Business Strategy Analysis: BHP Billiton's Global Operations

This report provides a comprehensive analysis of BHP Billiton's business strategy, examining its internal and external environments. The report begins with an overview of the company, its background, and the purpose of the analysis. The internal analysis delves into the company's strengths, weaknesses, resources, and core competencies, including a VRIO analysis to assess its competitive advantages. The report also includes a SWOT analysis. The external analysis utilizes a PESTLE framework to evaluate political, economic, social, technological, legal, and environmental factors impacting BHP Billiton's operations. The report concludes with a summary of the key findings and their implications for the company's future strategies. The report highlights the company's global presence, its mining, petroleum, and metals operations across various countries and its financial performance.

Running head: BUSINESS STRATEGY
Business strategy
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Executive Summary
The following report is based on the determination of the strategies of BHP Billiton. The
researcher has taken the example of the mentioned company because of its huge global presence
and large scale business operations. The report clearly analyzes the internal and external business
environment which includes the analysis of the business strengths, opportunities as well as the
threats and weaknesses. It also includes a detailed analysis of the Political, social, environmental,
legal analysis. The analysis will help the researcher and the readers to get a clear idea about the
following. The report begins with the introduction of the company and its background and also
states the purpose of the report. It ends with a modest conclusion about the total research.

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Table of Contents
Introduction......................................................................................................................................4
Purpose of the Report......................................................................................................................4
Internal Analysis..............................................................................................................................5
Graphs..............................................................................................................................................8
Figure 1- Revenue of BHP Billiton.................................................................................................8
Competitive Advantage...................................................................................................................9
Figure No 2- SWOT Table..............................................................................................................9
External Analysis...........................................................................................................................12
PESTLE Analysis..........................................................................................................................12
Conclusion.....................................................................................................................................14
References......................................................................................................................................15

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Introduction
BHP Billiton is a trading entity and is an Anglo Australian multinational company. It
deals in a number of areas namely mining, petroleum, metals and many more as such sectors.
Headquartered in the Melbourne it was founded in the year 1885 in broken hill of Australia. It is
termed as the World’s largest mining company in 2015 according to the value of its shares and
market presence. The mentioned report will provide a clear highlight of the business strategies of
the mentioned company and its success factors over the years.
Purpose of the Report
The purpose of the report is to determine the internal and external analysis of the mentioned
company. The mentioned company operates a wide variety of mining processing and oil and gas
production operations in around 25 countries across the world. The company has four primary
operational units, with an optional fifth operational unit, referred to as Businesses:
 Potash
 Iron Ore
 Copper
 Petroleum
 Coal
The company employs around 40,000 people all over the world in its vast range of corporate
offices and company facilities.

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Internal Analysis
The researcher states that the companies transformed them entirely in the world of information
and BHP Billiton ability to exploit the intangible assets is turning out to be more decisive than
their ability to administer tangible assets. BHP Billiton is expanding its business on global
platforms and study reveals that it has implemented the concept of balanced scorecard, which
helps in supplementing the measurement of financial performance of business (Bair and
Palpacuer 2015).
Hence, the resources and core competencies measures the criteria of perspective customers,
internal business process, learning and growth. BHP Billiton is of late has been transferring the
resources and capabilities across the geographical boundary which provides the way for
company to leverage its core competencies more fully and expands its competitive advantage
into the wider array of geographical markets (Billiton 2014).
VRIO Analysis is performed to determine the conceptual framework of which forms an
indispensible part of BHP Billiton strategic scheme. The primary objective of conducting such
analysis is to determine the resources of BHP Billiton or the capability worth of BHP Billiton.
Value: The primary question rose whether BHP Billiton has the ability to make optimum utilization
of its resources or does it put in effort in exploring and exploiting the opportunities (Billiton
2014). It is also puts an emphasis on inflecting threat in the market position for BHP Billiton, if a
firm is unable to possess threat in the market then it might expose its weakness. However, in this
context BHP Billiton having abundant of resources and assets is regarded as strength in mining

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industry and other competing firms might feel themselves as a threat in contrast to the resource
capabilities of BHP Billiton.
Rarity: BHP Billiton is considered as one of those mining companies which has a superior
competitive advantage in the market. It is not short of resources and capabilities and hence, it is
benefited from the other competing organizations due to is vast range of properties (Billiton
2014). Numerous studies has indicated that BHP Billiton enjoys the competitive advantage in
following sector over several other mining firms due to its overall objectives and strategies
which are apparent throughout the mining industry.
Immutability: The scenario of compatibility reflected through the framework of VRIO analysis
reflects the internal environment of BHP Billiton. It determines the adequacy of cost
disadvantage in terms of capability and resources in the process of procuring and the
development of the resources in comparison to other mining firms. Mining company like BHP
Billiton having rich and valuable resources can be hard to emulate for other competing firms in
order to gain advantage. BHP Billiton can either exploit those external opportunity or neutralize
the threat from external sources by making optimum utilization of available resources (White
2017).
Organization: Once BHP Billiton has understood the concept of rarity, value and immutability of
resources and capabilities, the next procedure is to organize the organization in an appropriate
manner to make an effective use of such resources (White 2017). However due to its large scale
of operation, BHP enjoys the benefits sustained competitive advantage for prolonged period of
time. The management and the control systems of BHP Billiton consist of both formal and

