Environmental Analysis Report: BHP Billiton, Australia

This report conducts an environmental analysis of BHP Billiton, a major Australian conglomerate, examining both its internal business operations and the external operating environment. The analysis delves into the company's competitive advantages, such as workforce diversity and inclusion, and investigates market trends within the Australian steel manufacturing industry, highlighting challenges like insufficient demand and the decline in skilled labor. The report also assesses BHP Billiton's current business strategy, which focuses on owning and operating large, low-cost assets. Furthermore, it includes an internal analysis of the company's assets, management talent, resources, and capabilities, alongside a review of sales, profits, and share prices over a five-year period. The external analysis considers both macro and micro environmental factors, identifying opportunities and threats. The report concludes with an overall assessment of the company's performance and outlook, supported by references and appendices.

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Environmental analysis of BHP Billiton, a large conglomerate in Australia
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Executive Summary
In this report, it will discuss on the environmental analysis of BHP Billiton which is a large
conglomerate organization in Australia. The analysis focuses on the internal business as well as
the external operating environment. Moreover, there would be need to make a conclusion in
regards to the performance and the outlook of the company.

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Table of Contents
1. Introduction...........................................................................................................................................4
1.1 purpose of the report...................................................................................................................4
1.2 The company snapshot................................................................................................................4
1.3 Competitive advantage of BHP Billiton.....................................................................................5
1.4 Market Trends in Australian steel manufacturing industry....................................................6
1.5 Current business strategy of BHP Billiton in Australia............................................................7
2. Internal analysis of BHP Billiton..........................................................................................................7
2.1 Assets............................................................................................................................................7
2.2 Competencies (Management talent; resources & Capabilities)................................................7
2.3 Sales, profits and share prices of 5 years...................................................................................9
2.4 Strengths and weaknesses...........................................................................................................9
3. External analysis (Macro and Micro)................................................................................................11
3.1 Macro environment...................................................................................................................11
3.2 Micro environment....................................................................................................................13
3.3 Opportunities and threats.........................................................................................................14
4. Conclusion............................................................................................................................................15
5. References.............................................................................................................................................16
6. Appendices...........................................................................................................................................18
Appendix 1:......................................................................................................................................18
Appendix 2:......................................................................................................................................19
Appendix 3:......................................................................................................................................20

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1. Introduction
1.1 purpose of the report
BHP Billiton is one off the global listed organization that specializes in the diversified mineral
resources mining with the establishment in over twenty five nations and has a wide range of
portfolio for the mining of commodities (Billiton, 2014). Some of the communities they
produced are copper, manganese, the precious metals such as the silver and diamond. Since the
company inception in 2001 the organization has shown an upward trend in the direction of
strengthening the position of the market through diversification of its commodities market
(Billiton, 2014). In this report it is about the environmental analysis of BHP Billiton (Jenkins,
and Yakovleva, 2006). It will mainly focus on the internal environmental analysis as well as the
strategies that are put in place for the organization which could influence both the external and
the internal environment of the company (Bonn and Fisher, 2011). Some of the other aspect
which would be discussed would be the competitive advantage of BHP Billiton, the trends in the
Australian steel manufacturing industry as well as the current business strategy which the
organization utilizes in Australia.
1.2 The company snapshot
Diagram 1: The diagram shows the sales based on the product produced.

