The chosen organization in this report, which has been in news in the past two years, is BHP Billiton. Further, this report focuses on industry attractiveness, resources, capabilities, core competencies and competitive advantages. In addition, this report also focuses on recommendations for enhancing the strategic management of BHP Billiton.
In the resources industry BHP Billiton is a worldwide boss. Created from an amalgamation amongst Billiton and BHP in year 2001, it gets collectively an outstanding combination of low-cost resource, quality, and assets, balanced with the well-built administration group strong-minded to manage the assets in a competent way (BHP Billiton, 2017). The outcome is a dual-listed organization. BHP Billiton Limited the Australia-registered has equivalent financial share in the organization, and has a principal registration in the Australian Securities Exchange and is one of the biggest organizations in Australia calculated in terms of market capitalization. BHP Billiton Plc the UK-registered has a principal registration on the London Stock Exchange and comes under FTSE 100 Index as a component. An Anglo-Australian international mining organization, BHP Billiton, petroleum and metals organization, main office is in Melbourne, Australia (BHP Billiton, 2017). It is the globe’s biggest mining organization deliberated by 2015 market values and fourth biggest organization of Australia in terms of revenue.
Threat to competition
There is extremely little differentiation of product in between the different rivals in the metal and mining industry, so the competition is extremely elevated. The main concentration of the organizations is to be competitive on grounds of their unit price and the profits they generate, as of the actuality that, only the organization that can be cheapest in terms of its market place can continue to exist. Over the years, BHP Billiton has generated a flourishing status, which helps it over the others to develop apparent perimeter.
Threat of substitute products
In the market of BHP Billiton the threat of substitutes exists is diminutive to some extent, as they contains more than solitary resources, which makes the organization more sustainable (Nappi, 2013). The cause behind this is as BHP Billiton does their greatest for expanding their assets all the way through the worldwide economy.
Threat of New Entrants
Irrespective of the size of the mining industry, it is extremely tough and costly for the new entrants to enter in this industry. The procedure to begin mining in long run in context of locating, finding, begin mining, investment of capital and authority to resist should have well-built and great network to give out and convey goods is critical, making it extremely unpleasant and costly plan for new entrants (Hurst, 2015). Therefore, the threat of new entrants is slight and approximately negligible.
Bargaining powers of the suppliers
In the related industry, the bargaining of suppliers is the aspect of demonstrating the amount of competition. In a resource organization, BHP Billiton, it is extremely tough job to evaluate the bargaining of suppliers, because the personality and performance of suppliers can be extremely unpredictable (Wilson, 2011). Therefore, the bargaining power of suppliers relies on the natural resources, which can be neither elevated nor low. Although, it can be argued with the accessibility in context of the quantity of assets accessible to mine, relying on the form of resources organizations mining and beneath that situation BHP Billiton mines are wealthy in assets or supply. The bargaining power of the suppliers is medium. When the organization ensures decreased capability by elevated operations, the entire prices of the suppliers have also enhanced.
Bargaining power of Customers
The bargaining power of customers is medium due to the reason BHP Billiton can go by along any cost enhance to the customers, in the market, as there is well-built demand and inadequate suppliers of natural resources.
BHP Billiton is a reputable organization, which is acknowledged all over the globe for its main possessions along with gas and oil. BHP Billiton is amongst the globe’s biggest refineries and has been in that manner from 2001, since they began (Menkveld, 2013). By developing it in the form of organization, now they have, they have created it the peak of the food chain when it comes to global refineries. Already they have a huge fame for themselves in this industry, the things they have to focus on is expansion and development.
From other refineries, BHP Billiton has spread themselves well. They refine gas and oil along with coal, aluminum, copper, manganese, iron ore, silver and nickel (BHP Billiton, 2014). They also work on refining of potash and petroleum. BHP Billiton concentrates on workers and low prices. They make their employees feel like important, so that they enhance their performance. Safety and working conditions are also considered. BHP believes in low prices more and more to serve the consumers.
The focus of BHP Billiton is on low prices, long-life and expandable approach for generating good chances for growing. The society and value reflected, there is requirement of employees by the company. Company objects to hire people from host commodities, to attract elevated capability people, those dedicated in the success of company and focus on team who can perform better (Christensen and Raynor, 2013). To develop in any situation, company needs to be prepared for alterations and meet the requirements of the society. The products they are producing will assist them now along with the guidance for future in terms of being successful and becoming the globe’s number one organization.
