To achieve the sustainable growth in the competitive growth, it is important for the companies to adopt some effective marketing strategies. The strategies adopted by the company depend upon the internal and external environment in which the company is operating. It becomes really important to analyze the trends and environment in the market for the effective strategic plans. This report is based on the strategic and environmental analysis of BHP Billiton. The analysis is done on the basis of the evaluation of resources, capabilities and management talent of the company. Along with this, report also analyzes the trends of the Australian steel industry and the current strategies of BHP Billiton in the operating market. By the internal and external analysis, the report describes the position of BHP Billiton in the Australian market. Company BHP Billiton is a global listed company and operating in the diversified in the mineral resources in many countries. The company is engaged in the mining of various commodities including energy coal, copper, iron ore, aluminum, silver and titanium minerals, oil, gas, diamonds, natural gases, and titanium minerals (BHP Billiton, 2017). This report analyzes the environment of the operating market that impacts the business operations of the BHP Billiton.
BHP Billiton is the leading resource company in all over the world. This is an Australian company operating in the mining and petroleum products. The company is operating in the diverse market along with the quality asset portfolio. The company has competitive advantage in the overall mining industry due to its effective operations in conventional and non-conventional resources such as uranium and coal, natural gases and oil etc (Walker, 2015). This is the core competency of the company in the operating market. Along with this, company has diverse nature of the business with the low expenditures that is helpful to keep the financial position strong in the market. This is one of the big advantages of BHP Billiton that the company takes benefit (Chambers, 2016).
Australian steel industry is the major sector of Australian economy. The Australian upstream steel industry (steel manufacturing) employs around 18,500 people every year and pays annually wages of $ 1.5 billion. Along with this, the industry has annual sales are service income of $11.1 billion. The overall steel industry of Australia including iron and steel manufacturing by the downstream has provided employment to over 100,000 people and generated around $36 billion in the service income and sales. So, the steel industry and the supply chain have contributed for 10.4% values from all the manufacturing (Department of Industry, Innovation and science, 2016).
The Australian steel industry has strong reputation and image in terms of producing high level of quality products and services by investing in the technology, skill development and innovations. The steel products in the Australian steel industry is highly sophisticated including lightweight steel and flexible applications that are sued for the cars and transport equipment. Australia is operating in the global steel market having significant capacity and capability. Based on the research of World Steel Association, Australia is producing 4.9 million tons of steel and has ranked 36th among all the top 66 steel producer countries. The Australian market is dominated by the steel business and industry which can be seen in the given graph (Appendix).
BHP Billiton has the strategy to achieve the organizational goals and objectives in the business operations. Current strategy of BHP Billiton in the business is as follows:
In case of BHP Billiton, there are two types of resources i.e. tangible and intangible. The concept of resources and capabilities are inter-related. Resources are helpful in business in gaining core-competencies for the success and growth in the market. The management of BHP Billiton has understanding of the resources in the business operations. There are various types of resources in the organization on which the organizational activities depend. The key resources of BHP are assets that include branding, loyalty, human resources, goods, equipments, and financial capabilities of the company. Management of the company uses tangible and intangible resources so that the company can create capabilities in the business operations (Dobrzykowski, Hong & Soon Park, 2012).
Tangible resources of BHP are financial resources including borrowing capacity of the company and ability to collect the fund. Along with this, controlling, planning, and coordination system of the company are the most important resources in the business. Physical resources of the company are equipments, plants and location of the company. Physical resources also include raw material for the production. Intangible resources include the stock of the technology such as trademarks, trade secrets and copyrights (Slack, 2015).
Among many of the resources, the management of the company has appropriate resources for the business operations which are helpful in achieving the organizational goals and objectives. With the help of right and proper interaction, communication and integration, BHP is able to achieve the ultimate success in the Australian market. With the combination of tangible and intangible resources, the capabilities of the company can be determined easily in terms of achieving the organizational objectives in the operating market (Hartmann, 2016).
Management of the company has the important role in the business operations. Management is helpful in determining the position of the company in the competitive environment of business. There are many layers of management in the company. Management of the company is focused on the effective business operations to gain high level of profit. In the BHP Billiton, the managers of the company are also focused on maintaining the culture i.e. normative and Academy culture. High authority of the company has managed the effective procedures in the company so that the business operations can be done by the existing guidelines. BHP is the renowned company and there is many knowledgeable and skilled staff to operate the business (Lestari, Ismail & Mansur, 2014).
Change in the environmental factors can have the direct impact on the BHP Billiton Limited and it is important to analyze the impact of environmental factors for the effective business operations. PEST analysis provides important details about the operating challenges in BHP Billiton.
