Business Strategy Development for BHP: Program & Portfolio Management

This report provides a comprehensive analysis of BHP's business strategy, utilizing strategic management models to advise top management on positioning the business for improved performance. It includes an organizational context, external strategic analysis using Porter's Five Forces and PESTLE analysis, and an internal strategic analysis. A SWOT analysis synthesizes these findings, leading to actionable recommendations for BHP. The report covers BHP's operational environment, competitive landscape, and internal capabilities, offering insights into opportunities and threats. It emphasizes innovation, market strategies, and alignment with sustainable development goals. The analysis highlights BHP's strengths in the Australian market, its challenges in the international market, and the importance of technological advancements and digital strategies. The report concludes with recommendations for BHP to enhance its business portfolio and maintain a competitive edge.

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Program and Portfolio Management
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Program and Portfolio Management 1
Table of Contents
Part A – Organisational Context......................................................................................................2
Part B1 –External Strategic Analysis................................................................................................3
Porter’s five-force model:............................................................................................................4
PESTLE Analysis............................................................................................................................7
Part B2 – Internal Strategic Analysis..............................................................................................10
Firm value chain:........................................................................................................................10
Part C – SWOT Analysis..................................................................................................................11
Part D – Recommendations...........................................................................................................13
References.....................................................................................................................................16

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Part A – Organisational Context
BHP is a group that provides excellent services in mining field in all over world. It has
many business processes and operations (Anderson, et al. 2015). This report will provide eight-
domain framework to identify eight environment of BHP Billiton Company. It will provide
different environments, such as technological, economic, competitive, legal, global, resource,
customer, and labour environments (Krstic and Becic 2011).
The multinational corporations (MNC) are having their business beyond a single country.
MNC tend to target markets in different countries. They require a strong marketing strategy to
get their aims. Headquarter of BHP Billiton is in Melbourne Australia. They maintain all
operations from headquarter and monitor all business processes (360strategy.co.il 2011).
SWOT analysis is useful for identification of its customers, competitors, threats, opportunities,
and collaborators. It is helpful for gather actual information of organization. Therefore, they can
develop a suitable marketing strategy (Billiton 2010).
BHP Billiton is having marketing strategy to manage all the operations of the
organization. This report will be proposed a marketing strategy and element of marketing mix
based on the PESTLE and SWOT analysis. BHP Billiton is a mining company and it was founded
in 1885 as a merger between Billiton and BHP. It is best in mining. First time, it mine zinc, lead,
and silver in Broken Hill Australia (BHP 2019).
BHP Billiton expended its operations to enhance its functions, which involved
production and advertising of other materials that included oil, iron, copper, and diamonds.
BHP Billiton is also increases its boundaries in business of steel products. BHP Billiton identifies
different fields to enhance business of the organization as leading global resource company
(bhp.com 2019). It will create value for its stakeholders using a well-designed market strategy.
It is a best way to identifies natural resources and marketing them to its target clients in all over
the world. BHP Billiton is having many mission and they creating value to all stakeholders of
company. It creates new operations, which can create new values for the company as well as

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stakeholders. BHP Billiton is having specific needs of its customers, shareholders, suppliers,
employees, and partners (Blainey 2010).
BHP Billiton is having different external environment. These external factors are help in
the designing of the marketing strategy. There is eight-domain framework. This is describing
about the BHP Billiton external environment (Adler 2013). It is a necessary thing for an industry
to aware about the external environments. Therefore, BHP Billiton is managing all the
environments using different marketing strategies. It requires many things to maintain all the
risks and fluctuations in the business of company. Some important environments affect the
growth of an organization. Innovation is a fresh idea of a person or a team, which is used to
solve or optimize a task. In case of business, innovations are game changing thing. Innovation
can change the main business idea. Business strategies and innovations are highly interlined
with each other. There are many game changer innovations in the market, which can make a
huge impact on the business strategies of an organization (Teece 2010).
This report will also describe about the major opportunities and threats for BHP Billiton.
It is necessary to find opportunities and threats for an organization. It will help in designing
market strategies. In conclusion, it will conclude about the major environments, opportunities,
and threats of BHP Billiton.
Part B1 –External Strategic Analysis
External strategic analysis is beneficial to enhance and change mandatory changes in the
marketing strategies of an organization. BHP uses many strategies to external strategic analysis
and it is a way to enhance their business process. It will provide help in taking opportunities and
reduces threats of organization. BHP uses porter’s five-force model for finding different forces,
which can make affects thier business. In next section, this repot will discuss about porter’s five-
force model for BHP.
Mining industry is highly uses optimization tools in their operations for reducing cost of
different unnecessary business processes. BHP can also use optimization process to overcome

