Analysis of BHP Billiton's Organizational Structure and Innovation

This report examines the organizational structure and strategies of BHP Billiton Limited, a multinational natural resource company. It analyzes the impact of the company's centralization and divisional structures, along with its product and process innovation strategies, on management innovation and overall business performance. The report highlights both positive impacts, such as the facilitation of technological advancements and effective delegation, and negative impacts, such as potential limitations on employee initiative. The report concludes with recommendations for improvement, such as adopting a specialization organizational structure to foster greater innovation. The analysis covers the company's structure, innovation strategies like acquisitions, joint ventures, and merging, and their influence on market expansion and global competitiveness. It also includes an overview of the company's financial performance and operational strategies.

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BHP Billiton limited Analysis
Name
(Affiliation Institution)

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Executive Summary
The main aim of the report was to examine the impact of the BHP Billiton Limited
Company structure on management innovation, overall performance and further provide
recommendation of what the company could do to improve on innovation and performances.
BHP Billiton Limited is a multinational natural resource company formed in 2001 through the
merging of Billiton PLC and BHP limited and its headquarters is based in Australia. The
company produced diverse products such as gas, silver, manganese, nickel, iron, aluminium,
uranium, titanium, copper and steel. BHP uses centralization and divisional organizational
structures to carry out its operations. The innovation strategies used by the company include
product and process strategies. Other entry strategies that are incorporated with the innovative
strategies to ensure the company is successful in global environment include joint venture,
acquisition and merging. The organizational structure and strategies used by BHP Billiton
Company impact management innovation as it ensures the organization utilizes the latest
technologies on its activities and procedures. Negatively, the organizational structure and
strategies used by the company have facilitated to employees making less frequent attempts to
pursue the finding of new and innovative solution to the problems. BHP’s organizational
structure and strategy has impact on performance as it facilitates quick decision making,
effective delegation of duties, encourages high motivation of staff and encouragement of
innovation. The suggested ways in which BHPs should improve its business performance is
through the adoption of specialization organizational structure that will develop expertise in one
field leading to high innovation within the organization. The paper concluded BHP company has
successfully developed within the market structure by improving on innovation, performances,
enhancing its management and implementing its marketing and organization structure.

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Table of Contents
Executive Summary.....................................................................................................................................2
Introduction.................................................................................................................................................3
Overview of BHP Billiton limited organisational structure, strategies and possible reasons.......................3
Impact of the BHP Billiton limited structure on management innovation...................................................3
Impact of the BHP Billiton limited structure on overall business performance...........................................3
Recommendations.......................................................................................................................................3
Conclusion...................................................................................................................................................3
Reference.....................................................................................................................................................3

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Introduction
BHP Billiton is a multinational natural resource company formed in 2001 through the
merging of Billiton PLC and BHP limited (Su, Yi, Hooper and Dutta, 2013 p.155). Currently,
BHP Billiton Limited is categorized among the largest mining companies in the world. The
company produced diverse products such as gas, silver, manganese, nickel, iron, aluminium,
uranium, titanium, copper and steel (Ratchev, Caffery, Sullivan, Olivares and Rigby, 2011,
p.762). In addition, BHP limited company also has interest in transportation and engineering.
The headquarters of the company are suited in Melbourne, Australia and it is listed under
Australia Security exchanges as BHP Billiton Limited (Su, Yi, Hooper and Dutta, 2013 p.155).
Currently, BHP Billiton Company has over 100,000 employees as compared to over 80,000 in
2008 across 25 countries it operates around the world (Okereke and Russel, 2010 p.100).
Furthermore, BHP Billiton Limited Company has revenues of US$43.638 billion after tax by
2018 as compared to $59.5m billion in 2008 before taxation, operating income of US$17.561
billion and net income of US$4.832 Billion.
Overview of BHP Billiton limited organisational structure, strategies and possible reasons
Organizational structure in business perspective defines how a department is arranged,
tasks are allocated, decisions are made, activities are coordinated and supervision is directed
towards achievement of set goals, objectives and targets (Colquitt, Lepine, Wesson and Gellatly,
2011 p.115). Organizational structures differ from one company or industry to another and it is
usually developed on basis of the type of industry, their SMART objectives and goals. Basically,
the most common organizational structure used in modern organizations includes Functional,
Divisional and matrix structure. In functional organizational structure, an organizational is
usually divided into smaller groups with each group designated specific roles and tasks (Verle,

