Strategic Performance Analysis for Competitive Advantage: A Report

This report provides an analysis of competitive advantage for two ASX-listed companies, BHP Billiton and Commonwealth Bank. It examines their strategic performance measurement systems (SPMS), including the adoption of multi-perspective SPMS and the examination of disclosures from publicly available reports. The report analyzes the financial performance of both companies, including net profits, cash equivalents, and solvency ratios. The analysis includes a comparison of their financial profitability and solvency, with conclusions drawn regarding the importance of SPMS in shaping strategic development and resource usage for better business outcomes. The study uses the annual reports of the companies to analyze their financial positions and strategic approaches.

Running head: ANALYSIS FOR COMPETITIVE ADVANTAGE
Analysis for Competitive Advantage
Name of the Student
Name of the University
Author’s Note

1ANALYSIS FOR COMPETITIVE ADVANTAGE
Table of Contents
Introduction......................................................................................................................................2
Company Research..........................................................................................................................2
Briefly outlining the profile of the companies.................................................................................2
Adopting a multi perspective SPMS................................................................................................3
Examining the disclosure from publicly available reports..............................................................3
Analysing financial performance of the companies........................................................................4
Conclusion.......................................................................................................................................6
References........................................................................................................................................7

2ANALYSIS FOR COMPETITIVE ADVANTAGE
Introduction
Strategic performance measurement system is useful for an organisation as it helps in
influencing the overall performance of an organisation in their normal course of business. In this
study, two ASX listed companies has been taken into consideration which are BHP Billiton and
Commonwealth Bank that provides different kinds of products and services to the customers.
Company research has been analysed which would help in adopting the multi perspective of
strategic performance measurement system.
Company Research
Briefly outlining the profile of the companies
The research of the companies includes the outlining the profile of the companies that
would help in meeting the targets. The first company that has been chosen is BHP Billiton which
is Australian multinational mining company. BHP Billiton has been formed in the year 2001 by
merging two companies which are Broken Hill Proprietary and Billiton. The company deals with
different kinds of operation which includes different types of metals such as aluminium,
uranium, nickel, iron ore and others. The company has it’s headquarter in Melbourne and
registered in Australian stock exchange (Bhp.com, 2019). It has been derived from their annual
report that in the year 2010 the company has earned around $ 166 billion as market
capitalization, net operating cash flow for $ 17.9 billion and $ 52.8 billion as total amount of
revenue.
The other company that has been chosen is the Commonwealth bank which is an
Australian multinational bank that has it’s headquarter in Darling Harbour, Sydney and the
company is registered in Australian stock exchange. The type of industry its falls that is banking

3ANALYSIS FOR COMPETITIVE ADVANTAGE
as well as financial services that are provided to the customers. The company has been founded
in the year 1991 as a public company and the company recently serving worldwide. The
company has disclosed their annual report for the year 2017 and it can be clearly seen that the
company has earned around $ 26.05 billion as total amount of revenue and $ 9.82 billion as their
net income for that particular year (Commbank.com.au, 2019). The total amount of assets of the
company is $ 976.3 billion and total equity is $ 63.7 billion.
Adopting a multi perspective SPMS
The relationship between the employees and the companies help in contributing the best
performance along with achieving the goals and objectives of the company. It is the system that
helps the companies to adopt for improving their performance along with developing the
capabilities of teams as well as the individuals (Ozturk & Coskun, 2014). The criteria that has
been used by Elijido-Ten & Tjan is to use the specific tools that would help in managing the
objectives along with a well-designed performance that would help the managers for improving
the process of performance management (Chen, Delmas & Lieberman, 2015). BHP Billiton has
adopted a multi perspective SPMS that helps the company in investing the process of
performance management that is associated with behaviour of desirable work (Bento, Bento &
White, 2014). On the other hand, Commonwealth bank has not adopted a multi perspective
SPMS that helps in managing the performances. Therefore, the company has other form of
measurement that mainly measures the effective performance of the company.
Examining the disclosure from publicly available reports
Both of the companies has disclosed their financial reports such as annual report for the
year 2017 and 2018 which mainly includes the disclosures of SPMS. The perspective of BHP
Billiton includes the broad strategic perspective that mainly helps in understanding the cyclical

