This paper focuses on the different strategic issues in the company BHP Billiton that is located and headquartered at Melbourne in Australia. It is a very famous Anglo-Australian multinational mining, metals and Petroleum Company. The purpose of this report is to identify a challenge that the company has been facing in the last five years and then to make the proper solution process so that the company can progress in their ways to reach their organizational objectives. One of the recent problems that the organization has been facing in the recent times is to maintain the proper quality for the mining production. The reasons that have been identified in the context are the increasing rate of the raw materials in the globalised market and their incapability to cope up with it. The business environment has been considered as one of the most important factors in shaping up the business environment. Both the internal and external environments are important as well. The external environmental changes are hampering the proper growth rate of the organization. Other than that the recent policies of the government and the rules that have been imposed are also reliable for this challenge.
In this part of the report, the strategic issues have to be identified and the issues have to be properly justified and analyzed so that it can be discussed with an attempt to resolve the problems. The strategic issues that have been identified in context to the BHP Billiton can be divided into three parts mainly. These three points can be regarded as the uncertainty, volatility and complexity in the organization. BHP Billiton is one of the most powerful and reputed organizations in the mining industry so it is natural that they have a lot of competitors in the outside business environment (“BHP Billiton | A leading global resources company”, 2017). So, these strategic issues have to be considered as the obvious blocks in their path to get competitive advantage over their competitors.
The first strategic issue that has been identified is the uncertainty. Uncertainty is an issue that can be attributed to almost any organization in all the industries. A company can never be complacent about their performances (Pulver, 2012). It is because there are clouds of competition always hovering over the heads of the companies. The rival companies are always trying to assess their weaknesses and make some strategic changes in their quest to become the leading organization by beating BHP Billiton (Tannenbaum, Weschler & Massarik, 2013). There are many political barriers that prevent the organization from undertaking many projects in and outside the country. There are technical issues as well because the proper number of skilled employees has been lacking for a long time and this has been a lack in their path. Various social limitations are also responsible like globalizing of the markets and the adaptation to the environments (Pulver, 2012).
The volatility in the market atmosphere is also a factor in the strategic issues because the business environments are constantly changing and the organizations need to adjust with these changes (Pulver, 2012). The government in the country makes some policies at different times and these policies tend to hamper the business proceedings of the company. The price of the raw materials for making the product portfolio in the liquid petroleum, aluminum and other costly materials like gold and silver are increasing in the global market on a daily basis and it is very hard to keep pace with the flow. BHP Billiton also has to cope up with the external environmental changes in the industry and the government policies (Pulver, 2012).
The strategic issue to be identified here is the complexity within the organization. Complexity is an obvious part of the organizations and their undertakings in the different contexts (Pulver, 2012). Complexities may arise at anytime for the companies because of many reasons. The reasons can be global recession, financial reasons and various social reasons. When an organization sets its goal to become the leading firm in the industry, it surely has to go through various complexities and tackle them properly. The complexities can be found both outside and within the organization. The internal complexities can be identified as the leadership and management style changes because the leadership style has a big role to play in achieving the organizational goal (Shinkle, 2012).
The objective of this part is to discuss about the various strategic options that can be used to shape up the difficulties and try to resolve them in the due course. The probable strategies have to be discussed so that one could sort out the best applicable strategy in solving the strategic issues. The methods of the strategies have to be discussed in order to understand in what ways the issues can be resolved. In this portion, some strategic options have to be designed and they have to be analyzed for obtaining the best results (Ungerer & Cayzer, 2016).
The organizational capabilities in BHP Billiton have to be reshaped and redefined so that they can gain the competitive advantage in any matter. BHP Billiton has to assess their organizational capabilities to meet the requirements of the customers and they have to understand what their customers want from them in this changing scenario. It has to be remembered that organizational capabilities do not depend on one single matter (Gibbons & Henderson, 2012). It has to deal with a lot of things and they have to be in line with the customers’ demands. They have to improve their capabilities in different aspects and also have to improve the distinctive competence and core competence that helps an organization to flourish by tackling the difficult times.
