BHP which was previously known as BHP Billiton is considered to be a major trading based entity of the organization named BHP Billiton Limited. This is an Anglo-Australian multinational organization which mainly operates in the mining based industry. The organization has its headquarters in Melbourne Australia and was established in the year 1885. BHP had also been able to acquire the rank of the biggest mining organization with respect to the total market capitalization (Bhp.com, 2018). BHP Billiton was developed in the year 2001 with the merger of companies like, Anglo-Dutch Billiton Plc. and Australia Broken Hill Proprietary Company Limited.
The mission statement of BHP Billiton is based on the proper development of methods that can be used for achieving the objectives. The sustainable value which has been developed by the organization for its shareholders, contractors, customers, employees, suppliers and the business partners is also a significant part of the mission of the firm. The vision statement of the company on the other hand is based on the ways by which it aims at creating value for long term operations of the company with the help of proper discovery, effective development and further conversion of the natural resources. The market based solutions and innovative customers are also considered with the help of the long term based strategies which have been developed by the company. The organization is also known in the market for sustainable solutions which are provided to the customers.
The strategies which have been employed by BHP in the past were mainly based on the effective growth of the company by providing the highest levels of value to the customers. The company had implemented these strategies in order to increase the growth and attract customers towards its operations as well (Barros, Hernangómez and Martin-Cruz, 2016).
BHP Billiton has implemented new growth based strategies in the current business scenario in order to operate in an effective and profitable manner. The new strategy is thereby aimed at increasing the returns of the shareholders and their value as well. The major expectation of the organization from implementation of new growth strategy is related to the generation of higher profitability and increasing the levels of productivity as well. The organization has also aimed at increasing the shale and copper based assets in order to grow in the top line and bottom line based areas. The dividend policy which has been developed by the company is also quite effective in nature and is able to reflect the growth of commitment based levels (Daspit et al., 2017).
The growth strategy which is employed by BHP Billiton in the industry is built on increasing the value. The creation of value is thereby considered to be the most important strategy which has been implemented by the organization in an effective manner. The company further aims at five different areas which are based on its growth in the industry. BHP aims at improving the levels of productivity and maintaining their momentum (Demir, Wennberg and McKelvie, 2017). The investment in different products is also based on the ways by which the company is able to unlock latent capacity of the assets. The quality portfolio of the organization based on its assets is able to offer the medium levels of growth related options. The exploration related activities of the company is based on the ways by which it can advantage of the falling costs. The global technology based function is implemented in order to unlock the resources effectively (Durand, Grant and Madsen, 2017).
The generic strategy which has been implemented by BHP Billiton in the industry is based on the development of broad differentiation with the proper development of value which has been discussed in the growth based activities.
BHP Billiton had faced a huge issue based on a disastrous dam disaster which had occurred in the year 2015. The bursting of dam was based on the ways by which waste related to different operations were spread out in various areas. The organization had thereby changed the ways by which it operated so that failure which had occurred in its co-owned organization named did not take place again. The history related to issues and failures is quite long in case of the operations of BHP Billiton (Theguardian.com, 2018). The company was thereby not able to maintain the promise that had been made related to the ways by which it can avoid the dumping of tailings of the production in different rivers. This had further led to the fall in prices of the stock market based values of different commodities of the organization like iron ore and coal.
Another major issue which was thereby faced by the organization was based on the dispute which the management of the company had with the trade unions based on benefits and pay. The workers thereby went on a strike of six weeks in Chile which is also considered to be the biggest mining based industry from the year 1973. The strike had ended in the month of March and the company had also aimed at the cutting through the costs with the help of lower benefits and costs which can be provided to the employees (Ft.com, 2018).
The PESTEL analysis framework is used for the purpose of analysing the external environment in which the BHP has its operations. The changes which can thereby take place in the external factors are able to influence the operations of BHP Billiton in an effective manner.
Political factors – The political situation of Australia is able to affect the operations of BHP Billiton in the country. The company mainly operates in the industry which is able to provide the basic resources. The political risks are thereby able to affect the prices of these products which are thereby offered to the consumers in an effective manner The stable political environment on the other hand is able to provide effective levels of opportunities of growth to the organization (Ethiraj, Gambardella and Helfat, 2018).
Economic factors – The macro-economic factors which are able to affect the operations of profitability of the company in Australia mainly includes, the savings rate, inflation rate and the foreign exchange based rates as well. The revenues of BHP Billiton are thereby based on the ways by which it is able to offer the product and services to the consumers. The economic condition of the country is thereby able to affect the prices which have been decided by the firm for different products. The stability and health of the economy is thereby considered to be an important factor which is able to affect the company (Frynas and Mellahi, 2015).
Social factors – The social condition and demographics of the customers in Australia are significant factors which are able to influence the operations of BHP Billiton. The skill based levels of the population thereby acts as an important factor which can have an influence on the products that are chosen by the customers.