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1.3 Competitive advantage of BHP Billiton
BHP Billiton has been able to achieve competitive advantage through workforce diversity and
inclusion. Diversity provides multiple perspective to the table and these diverse perspectives and
inclusion could be a valuable resource to foster innovation (Deegan, Rankin and Tobin, 2002).
The organization is able to utilize on these perspective, and they include the viewpoints when it
comes to the decision making (Deegan, Rankin and Tobin, 2002). The organization stimulate
the workers by making them to work with the diverse work groups that leads to their career
growth as well as polishing on their team skills (Bonn and Fisher, 2011). Diversity could be used
in boosting the employee value proposition of the company. Working with the individuals with
the diverse background and experience could lead to the tremendous growth. This has been a
very productive tools for the engagement of the employees. The employees are essentially
trained to work with a lot of different types of teams, each team they possess their own strength
and associated weaknesses and the challenges (Jenkins and Yakovleva, 2006). The aspect of
inclusion of individual who are coming from the deprived strata of the society is a human step
that has contributed to the overall development of the society especially in Australia. This has
helped in building of the organization brand (Bonn and Fisher, 2011). Moreover, it has helped
them in enhancing on the emotional intelligence of the workers and created a balanced
workforce. The aspect of diversity has acted as a safeguard against discrimination. The aspect of
discrimination has caused more harm than good. The acute discrimination could be illegal that
hampers on the organization corporate image (Kirsch, 2010). Therefore fostering involves in
dealing with the recruitment challenges, for organization, thus finding open minded as well as
skilled people who are ready to drop on the stereotype and willing to work with diverse
individuals (Tilton, 2014). Diversity has enabled this organization to overcome these aspects and
helped employees to communicate more in proper and professional manner so that they do not

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hurt on the sentiments of the minority in workplace. The diversity of the thoughts in the
organization has led to higher performance and thus shareholder value (Jenkins and Yakovleva,
2006). BHP Billiton has prioritized on diversity and inclusion of as their key strategic objectives
to be able to gain competitive advantage over the other rivalry in manufacturing company.
1.4 Market Trends in Australian steel manufacturing industry
The Australian steel sector has been in the dire situation due to the insufficient demand, and
business aims in securing larger along with fairer share in the value added steel fabrication work
in the majorly Australian resources tasks (Saunders, 2015). This would will make sure company
maintain a robust and viable industry later on (Saunders, 2015). The conventional markets for the
steel for example the manufacturing in addition to the industrial, commercial as well as the
residential building are depressed (Tilton, 2014). The Australian share for the fabricated steel has
been alarmingly low for the resources as well as the infrastructure projects (Saunders, 2015). In
the industry there has been reduction in the skilled and the apprenticeships which could lead to
danger of losing these workforce forever (Deegan, Rankin and Tobin, 2002). It has also been
observed there are many business which are closing and the experienced capability is being lost.
Another trend is that some of the companies in Australian company have indicated that they are
considering on relocating to Asia as well as investing in this region due to the aspect of lack of
opportunity and success in Australia (Deegan, Rankin and Tobin, 2002). Another trend that has
been noticed in the steel industry in Australia is the steel fabrication as well as the heavy
engineering market are battling so they are in the risk of disappearing. Their share of the steel
sector and heavy engineering local information in the leading Australia has reduced in the last 2
years to around 10% from 12%. The majority of this work was imported to Chinaas well as the
other parts of Asia.

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1.5 Current business strategy of BHP Billiton in Australia
The present organization technique would be to own and also operate massive, longevity, cheap,
upstream assets versatile by the commodity. The organization strategy has remained unaffected
more than decade this has allowed these to deliver superior margins all through the economic
and commodity cycles for several years (Jenkins and Yakovleva, 2006). The present strategy
utilized is Ansoff’s diversification strategy. This diversification by the asset, geography and the
industry. To have the ability to succeed they have a workforce which reveal their values and
communities wherein they are operating (Saunders, 2015). They have recruited host
communities, to have the ability to entice high caliber people that are devoted to the success of
the organization and thrive on working together with high performing teams. Furthermore, to
have the strategy they impeded on growth in periods of minimal revenue, cut cost by 18%. The
company halted 20 US dollars Olympic Dam copper and uranium mine project that was in South
Australia in August 2012, because of the decrease in the asset prices as well as the global
economic growth.
2. Internal analysis of BHP Billiton
2.1 Assets
The organization has been headed by Andrew Mackenzie who has headed the business and has
seen it grow and become one of the leaders in mining industry. The organization has been
fortunate to have Chairman by the Jacques Nasser, who has been devoted to make sure that the
shareholders interest are taken care. They have worked together to make sure the organization
gain competitive advantage and profitability margins higher than the competitors. The primary
objective of conducting the internal analysis is to determine on the management talent as well as
resource and the capabilities of the company.
2.2 Competencies (Management talent; resources & Capabilities)
Talent management