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Markič, Kodrič and Gorenc Zoran, 2014 p.922). This type of organization is suitable for small
companies. In divisional organization structure, an organization operates in division with each
division operating as its own company and controlling its own resources (Burton, Obel and
Haakonsson, 2015 p.37). Matrix organization is a combination of both functional and divisional
organization structure meaning an employee can report to more than one boss within the same
organization.
BHP Billiton Limited Company uses a centralization and divisional organizational
structure to manage its operations across the country. With the company operating in over 25
countries, each country (region) has its own management team headed by the Director. The
director of each region usually reports to one CEO who is appointed by the board of directors
and stationed at the Company’s headquarters in Melbourne, Australia. In addition, each regional
manager is responsible for delegating tasks to the employees within that division. For example, if
BHP Limited Company is operating in Mexico region, the company operates in that region as an
independent company, controls all the resources and spending of money on aspects of the region
or on a particular project.
The main reason why BHP Limited Company uses the divisional and centralized
organizational structure is that the model makes it easier for the company to focus on innovation,
performances of geographical regions and support from globalized functional services with
consideration of world-class experts found in those areas. In addition, the organizational
structure also creates a more agile organization that is ready to respond to opportunities and
challenges presented in a rapidly changing global market place.
BHP Organizational structure

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BHP limited has various strategies that it utilizes to innovate and venture successfully in
the new markets, expand its operations and further carry out operations effectively. The
innovation and entry strategies have maintained sustainability of the organization to compete
with key players in the industry such as Rio Tinto. BHP Company uses many strategies that
differ from one resource to another. However, the general strategy of the company is growing
strategy that focuses on low cost, life-long and expendable assets. The common innovation
strategies used by BHP Billiton Company include product innovation and process innovation.
Product innovation strategy involves BHP Company introducing new products into its operation,
improving the existing products or adding features. Process innovation strategy as used by BHP
includes the company involves changing in equipment and technology that is used in the
manufacturing of its products.
Incorporation of the innovation and entry strategies practice by the company such as
acquisitions, joint venture and merging ensures the company expands easily to other regions. In
merging perspective, BHP limited company merged successfully with Billiton plc. and BHP
BHP CEO
Region A
Manager
Employees Supervisors
Region B
Manager
Employees Supervisors

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limited which created the BHP Billiton limited Company. The main reason for merging was to
establish an effective Research and Development (R& D) department that supports product and
process innovation in order to bring expansion opportunities, strengthened monetary strength and
create the organization’s consolidation resources which do not conflict with each other instead of
strengthening each other acquired and developed resources.
BHP limited Company also used acquisition strategy. With product and process innovation
creating a good reputation of the company, BHP Billiton Limited has been able to use acquisition
strategy for its developmental and expansion to various regions across the world. For example, in
2010, BHP Billiton limited company acquired Athabasca Potash Inc successfully (Grant, 2012
p.1)
The main reason for the product and process innovation strategies alongside other market
entry strategies is to successfully differentiate its product from those of competitors. In addition,
the strategies ensured that BHP’s product ventures into new markets that have diversified
cultures and high government restrictions on international companies.
Impact of the BHP Billiton limited structure on management innovation
The current organizational structure and strategies used by BHP Billiton Limited
Company structure have various impacts on management innovation. Positively, the
centralization structure adopted by BHP Billiton has ensured that the organization utilizes the
latest technologies on its activities and procedures. Centralization in this context refers to the
manner by which BHP Billiton Limited Company carries out a decision making process and
arranges its authority in relation to the management innovation. The BHP Billiton structure of
centralizations which is aimed at providing expansion and developmental opportunities to the
company impacts management positively as upper-level managers who are based on one region

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have increased control and freedom of making decisions in relation to innovations. For example,
is there is an innovation identified at one region, a manager can implement the product or
process innovations without a long process of consultation with other regional managers or
headquarter which sometimes may take a long process to get feedback.
With centralization and divisional organizational structure in place, the BHP Billiton’s
upper-level management in region is able to organize and integrate knowledge and resource
efficiency to lower costs and foster innovations. Furthermore, with integrated knowledge and
availability of resources, employees are motivated to come up with innovations that will enhance
efficiencies, improve productivity and maintain a sustainable environment for the company to
business by reducing tracking costs, labour costs and any other costs related to resources.
Divisional and centralization organization structures support the great level of responsibilities
and authority in BHP Company making the company more receptive to opportunities of the
current technological, market and organizational variety.
Generally, the centralization structure and strategies have further facilitated to
development of Research and development (R&D) for BHP Billiton Company which has fueled
better commitment of the staff, resolution of conflicts, cooperation in job roles and aided
effective distribution of knowledge within the company which in return has resulted to greater
innovation output. In addition to Research and Development support, the employees are capable
of innovating technology that reduced the period of the life cycle within the business.
Negatively, the Divisional and centralization structures and strategies also have
implications for BHP Billiton Limited Company. In centralized structures, the progress of
information from upper levels of management to lower and sources of knowledge formation are
impeded hence reducing the frequency and quality of ideas, problem-solving and employee