They also have to shift their focus on their marketing capability and the manufacturing capability that has to be handled with priority by them because the globalization of markets and increasing price hike of the raw materials for the production of their goods. They have to improve their human resource capability and employ more people to engage in the production process (Gibbons & Henderson, 2012). BHP Billiton has to look into the matter of their dynamic capability i.e. they have to adapt to the changing business environments readily so that these changes do not leave an impact on their productivity (Phipps, Prieto & Ndinguri, 2013). They also have to look forward to the integration of the individual resources so that they can be able to achieve an object. They also have to involve their tangible and intangible resources so that they can maintain the business integrity they have promised to their customers (Greco, Cricelli & Grimaldi, 2013).
In course of analyzing this strategy in the context of the RACES framework can be assessed as follows:
The resources for utilizing on this strategic option have the resources available because some of these things have to be managed within the organization (Daley, 2012). Though these things are easy to be imitated by the competitors, they have to measure their weaknesses and take the measures accordingly. The marketing and management aspects along with the leadership factors have to be managed properly so that it helps to retain the competitive advantage over the other competitors.
The internal power brokers, stakeholders (both internal and external) and the leaders of the organization have agreed to this strategic option because their knowledge and skills will be up graded through this option and they will be able to imply new leadership styles. The organization will be benefited by this option (Hitt, Ireland & Hoskisson, 2012).
This strategic option will surely fit with their culture and brand reputation because they want to possess their place in the industry and they will surely be able to conform to these changes.
This strategic option will be very much effective because all the problems they are facing like the manufacturing capability has to be increase in order to manage the manufacturing problems and cope up with the difficulties (Zairi, 2012).
If these strategies are applied in BHP Billiton, long-term sustainability may be achieved because these strategies tend to focus on almost every aspect in which the problems have been seen. These problems can be resolved by applying these strategies and they will be able to gain the competitive advantage (Rothaermel, 2015). The competitors will not be able to imitate these strategies easily and thus it will prove to be unique (Thomas & Lamm, 2012).
If organizational changes are applied in BHP Billiton there can be seen many mixed reactions and some of the effects will be positive but in most cases the implications can be in negative. In organizational change, entire organizational structure can be modified including the leadership management and the structure of the hierarchy, their programs and their organizational culture may go through a change as well that could result in the ruining of their reputation (Benn, Dunphy & Griffiths, 2014). It may lead to the loss of status, freedom, responsibility, money and many more things.
If this strategy is applied the resources will not be available within the organization and the competitors would be able to imitate these things very easily because every organization can imply the organizational changes (Daley, 2012).
When an organization goes through a change, it is not sure whether the people linked with the organization can be able to adjust with the changes (Hitt, Ireland & Hoskisson, 2012). Situations may arise that some stakeholders might agree with the change and some disagree. This may take place in case of the leaders as well. Thus this strategy may not be universally acceptable.
As the matter of consistency, change is a continuous process and this goes on in short intervals. It is not guaranteed that whether these strategies will be consistent because strategies have to be changed as per requirements of the customers. These changes may not be consistent.
The effectiveness of this strategy cannot be measured beforehand. It may be positive or it may be negative as well. So, it is better to judge the different possible implications before applying it (Zairi, 2012).
Organizational change is a certain aspect that is designed to bring the positive changes within an organization but it is not sure to predict whether it will bring the positive effects or not. So, sustainability cannot be ensured in this context (Thomas & Lamm, 2012).
In this part of the paper the topic of discussion is about the strategy that will be the most suitable to be applied in BHP Billiton. The previous portion has been described regarding the strategy options that could be implied to resolve the strategic issues that have been observed. Those strategic issues are very much in connection with the welfare of the organization and the possible developments that can be made in the organization (Bargal & Schmid, 2012). BHP Billiton, as discussed earlier, is a leading organization in mining. They have to produce the best goods that will satisfy their customers and they can gain the competitive advantage over their competitors (Fraering & Minor, 2013). The strategic issues that were observed in the organization were due to its uncertainty, volatility and complexity. Two strategic options have been discussed in this context that will lead to the removal of those issues and establishing the ways in which BHP Billiton can prosper. The two mentioned strategies are the redefining of the organizational capabilities and bringing in organizational changes within the organization (Fallik, 2013).
