Write an essay on BHP Billiton.
BHP Billiton is one of the global listed companies, which is specialised in the diversified mineral resources mining with the establishment in 25 nations and has a wide range of portfolio for mining of commodities, which consists of aluminium, energy coal, metallurgical coal. On the other hand, it also deals in iron ore copper, manganese, liquefied petroleum gas precious metals such silver and diamond. Since the inception of 2001 BHP Billiton has shown an upward trend in towards strengthening the market position through diversification of commodities in market.
There are several key indicators of success for BHP Billiton, which can be considered to determine the success of the organisation in the international market. It is evident that the attributable profits obtained after the deductions of tax are attributable to the members of the group. It act as a financial indicator which helps in depth view regarding the amount of profit available for distribution to the shareholders. On the other hand, the total return yielded from the shareholders during the financial year shows the combination of dividends and the share prices, which has helped BHP Billiton in generation of wealth (Moon et al., 2015).
Grünig and Kühn, 2015 states that the companies transformed them entirely in the world of information and BHP Billiton ability to exploit the intangible assets is turning out to be more decisive than their ability to administer tangible assets. BHP Billiton is expanding its business on global platforms and study reveals that it has implemented the concept of balanced scorecard, which helps in supplementing the measurement of financial performance of business.
Hence, the resources and core competencies measures the criteria of perspective customers, internal business process, learning and growth. BHP Billiton is of late has been transferring the resources and capabilities across the geographical boundary which provides the way for company to leverage its core competencies more fully and expands its competitive advantage into the wider array of geographical markets.
VRIO Analysis is performed to determine the conceptual framework of which forms an indispensible part of BHP Billiton strategic scheme. The primary objective of conducting such analysis is to determine the resources of BHP Billiton or the capability worth of BHP Billiton (Chen and Kodono, 2014).
Value: The primary question raised whether BHP Billiton has the ability to make optimum utilisation of its resources or does it put in effort in exploring and exploiting the opportunities. It is also puts an emphasis on inflecting threat in the market position for BHP Billiton, if a firm is unable to possess threat in the market then it might expose its weakness. However, in this context BHP Billiton having abundant of resources and assets is regarded as strength in mining industry and other competing firms might feel themselves as a threat in contrast to the resource capabilities of BHP Billiton.
Rarity: BHP Billiton is considered as one of those rare mining companies which enjoys the competitive advantages. It does not lags in resources and capabilities and hence, it is benefited from other competing firms due to is wide range of assets. Numerous studies has indicated that BHP Billiton enjoys the competitive benefit in mining sector over several other mining industry due to its overall objectives and strategies which are apparent throughout the mining industry (Knott, 2015).
Immutability: The scenario of compatibility reflected through the framework of VRIO analysis reflects the internal environment of BHP Billiton. It determines the adequacy of cost disadvantage in terms of resources and capability in the process of procuring and developing resources in comparison to other mining firms. Mining company like BHP Billiton having rich and valuable resources can be hard to emulate for other competing firms in order to gain advantage. BHP Billiton can either exploit those external opportunity or neutralise the threat from external sources by making optimum utilisation of available resources.
Organisation: Once BHP Billiton has understood the concept of value, rarity and immutability of resources and capabilities, the next procedure is to organise the organisation in an appropriate manner to make an effective use of such resources. However due to its large scale of operation, BHP enjoys the benefits sustained competitive advantage for prolonged period of time. The management and the control systems of BHP Billiton consists of both formal and informal mode of managerial decisions by aligning such decisions with the strategy of the organisation (Chapman, 2012).
These components of BHP Billiton are better known for complementary capabilities and resources because it helps in sustained competitive advantage. Without correct organisational and managerial strategies no firms can achieve the valuable, rarity and immutability and may suffer competitive disadvantage.
The term value chain comprises of activities defines the functional operations and performance of specific activities in order to deliver valuable product and service in the market. The theory of value chain is based on the foundation of decision supporting tools, which adds to the competitive parameters. Value chain analysis facilitates the physical illustration of several processes for BHP Billiton, which are involved in the mining, and extraction of raw materials and concluding the procedure by rendering the final product, which is commonly known as value chain.
Primary activities: Facilitating the arrangement for inbound movement of minerals, metallurgical coal, silver, irons ore, manganese from the mining site to the manufacturing units. The functions and operations of BHP Billiton are concentrated on administrating the process, which converts the inputs of raw materials in to the output of finished goods.
Supportive activities: This process consists of procuring the raw materials such as metallurgical coal, silver extracts, iron ore, diamonds, and manganese from the mining sites to the manufacturing unit where plants and equipment are located. The technological unit in collaboration with the manufacturing unit is concerned with pertaining the equipments such as the hardware, software and technological knowledge which is introduced by BHP Billiton in converting those inputs into finished goods. BHP Billiton is well supported by the activities such as accounting and finance controlling the public relation and the quality (De Souza & Márcio de Almeida, 2013).
