Organizational Analysis: A Case Study of BHP Billiton Report

This report provides an organizational analysis of BHP Billiton, examining its strategies, controversies, environmental factors, and leadership style. It traces the company's development, analyzes its strategic approaches, and discusses controversies related to business practices. The report includes an environmental analysis using the SWOT framework, identifying strengths, weaknesses, opportunities, and threats. It also explores the organizational culture and leadership style within BHP Billiton. The analysis highlights the importance of strategic planning, leadership in determining profitability, and the potential for the company to capitalize on opportunities and mitigate threats. Recommendations include expanding into potash and shale industries and utilizing online channels for market expansion.

Organizational Analysis: A Case Study of BHP Billiton
Organizational Analysis: A Case Study of BHP Billiton
By (name)
Student number
Faculty of
Professor (tutor)
Name of school (university)
Country
Date

Organizational Analysis: A Case Study of BHP Billiton
Contents
Executive summary....................................................................................................................3
Introduction................................................................................................................................4
An overview of the company.....................................................................................................4
Strategies deployed by the company..........................................................................................4
Controversies of the business and their outcomes.....................................................................5
An ecological analysis of the company......................................................................................5
Organizational culture and leadership style...............................................................................6
Conclusion..................................................................................................................................6
References..................................................................................................................................8

Organizational Analysis: A Case Study of BHP Billiton
Executive summary
The main aim of this report was to carry out an organizational analysis of BHP Billiton
Company. This analysis encompassed its strategies, issues facing criticism in the company,
environmental analysis to come up with some of its significant threats and opportunities as
well as its leadership style and culture. This report has established a better understanding of
the factors affecting an organization's performance and even those that may lead to its
downfall regarding its environment, both internal and external. It was found that strategic
planning is very imperative as it gives a company the direction in which it should operate to
ensure that it reaches its long-term goals. The organizational leadership was found to be very
crucial in determining the profit margin earned by a particular company as poor leadership
may lead to the registry of significant losses and stagnation in the price of investor's shares.
The report also established that the company has the opportunity of turning its threats into
opportunities and core competencies into competitive advantages to outdo their rivals. Some
of the recommendations were the expansion of potash and shale industry as well as using the
online channel to fetch a broader market for its commodities. If the opportunities discussed in
this paper are seized and the threats dealt with, then the company has the potential of
remaining the largest and the global leader in the mining industry.

Organizational Analysis: A Case Study of BHP Billiton
Introduction
For a company to maneuver and flourish in the contemporary business market, it is obliged to
coming up with strategies that will enable it to reach its strategic goals. That is because
operating without goals is equivalent to traveling without establishing a destination. For this
reason, therefore, organizations set goals that they target to meet within a specific period.
These goals are evaluated regularly to establish the likelihood of meeting them within the
specific time frame. On top of goals, organizations have a vision and mission statement that
guide them in their operation in the zeal of achieving their long-term goals and prevailing in
the market. This paper focuses on a case study of BHP Company whose strategies will be
explored. The paper will also dig deep into some of the company’s criticism, its
environmental analysis as well as its culture and leadership style.
An overview of the company
BHP, initially going by the name BBHP Billiton is “the trading identity of BHP Billiton
Limited and BHP Billiton plc.” The company was formed after the merging of Billiton Hill
Proprietary Company Limited that was founded in 1885 and Billiton Plc which was formed in
1860 (Barney, 2016). BHP and Billiton merged in 2002 to result to what is currently known
as BHP. This company has its headquarters in Melbourne, Australia and it is regarded as the
world’s leading company in asset diversification (Henri, 2016). It is also considered to be the
world’s largest mining company with 125,000 employees and contractors. Its operations
expand in more than 26 countries and thus is considered to have been successful in
diversification and entering new countries in the global market.
Strategies deployed by the company
Like every other company, BHP has well-laid strategies that it has put in place in the toil of
meeting their long-term goals. These strategies are generally aimed at ensuring that the set
goals and objectives of the company are achieved. This company achieves its strategies by
having every department carry out its roles as required and being accorded the necessary
support as well as employee training (Marcoulides, 2017). One of the strategies is operating
by the mission and vision statement. This company missions to “becoming the company of
choice, creating sustainable value for our stakeholders,” aspiring to “zero harm to people, our
host communities and the environment and strive to achieve industry leading practice.”
Tracing the history of the company, it is evident that the company is achieving its mission of
being the company of choice. According to (Hartnell, 2016), BHP is one of the most
renowned companies around the world for whose success is attached to the inspiration behind
its mission statement.
This statement regularly reminds them that they have a goal to achieve. Employees and
stakeholders are obliged to ensuring that they work in the best interest of the company,
focusing on maintaining the reality of the mission (Prajogo, 2017). Among the critics faced
by the company, very few are related to environmental issues, indicating that the company,
through its mission has been able to attain zero harm to people and the environment. The
company vision is to "create long-term shareholder value through the discovery, acquisition,
development, and marketing of natural resources (Gordon, 2015)." Regarding this strategy,
value creation has been achieved by successful efforts of increasing the shareholders'
monetary value. Fetching a broader market and diversification of activities has seen the
company earn large amounts of income which translates to increment in the price of the
investor’s shares.
BHP Company also turns its core capabilities and competencies into competitive advantages.
The company has a highly diversified asset portfolio such as shares, bonds, cash, property,

