Discuss about the BHP Billiton.
This research paper is primarily concerned with the strategic management of the organization. In order to sustain the growth in the global competitive market, it is necessary for the management of the organization to adopt and implement strategies. Before implementing strategies for the organization, the management of the organization has to understand the internal and externals factors of the organization. After understanding the demand of the service users, the management of the organization has to implement strategies (Birkinshaw, 2004). There is no specific definition of strategies, as the strategy of the organization depends on the organizational structure. Strategies should be adopted on the basis of several factors like competitive position of the company, supply chain analysis, value chain analysis and most importantly culture of the organization.
This research paper is going to excavate strategic management with the help of the Resource Based Views, Core Competencies, VRIO model, Value Chain Analysis. With the increasing demand of the customers and rapid changes in the market growth, the mangers and leaders of the organization have to undertake several strategies (Dess and Miller, 2003). To retain the growth of the company in the competitive market, it is mandatory that strategies should be innovative.
BHP Billiton is the Australian Mining and Petroleum company and the headquarter of this company is in the Melbourne. From the survey of 2013, it is determined as the largest mining company of the world (Hitt, et al, 2009).This company is considered as the largest resource group, which has diversified market and the organization have global portfolio regarding the quality asset.
Resources: There are two types of Resources, one is Tangible and another is Intangible. Tangible resource is the resources, which can be seen such as equipments and employees. On the other hand, Intangible resources are the resources, which cannot be seen like service or competitors’ strength. Resources, capabilities and core competencies are all inter-related. Resources help to judge the capabilities of the organization and with the help of the capabilities core-competencies can be understood (Jeyarathnam, 2008). Resources are the source of a firm’s capabilities. The management of BHP Billiton has to understand the resources of the organization. There are different types of resources in the organization, on which activities of the organization is depending. Resources help to cover the organizational phenomenon; management of the organization has to understand that the need of the resources and use those resources collaboratively to win the competitive advantages (Grundy, 2004). Resources of BHP are asset of the company and assets of the company includes human resources, branding, loyalty, equipments, goods, capital equipments, and financial capabilities of the company, skills and knowledge of the employees. The management of the organization has to understand that there is a significant difference between tangible and intangible resources (Foss, 2007). Management should use the tangible and intangible so that organization can create capabilities. Moreover, the capabilities of the organization are structures in such a way that generate core competencies.
The tangible resources of the BHP are Financial Resources including the borrowing capacity of the firm and ability of the firm to generate internal funds. Besides planning, controlling and coordination system are the most significant resources. Along with that, Physical Resources are the equipments, building or plants of the company and location of the company (Grundy, 2004). Raw materials are also known as the physical resources of the company. Intangible resources are the stock of technology like the trademarks, trade secrets and copyrights. Patents are considered as the technological resources.
Some examples of Tangible resources are the Human resources, Brand Name or reputational resources and innovation resources.
Tangible resources of the BHP Billiton are Cash, Human Resources and equipments for production. Intangible Resources for BHP Billiton are Copy Rights, patents, Motivation to the employees and reward management in the organization.
Capabilities: Among the several other resources, the management of the organization has to determine the correct resources for the organization, which helps in incorporating the ultimate goals (Barney and Hesterly. 2008). With the help of correct integration and interaction, the organization can able to avail ultimate success. With the combination of the tangible and intangible resources the capabilities of the organization can be determined (Sadler, 2003).
Core competencies: Resources and Capabilities are the sources of competitive advantages, core competencies helps to determine the three key criteria. It helps the competitors to not to intimate with the competitors easily; products and service can be reused and ensure that customers are getting desired products. With the help of the Resource Based View, management can determine three factors (Saloner, et al, 2001).
With the help of the VRIO framework, researcher can able to determine the position of the organization.
Value: Value helps to determine the cost of the resources and how easily these resources can be obtained from the market. With the help of this framework, the management of the BHP Billiton has to depend on the resources for the better service. The manager is entitled to determine the cost of the resources and maintained availability of resources so that process can be done smoothly.
Rareness: This Factor help to determine the availability of the resources if the resources of the organization are limited in that case the production of the organization will suffer definitely (Powalla, Bresser and Marewski, 2009).
There are several resources, on which the activities of the organization are dependent, so it is necessary for the management of the organization to make the goods available. If the management is unable to arrange the resources time to time then the organizational process can be suffered. From the survey of BHP Billiton, it can be assured that management has always successfully maintained resources so no such problem has been occurred.