Out of these two strategies, the most competent strategy would be redefining of the organizational capabilities (Gibbons & Henderson, 2012). The reason for this has to be justified first. In order to do so, both the positive and negative sides have to be discussed for a better understanding.
The first strategy that has been discussed first is the redefining of the organizational capabilities. Organizational capability is one of the most important aspects that have to be managed by every organization in the competitive market (Anderson & Simester, 2013). Organizational capability must be focused by all the organizations and their management because many aspects of organizational welfare are associated with it. Organization capability, in general, means the capabilities of an organization to manage the internal and external resources (Gibbons & Henderson, 2012). This will help the organization to establish its supreme command over other rival; organizations. These resources include mainly the marketing, management and human resource sectors. When these organizational capabilities are improved, it is definite that the business itself develops uniqueness and stands way ahead of the rivals in the competitive market. In this aspect, it can be said that the feasibility of the company improves as well (Wooten & Hoffman, 2016). There are some positive aspects that can be gained when an organization redefines its capability. These aspects can be discussed as follows:-
An organization needs to create new capabilities besides developing the ones that already exist. This gives them an edge in the market (Wagner & Hollenbeck, 2014). They have to reshape the areas like the marketing, management and the human resource team. This is most important because this focuses on employing new skilled employees in the organization (Baer, 2012).
The customer demand changes from time to time for an organization and they have to provide what the customer wants. The skilled and effective employees will help to meet the demands of those customers by their upgraded knowledge. This is another effectiveness of the organizational capability (Gibbons & Henderson, 2012). This positive response will help the organization to flourish in new directions.
Another aspect of the organizational capability is the presence of knowledgeable workforce at their disposal (Ankli & Palliam, 2012). Every company has some particular business goals that they want to achieve but it is impossible to reach those goals without the help of the skilled employees who work there. They can be categorized as the backbones of the success of the organizations. They should be trained properly with an added advantage of their academic knowledge of that particular perspective. The organization must ensure that their workforce is continuously improving and they should be supplied with the resources. When an organization successfully manages their workforce with resources, the result is an integrated success for the organization (Kaufman & Guerra-Lopez, 2013).
The relationship between the customers and the organizations is very important in the growth of the organization (Al, 2012). This relationship itself is a part of the organizational capability as it reflects the sales, reputation and customer loyalties. The parameters that is useful for the growth of the firm lies in the relationship development with the old customers as well as gaining new customers. Thus, the organizational capability improves the business relationships. This is how organizational capability is very much important for the growth of the organization and of utmost importance (Al, 2012).
In this context, another prospect has to be discussed and i.e. the reason for rejecting organizational change as a tool for strategic option (Benn, Dunphy & Griffiths, 2013). Though, it is a available strategic option but the its usefulness is not as crucial as managing and redefining organizational capabilities. Organizational change is a very important perspective and sometimes the organizations need to go through changes as traditional ways cannot be beneficial for the sustainability of the firm (Benn, Dunphy & Griffiths, 2014). Though, organizational change is done for the development for the firm, it does not always reflect in the positive. The risk factors are always present in this. So, it will be better for BHP Billiton to imply the strategy of redefining the organizational capabilities.
Conclusion
It is to conclude the paper that in this discussion, many important aspects of the organization BHP Billiton has been highlighted. The main purpose of this discussion was to talk about the different strategic issues that were reigning issues in BHP Billiton, an organization associated to the mining industry. The strategic issues that have been very effective and the problems that the company is facing have been described with special attention to the particular strategic options. These strategic options would be very helpful in resolving the problems. It is understandable that the company has been facing the problems of adapting to the external business environment changes and not being able to cope up with the increasing cost level of the raw materials. The way to resolve this is to redefine the organizational capabilities because it will be helpful to establish sustainability in the organization and bring back the organizational success. BHP Billiton will always look to keep its place in the competitive market and they have to resolve their important strategic issues by using these strategies by focusing on management and human resource factors. This will help them to prosper in the competitive market.
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