Value chain forms an integral part of BHP Billiton for appropriate functional operations. The concept of value chain has rapidly paved its way in leading the management position, which is considered as an important tool for strategic planning. BHP Billiton implements the theory of value chain to the entire supply chains and distribution channels of its organisation. This implementation has enabled BHP Billiton to post yet another groundbreaking performance based on its business approach aimed at developing the manifold equipments for growth. Such feat acts as an encouraging aspect adjacent to the surroundings of financially viable challenges in relation to its business.
BHP Billiton is dedicated towards the highest echelon of supremacy and endeavour to promote a culture that values and honour the commendable moral principles, individual and business integrity and admiration for others. Responsibilities have been undertaken by the financial committee and have also taken up the peril for audit and business in securities. On the other hand, BHP Billiton long-term incentive plan for the executive leadership are governed by the independent director policies and variety in approach.
Each of the BHP Billiton Group operational functions clearly consent the company managerial leadership. The social environment gives effect to such consents and illustrates the obligatory performance necessary for the business. Such approach has transparency in the management approach where there is a broader community or industrial advantage.
Uncertainty: uncertainty can be regarded as an issue in each day business. It can be understood that a firms individual incapability to foresee something precisely. In the modern era business world, managers have to deal with the different kind of uncertainty. They face ambiguity in the overall environment in the form of macro-economic, political, social, technological and environmental limitations in which BHP Billiton functions. BHP Billiton faces strategic issues in the industry it operates regarding the uncertainty about the authentic state, it effects and impacts the uncertainty about responses or sufficient measures (Grant, 2015).
Volatility: A strategic decision is robustly exaggerated by the changes that effect the BHP Billiton personality state of affairs. One such scenario of volatility is the change in price of raw material, metallurgical coal, copper, nickel, etc, at the manufacturing stage in the current years. Such materials forms the basis for the mining industry and government policy of changing the price of the raw material has lead to strategically pertinent restrictions.
Complexity: Complexity determines the factors, which BHP Billiton must take into the account when preparing the strategies. It is observed in the study that BHP Billiton major strategic issue in business is the major change in the rule rather than expectations. Change in leadership, overseas initiatives and services are the grounds of such complication leading to strategic issues.
Ambiguity: How accurately can BHP Billiton determine the intensity of impact in executive initiatives on a company’s performance? Decision-making is difficult due to the fact that it is sometimes unclear which variables are concerned and what is their specific role. Executives of BHP Billiton are facing circumstances that have never been faced earlier. It is still unclear regarding how the political shorter time will generate an impact on the mid-term and long-term environments of BHP Billiton decisions (Gamble and Thompson, 2014).
Conclusion:
As it has been observed that the first decade of the industrial revolution in 21st century has been featured by the improbability in numerous ways. Rapid globalisation, accelerating innovation and growing competition, conveys with them the volatility, complexity and ambiguity. Hence, BHP Billiton need an additional approach to counter the challenges of intricacy in their trade and it should to build up an approach, which must be based on the strategic planning. Situational based strategic planning will allow BHP Billiton to establish different pictures of outlook and arrange their system of government for different futures.
Reference List:
Grant, R.M., 2015. Contemporary Strategy Analysis 9e Text Only. John Wiley & Sons.
Moon, B.E., Kim, H.T., Nah, K.D., Kim, J.H. and Kim, H.T., 2015. Analysis of internal environment of a pig house using energy recovery ventilator.Tropical Agricultural Research, 26(3), pp.547-553.
Chapman, R.J., 2012. Appendix 9: VRIO Analysis. Simple Tools and Techniques for Enterprise Risk Management, Second Edition, pp.587-588.
Grünig, R. and Kühn, R., 2015. Strategy Planning Process. In The Strategy Planning Process (pp. 41-52). Springer Berlin Heidelberg.
Chen, F. and Kodono, Y., 2014. Fuzzy VRIO and SWOT Analysis of Chery Automobile. JACIII, 18(3), pp.429-434.
Knott, P.J., 2015. Does VRIO help managers evaluate a firm’s resources?.Management Decision, 53(8), pp.1806-1822.
Hesterly, W. and Barney, J.B., 2015. Strategic Management and Competitive Advantage Concepts and Cases. Pearson Higher Ed.
De Souza, C.D.R. and Márcio de Almeida, D.A., 2013. Value chain analysis applied to the scrap tire reverse logistics chain: An applied study of co-processing in the mining industry. Resources, Conservation and Recycling,78, pp.15-25.
Darmawan, M.A., Putra, M.P.I.F. and Wiguna, B., 2014. Value chain analysis for green productivity improvement in the natural rubber supply chain: a case study. Journal of Cleaner Production, 85, pp.201-211.
Sausman, C., Garcia, M., Fearne, A., Felgate, M., El Mekki, A.A., Cagatay, S., Soliman, I., Thabet, B., Thabet, C., Saïd, M.B. and Laajimi, A., 2015. From value chain analysis to global value chain analysis: fresh mining export sector in mediterranean partner countries. In Sustainable Agricultural Development (pp. 197-225). Springer International Publishing.
Gamble, J.E. and Thompson Jr, A.A., 2014. Essentials of strategic management. Irwin Mcgraw-Hill.
Walker, G., 2015. Modern competitive strategy. McGraw-Hill Higher Education.
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