BHP Billiton deals in unpredictable goods market, which is weakness. This might be considered normal but for monetary administration, it makes it tough and it also makes it tough to see how the cash flows of the organizations will be (MeerSMan, Rechtsteiner and Sharp, 2012). Commodity trading is better if the market is better but if the market is not in a better condition than the cash flow of the company will not be as better. BHP generates their income from selling and trading but in an unpredictable market, it is tough to acquire an upcoming value of revenue.
When the market is not functioning well then there will be seen deduction in profitability. BHP Billiton is generating their income from selling and trading. Therefore, they have to fulfill their proportion of selling and trading for them to generate income from it (LeeSun, 2015). When the economy goes downwards the BHP is cuffed, as they prepared their costs as per to the worldwide market.
In the metals and mining industry, BHP Billiton countenances strong competition. The mining and metals industry be inclined towards focus. Inside every section, big international organizations lead. Furthermore, this is a recurring industry, which recommends that the present elevated growth rate is improbable to be maintained. Margins of industry are inclined to modification in costs of raw material, in the subsequent few years, with iron ore costs anticipated to increase and the industry is susceptible to increase one of its major costs that are in the cost of energy (Morrison, 2011). Xstrata is a UK based natural resources organization, with its existence in copper, zinc, coal, alloys and a US based company Newmont Mining a producer in gold and other businesses, from these BHP Billiton goes through competition. The BHP Billiton also goes through competition from ThyssenKrupp, UK based company (BHP Billiton, 2017). Strong competition in this industry can direct to hampering of market share and locate force on the BHP Billiton’s margins.
The high competition can result in high pressure on company, which can also pressurize the strategic management. New entrants, if enters more and more can make the work of management hectic. Suppliers and buyers are essential for company and the relationships with them should be good. Strategic management helps to maintain this, but if strategic management fails them it results in loss.
To enhance the strategic management of the BHP Billiton, they had to concentrate on various uncovered aspects. If the organization wishes for becoming the commodity producing number one organization in the globe, then they will require to go into further countries then what they are at present in and discover a method to take out as much as commodity possible. To become successful, the organizations must focus on core ideology, which fosters the organizational performance. The strategies and approaches keep on changing with the requirements, but core ideologies remains the same, which motivates workers to construct company, which last. BHP Billiton should follow strategy control and analysis. Strategy control and analysis is necessary as it evaluates performance, external and internal problems and taking corrective steps, if required.
Conclusion
From the overall information, it can be concluded that BHP Billiton is the fourth largest company in the world. To become the first largest company, it has to focus on various strategies and improvement in strategic management. It is tough for the new entrants to enter in this industry, bargaining power of buyer and suppliers is medium and substitution is small. Therefore, overall it not very tough to come at first position, strong strategic management can support the organization to be at top.
References
BHP Billiton (2014). BHP Billiton Iron Ore management approach. Retried From https://www.epa.wa.gov.au/sites/default/files/API_documents/Appendix%20B%20-%20BHP%20Billiton%20Iron%20Ore%20ManagementApproach.pdf
BHP Billiton (2017). About us. Retrieved From https://www.bhpbilliton.com/our-approach/our-company/about-us
BHP Billiton (2017). Sustaining Australia’s competitive advantage. Retrieved From https://www.bhpbilliton.com/media-and-insights/reports-and-presentations/2015/06/sustaining-australias-competitive-advantage
Christensen, C., & Raynor, M. (2013). The innovator’s solution: Creating and sustaining successful growth. UK: Harvard Business Review Press.
Hurst, L. (2015). Assessing the competitiveness of the supply side response to China’s iron ore demand shock. Resources Policy, 45, 247-254.
LeeSun (2015). BHP Billiton – Remotely Resourcing the Future. Retrieved From https://rctom.hbs.org/submission/bhp-billiton-remotely-resourcing-the-future/
MeerSMan, S., Rechtsteiner, R., & Sharp, G. (2012). The dawn of a new order in commodity trading. Oliver Wyman Risk Journal, 2, 1-9.
Menkveld, A. J. (2013). High frequency trading and the new market makers. Journal of Financial Markets, 16(4), 712-740.
Morrison, J. (2011). The Global Business Environment: Meeting the Challenges. 3rd edn. UK: Palgrave Macmillan
Nappi, C. (2013). The global aluminium industry 40 years from 1972. World Aluminium, 1-27.
Wilson, J. D. (2011). Resource nationalism or resource liberalism? Explaining Australia’s approach to Chinese investment in its minerals sector. Australian Journal of International Affairs, 65(3), 283-304.
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