Organizational Analysis: A Case Study of BHP Billiton
and commodities. That means that it can produce products and meet the different customer
requirements, unlike its rivals. It also has a highly qualified workforce which enables it
carries out its activities with precision and easily achieve its strategic goals (Jones, 2016).
Size, as one of its core competencies, enables it to reach out to a large number of potential
customers across the globe and grow to enter other countries in the global market. The
company also uses the Ansoff's diversification strategy. Unlike its competitors, its products
are diversified by both commodity, market and geography. It has embraced horizontal
integration into potash and shale by having a 100% equity in the Canadian Jansen potash
project and acquiring Petrohawk energy in 2011 aimed at expanding the shale natural gas
(Shahba, 2014). It also cuts cost by 18% by stopping expansion during low-income periods.
For instance, in August 2012 it halted the “USD 20 billion Olympic Dam Copper and
Uranium mine project in South Australia." That step was taken after the commodity price
decreased.
Controversies of the business and their outcomes
Even though BHP Company has gotten a lot of praises for its successful diversification,
growth and performance strategies, it has gotten some critics for obligations and goals not
achieved. BPH leadership is one of the factors in the company that has gotten a good number
of weighty critics. For instance, in August 2017, the former chairman Grant king who
succeeded Jac Nasser was accused of poor leadership that saw the company lose a substantial
amount of income and the decrease in value of the “Origin Energy liquefied gas project” that
he approved while he was the company’s chief executive officer (Homburg, 2017). King is
alleged to have made decisions without the board’s input in decision making, a decision that
bore adverse effects as far as the company’s value of assets is concerned. As a result, the
former chairman was not in a position to vie for any position in the following BHP annual
meeting. He was also forced to retire in the same month so that the company gets another
leader who would thrust the company forward in an attempt to reach its long-term goals and
operate within its mission and vision statement. To cool down the critics and see the company
progress, Ken Mackenzie assumed the position of the company’s new chairman.
BHP Company has also been criticized for not increasing the value of investors’ shares for
quite a long period even with a substantial increase in the company's net worth and successful
diversification strategies. In August 2017, a criticism framed “share price today is where it
was a decade ago” was laid against the company. The shareholder complained that “an
investor who had fallen asleep and awoken now would be unaware that the world’s largest
miner had wasted the world’s greatest resources boom (Tsai, 2016).” According to the media,
analysts, and investors the company wasted the substantial boom resources. The critics
alleged that the company poorly spent assets earned in the boom years than a triple of what
was misspend since the year 2006 to 2016. They further had it that the company spend USD
140 billion inform of capital expenditure whereas the revenue generated in half the previous
year was less than half of earning per share of what used to be earned a decade ago. This
critic saw potential investors shy away from purchasing shares in the company (Hogan,
2016). A few of those who had shares in the company withdrew their investment as a result
of unpromising future of their investment.
An ecological analysis of the company
Environmental analysis is very imperative in an organization as it gives the organization a
piece of knowledge on both the internal and external factors affecting it. In the zeal to
analyze the environment of BHP Billiton, the SWOT analysis tool (Byles, 2017) will be used
as it can be used to do an organizational situation analysis by its managers. This tool will look
at the strengths, weaknesses, opportunities, and threats in Billiton's current environment. This