Imitation: Imitation is often fruitful for the growth of the organization. Vale and Rio Tinto are the major competitors of the organization and several strategies are adopted for keeping the growth of the market (Special Issue of Strategic Organization: “Strategic Management Theory and Universities”, 2015).BHP Billiton should understand the strategies of different organizations and imitate those strategies with innovative process of implementation. Marketing manager must understand the strategies of different competitors and apply those strategies in innovative way.
Organization: After managing the resources, the management of the BHP Billiton allocates the resources properly. It is the duty of the organization to use the resources effectively and this will be beneficial for the organization. Management should understand that all the resources of the organization whether it is tangible or in tangible should use strategically. Strategically use of the resources helps the BHP Billiton to sustain its position in the global competitive market (Barney and Hesterly, 2010). Among the several other resources, the BHP Billiton has successfully managed the Human Resources.
To understand the value chain analysis of the organization, it is the sole responsibility of the management of the organization to determine the value chain analysis of Oil and Gas Industry (Foss, 2007). Value Chain Analysis of the Oil and Gas Industry is the essential source for data. It helps to determine the strategic insight of BHP Billiton. Value Chain is a useful tool that helps to determine or create value for the customers (Powell, 2014). The ultimate goal of this analysis is to set a specific margin of profit that can be earned by offering the customers a definite level of value against the products and services by BHP Billiton. All the activities that are carried out in the organization tend to create value for the customers associated and thus it helps the company to earn a specific margin of profit thereby enabling them to attain success and competitive advantage. The profit margin of the company depends widely upon the effectiveness of executing its operations so as to gain the interests and loyalty of the customers for satisfying them (Oliveira and Gimeno, 2014). By such intervention, the customers will feel encouraged to buy products and services from the company and therefore the customers’ purchasing costs will exceed the overall cost of the activities performed in the value chain of the company. Thus it can be said that following a proper value chain procedure, BHP Billiton is able to understand the costs of the activities in a better way and constrict them out of all the activities related to the value chain. Moreover by putting emphasis on those activities or operations, the company will be likely to earn the desired margin of profit and showcase their capabilities of performing better than the competitors.
Culture of the Organization plays a significant role in determining the position of the company in global competitive world. Culture helps to determine the behavior of the employees and share the ideas and beliefs of the company (Birkinshaw, 2004). There are many layers in the company, among several layers, some layers are visible and some layers are invisible. Culture helps to shape the behavior of the behavior of the activities of BHP Billiton. In BHP Billiton manager of the organization has followed two types of culture one is Normative and another is Academy Culture. Higher authority of the organization has managed the norms and procedures of the organization so that everything can be done by following the existing guidelines.
BHP Billiton is the renowned company and it needs several skilled and knowledgeable staffs for running the business. Academic Culture helps to ensure that all the staffs are educated and skilled Foss, N. (2007).
Along with the effective strategies for the organization, the management of the organization has to face several challenges. BHP Billiton is the leading company energy-oriented good manufacturing company, so it can be said that the company has contributed in global warming. Green Houses gases and climate change are consumed by the fossil fuel (Special Issue of Strategic Organization: “Strategic Management Theory and Universities”, 2015). BHP has to undertake the Regulatory Changes and implement those changes to tackle the climate change. Service users are getting conscious about the change in the environment, so it is a posing threat for the organization to run the business (Harris, 2011). In 2010, Australian Government has declared that the Australian Governing Body is trying to increase the chance of the renewable energy by 20%. Due to the upcoming changes in the marker, the regulations have been changed and to minimize the profit percentage, the company has undertaken several policies (Birkinshaw, 2004).
From the light of the above analysis, it can be determined that the negative environmental impact on BHP Billiton can affect the financial performance of the company. Due to several regulations, from the Australian Governing Body, BHP Billiton is forced to close the Nickel Mine and after that company has to face severe Downturn, this problem has occurred due to lack of effective strategies (Birkinshaw, 2004).
Conclusion:
From the above analysis of the paper, it can be concluded that this research paper is primarily concerned with the Strategic Management of BHP Billion. With the help of several tools and techniques, the strategies can be developed. VRIO Framework helps to determine the necessary resources of the organization and after understanding the external and internal factors, the issues in the strategies can be determined. The VRIO Framework can manage the resources. The management of the organization should undertake the strategies, which are beneficial for the company (Jeyarathnam, 2008). The issues are affecting the positive image of the company and imprinting a negative image on the mind of the service users. On the other hand, above-mentioned two cultures are playing a symbolic role in shaping the performance of the employees as well as performance of the organization (“Co-creating strategic risk-return management”, 2010).
References
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