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The company has employed over 65000 individuals across their 91 locations. Their aim has been
creating an environment where their talented team have a sense of purpose as well as achieve
their full potential (Giurco, Littleboy, Boyle, Fyfe and White, 2014). When there is harmonious
workplace there is more productivity. When it comes to the talent management the company has
been able to recognize the diversity of individual and culture and has brought various skills to the
team (Hubbard, Hubbard, Moore and Moore, 2017). These individuals through the mentor have
been able to be nurtured to be able to grow in their careers and be able to be in a position to take
top management roles in the future. To ensure there is management of the talent the organization
engages, enables as well as provide support to the line leaders to enable them create work
environment of greater inclusion where employers are able to reach their full potential (Giurco,
Littleboy, Boyle, Fyfe and White, 2014). The company has been able to build a diverse skilled
staff, by understanding all the different aspects of personal uniqueness which include looked at
perspective, expertise, age disability, ethnicity, nationality and gender (Kemp and Owen, 2013).
Additional, to have the ability to maximize on these types of skills these are a lot more plans for
creating consists environment where people are involved, esteemed together with valued and
contrasts are embraced.
Resources & capabilities
The internal environment depends on the resources which are available for the organization to
operate in the market (Hubbard, Hubbard, Moore and Moore, 2017). Analysis of these resources
is done with context to BHP Billiton. The competencies of the resources and capabilities are as
follows;
 Resources are the tangible as well as intangible assets which the organization has. It is
related to both the human resource as well as the material available for the organization.

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 The capabilities are defined as the organization ability in order to integrate the resources
of the organization and achieve the desired objectives.
The organization is related to the extraction of resources such as the copper, bauxite, and gas.
The company does not require any kind of raw material since they are involved in extraction
thus, their main requirement is the human labor and the major resource is the human (Jenkins
and Yakovleva, 2006). It has been observed also that the organization has been working for long
time and it has been operating in various business (Hudson and Sadler, 2017). They have the
ability to carry out the activities of the business by combination with the labor skills and the raw
materials which highlights the core competencies of the company.
2.3 Sales, profits and share prices of 5 years
The figure below highlights the share prices, and the sales of the company as comparison to the
other competitors.
2.4 Strengths and weaknesses
Strengths
Some of the strength of BTP Billiton which they have been able to achieve are as follows;

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 Diversification: this organization is one of the renowned when it comes to portfolio of
the natural resources (Kemp and Owen, 2013). The company is able to supply resources
such as copper, silver, Uranium, and silver in large quantities with their various
operations in Brazil, Australia and South Africa.
 They have a strong financial performance. The organization has manifested the strong
financial returns to their stakeholders by utilizing the capital buy back campaigns (Kemp
and Owen, 2013). Additionally, their profitability ratios, solvency ratio they also exhibit
strong hold to the market.
 They have internal presence. The organization has various operation across eight
countries. This hence enhance on the faith of the stakeholder towards the organization.
 They are also associated to the social causes such as the corporate responsibility activities
that are able to enhance the image of the organization
Weaknesses
 They are facing the aspect of unskilled and semiskilled human resources: The
Company faces the dearth of the well trained individuals in the human resources that
inhibit the pace for development of the company.
 Corporate communication: the efficiency of the employees that are involved in the
corporate communication department is not up to the expected level which could be
detrimental to the growth of the organization.
3. External analysis (Macro and Micro)
The eexternal environment of the company comprise of the macro and micro environment. The
macro environment of BHP Billiton includes the external and uncontrolled elements which has

