015). Along with this, environmental factors are also part of macro factors,
BHP Billiton mainly focus to provide benefits to environment by improvement of natural
resources. Legal macro factors are affecting the business because BHP Billiton is working in
different countries and every country have its own laws and regulation that should be consider by
the BHP Billiton whenever it start operations. Along with this technological factor is also a part

Business Strategy 13
of macro external factors that can affect the business. Innovation is very important for oil
business if business will not adopt innovation than it will not survive. To focus on its efforts on
technology, BHP Billiton has a technological park in Australia. By focusing in this innovation
and technology BHP Billiton can beat its competitors.
Conclusion
From the above report it can be concluded that BHP Billiton has some competitive advantages
that make it stronger than other companies. Beside this, it can be also concluded that the trends
in Australian steel manufacturing industry is not constant and there are some decrement and
increment in the trend in past few years. It is also concluded that management talent of the
company good and BHP is hiring graduates from different countries and the available resources
and capability of BHP is high. In addition to this, it can be concluded that there are some external
factors that can affect the company and BHP Billiton working with the consideration of those
factors.
References
Benn, S., Dunphy, D. and Griffiths, A. (2014) Organizational Change for Corporate
Sustainability. 3rd edn. New York: Routledge.

Business Strategy 14
BHP (2017) About Us. [Online]. Available at:
http://www.bhp.com/our-approach/our-company/about-us (Accessed: 18 September 2017).
Dickie, C. and Dwyer, J. (2011) A 2009 perspective of HR practices in Australian
mining, Journal of Management Development, 30(4), pp.329-343.
Humphreys, D.( 2011) Emerging miners and their growing competitiveness, Mineral
Economics, 24(1), pp.7-14.
Ireland, R.D., Hoskisson, R.E. and Hitt, M.A. (2014) Understanding Business Strategy Concepts
Plus. Australia: Cengage Learning.
Lodhia, S. and Martin, N. (2014) Corporate sustainability indicators: an Australian mining case
study, Journal of cleaner production, 84, pp.107-115.
Marin, A., Navas‐Alemán, L. and Perez, C. (2015) Natural resource industries as a platform for
the development of knowledge intensive industries, Tijdschrift voor economische en sociale
geografie, 106(2), pp.154-168.
Mason, L., Prior, T., Mudd, G. and Giurco, D. (2011) Availability, addiction and alternatives:
three criteria for assessing the impact of peak minerals on society, Journal of Cleaner
Production, 19(9), pp.958-966.
Robbins, S. P., Bergman, R., Stagg, I. and Coulter, M. (2014) Management. Australia:Pearson.
Yellishetty, M., Mudd, G.M. and Ranjith, P.G. (2011) The steel industry, abiotic resource
depletion and life cycle assessment: a real or perceived issue?, Journal of Cleaner
Production, 19(1), pp.78-90.