Question:
Discuss about the Strategic Management Decisions Making.
The following report is a study of BHP Milliton, world’s largest multinational mining petroleum and metal company. BHP Billiton has its headquarters in Melbourne. The company came into existence due to the merger of Australian Broken Hill Proprietary Company Limited and the Anglo- Dutch Billiton plc. Currently BHP Billiton provides minings, oil and gas production in about 25 countries and provides employment to around 41,000 people. Assessment of the competitive external environment is done by three Key Success Factors for BHP Billiton. For the company success and the monitoring of the internal environment, it is very important to follow and achieves the three Key Success Factors (Heather et al. 2014).
Investigation and Development:
To Produce and manage high end product line and efficiently building, delivering and marketing the products is the main aim of the company. Investigation and development are KSF as the customers would demand efficient, punctual and cost effective delivery of the products with high customer satisfaction and service (Osae et al. 2011).
Proficiency and potential:
Proficiency and potential to perform primary and secondary value chain procedures cost effectively and in a speedier manner. BHP Billiton investors ask for strong company leadership which is dependent on the management to achieve the goals that are targeted, the objectives and progress, delivering risk free financial performance (Heather et al. 2014).
Long term Development:
The aim of BHP Billiton is to create no harm or problems to the environment and to be known as employer of choice in the mining industry. Also the company considers its stakeholders a very important part of the company so their satisfaction matters much to the company. Thus its aim is to attract and retain employee across markets (Wilfred, 2013).
Internal Environment Analysis:
Value Chain:
BHP Billiton focuses on various value chain activities which are supply chain management, operations, distribution, marketing sales and service. Supply chain is one of the most important factors for the company monetarily and inventory management is the key function (Pavan, 2014). The company has been able to achieve faster deliveries but rise of transportation costs and fuel costs affects the cost on the delivery of goods. Freight operations needs 20% of the overall cost being the largest cost category. Considering the operations value chain, the company has invested a high amount in producing large quantity bulk products. The mining operations are global and geographically are located in Northern Hemisphere and Southern Hemisphere.
BHP also considers health and safety of the workers as a prime concern. Employees are given specific training to maintain the safety and to assure no harm to any employee (Heather et al, 2014).
A big risk in the primary value chain is cost suppression. The other costs that are rising in a very speedy manner are mining operations costs in an Australian Ravensthrope Nickel project that incremented the capital costs due to low labor productivity. The emissions credits business and power trading operations are the two emerging segments of BHP that have a very wide scope in the future. If distribution is considered, it is very important function as BHP Billiton is one of the largest bulk shipping carriers in the world. It is also a primary cost of the company (Osae et al, 2011). The company has seven customer service groups positioned throughout the countries. The company uses a customer centric value chain considering keeping the needs of the customers at the first place. The company would need high promotion to achieve its agenda of being the employer of choice. There should be messages from the senior management to reinforce the mission of the company. Internet, public relations are the mediums through which the company can gain maximum faith of the stake holders (Wilfred, 2013).
Resources, Core Competencies and capabilities:
BHP Billiton is divided into units or customer service groups which are Aluminum, Stainless Steel Materials, Base Metals, Petroleum, Carbon Steel Materials Diamonds and Energy Coal. BHP has consists of minerals exploration group, technology association and transport or logistics section (Heather et al, 2014).
BHP Billiton has a varied portfolio of assets. It holds a strong position in the market due to its efficiency and services. The company is one of the largest suppliers of copper, silver, uranium and lead. BHP has delivered excellent financial results over past years. The company has incremented the dividends over past 10 years (Pavan, 2014).The company has managed the monetary issues quite well. Also it is able to manage the customers with customer service stations across the world. The large logistics and supply chain management and coverage of among 25 countries are the core competencies of BHP Billiton that contributes in the overall success and expansion of the company.
VRIO: VRIO is a very helpful tool in evaluating a firm’s internal environment and competitive strategy. This is the analysis done by the evaluation of company’s basic resources and capabilities (Wilfred, 2013).
Financial Resource:
The three aspects of financial resources are debts, cash flow and ability to attract capital. We can consider that the company has quite cash as it has already covered vast regions of the world and has established its stations. The company does not currently likely to serve any debts as the cash flow is quite in stable. The financial records of the company have been super excellent since last five years (Wilfred, 2013).
Supply chain:
The company delivers its resources like coal, silver, uranium all over the world and has been ranked as the largest supplier of coal and metals. The supply chain of the company is quite considerable and expanded (Ali, 2012).