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an effect on the decision of the business, overall performance together with their approach
(Hudson and Sadler, 2017). These aspects are social, political, legal, economical as well as the
technological factors. Under the micro environment aspects impacting the business operation for
the company are the market structure, market trends, competitions, the customers as well as the
suppliers.
3.1 Macro environment
Political factor
The BHP Billiton has been a worldwide resource organization which is susceptible to the with
political affiliations risk aspects in just about all the markets (Kemp and Owen, 2013). The
political elements have big impact to the industry itself such as the authorization to operate,
development alternatives and the pipeline of the project (Hudson and Sadler, 2017). These
aspects have caused the manufacturing industry to suffer a lot and many of the organization have
incurred losses. Some of the political aspect which have impacted the sector are civil unrest,
nationalization as well as changes in the government policy.
Economical factors
The macro environment aspect such as inflation rate, the interest rate as well as the exchange rate
along with the economic cycle usually determine the aspect of the aggregate demand as well as
the aggregate investment in the economy (Kemp and Owen, 2013). The organization in the
manufacturing sector could utilize economic factor such as the growth rate, the inflation and the
industry economic indicator for example the materials industry growth rate to be able to forecast
the growth of trajectory manufacturing sector (Pepper McIntosh, Fitzsimmons, Gebhardt and
Dillenbeck, 2015).

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Social-cultural factors
The social culture as well as the way of undertaking duties usually impact the culture of an
organization in any environment. The shared belief as well as the attitudes of the population
could play a significant role when it comes to how the marketers of businesses such as BHP
Billiton understand the clients of a given market and be able to design marketing message for the
materials industry clients. Some of the social aspects which need to be analyzed by organization
are demographic and skilled level of population, education level as well as attitudes.
Technology factors
The technology is fast disrupting different industries all across the board. The manufacturing
industry is a good case which can illustrate this point. Over the last five years this sector has
been transforming fast, not giving the chance to establishing the players to be able to cope with
changes. Organization need to do technological analysis as well as the speed to which the
technology disrupt the sector.
Legal factors
The various market usually have different norms or even the environmental standards that could
impact the aspect of the profitability for the organization in those markets. When entering a new
market or even starting new business in the existing market the organization need to evaluate the
environmental standards which are required to operate in those markets. Some of these
environmental aspects are climate change, and laws and the regulation in regards to the
environmental pollution

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3.2 Micro environment
When it comes to the micro environment the following aspect will be looked at competition, the
customers as well as the suppliers.
Competitors
When it comes competition aspect this norm impacts the competitive advantage of the firm.
Some of the competitors of the organization are Arconic Inc., Rio Tinto Limited and Vale S/A.
BHP Billiton has been able to be above these competitors by having a diversification strategy in
place (Spuerk, Drobe and Lottermoser, 2017). Nonetheless, these competitors have been able to
affect how the organization operates in different ways especially affecting on the prices they
offer.
Suppliers
It has been observed in the industry that the high commodity of the prices have driven the
shortages in the mining equipment. This therefore means that BHP Billiton should be careful
when they are obtaining the supplies to enable them meet the demand, while at the same time
keeping the costs down (Schoenberger, 2016). The company intends to increase in the power of
the suppliers. The organization has been a leader when it comes to innovative technology and as
the demand of the organization increase, the strength of the suppliers would also increase as
fewer are in a position of supplying the specialist equipment.
Customers
BTP Billiton listens well to the customer’s preferences to be able to understand on their needs as
well as feedback to be able to improve the product and create a mutual benefit to the customer
and the organization (Schoenberger, 2016). Nonetheless, unlike most of the other rival

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companies they have a different aspect when it comes to addressing on their clients, this
organization provides a scheme for the customer development and training to help them to be
fully trained and be able to work their business much more efficiently and profitable.
3.3 Opportunities and threats
a) Expanding operations: there is possibility of expanding the overall credibility of the
organization financial position through expanding the current operations.
b) Innovations in the marketing: Currently, when it comes to operating a business
especially in the competitive world, it is important to be innovation to be able to survive.
The organization therefore should have proper channels for effective marketing (Kemp
and Owen, 2013).
c) The global ventures: the organization has the capabilities of collaborating with the local
players due to their presence in many countries. This therefore could improve on the
image view of the company in various countries.
Threats
a) Political threats: there is the threat especially from the current government particularly
after the occurrence of mishaps, which could lead to poor functioning of the organization.
b) The increased costs: the cost of the raw materials in increasing at alarming rate. This
leads to the increase in cost of the production and this may lead to decrease in profits.
c) Fluctuation to the demand: due to the developing of economies as that of China, or
even India they are developing at a fast rate where there is manufacturing in-house, the
demand for the BHP Billiton is fluctuating (Kemp and Owen, 2013).