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the unnecessary cost of different processes, which can be used in the other beneficial processes
of the organization (Menabde, et al. 2012).
Source: (BHP-annual-report 2018)
Porter’s five-force model:
Porter’s five-force model is highly used for external strategic analysis. It will provide
better results in terms of identification of the external forces of the organization. BHP is having
many business processes. Therefore, it has many threats from different things, such as buyers,
suppliers, new entrants in market, and many others ( Jurevicius 2013). Porter’s five-force model

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is helpful to identify different forces, which can effects on the performance, efficiency, growth
and many other things.
Threats of New entrants: BHP is having few new entrants in the market, which are
share in mining, such as CITIC Pacific Mining. Because of dearth of natural resources, there is
limited supply and capacity available in the global market.
Source: (BHP-annual-report 2018)
BHP has a good financial growth but in year 2015, it has a mishap and they lost their
financial growth. Now, BHP is again on same page and they have a good growth in their
productivity and performance.
Threats of substitutions: BHP is strongly placed in Australian market as well as global
market. It is broad organization with his diversified portfolio of natural resource assets, to
counter any threats of substitutes. Many organisations are highly interested in the mining
industries, as it provides high benefits from different processes. However, natural resources are
limited. In addition, investors are interested in the sustainable development and sustainable
products. BHP is highly follows all the Sustainable Development Goals (SDGs) to manage their
growth and performance. There is a threat for most of the organization, which is substitution.

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BHP also faced it starting days, but it merged all those organization, which are new in this
industry.
Bargaining Power of Buyers: in the field of mining, there are not many substitutes
available in large quantities. Mining industry is a large industry in which it requires large
investment. It is depend on the natural resources, which reduce the bargaining power of
buyers. Porter’s five forces are used to identify the different factor that can affect the business
of organization. Therefore, it is necessary to manage all the factors with right market strategies.
BHP has faced fluctuation in the employees and contractors ratio, because of their work and
performance. BHP has provided their best facilities as per the standard of Australian
government. In year 2018, BHP has 27161 employees and 35315 contractors for different
operations.
Source: ( Jurevicius 2013)
Bargaining Power of Suppliers: Supplier is main concern in the field of mining and it is
highly affected the business of mining industry. BHP is largely impacted by the bargaining
power of suppliers in energy costs, materials, shipping and labour. BHP extends their
operations. Therefore, overall costs from suppliers have increased in a high scale as well.

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Industry Rivalry: the rivalry among competing sellers is tough. Natural resources are
limited in the world and several natural resources companies are in competition to access the
reserves available across the world. It is also depend on the retaining qualified staff also. It is a
strong factor, which is affecting the BHP operations. It makes huge effects on the business of
organisation, such as transportation, building infrastructure, and new development projects
(Jaworski 2018). BHP is also having strong competitors, which are Vale, Rio Tinto, Jacobs,
Vedanta, and many others. BHP is having more than 62000 employees and annual revenue is
$43.6 Billion. Moreover, it faces different challenges from their competitors. BHP can handle all
those changes except some challenges, which are happened because of natural resources.
Mining industry is totally depends on the natural resources. Therefore, it is hard to believe that
company can get proper benefits from mining of different materials.
Source: (BHP-annual-report 2018)