Customer experience:
The company’s main aim is to be the employer of choice. To achieve this target the company has started various measures to allure the employees and the customers or take holders (Taylor 2015). The company has different customer service stations at around 7 countries that are made for helping the customers and understand their needs. The company wants to focus on the customer satisfaction by delivering reliable and efficient services (Heather et al, 2014).
The company serves around 25 countries in the world and covers a vast portion of customers as well investors. The main of the company is to create long term value for the customers by development of natural resources and providing the customers with innovative services and solutions. BHP believes in managing and building high quality commodities and services. To constantly work for high performance and results where every employee understands the responsibility towards the organization. Also the employees generating more profits are rewarded and appraised. The company focuses to earn the trust and loyalty of the customers, the distributors, stake holders, and communities by delivering value added services and fulfilling the commitments efficiently (Ali, 2012).
Strategic issues:
The formation of strategic issues is done on the outcomes of the internal and external analysis of the company. A very prime issue of BHP Billiton is cost control. If the costs are managed properly, the company can lead to growth and successful operations (Osae et al, 2011). The company must plan strategies to growth objectives. One option can be to reduce the cost value chain activities, in comparison to the rivals to maintain dominance in natural resources. The company is fighting through high inflation and rising costs of commodities. This weakness can be turned into a competitive advantage making the company a cost leader. Employee encouragement is another area where the company can focus. To achieve the company’s overall goals, it should widen its vision from financial goals to some innovative programs to make the employees feel a sense of responsibility and belonging to the company’s performances. The mission needs to be taken seriously by every employee of the company for strategic growth (Heather et al, 2014).
Another issue with the company is, considered as a public enemy as, it highly contributes to global warming. Long term development is important at every level to meet the global standards of the stake holders by eliminating environmental pollution. Every company must have a sense of responsibility and giving back to the society (Cawood, 2011). Reaching maximum stake holders and through dominance and media is highly demanded and also is a major strategic issue for the company. Investors and stakeholders should be felt the presence of the company at global level through media. Juts conducting a press release would not be able to justify the answers regarding management change or difficulties the company is facing for long term progress (Ali, 2012).
The company must assign leaders to comment on the issues and handle such conditions. The future of BHP is extinct if the company becomes the target of equity marauders. Survival is an issue as fewer deals and high capital can lead to high debts and broken company. BHP Billiton is a huge mining company with high end services and assets that needs to be protected by the external effects (Cawood, 2011). The senior management needs to make smart decisions avoiding wrong decisions at high prices. External distractions should be eliminated and the focus should be shifted on the effective and fruitful business plan Thus cost control, human resource, quality, long term development, joint ventures and management restructuring can be recommended for the development and success of the company (Heather et al, 2014).
Conclusion:
BHP Billiton is large mining company but it needs to be restructured to implement the strategic programs to achieve the goal of being the largest mining company and employer of choice. Emphasis should be made on providing more quality services and empower the supply chain of the company (Cecilia, 2013). Also the key element that is Environmental responsibility should be taken very seriously and the company should start measures to avoid making huge contribution in environmental pollution and global warming. Changes should be made in the management and new people with high experiences and dedication for the company should be hired. The company can progress even more if certain aspects that are discussed above are conquered and strategies for achieving the goals are implemented efficiently (Ali, 2012).
References:
Ali Gorener,(2012) “Comparing AHP and ANP: An Application of Strategic Decisions Making in a Manufacturing Company,” International Journal of Business and Social Science, 3,11.
Taylor,(2015). Identify Energy Efficiency Improvements to Cut Operating Costs, Engineering and Mining Journal, 123.
Cecilia Jamasmie,(2013). “Global mining industry faces unprecedented threats:” report, Info Mine.
F.T. Cawood,(2011). “Threats to the South African minerals sector–an independent view on the investment environment for mining,” The Journal of The Southern African Institute of Mining and Metallurgy, 111.
Heather Swanepoel, Greg Johnson, Yong., (2014). “Using an Integrated Planning and Optimization Solution to Meet Mining Challenges in a Volatile Market,” International Journal of Business, 133.
Pavan Kumar,(2014) “Review on Sustainable Mining Practices,” International Research Journal of Earth Sciences, 2(10), 26-29.
Wilfred Visser,(2013). “The lack of innovation in mining,” The International Resource Journal.
W.K. Osae, C.J. Fauconnier and R.C.W. Webber Youngman,(2011) “A value assessment of mergers and acquisitions in the South African mining industry–the Harmony ARM gold example,” The Journal of The Southern African Institute of Mining and Metallurgy, Volume 111.
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