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4. Conclusion
Based on the environmental analysis which has been discussed the following have been
concluded; in every existing organization they have resources and it is the role of the company in
ensure for the successful, these resources have assets to the firm and not a liability. The culture
of the company is the internal environment aspect which impacts on the performance. The
culture usually impact on how the workers perform their duties that in turn impacts to the overall
performance. In this report it has highlighted on the external analysis of the BTP Billiton
organization which has focused on the current trends in the market, competitive advantage,
current strategy they use as well the internal and external analysis.

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5. References
Billiton, B.H.P., 2014. BHP Billiton Annual Report 2012. Retrieved on September, 28, p.2014.
Billiton, B.H.P., 2014. BHP Billiton results for the year ended 30 June 2014. Available at:
(accessed 20 December 2014).
Bonn, I. and Fisher, J., 2011. Sustainability: the missing ingredient in strategy. Journal of
business strategy, 32(1), pp.5-14.
Deegan, C., Rankin, M. and Tobin, J., 2002. An examination of the corporate social and
environmental disclosures of BHP from 1983-1997: A test of legitimacy theory. Accounting,
Auditing & Accountability Journal, 15(3), pp.312-343.
Giurco, D., Littleboy, A., Boyle, T., Fyfe, J. and White, S., 2014. Circular economy: questions
for responsible minerals, additive manufacturing and recycling of metals. Resources, 3(2),
pp.432-453.
Hubbard, T.N., Hubbard, T.N., Moore, M.J. and Moore, M.J., 2017. BHP Billiton: Mining
Potash. Kellogg School of Management Cases, pp.1-13.
Hudson, R. and Sadler, D., 2017. The international steel industry: restructuring, state policies
and localities. Routledge.
Jenkins, H. and Yakovleva, N., 2006. Corporate social responsibility in the mining industry:
Exploring trends in social and environmental disclosure. Journal of cleaner production, 14(3),
pp.271-284.
Kemp, D. and Owen, J.R., 2013. Community relations and mining: core to business but not “core
business”. Resources Policy, 38(4), pp.523-531.
Kirsch, S., 2010. Sustainable mining. Dialectical anthropology, 34(1), pp.87-93.
Pepper*, A., McIntosh, P., Fitzsimmons, R., Gebhardt, T. and Dillenbeck, E., 2015, September.
The Unconventional Global Endowment: Results of BHP Billiton's Global Assessment. In
International Conference and Exhibition, Melbourne, Australia 13-16 September 2015 (pp. 283-
283). Society of Exploration Geophysicists and American Association of Petroleum Geologists.
Saunders, A., 2015. BHP Billiton winds back China forecast.
Schoenberger, E., 2016. Environmentally sustainable mining: The case of tailings storage
facilities. Resources Policy, 49, pp.119-128.
Spuerk, S., Drobe, M. and Lottermoser, B.G., 2017. Evaluating resource efficiency at major
copper mines. Minerals Engineering, 107, pp.27-33.

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Tilton, J.E., 2014. Cyclical and secular determinants of productivity in the copper, aluminum,
iron ore, and coal industries. Mineral Economics, 27(1), pp.1-19.

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6. Appendices
Appendix 1:
Figure 1: The diagram shows the financials of BHP Billiton organization

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Appendix 2:
Figure 2: The diagram below shows the market prices of steel.

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Appendix 3:
Figure 3: The diagram shows the global iron core production in other countries