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Australia is main area on which BHP focuses because of their history and proper
sources. BHP facing fewer issues in the Australian market as compared to other continents. It
has faced international market challenges.
PESTLE Analysis
PESTLE analysis uses to identify six factors about the organization, which can affect their
business, such as political factors, environmental factors, economic factors, technological
factors, social factors, and legal factors. It is an external analysis, which is highly used in the
analysis of different factors of company. These factors are beneficial for creation of new
marketing strategies.
Political factors BHP is having a large-scale business in all over the world. It has
affected by the local governments and national governments
actions on mining. There are many rule and regulation for mining.
Therefore, it is depends on the political relationship with the
domain countries. BHP is already having expends his business in
many countries. However, mining industry is providing benefits of
many courtiers in their financial growth (Macklin and Thompson
2010).
Economic factors Mining industry is a large industry and it affects the economy of a
country. BHP provides many advantages to the corresponding
countries.
Social factors BHP provides lots of jobs and facilities in those areas. BHP provides
many facilities to their employees. BHP is establishing infrastructure
for different people. It is developing local areas, which are near to
mining fields (Hunt 2015 ).
Technological factors BHP is having latest machinery in their operations. It mines many
materials such as coal, petroleum, iron, and many others. It is a
largest industry in mining field in all over world. Technology is

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helping it to expend their operations and new projects (Kingsnorth
2016). Mining industry is highly required technological changes for
betterment of different business processes and operations.
BHP is having latest servers and information systems to manage
their different operations, such as sales, marketing, finance, and
many others. BHP uses digital strategies to expand their operations
in different countries (Bharadwaj, et al. 2013).
Digital marketing strategies are beneficial for managing all the
threats and reduce different vulnerabilities of business.
Legal factors BHP was established before 150 years ago and it has rules and
responsibilities for all the staff members. It has many policies,
which are based on the national and international laws of mining.
It provides many facilities to their employees as per the rules and
regulations of particular country (Gilroy 2018).
Environmental factors BHP is having suitable development in their different processes. It
uses renewable energy source for their works (Lockrey 2015). It is
directly affecting their cost and climate change issue (Arias, Atienza
and Cademartori 2013). Organizational culture is highly matter in
growth of an organization. Therefore, it is necessary to follow
international standards, Australian standards, and sustainable
development goals to create a new image in the market. BHP
follows all the rules and regulations, which are created by the local
and national governments to secure environments.
Marketing strategies are used based on the business strategies framework. Business
strategies are influences the portfolio management of an organization. It is a way to change the
current position of an organization with better performance and productivity. BHP uses
business strategies to make their business portfolio (Meskendahl 2010).

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Source: (BHP-annual-report 2018)
BHP is having a good image in Australian mining market as well as all over economy of
Australia. BHP can get better remuneration in Australian market because of it long trend in
Australian market. It is a reputational advantage, which is a long-term goal of BHP.it works from
1887 and right now, it has a big part of Australian economy (Pottenger and Leigh 2016).
BHP is having safety at their top priority. They use latest safety tools for their
employees, which are working in the mines and other operations. BHP has strong financial
performance achieved in year 2018. BHP has investment in community development more than
$ 77 million as shows in below figure.
Part B2 – Internal Strategic Analysis
Internal strategic analysis is useful finding internal factors of an organization, which are
used to develop new marketing strategies for expending their business in market place
(Enderwick 2009).

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Firm value chain:
Firm value-chain analysis is used to analyze internal strategy of an organization. Firm value
chain is used two types of activities, which are support activities and primary activities. It is a
best way to identify support activities and primary activities of an organization ( Saif 2015).
Support activities are included these things, which are firm infrastructure, human resource
management, technological development, and procurement (Cacciolatti and Lee 2016).
Source: (business-to-you.com 2018)
Primary activities are having these things, which are inbound logistics, operations,
outbound logistics, service, marketing, and sales. The firm value chain is providing margin of
support activities and primary activities, which is useful for cost analysis. It is also beneficial for
the cost reducing activity (Pandurangarao 2015).
Technological development is a best way to enhance the growth of an organization.
Digital transformation provides many benefits to the organization. BHP has already having
information system for different processes. However, there are many changes in technologies,
which provide different advantages to the organization. Mining industry is based on the
machines and technology. Therefore, it is always required changes in the processes to increase