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nature along with the resources (Silvi et al., 2015). The commodity that is associated with the
business and value chain has proven health and safety environment that would help in allocating
the performances of the company. Commonwealth bank consist of interest risk return that has
changes the total amount of earnings which is measured in their overall course of business
(Capelo, Lopes & Mata, 2014). Moreover, on the basis of objectives and measures, BHP has
slightly changed their disclosures of SPMS which points out the areas of responsibility that
would be beneficial for the companies.
In the financial year 2017, the focus on creating the perspective of shareholders that
mainly contributes the effective decision in performing the activities. The potential areas of
development of Commonwealth bank has made certain rough estimates that would help the
company in gaining the effective measurement for the company. The participants in the market
that includes overall amount of prices and volumes of future production mainly points out the
cost of operation that would be incurred by the company in their normal course business
(O'Connell & O'Sullivan, 2014). On the basis of target set, both companies has slight changes in
their structure of the business that would help the company in effective support for providing the
best experience of the customers.
Analysing financial performance of the companies
The financial performance of the companies has been analysed with the help of annual
report. BHP Billiton has disclosed their financial statement that points out the company has
earned net profit after every deduction are $ 4823 million in the year 2018 and $ 6222 million in
the year 2017. This shows that the company has face reduction in total income (Bhp.com, 2019).
It can also be seen that BHP has total of $ 15813 million in the year 2018 as cash and cash
equivalent and $ 14108 million in the year 2017. On the other hand, Commonwealth bank has

5ANALYSIS FOR COMPETITIVE ADVANTAGE
earned $ 9394 million in the year 2018 and $ 9786 million in the year 2017 (Commbank.com.au,
2019). It also points out reduction in total income. Moreover, cash and cash equivalent for the
year 2018 is $ 1109 million and in the year 2017, it is $ 807 million.
Financial profitability and solvency measures along with analysis
The financial profitability of both of the companies has been calculated which points out the
profitability as well as solvency of both of the company. Solvency ratio has been calculated
which points out the effective nature of the organisation. BHP Billiton and Commonwealth Bank
has been considered for evaluating the financial profitability along with solvency. The following
figure shows the calculation of ratio that points out the effective nature of the organisation.
Figure 1: Financial profitability and solvency

6ANALYSIS FOR COMPETITIVE ADVANTAGE
(Source: Created by author)
The above figure points out the financial profitability as well as solvency measures which has
been pointed by both of the companies. It shows that both of the organisation has quite a good
amount of financial position that has already been reflected in their financial statement. The
solvency ratio states that BHP Billiton is more stable that Commonwealth Bank.
Conclusion
From the above study, it can be concluded that the strategic performance management is
vital process that points out the effective measurement technique for the business. Shaping of
strategic development that would help the companies for their growth and development along
with shaping the usage of resources for better outcome from the businesses. The commodity that
is associated with the business and value chain has proven health and safety environment that
would help in allocating the performances of the company.

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References
Bento, A. L., Bento, R., & White, L. F. (2014). Strategic performance management systems:
Impact on business results. Journal of Computer Information Systems, 54(3), 25-33.
Bhp.com (2019). Annual report 2018. Retrieved on 5 September 2019 retrieved from
https://www.bhp.com/-/media/documents/investors/annual-reports/2018/
bhpannualreport2018.pdf
Capelo, C., Lopes, A., & Mata, A. (2015). A simulation-based approach for teaching the systems
perspective of strategic performance management. Accounting Education, 24(1), 1-26.
Chen, C. M., Delmas, M. A., & Lieberman, M. B. (2015). Production frontier methodologies and
efficiency as a performance measure in strategic management research. Strategic
Management Journal, 36(1), 19-36.
Commbank.com.au (2019). Annual report 2018. Retrieved on 6 September 2019 retrieved from
https://www.commbank.com.au/content/dam/commbank/about-us/shareholders/pdfs/
results/fy18/cba-annual-report-2018.pdf
O'Connell, V., & O'Sullivan, D. (2014). The influence of lead indicator strength on the use of
nonfinancial measures in performance management: Evidence from CEO compensation
schemes. Strategic Management Journal, 35(6), 826-844.
Ozturk, E., & Coskun, A. (2014). A strategic approach to performance management in banks:
The balanced scorecard. Accounting and Finance Research, 3(3), 151-158.
Silvi, R., Bartolini, M., Raffoni, A., & Visani, F. (2015). The practice of strategic performance
measurement systems: Models, drivers and information effectiveness. International
Journal of Productivity and Performance Management, 64(2), 194-227.