Discuss about the Strategic Report for Within Producer Organizations.
The world’s largest mining company is BHP Billiton (2013 census) in terms of revenue collection, as well it is the largest business organization of Australian economy. BHP Billiton come leading on the list when it comes to iron ore mining. The mining organization focuses to generate sustainable value by the discovery, possession, improvement and promotion of natural resources. The organization reported of earning a profit of US$ 7.8billion in the financial year of 2013, which was a significant growth of 31% from the previous fiscal year. The mining company has also a net revenue profit of A$140 billion (1985-2013) (Bhpbilliton.com, 2016). However, the organization is known for its transparency has paid a total amount of $76 billion of taxes. It is a dual listed company with both shares of Anglo-Australian corporate organization. BHP Billiton documented the require to raise the effectiveness and visibility of efficiency management processes throughout all of their operations to make sure nonstop effectiveness with governmental and administrative laws as well as corporate principles and site commitments. BHP Billiton is presently facing human resources management challenge issues affecting the operationsThere are a lack of trained staff to work on the mining sites. In this report, the author is conducting a internal analysis of BHP Billiton to explore the competencies, cost positioning and competitive advantage of the organization. It will assess to identify the strength, weakness, opportunity and threats of BHP Billiton.
The initial business of BHP Billiton was smelting lead and tin. Currently, the mining giant mainly operates a extensive range of mining, doling out and oil and gas fabrication operations. BHP Billiton is the mining business organisation, which is experiencing a sustainable growth despite economic slowdown and turmoil. In 2015 financial year, the organization set new records in terms of production. It is present in 25 countries throughout the world and has total workforce strength of 41,000 human resources. The main mining ores are Coal, Petroleum, Copper, Potash and Copper. As the organization has huge existence in mining sites, so there is a invariable need for trained workforce to work in the mines. Recently, the mining sites of BHP Billiton were facing a shortfall of trained employees who are compatible to work in mines. There was an ongoing struggle between the management and the workers and was followed by strikes by labor unions. The disagreement and strikes caused a depression in global coal-consuming markets since the BMA-operated mines generate more than 58 million metric tons per annum, which comprises about a fifth of the yearly global coal trade.
The instrument for evaluatation of the business internal assets and capabilities assess if they can be a foundation of persistent competitive gain. To recognize the business organizations competitive advantage marketers uses different tools and techniques to analyze the external; and internal environmental factors like POTER’S 5 Force, SWOT, PESTEL etc. “VRIO framework is a marketing tool used to analyze the internal resources and their competiveness for the business organization.” (Stead & Stead, 2013).
Figure: VRIO Framework
Source: Created by author
Value: This assess if the available resources available in the system is useful for the organization to gain competitive advantage or is not compatible.
Rare: Products or services that only produced or served only by limited sources or organizations regarded as rare. Rare resources have competitive advantage in the market, as they are unique.
Cost to Imitate: A resource is expensive to copy if other businesses that do not have it cannot copy or replace with it at a cheaper value. Replication can take place in two ways: by openly imitating, (duplicate) the product or service or providing the similar kind of product or service (substituting). A business organization that has expensive, rare and precious to copy resources can (but not essentially will) attain continued competitive advantage.
Understanding Value: To create value of the resource of an organization, it should organize the process, structure, organizational values and principles to realize the potential of its resources and capabilities. In process, it can stop from duplicity in resources. Only then, the organizations can accomplish sustained competitive advantage.
In this scenario, the analysis should done if the current market demand is more or less than the total produced ore and what could be done to increase sustainable demand in the market. On the other hand, is there enough number of trained staffs to operate in the mining sites. It is essential continuously review the worth of the available resources since of altering market that affect the external as well as the internal factor of an organization. Also regarding rarity of the resources, BHP should concentrate on maintaining quality of the mined ores to maintain the rarity of the quality of the product. Rarity helps a business organization to build brand loyalty and trust among consumers. By assess VRIO; BHP will understand the true value of its resources and the competency areas where it needs to focus for effective organizational process.
A business organizations internal analysis is the study of the value chain, which constitutes the financial reports, and analysis of potential threat, strength opportunity and threat before strategically plan for organizational process and implications. It is a tool to formulate the possible strategies to generate greater value for the customers. In business, resources are purchased and inputted, and to “add value” to them by turning producing something of value customers. Supply chain managing is the major cost drivers designed for the trade and account supervision is a chief purpose of the enterprise. “The BHP Billiton business organization has occupied by the five value chain primary activities: supply chain management, operations, distribution, sales and marketing, and service.” (Gamble & Thompson, 2014). All through the business organization, size is concerned it can engage in bulk goods and accomplishes delivery competence; on the other hand, transportation and carrying costs have increased drastically because of the high cost of fuel (Eden & Ackermann, 2013). The organization has invested heavily to achieve efficiency in operational functions as most of the sites are situated in the southern hemisphere and customers are located mostly at north part of the globe. The management has suitably developed trained task force to ensure healthy and safety of the employees maintain safety standards. There is a rising issue faced by the mining giant, increasing cost of skilled labors in the market. “The management has wanted to work with the Western Australia Government to increase government interventions for new labor training. Despites all steps, labor costs have been raising because of the constant scarcity of skilled mine labors.” (Bhpbilliton.com, 2016) The organization has a strong organizational structure and communication process. Although the organizations sustainable progress strategy is comprehensible still more efforts in building public relations for stronger case for BHP corporate citizenship.
Culture
Every organization is unique unlike every individual. Organizational culture is the process of sharing hypothesis, values, principles and beliefs, which rules how employees behave in an organization. These collective principles include a well-built authority on the employees in the business and order how they gear, proceed, and execute their jobs. All organization builds up and sustains a exclusive traditions, which provides strategy and limitations for the activities of the employees of the organization.
Organizational culture has seven uniqueness. all organization has a diverse significance for every uniqueness, which, once combine, explains the organization’s distinctive culture. Associates of organizations create decision lying on the assessment on these characteristics, and subsequently regulate their performance to equal this perceived set of principles. The seven characteristics are behavior, words, customs, traditions, belief, values, assumptions and thought process. BHP Billiton has a unique culture and the management is very significant in maintaining the corporate culture at BHP Billiton.
In the year 2001, Billiton merged with the BHP to form a new business organization BHP Billiton. It has successfully faced and accepted challenges and issues in the market. It is one of the market leaders in value added flat steel products. Brian Gilbertson of Billiton was chosen the CEO of BHP Billiton but just six months afterward, he resigned which was a consequence of successive board disagreements. Therefore, there was a sudden turmoil in the management of BHP Billiton and there was a lack of leadership and management in the organization for a very short period. However, the organization quickly got in tracks when in 2003 Chip Goodyear was elected as the new CEO and he served the organization until he was retired in 2007. Marius Kloppers is the current CEO of BHP Billiton (Bhpbilliton.com, 2016).
Conclusion:
The above report was performed by author to conduct a in depth critical analysis of the internal environment of NHP Billiton. In the report, it is discussed that resources and assets that a business has for conducting activities and processes comparative to its business definition, business mission and goals and objectives. An internal analysis of BHP Billiton conducted to evaluate the organization’s specific uniqueness, including its assets, capability, and core values. Finally, competitive market in the globalization era, BHP have to identify the current issues and threats for the organization and strategize that will assess the organizational growth and development and will ensure value to the business as well assist to face challenges with the financial down turn.
Reference:
Bhpbilliton.com. (2016). BHP Billiton | Strategic Report. [online] Available at: https://www.bhpbilliton.com/investors/annualreporting2015/strategic-report [Accessed 27 May 2016].
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