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Political factors- |
· Different political environment and political risks, · Legal frameworks for the enforcement, · Political stability of the Australian market, · Tariffs and trade regulations related to the raw material, · Pricing regulations for the basic materials |
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Economic factors- |
· Economic factors of the country such as inflation, growth rate, and economic indicators of the industry, · Growth rate of the metals and minerals industry, · Labor cost and productivity, · Economic growth rate, · Exchange rates of the country’s currency, and · Unemployment rate and inflation rate |
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Social factors- |
· Demographic and knowledgeable population, · Share beliefs and attitude of people in Australian market, · Environmental conscious population, · Societies encouraging entrepreneurship, and · Class and power structure in the society |
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Technological factors- |
· Technological development by BHP Billiton, · Technology impact of on product offering, · Impact on value chain structure, and · Impact on cots structure in industry (Kemp, 2010) |
BHP Billiton is an Anglo-American mining company operating in the Australian market. The company is the merger of the two companies i.e. BHP and Billiton. To analyze the market position of the company, it is important to understand the external; environment of the market in which the company is operating. For this, SWOT analysis of BHP Billiton would be suitable. SWOT analysis of the company is given below:
In case of the portfolio of the natural resources, BHP Billiton is one of the famous companies in the Australian and other markets. Company has its operations in all over the world and has strong position in the global market. Further, the company has strong financial position and financial returns to the stakeholders by the aggressive capital buy back campaigns. BHP Billiton has its presence at the global level i.e. it has the operations in eight countries including USA, South Africa, Australia and South America. Along with this, the market position of the company is also very strong in terms of market capitalization that is improving the trust of the stakeholders towards the company (BHP, 2015).
One of the weaknesses of BHP Billiton is that there is the lack of skilled human resources in the company. In the mining sector, the company is facing efficiency problems because of the lack of the skilled human resources. Due to some incidents, company is facing lots of restrictions by the law of the operating country. This is reducing the efficiency of the operational activities of the company significantly. Further, the communication department of the company is not up to the mark and is the obstacles in the growth of the company.
There can be various opportunities for BHP Billiton in the global market. The financial position and overall capacity of the company can be improved by expanding the business in more countries. Merger and acquisition with various companies can be a huge opportunity for BHP Billiton to grow in size of the business. Company can acquire small business and can gain competitive advantage. BHP Billiton is B2B Company and by the proper marketing with the effective channels would be helpful to sustain and grow (Ragin, 2014).
One of the big threats for BHP Billiton is fluctuations in demand. Developing economies like India and China are increasing the rate by manufacturing in-house and demand of BHP Billiton is fluctuating. Further, the competition is increasing in the manufacturing industry and there are many companies like Anglo American plc, ExxonMobil Corporation, and Nippon Steel Corporation etc. This is also a big threat for the company while operating in global market. Further, raw material for the company is increasing at the high rate and this would increase the cost of production and affect the level of profitability.
Conclusion:
This report provides the environmental analysis of the Australian market in which BHP Billiton is operating. From the above analysis, it is observed that BHP Billiton is operating well in the Australian market. The company has effective business strategy to improve the financial position in more countries. It is observed from the above analysis that company has competitive advantage in the steel industry of Australia due to the diverse nature of the business. By the environmental analysis, it is analyzed that company is providing high financial returns to the stakeholders so they have full trust on the company. There are various opportunities for BHP Billiton in the global market such as joint venture and merger and acquisition for achieving the growth in the size of the business. In conclusion, it can be said that Australian market is suitable for BHP Billiton to grow and company can also expand in other countries as it has effective business strategies.
References:
Ackermann, F., & Eden, C., (2010), Strategic options development and analysis, In Systems approaches to managing change: A practical guide, pp. 135-190, Springer London
Hartmann, A. M., (2016), Strategic Options for MNEs Operating in Emerging Markets, In Multinational Enterprise Management Strategies in Developing Countries, pp. 34-49, IGI Global
Department of Industry, Innovation and science, (2016), Analysis of steel and aluminum markets report to the commissioner of the anti-dumping commission, accessed on 21st September 2017 from https://www.adcommission.gov.au/adsystem/referencematerial/Documents/MASTER%20-%20Steel%20aluminium%20report%20%20-%2031%20August%202016%20-%20for%20public%20release.pdf
Chambers, M., (2016), BHP Billiton to focus on strategy and development, accessed on 21st September 2017 from https://www.theaustralian.com.au/business/mining-energy/bhp-billiton-to-focus-on-strategy-and-development/news-story/6218fc52b8eb9f415fe26564202d10fc
Kemp, D. (2010), Community relations in the global mining industry: exploring the internal dimensions of externally orientated work: Corporate Social Responsibility and Environmental Management, 17(1), 1-14.
Hesterly, W., and Barney, J. B., (2015), Strategic Management and Competitive Advantage Concepts and Cases, Pearson Higher Ed.
Walker, G., (2015), Modern competitive strategy. McGraw-Hill Higher Education
BHP, (2015), Sustaining Australia’s competitive advantage, accessed on 21st September 2017 from https://www.bhp.com/media-and-insights/reports-and-presentations/2015/06/sustaining-australias-competitive-advantage
Lestari, H., Ismail, R., & Mansur, A., (2014), Organizational Culture in Manufacturing Company: Study Case of Small and Medium Sized Enterprises in Central Java: In Applied Mechanics and Materials, 493, pp. 486-491
Ragin, C. C., (2014), The comparative method: Moving beyond qualitative and quantitative strategies, Univ of California Press
BHP Billiton, (2017), A leading global resources company, accessed on 21st September 2017 from https://www.bhpbilliton.com/
Slack, N., (2015), Operations strategy, John Wiley & Sons, Ltd.
Dobrzykowski, D. D., Hong, P. C., & Soon Park, J., (2012), Building procurement capability for firm performance: A service-dominant logic view: Benchmarking: An International Journal, 19(4/5), 567-584
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