Technological factors – The levels of disruption which have taken place in Australia have affected the products that are designed and the processes which are used as well. The effective technological analysis thereby needs to be made by the company in order to operate in the country and in other areas of its operations in a profitable manner. The implementation of modern technologies within organizational processes is thereby effective for the improvement of BHP Billiton in the industry (Dyer et al., 2015).
Legal factors – The robust nature of the legal systems of different countries where the company operates can influence the policies which have been developed by BHP Billiton. The company thereby needs to analyse these factors in order to improve its operations in the industry. The major legal factors which can be considered by BHP mainly include, the Anti-trust law, Discrimination based law and employment based laws as well (Engert, Rauter and Baumgartner, 2016).
Environmental factors – The environmental standards which have been developed in different countries has been able to play a key part in the formation of the policies of BHP Billiton. The company has already faced some major environmental disasters in the past which have been able to cause huge issues for its operations in the industry. The management of the organization thereby needs to consider the environmental standards in an effective manner while operating in any country (Hill, Jones and Schilling, 2014).
The analysis of external environment has been able to depict that the operations of BHP Billiton has been affected in an immense manner due to the changes which can take place in different countries.
The industry in which BHP Billiton operates can be analysed in a strategic manner with the help of Porter’s five forces framework. The different competitive forces which can affect the company can be analysed with the help of this framework.
Bargaining power of the buyers – The power of the buyers is moderate to low and the prices of products that are provided to them can vary with respect to the demands. The long term based customer relationships are thereby based on the impact related increase in prices (Dobbs, 2014).
Bargaining power of the suppliers – The company is impacted by the powerful suppliers who are present in the industry. This power is thereby based on the materials, energy, shipping based costs and energy costs. The enhanced operations of these factors are thereby able to affect the supplier based power of BHP.
Threats of the new entrants – Major threats are also faced by the company based on the entry of new companies in the industry. The fall in prices of commodities and loss in demands of iron ore has been able to affect the entry of the new companies. The enhanced infrastructure of BHP has been able to reduce the effects of new organizations (Hitt and Duane Ireland, 2017).
Threats of the substitutes – The threats based on the substitute products of the company are quite low in case of an organization like BHP which has been able to develop a leadership position in the industry. The diverse portfolio of the organization is also considered to be a significant part of the processes of the firm (Sakas, Vlachos and Nasiopoulos, 2014).
Levels of the rivalry – The rivalry levels between the sellers in the industry is quite high. The natural resource based organizations provide tough competition for access to the reserves. The industry is however highly lucrative in nature and has a strong potential related to profits as well (Hubbard, Rice and Galvin, 2014).
Strengths – The portfolio of the assets of BHP Billiton is diverse in nature. The organization is also considered to be a large supplier of copper, silver, aluminium and lead. The products of the company are supplied to many different countries all over the world including, Australia, South Africa, United States and Brazil. The financial returns provided by the company are also high (Kasemsap, 2014).
Weaknesses – The organization has to improve financial assets and the gross margins in order to operate in a profitable manner. The corporate communications of the company are weak and this has led to the lack of response to the corporate enquiries (Meyer, Neck and Meeks, 2017).
Opportunities – The different projects which are available for the company are major opportunities which are provided to BHP Billiton. The organization thereby needs to improve the position of the brand in the industry in which BHP operates (Michael, Storey and Thomas, 2017).
Threats – BHP Billiton had faced huge threats due to the rise in costs based on the suppliers of the company. The rise in costs are have become huge obstacles in the development and growth of the organization in the industry. The high reliance of BHP Billiton on the demands based on the natural resources is able to affect the revenues in an adverse manner (Morschett, Schramm-Klein and Zentes, 2015).
The talent management based activities in the organizations are based on the ways by which the employees of BHP are managed and retained. The industry has experienced huge demands for the efficient employees. The talent and succession management based programmes are implemented by the company in order to retain the employees effectively. The proper identification of talent has played an important part in the process of developing the global network of employees. The programmes are thereby helpful in developing the skills and talent of the employees effectively. The company has always maintained a forward looking approach in order to develop the talent which is appropriate for its operations all over the world (Ethiraj, Gambardella and Helfat, 2018).
The culture of the company is effective in the proper development of leaders who are able to lead the company effectively. BHP Billiton has been able to build a culture of diversity and inclusion and has included different types of talent from all over the world. The outstanding performance of the organization is thereby based on the diversity of the workforce and the diversity of perspectives and thoughts as well. The talent management and diversity based culture which has been developed by the firm has been based on the capabilities and the needs of the employees and the organization as a whole (Bhp.com, 2018).
Conclusion
The report can be settled by stating that BHP Billiton has faced some major issues based on its operations in Australia and many other countries of the world. The external environment factors have affected the operations of BHP Billiton. The industry analysis of the company has been able to depict that the company has developed its unique position with respect to the other companies. The internal environment of company has been analysed and it has depicted that BHP Billiton has a strong leadership position in the country. The organizational culture of BHP has been able to support the effective leadership development related activities of the company. This has provided the company with a talented pool of employees who can provide the best levels of services in an effective way.
References
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