BHP Billiton: Managing Stakeholders and Business-Society Dynamics

This essay provides an in-depth analysis of the business and society relationship, focusing on the case of BHP Billiton. It begins with an introduction to the evolving dynamics between businesses and society, emphasizing the impact of globalization and the increasing importance of stakeholder management. The essay then provides a company overview of BHP Billiton, tracing its history and evolution, and highlighting the significance of its operations within various communities. A key aspect of the essay is the macro-environment analysis, examining the political, economic, social, and technological factors influencing BHP Billiton. The essay also delves into stakeholder analysis, defining stakeholders and their impact on the company. It differentiates between primary and secondary stakeholders, discussing how management can effectively handle their interests. The essay concludes by emphasizing the critical role of management in navigating complex stakeholder relationships, ensuring long-term business viability, and maintaining a positive societal impact.

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INTRODUCTION
The impact on society from business organizations have changed over the last few decades.
Globalization has resulted in large organizations increasing their reach to almost every corner of
the world. This expansion has caused the organizations to interact with more people and
governments and face newer challenges from time to time. As any organization looks to expand
in a sustainable and long-term business, it has to develop a harmony with its ecosystem of
consumers, stakeholders, and regulators of the different regions where they operate. The
stakeholders are no longer limited to the shareholders or the owners only, but nowadays they also
include consumers, regulators, and the environment as a whole. This essay discusses the role of
management at BHP Billiton, in managing the stakeholders associated with it and the evolution
of relations that has developed between the organization and society during the course of its
decades long existence to become a diversified resource behemoth.
COMPANY OVERVIEW
BHP Ltd. was established in the year 1885 with mining interests in zinc lead and silver. The
company was quick to recognize the potential of these resources, which were abundantly
available in the city named as Broken Hills. (Anon., 2017) Those days mining companies were
less regulated and had a free hand in investing and utilizing the resources. The management of
large companies such as BHP went from strength to strength, based on acquisitions or new
ventures while the management followed the task of planning the venture, organizing the
resources and then leading the venture, after which they had to control the unit accordingly.
(Wren, et al., 2002) It merged with Billiton group to become BHP Billiton in the year
2001 .Where BHP was succeeding in its goal to become a diversified minerals and

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petrochemical company , it had to involve in multiple communities and their sentiments. It has to
take decisions responsibly and doing so may not result in pleasant results always. For example ,
the company started a AUD 2 Billion mine in western Australia , which bought a lot of progress
to the local community , who had soon grown dependent on it (MAYES, 2008).Shortly after its
opening , the company had to close the mine after just 9 months of operations , leaving the
community and workers in disarray. These kinds of incidences have increased the focus on the
role of corporate entities about the society. Other factors, which are emerging, are also equally
important; like the opportunities businesses bring to the communities, they operate in. When
BHP had started the mine in West Australia, the place had transformed in ways never seen
before. Job prospects were increasing, the place had, for the first time, witnessed significant
economic activity, which resulted in indirect business opportunities as well. These sorts of
effects, which a large organization invariably brings, are also a threat to the stability of a society.
Like in case of the mine’s unexpected closure, the public had to face the consequences of the
decision of a corporate entity. Many other such incidences such as the BP oil spill, the
Volkswagen emission scandal, the Takata Air Bags problem, or the Global Financial Crisis have
given rise to the concept of The Macro Social Environment. (CARROLL & BUCHHOLTZ,
2015, p. 6) This Macroeconomic environment analysis can be divided broadly into four
categories, which are political, economic, social, and environmental factors. (Achrol, et al.,
1983)
MACRO ENVIRONMENT ANALYSIS
Organizations as large as BHP Billiton often enjoy favorable political environment, as they are
an important source of economic activity. The company , with its over 1,00,000 strong workforce
,of whom about 13000 are from west Australia, is large enough to be politically important ,

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helping it secure a goodwill among the governmental departments. The government sees it as a
flag bearer of economic development as it commands the highest market capitalization in
Australia, and the long history of presence there has incorporated a sense of belonging among the
local community. Economically, the company is well placed currently, with access to low cost
capital owing to its reputation; BHP Billiton has an advantage over its competitors in raw
materials as well. Moreover, with a cash flow of AUD 14.6 billion, BHP has little worry
regarding large investments or near term difficulties. (Anon., 2017) Its major material, nickel, is
sourced from its mines at Ravens Thorpe at a competitive cost, resulting in significant gains for
the company. These factors and economies of scale have helped the organization develop a
stable image and established it as a long-term player. BHP is also on a strong footing socially, as
it has a long and fruitful history for the people of the region, it has become a part of life for many
people as they are connected directly or indirectly to the company. Very few companies in the
world achieve a patriotic identity among its people, like Tata Group in India; BHP Billiton is one
such company .Even the name of the company is taken from broken hills, a local area where
mining opportunities were first started by the organization. While mining activities traditionally
invite more scrutiny from among environment groups and local communities, it helps that the
company has a good rapport with the local population and knows the general principals and
guidelines that need to be followed while dealing with them. Technologically, BHP Billiton has
the resources to invest in R&D, and it has helped in developing techniques like the use of
pressure acid leach in the extraction of Nickel has helped it to improve output, thereby improving
cost benefits. Since the company has a large network of operations and has to follow rules and
regulations which can change from time to time, BHP has to maintain a strong legal team in
order to sort out any issues arising from its operations to avoid any major penalties or hurdles.

