Strategic Options For BHP Billiton: Dealing With Climate Change And Uncertainty

Strategic Issue

Discuss about the Strategic Options for BHP Billiton. 

BHP Billiton which is one of the global listed companies is a specialized company in mineral resources mining and with a wide range of commodities which consists of aluminum, energy coal and metallurgical coal. The company also deals in iron ore copper, manganese, and other metals such as silver and diamond. (Radosavljević, & Radosavljević, 2009) But in the past half a decade they have been dealing with the issue of climate change in excess. The board candidate- Mr. Dunlop has even mentioned it several times that the climate change is scary and the company can get affected a lot by it- but the issue is too big or small for the other to understand. But this certainly has created a very big hurdle for the company to operate. Because we are dealing with a company who has actually operations in various metals, and coals. The even more bigger challenge is of the board to handle this issue of climate change- so what needs to be done when the company’s board is not in the right state of mind to handle such a sensitive issue which can actually turn the company upside down. 

The strategic issue of BHP Billiton is towards the environment as even mentioned earlier.  Till the time there is very fast combustion of fossil fuels- it may result in decrease in the resources like coal and petroleum. And thus with this being there main issue and even discussed by board of the company- Mr. Mackenzie has time and again said that if at all they can continue with their current policies and portfolio to match energy demand and also to make sure that the expectations by the society’s expectations and by maximizing shareholder’s returns- Then only its possible for them to survive in this VUCA world. (Hesterly, and Barney, 2015) To get rid of this strategic issue- they are trying to make sure that the media gets their vision correctly that will try to maximize what they have. Uncertainty which is an integral part of any business will continue be so but the BHP Billiton needs to understand that the uncertainty of all of this and this is the biggest issue.  BHP Billiton faces vital issues in the business it works with respect to the instability about the genuine state; it impacts and affects the vulnerability about reactions or adequate measures. (Grant, 2015). Moreover this issue is so important because the kind of business the BHP Billiton has it gets affected a lot because of price and all. This issue of the availability of raw materials and all increases so much. There will always be so much of instability in this business of BHP Billiton because of the biggest adjustment in cost of crude material, metallurgical coal, copper, nickel, and so on, at the assembling stage in the present years. (Sethi, & Emelianova, 2006) Such materials frames the premise for the mining business and government strategy of changing the cost of the crude material has led to deliberately related confinements. (Walker, 2015)

Why this is the Most Important Issue?

Thus if at all the company wants to play it right and have strategies in place- some things can ruin it pretty badly because of the instability. Change in administration, abroad activities and administrations are the grounds of such complexity prompting key issues. (Gamble and Thompson, 2014)
Basic leadership is troublesome because of the way that it is here and there vague which variables are concerned and what is their particular part. Administrators of BHP Billiton are confronting circumstances that have never been confronted before. It is still indistinct in regards to how the political shorter the reality of the situation will become obvious eventually an effect on the mid-term and long haul situations of BHP Billiton choices (Gamble and Thompson, 2014).

This being in reference to AAP’s article in The Australian, 2013- BHP challenged over climate strategy and above explanation- the issue of a great important because of its nature. (Rowley, 2011) The climate change and the inability of the board to actually handle the same is quite critical. For a company to run smoothly, it’s very important to actually have a great leadership team who can look after the shareholder’s wealth maximization. (Allan,2004) But in a business like that of BHP Billiton, it’s so difficult because the raw material they need gets affected due to climate change and thus factors that of fossil fuels depleting and loads more comes in picture. (Gordon, 2007) 

The issues connected with environmental change keep on being a test for governments, groups and industry around the globe. The direness and unpredictability of these issues require reactions from every one of us. BHP Billiton offers the view that the balanced decision is to acknowledge that the standard science is right in indicating high dangers from unmitigated environmental change. They being such a huge group can actually work with the possibility decrease the most exceedingly terrible effects of environmental change, and unmistakably the best advantages will originate from acting early. Organizations together need to handle the kind of change and moreover understand the kind of issue this is.

Source: (Grünig, R. and Kühn, R., 2015 (pp. 41-52)

With the above strategies which can we taken, BHP Billiton has around three strategies to consider

1.Fight against Climate Change and try and maximize potential with the existing resources by increasing vendors and trying to get the maximum output.

Companies like BHP Billiton have a huge business which needs to be managed well. But when it comes down environment and climate, there is nothing anybody can do in this. Thus BHP Billiton needs to manage within the resources and find new ways to actually get the maximum output of all this. Moreover BHP can even stand to increase its CSR activities which can they can increase awareness in respect to climate change and a lot more. With this the company can flourish a lot and actually go forward in increasing its presence. As far as the climate change issue is concerned, many companies are hit by the same roadblock and needs to get past it with only one possible factor of fighting against increasing the output with the available inputs.  

Strategic Options

2.Focus on vendors which can provide you with low cost material- the low cost vendors can provide the materials in low cost which can decrease the operational cost. With no possible option, a company needs to operate on this sort of so called cost leadership because ultimately to continue being a profit making company- it needs to have such strategies.