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initiative. The reduction of ideas, employee initiative and problem-solving has resulted in the
decreased level of innovative performance leading to substandard development of management,
processes and products as a whole. In addition, the organizational structure and strategies used
by the company have facilitated to employees making less frequent attempts to pursue the
finding of a new and innovative solution to the problems.
Impact of the BHP Billiton limited structure on overall business performance
Generally, BHP Billiton Limited’s organizational structure and strategies have positive
impacts on the overall business performances. The divisional organization structure of BHP
Billiton Limited Company has facilitated to breaking down of organization into self-contained
divisions around the world which in turn has contributed to the effective exploitation of
resources. Furthermore, with the divisional organizational structure being based on the extensive
delegation of authority, the overall business performance has improved as the performance on
each division can be me measured directly. In addition, each division is responsible and
accountable for the profits and sales and therefore the employee morale and motivation is
generally high with manager performing excellently. When employee morale and motivation is
high, employees perform excellently as they feel appreciated and valued in an organization.
The organizational structure and the innovation and entry strategies used by the BHP
Billiton Limited Company are more effective and efficient when it comes to coordination of
activities and therefore employees are able to respond positively to change in the local market
and enhance their overall performances. Through divisional and centralization organizational
structure, it becomes easier for the company to implement business strategies and focus on the
core products that are needed in the market. Furthermore, the divisional organizational structure

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enables effective business decisions to be made locally which has significantly improved on how
the business strategies are implemented to fit the general and specific demand of a local market.
The organization structure of BHP Billiton Limited Company has enhanced the
performance of company as it supports easier implementation of latest technologies the
strategies, processes and procedures. For example, BHP Billiton uses Escondido innovation to
achieve its business strategic direction. The technology generates massive amount of data that
increases the performance of the company by ensuring data is processes much quickly for quick
decision making. In addition, the technology allows data mining hence helping the company to
have secured data and high level of accuracy for making better decisions.
Recommendations
BHP Billiton can improve innovation and performance in diverse ways. Adopting
specialization organizational structure is one way BHP Billiton Limited Company can use to
encourage and sustain innovation and performance. Specialization organizational structure is
famously known as “division of labour”. The organization structures will involve managers of
diverse BHP’s regions breaking down complex tasks into a more precise task that each employee
can handle effectively. In addition, breaking down of the tasks develops competencies especially
in a situation where employee’s works on repetitive task for long which in turn leads to
marginalized errors and improved performances. In addition, employees are likely to innovate
often as specialization structure allows employees to be trained on how to best perform specific
tasks. Over time, employees tend to be more effective and proficient in performing their tasks
and allow them to be an expert to some degree. When an organization has a combination of
skilled, experienced and motivated employees, it performs excellently (Yavas, Karatepe and

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Babakus 2010 p.70-83). Therefore, BHP Company should consider utilizing the opportunity of
using specialization organizational culture.
Conclusion
In conclusion, BHP still remains one of the leading companies in the world and the
company has successfully developed within the market structure by improving on innovation,
performances, enhancing its management and sustaining its marketing and organization
structure. In addition, the company has maintained its reputation and global image through
innovations, renovation of its structure, production of quality metals to compete with Rio Tinto
and meeting any other technological requirements. BHP Billiton Company is still known as a
diversified company due to its ability to produce standard spanning copper and other large-
quality metals. The ability of BHP Billiton has a sophisticated IT management and innovation
which aligns with the business strategies leading to the achievement of objectives and goals of
the organization.

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References
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Improving performance and commitment in the workplace (Vol. 375). New York, NY: McGraw-
Hill Irwin.
Grant, M.W., 2012. Fear the Dragon? Chinese Foreign Direct Investment in Canada. In Chinese
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Okereke, C. and Russel, D., 2010. Regulatory pressure and competitive dynamics: Carbon
management strategies of UK energy-intensive companies. California Management
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Ratchev, I., Caffery, G., Sullivan, S.P., Olivares, R.I. and Rigby, G.D., BHP Billiton Innovation
Pty Ltd, 2011. Production of Nickel. U.S. Patent Application 12/739,767.
Su, R., Yi, R., Hooper, K. and Dutta, A., 2013. Information Spillover, Profit Opportunities, and
Return Deviations Analysis: The Case of Cross-Listed BHP Billiton. International Journal of
Business and Economics, 12(2), p.155.
Verle, K., Markič, M., Kodrič, B. and Gorenc Zoran, A., 2014. Managerial competencies and
organizational structures. Industrial Management & Data Systems, 114(6), pp.922-935.