Organizational Analysis: A Case Study of BHP Billiton
tool is the most preferable as it not only looks at the internal but also the external
environment. To begin with, some of its strengths are having a strong dealer community that
is trained on how to convince prospective buyers that their commodities are the best (Bass,
2018). It also has a good performance upon entry into new markets which has enabled it to
acquire new revenue streams and consequently increase its revenue. It also has a good return
on expenditure due to the successful execution of new projects thereby earning more income.
The company has several weaknesses. For instance, it has higher inventory days in
comparison with its rivals thereby investing more capital in the channel thus impacting its
long-term growth (Barney, 2017). Again, the company is not successful in the integration of
firms having a different culture. It also has improper financial re-planning as evident from the
current asset and liquid asset ratio.
Even with the above-mentioned weaknesses, the company has several opportunities to
explore in the present and the future. BHP Billiton has an opportunity of getting more
customers from the online channel. Many businesses have known their customers better by
working with data analytics through online channels and have maneuvered. BHP has the
same opportunity that has not been tapped. Decreasing the transportation cost is also an
opportunity that can be used by the company to get more profits or sell its products at lower
prices to invite more customers (Ogbonna, 2017). The organization also has an opportunity of
turning its core competencies like size and experience into competitive advantages. There are
also several threats associated with the company. The rising pay levels and price in some
places like China may pose a significant threat to the amount of revenue earned by the
company (Gregory, 2016). The likelihood of an increase in the price of raw material is also a
big challenge and threat to the profitability of the company. Again, its competitors are
developing new technologies in droves, and this is a threat to the company shortly.
Organizational culture and leadership style
According to (Fonseca, 2017), “understanding the entity culture is vital in the description of
the immediate organizational phenomena to which glues and aligns the operational elements
into a shared system that delivers desired results.” Understanding the culture of BHP Billiton
will reveal the shared values and norms that are leaned and shared from employee generation
to generation concerning the business environment. In an attempt to remain the leading
world’s mining company, BHP Billiton has upheld several values which its members rely on
during the performance. One of its core values is accountability where managers are
responsible for their misconduct. The employees are required to embrace the virtue of
“diligent leadership and workmanship behavior (Lean, 2017).” The employees are also
subjected to training on how to deal with customers with the virtue of politeness and how
they can achieve a safer working environment. On the part of leadership, though the company
had received several critics during the tenure of Jac Nasser, the reign of Andrew Mackenzie
saw things change for the better. Since Mackenzie took the position of the new CEO in
August 2017, the price of the shares has increased as opposed to the trend before his entry.
The increase was achieved by decreasing the production cost to see the company earn more
revenue even without an increase in sales.
Conclusion
BHP Billiton has proven to have a significant strategic performance. It has been able to
diversify its activities and market to more than 26 countries in the world, still focusing on
harvesting more in the global market. In spite of a few leadership challenges that led to the
stagnant price of shares for a decade, the company has gotten a new leadership that is
promising in taking the company to another level that will enable it to achieve more and
diversifies its market through operating following its strategic goals, mission, and vision

Organizational Analysis: A Case Study of BHP Billiton
statement. The company has been able to adequately deal with staffing by replacing
underperforming staff and carrying out employee training to instill the company’s culture and
values into them for sound decision making and improved performance. It had also been able
to cut costs of production thus increasing the profit margin and consequently the price of
shares. The company has a potential of expanding the potash and shale industries, increase
the future demand for potash and shun diversifying into resources highly sensitive to carbon
dating.

Organizational Analysis: A Case Study of BHP Billiton
References
Barney, J., 2016. Organizational culture: can it be a source of sustained competitive
advantage. Academy of management review, 6(8), pp. 70-89.
Barney, J., 2017. Organizational culture: can it be a source of sustained competitive
advantage. Academy of management review, 6(8), pp. 67-93.
Bass, B., 2018. Transformational leadership and organizational culture. Public
administration quarterly, 58(9), pp. 44-74.
Byles, C., 2017. Organizational culture and performance. Journal of Managerial Issues, 4(6),
pp. 43-61.
Fonseca, A., 2017. How credible are mining corporations' sustainability reports? A critical
analysis of external assurance under the requirements of the international council on mining
and metals. Corporate Social Responsibility and Environmental Management, 5(8), pp. 56-
87.
Gordon, G., 2015. Predicting corporate performance from organizational culture. Journal of
management studies, 7(8), pp. 87-98.
Gregory, B., 2016. Organizational culture and effectiveness: A study of values, attitudes, and
organizational outcomes. Journal of Business Research, 8(9), pp. 76-90.
Hartnell, C., 2016. Organizational culture and organizational effectiveness: a meta-analytic
investigation of the competing values framework's theoretical suppositions. Journal of
applied psychology, 8(7), pp. 34-65.
Henri, J., 2016. Organizational culture and performance measurement systems. Accounting,
organizations and society, 9(9), pp. 76-102.
Hogan, J., 2016. Sustainability reporting and reputation risk management: an Australian case
study. International Journal of Accounting & Information Management, 7(9), pp. 65-87.
Homburg, C., 2017. A multiple-layer model of market-oriented organizational culture:
Measurement issues and performance outcomes. Journal of marketing research, 7(8), pp. 54-
88.
Jones, M., 2016. Corporate social responsibility and the management of labor in two
Australian mining industry companies. Corporate governance: an international review, 6(8),
pp. 61-84.
Lean, R., 2017. Closing the credibility gap: The challenges of corporate responsibility
reporting. Environmental Quality Management, 79(7), pp. 67-98.
Marcoulides, G., 2017. Organizational culture and performance: Proposing and testing a
model. Organization Science, 6(76), pp. 40-63.
Ogbonna, E., 2017. Leadership style, organizational culture, and performance: empirical
evidence from UK companies. International Journal of Human Resource Management, 6(8),
pp. 67-83.

Organizational Analysis: A Case Study of BHP Billiton
Prajogo, D., 2017. The relationship between multidimensional organizational culture and
performance. International Journal of Operations & Production Management, 59(6), pp. 34-
65.
Shahba, S., 2014. Application of multi-attribute decision-making methods in SWOT analysis
of mine waste management. Resources Policy, 6(9), pp. 87-105.
Tsai, Y., 2016. The relationship between organizational culture, leadership behavior, and job
satisfaction. BMC health services research, 6(8), pp. 63-85.