Dunlop who is so worried about the company which is isn’t doing enough to prepare for a low-carbon future- thus because of a minimum rise of 4 degrees even- it can vanish mostly the human resource, so thus the company needs to operate on the lines of low carbon usage. Because till the time this doesn’t happen, they won’t be able to get out of this issue.

3.Different Markets

A company needs to find new markets to step their foot in- in order to get past the old already saturated markets. Moreover the kind of business BHP is in- it will obviously effect the very existence of the company, thus its actually high time that BHP gets in touch with new markets and flourish themselves in excess, because till the time BHP doesn’t go ahead with this- it won’t be possible for the company to actually go ahead with the going concern principal. Companies like BHP who are hit because of climate change, needs to understand that the climate is quite mighty and there should be availability of new markets for them to get into.  (BHP Billiton 2013)

4.Diversification or using by products

The companies which deals in so many minerals and so much more can always look for strategies which help them make new products from their existing business only. Minerals, ores etc.- all have byproducts which needs to be used in a manner which can be beneficial for the world to have and the company to generate profit. This all is also giving back to the society and can make sure that the world is a better place to live in. Also BHP can cash out the opportunity of being a green company. 

	1st Option- Fighting against Climate Change	2nd Option- Getting Low cost Vendors	3rd Option- Different Markets	4th Option- Diversification in existing markets
R- Resource	Too much of resources needed but can be done. Still will be a very long process	It will be requiring a lot of resources from all the vendors	This has abundant resources because new markets are being explored.	Same as 2nd option- Limited resources
A- Acceptable	Yes	No- might have protests from supports of no global warming and such businesses	Yes	NO
C- Coherent	Yes	No because of the nature of the business	Yes because new markets will have new products	No because of the nature of the business
E- Effective	Yes	NO	Yes	No
S- Sustainable	Yes but in less extent	No	Yes because of new markets and new products which not be related to existing business	No

For the company to keep growing, it should always find new markets so that they can actually work and explore new dimensions. As mentioned above finding new markets is the best strategy which should be used by the company as to make sure that the company stays intact and is able to function besides the major in availability of the resources they used to use.  

The long haul nature of their operations permits us to fabricate communitarian group connections. Their size and degree mean that they can make an important commitment to groups in which they work. Thus actually making sure that the world still has great chances of having a green future and companies like these won’t be using the non- renewable substances more. Also if they so this then they will be able to amplify the financial and social advantages of their operations to add to worldwide monetary improvement, while minimizing their ecological impression, for instance through advancement, profitability and innovation. This not only helps them to protect the environment but also makes them eco- friendly companies. But they need to make sure that they find markets where there is not a possibility of leaving carbon footprints.

They indeed have a solid administration forms set up, exclusive expectations of moral and mindful conduct, and also they are a dynamic benefactor to societal improvement. But this all is only possible if they reject all the other options of the strategies i.e., low cost, finding new vendors and using byproducts.

If at all they find the new markets which are eco- friendly then it’s possible for them to actually come above their image of being as a company to use non- renewable resources. If at all they use the byproducts, still they will be able to leave carbon footprints only. Rejecting the cost leadership is because even though besides may be maximizing shareholder’s wealth it destroys the environment majorly.

Same is the reason with byproducts- unless and until you have the actual raw material, you can’t have byproducts and thus it affects the kind of environment we have. 

Over the globe, groups are encountering transformational change – monetarily, socially, mechanically what’s more, naturally. As these quicken and interconnect, they make open doors for advancement and change. Thus BHP need to make sure that these front line movements and give the assets expected to transform change into positive improvement. Also they dealing in new markets of new sort of products which will be very significant for all phases of monetary development. Rising economies require development materials like cements and etc. which leave less impression as their populaces grow and new urban communities and overwhelming industry create. As economies develop and individuals get to be wealthier, a shopper economy rises and we need more diversified markets which BHP should target for sure. (BHP Annual Report 2010)  

Conclusion

BHP Billiton has the solid business sector position as a result of spread everywhere throughout the worldwide business sector. It is one of the biggest coal maker organizations of the world. The inner environment impacts its way of life specifically and in a roundabout way. It has the diverse procedure that drove the organization and aides in keep up the position in the worldwide business sector. In this manner if BHP Billiton puts incredible endeavors in building association with its new clients, new supplies and so on and make new items it can do ponders for the world to see. On the off chance that gives careful consideration towards the earth by achieving power from reestablishment assets that will help in diminishing the nursery impact. What’s more, therefore their primary adage of the organization will be in place which is to give quality in the item and complete fulfillment of the organization. As it has been watched that the main decade of the modern transformation in 21st century has been included by the doubtfulness from numerous points of view. The massive globalization, the ever happening development and developing rivalry, passes on with them the instability, unpredictability and uncertainty. Thus, BHP Billiton needs an extra way to deal with counter the difficulties like that of making sure that they find more and more new markets and ought to develop a methodology, which must be founded on the key arranging. 

References

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Walker, G., 2015. Modern competitive strategy. McGraw-Hill Higher Education.

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