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informal mode of managerial decisions by aligning such decisions with the strategy of the
organization.
These components of BHP Billiton are better known for complementary capabilities and
resources because it helps in sustained competitive advantage. Without correct organizational
and managerial strategies no firms can achieve the valuable, rarity and immutability and may
suffer competitive disadvantage.
The term value chain comprises of activities defines the functional operations and
performance of specific activities in order to deliver valuable product and service in the market.
The theory of value chain is based on the foundation of decision supporting tools, which adds to
the competitive parameters (Billiton 2016). Value chain analysis facilitates the physical
illustration of several processes for BHP Billiton, which are involved in mining, and extraction
of raw materials and concluding the procedure by rendering the final product, which is
commonly known as value chain.
Primary activities: Facilitating the arrangement for inbound movement of minerals, metallurgical
coal, silver, irons ore, manganese from the mining site to the manufacturing units. The functions
and operations of BHP Billiton are concentrated on administrating the process, which converts
the inputs of raw materials in to the output of finished goods.
Supportive activities: This process consists of procuring the raw materials such as metallurgical
coal, silver extracts, iron ore, diamonds, and manganese from the mining sites to the
manufacturing unit where plants and equipment are located. The technological unit in
collaboration with the unit that manufactures the products is concerned with retaining the
equipments such as the software, technological knowledge and hardware which is introduced by

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BHP Billiton in converting those inputs into finished goods. BHP Billiton is supported in a
proper way by the activities such as accounting and finance controlling the public relation and
the quality.
Value chain forms an integral part of BHP Billiton for appropriate functional operations. The
concept of value chain has rapidly paved its way in leading the management position, which is
considered as an important tool for strategic planning. BHP Billiton implements the theory of
value chain to the entire supply chains and distribution channels of its organization (Billiton
2016). This implementation has enabled BHP Billiton to post yet another groundbreaking
performance based on its business approach aimed at developing the manifold equipments for
growth. Such feat acts as an encouraging aspect adjacent to the surroundings of financially viable
challenges in relation to its business.
Graphs

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Figure 1- Revenue of BHP Billiton
Source: (Billiton 2014)
Figure 2- Product Segmentation
Source: (Billiton 2014)

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Figure 3- Sales Figures
Source: (Billiton 2014)
Competitive Advantage
STRENGTHS OPPURTUNITIES
 Strong performance financially
 Diversification
 International Presence
 Marketing Position
 Association with Social Presence
 Mergers and Acquisitions
 Global Expansion
 New tasks
 Marketing Innovations
WEAKNESS THREATS
 Earlier History of Mishaps
 Unskilled Human Resources
 Corporate Communication
 Demand Fluctuations
 Rise in Competition
 Rise in the Costs
 Threats from political grounds
Figure No 2- SWOT Table
Source- (As created by the Author)
Strengths
 BHP Billiton is a well known company that deals in Natural Resources. The company has a
vast range of assets spanning across the globe which makes it one of the very best in the
business. The company is one of the largest suppliers of uranium, copper, silver, lead and

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aluminum. BHP is also a major producer of iron ore, metallurgical coal and manganese with
operations in Australia, Brazil and South Africa. With eight operations across South Africa,
Australia, the South America, United States the Coal section of the organization provides
thermal power for the production of electricity in power generation and some other industries
that requires electricity.
 The mentioned company in this report has been influential in dealing with financial
transactions and has been successfully able to provide huge financial returns to the people
who have invested in the company. This has been possible because of the aggressive share
buyback program of the company. (Pepper et al. 2015).
 A dedicated customer service for its product and on the other hand the price increases for the
customers in a similar way.
Weaknesses
 The management of the company has to take care to improve the gross profit margins and
also on some long term plans like financial equity.
 BHP Billiton currently faces several issues that are directly connected to human resources
that have a clear impact on the operations. This happens due to the absence of a bunch of
trained and qualified staff in the ranks.
 The weakness of the company in corporate communication is a disadvantage for the company
as the staffs of the mentioned company are not that active while responding to enquiries
related to corporate management or effective communication between them and the
shareholders of the company.

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Opportunities
 A number of projects have been undertaken by the mentioned company which is to be
executed by them. There are more than 25 projects in the offering which promises to be a
huge source of revenue for the company if they are done and completed in an efficient
manner.
 The mentioned organization can undertake different activities to strengthen its brand position
by integrating innovative and latest marketing solutions and by using some new media tools
and reaching out to the customers.
 Kyoto Protocol is now mandatory to abide for every single business organization. BHP
Billiton promised to cut down greenhouse gas emissions by at least 5%. The program if
managed properly will provide the best example for environmental responsibility and
development of the sustainability of the company.
Threats
 There has been a looming threat from continuously rising costs from the suppliers like
shipping costs, inflation of prices of essential commodities, rising issues with workers
that has been restricting the development of the company globally (Mayes et al. 2014).
 BHP Billiton is facing political issues even in Australia, as the company has received an
unfavorable ruling from the government regarding infrastructure access and the political
dynamics of being on the ‘right side’ of issues cannot be underestimated (Grant et al. 2014).
 BHP Billiton depends entirely on China for supplying a large chunk of natural resources and
global slowdown in world markets will have a direct and devastating impact on BHP. The