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BHP inevitably has a large role to play in the pollution emissions due to its scale of operations.
(Goldenberg, 2013) In this regard, BHP Billiton has been successful in addressing environmental
issues. As indicated in its organizational structure, it has a separate committee of director to look
into sustainable resources and environment. It has also been right in adopting a policy of
allocating one percent of its profits for philanthropic causes, which goes a long way in harboring
a healthy image for the organization Thus, the overall macro-economic situation for BHP may be
healthy on most fronts, and the company seems free to navigate the market according to its
strategies.
STAKEHOLDERS ANALYSIS
The reason of BHP Billiton’s immense success can be attributed to these four macro-
environmental factors mostly in its favor. The existing challenge its management now has to
overcome is to manage the stakeholders in a balanced manner, to achieve sustainable growth in
the business and long-term viability. Any person or entity who are affected, monetarily or
otherwise, are the stakeholders. (Haughey, 2016) The notion of a stake can be applied to any
entity in a manner which it has an interest for the stakeholder. For example, in case of BHP
Billiton, environment groups can be considered as stakeholders, since the mining activities of
BHP directly or indirectly affect the environment, the environment groups would respond if there
were any adverse effects due to the company. The general public who are connected to BHP for
their livelihoods , are also stake holders as they are directly affected by the company’s outcomes
and are contributors to the company’s’ growth. BHP being a large company, it has to face
constant scrutiny and apprehensions over its business practices. (Sutton & Galunic, 1995)
Therefore, it has to deal with the sensitivities of the enquiries in a sophisticated and experienced
manner. The public outcry over large scale scandals like that of the Volkswagen emissions

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scandal has made large organizations like BHP aware that any wrong handling of an issue on
their part can result in loss of image and reputation which they took decades to build as was
evident in the case of VW. (Gwyn Topham, 2015)Thus, any organization should identify who its
stakeholders are, and act accordingly. Just like when an organization makes a decision, the stake
holders are affected, the reverse is also true, i.e., if the stakeholders make a decision, an
organization may be affected. For example, if the government of west Australia decides that
mining activities may affect the scenic beauty and environment, and restricts mining in certain
regions, it will directly have an impact on BHP’s bottom line. Here, the government is already a
stakeholder for BHP, since it receives a sizeable share of taxes and other support from the
company. This is precisely what any organization seeks to avoid. If the stakeholders are well
informed and their concerns taken into account, it is less likely that they will cause an adverse
effect for the organization. (Bowen, 2011) While managing them, stakeholder of an organization
can be identified as primary or secondary. Primary stakeholders include the shareholders,
employees, management, the customers, suppliers, and other businesses, which provide relevant
services like transportation etc. Secondary stakeholders generally include bodies like regulatory
authorities, government, civic institutions, social groups or activists, and competitors. (Haughey,
2016, p. 67). While primary stakeholders are directly involved with the company, they have
more sway over the organizational matters. They are more easily recognized and their concerns
can be addressed in a more direct manner (Spacey, 2017). For example, if customers of company
develop a changing preference for a product, the organization can make relevant changes to
satisfy the needs. This may not be the case with indirect stakeholders, they may play a greater
role in the overall image of the company, but they are indirect in nature. For example, if an
environment group finds that construction activities are causing health and other issues in a

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region, the construction companies may invite scrutiny over their practices, thereby creating
negativity around their repute. Thus, the managers are well aware of their extended
responsibilities as those not only managing the human resources and business model, but also
involving the greater circle of direct and indirect stakeholders. As the responsibility of providing
the goals and the overall strategy, the management of any organization has to look for long-term
solutions. As managers are more aware of the changing scenario of stakeholders and their
importance , their tasks has changed become indispensable .The principal goal of stakeholder
management is to ensure that the primary stakeholders get what they expect from the company ,
while the non-primary stakeholders are also handled reasonably so that they are satisfied
(Kennedy, 2011). All these goals should be achieved while keeping the profitability and
competitiveness of the firm. Sometimes the management may find it difficult to satisfy all
aspects of their stakeholders, these situations require them to priorities the interests of their
primary stakeholders, while ensuring minimum discomfort to the other stakeholders, as was the
case in BHP Billiton closing one of its mines within nine months of operations. (Lucas & Kagi,
2017) Thus, in the current era of connected economies and globalization, the role of management
is very crucial to the success of any organization, as they have to take tough decisions for the
sake of long-term viability of the company, and at the same time, they have to ensure minimum
friction with the immediate stakeholders. (Manning, 2017)
CONCLUSION
If the past successes and achievements of BHP is taken into account , it can be seen that the
company has efficiently handled most of its decisions so far , and the principal reason behind its
sustained profitability is its management of each and every aspect of its business , like its
stakeholders , social causes , long term goals and strategies. The fact that it has been a dominant

BUSINESS AND SOCIETY RELATIONSHIP 7
company for such a long time is an example of outstanding management of resources and
prompts handling of issues. BHP has been, and continues to be, a light bearer of efficient
corporate culture for the whole of western Australian region, and thus it has inculcated a sense of
responsibility among its management of the need to perform exceedingly well in order to meet
the expectations of its owners as well as the general society.

BUSINESS AND SOCIETY RELATIONSHIP 8
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