Competitive Strategy: BHP Billiton and Wesfarmers Business Models

This report provides a comparative analysis of the competitive strategies employed by BHP Billiton and Wesfarmers, two major players in the metal, mining, and retail industries, respectively. It explores how BHP Billiton leverages innovation, diversification, and operational efficiency to maintain its market leadership, focusing on its asset-intensive business model, integrated metrics, and continuous technological advancements. The report also examines Wesfarmers' diversified portfolio, data-driven marketing, and strategic acquisitions, while acknowledging criticisms of its business model. The analysis highlights how both companies adapt to market challenges and emphasizes the importance of innovation, strong management, and long-term planning in achieving and sustaining competitive advantage in their respective sectors, with references to key academic sources supporting the findings.

Running head: COMPETITIVE STRATEGY
Competitive Strategy
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Key Strategic Idea
BHP Billiton is one of the market leaders in their field of metal, mining and
petroleum. The company has followed a unique structure and strategy in the last decade to
gain competitive advantage in the market. BHP Billiton is largest mining company in the
world and this has been possible only because of the usage of innovation in the business
model (Grant et al. 2014). The company has kept its core value intact and it has produced
positive results for them. BHP Billiton’s Strategy is based on diversification where the
organization tries to operate on low cost, long life, expandable assets.
Wesfarmers have invested in retail, coal mining, chemicals, industrial products for
safety and fertilizers. This shows that the organization has a diversified portfolio and the
organization is able to gain large amount share in market due to the innovation they sue in
their business model. Wesfarmers is one of the largest companies in Australia and has been
able to hold on the market share due to their use of innovation in the business model.
Wesfarmers have a strong management capability, which helps them to formulate and
execute strategies (Biddle 2016). The company monitors day to day activities to ensure
maximum productivity in all their diversified portfolios.
Business model innovation at BHP Billiton
The business model that has been established by the company helps in the
development of the core competencies and the at the same time expertise’s in the
development, evaluation, selling and extraction of natural resources. The business of the
organization is asset intensive and the success of the organization is dependent on the safety,
reliability and productivity of the operations (Perrott 2015). The improvements in the
productivity of the organization with the help of unique features are the reason for their huge

2COMPETITIVE STRATEGY
share in the market. The scale of operation of the company is large which will minimize the
production cost of the company. The operations of the company is diversified which consists
of commodities of various types which helps to hedge the risks involved in the market. The
company also uses innovative ways to reduce the cost of the supply chain of the organization.
the company uses simple integrated metrics in a structured way to make improvement in the
productivity. The company continuously measure the performance to make further
improvements (Klettner, Clarke and Boersma 2014). The continuous enhancement in the
culture and the technology in the organization has helped the organization to lay the
foundation for the growth and production. There are lot of complexities associated with the
mining industry but the company has made usage of the simple design to monitor the
performance. The business model is designed in such way that it will help the organization in
all the elements. Therefore, all the essential activities in the organization is monitored on a
regular basis to ensure effective use of resources. The supply chain of the organization is very
effective and it acts a backbone for the operating model of the organization. The supply chain
of the organization helps to streamline of the business model. The organization uses a
integrated system for management which helps the organization track, measure and
benchmark the performances in to a single component. The company sues standard process
and common system to step up duplication of the best practices (Chaston 2017). The
company spends a lot of capital on the research and development of technology. The
continuous improvement in the technology acts as a major catalyst in the growth in the
productivity of the organization. The organization in still searching for autonomous ways to
reduce the cost and time involved in the operations. The company is focusing on
improvement in the technology through innovation, which will help the organization to
improve safety, increase the output and minimize the cost of production.

3COMPETITIVE STRATEGY
Business model innovation at Wesfarmers
Wesfarmers has a diversified portfolio, which helps the organization to hedge the risk
involved in the market. The use of big data is one of the key to success of the organization
and they have huge amount of data on customer information, which provides valuable
insights. The big data analysis of the data helps the organization to pick best location for their
stores and provides guidance in the marketing campaign of the company. This has helped the
organization to gain competitive advantage in the market. Coles insurance is one of the
divisions which is not known by the organization and it plays a very important role in the
growth of the organization (Sokolov Mladenović and Ćuzović 2015). The company uses
competitive marketing strategy to increase the growth and productivity of the organization.
Wesfarmers have made a lot of acquisitions which has created value for the organization. The
main reason of the success of the organization is due to the diversified portfolio of the
company as it able to hedge the risk in the market. The company tries to make usage of
innovation to analyze the needs and wants of the consumers. The company uses big data to
identify the trends in the market, which will help the organization to identify the most popular
products in the retail sector. The company has been able to gain a majority of share in the
market and keeps on using long term planning as the basis of their strategy. However, the
business model of the organization has been criticized severely because of the decrease in the
growth of the organization. However, the company is using the same strategy and business
model as it has full confidence that they will be able to bounce and regain the loss share in
the market (Nwogugu 2016). The organization uses innovative structure to sustain the
leaseback and sale of property so that they can drive the return on capital. The growth of the
mining division is less but the deficit is being covered by the growth in the retail. This shows
that diversification of the portfolio is one of the strong suits for the organization. There are lot
of experts who feel that the organization needs to change their business model but the CEO of

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the company has defended their business model and will be using the same business model
which has proved to be successful for the organization for so many decades (Beech et al.
2017).

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Reference
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Cambridge University Press.
Biddle, I., 2016. The Wesfarmers/Woolworths duopoly war: The Bunnings vs. Masters
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Chaston, I., 2017. Entrepreneurship. In Technological Entrepreneurship (pp. 1-24). Springer
International Publishing.
Grant, R., Butler, B., Orr, S. and Murray, P.A., 2014. Contemporary strategic management:
An Australasian perspective. John Wiley & Sons Australia, Ltd..
Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability:
Empirical insights into the development, leadership and implementation of responsible
business strategy. Journal of Business Ethics, 122(1), pp.145-165.
Nwogugu, M.C., 2016. Corporate Governance, Financial Stability and Evolving Insurtech:
The Case of Insurance Australia Group (2011-2016).
Perrott, B.E., 2015. Building the sustainable organization: an integrated approach. Journal of
Business Strategy, 36(1), pp.41-51.
Sokolov Mladenović, S. and Ćuzović, Đ., 2015. FRANCHISING AS THE MODEL OF
INTERNATIONALISATION OF RETAILING. TEME: Casopis za Društvene Nauke, 39(1).