Strategic Management of BHP Billiton Limited †Free Samples

Question: Discuss about the Strategic Management BHP Billiton Limited. Answer: Introduction: BHP Billiton has been one of the leading companies in the resource industry. It was formed with the merging of BHP and Billiton to bring an exceptional amalgamation of low-cost and high-quality resource assets. It is complemented by a very strong and effective team of management that is determined for the operation of the assets in an efficient manner. The report deals with the analysis of the internal environment of BHP Billiton which provides the insights into the capabilities and resources of the company (Barney Hesterly, 2015). BHP Billiton Limited is the world's biggest miner whose net profit is generated from the revenues of $820 billion and more on an average of six months. Another fact that is new for the world to know is that Arrium which is BlueScope Steel and ex-OneSteel were both a part of BHP. However, they were removed from the amalgamation in the year 2002 and 2000 respectively. BHP was almost taken over by an entrepreneur named Robert Holmes A Court in the year 1985 (Bettis, et al., 2015). It was saved from being taken over when a deal was made with the Elders IXL. Peter who was Robert's son is a co-owner of the team of NRL south Sydney Rabbitohs, along with Russell Crowe. Resources, Capabilities and Core Competencies As per Chen, Delmas Lieberman, Key performance indicators (KPI) have an important role in the measuring of the effectiveness of the business in relation to the identification, requirement and the strategic objectives. Determination of the success of the business and the activities of the business is not going to be clear and quantification of attainment of the goal is not possible without Key Performance Indicators (Chen, Delmas Lieberman, 2015). The first key performance indicators that matter for BHP Billiton are cost to acquire a customer, revenue per customer, and the lifetime value of a customer. The strength of BHP Billiton is that it is among the largest suppliers copper, silver, uranium, aluminium and lead. It leads the list of global producers of metallurgical coal, manganese and iron ore with Brazil, South Africa, and Australia. The company operates in Australia, South America, South Africa and the United States. The thermal coal generation by the section of the Energy Coal generates electric power for the concerns of the general industries. The weakness of BHP Billiton lies in the wide range of projects that it executes. The feasibility of all the projects has the probability of being a source of generation of revenue in a cost effective manner of execution of the projects. BHP Billiton can further operate on strengthening the brand position by the induction of the innovative solutions regarding marketing. The internal analysis of the company provides us with the insight so the policies, plans, and objectives of the company and in what manner they are obtained. The strengths, weakness, opportunities and threats associated with the company are understood through the internal environment analysis. According to Eden Ackermann, the global organizations have been transforming themselves completely in the in the age of information. BHP Billiton has the ability to exploit the assets that are intangible and this exploitation is turning out to be a better decision than the ability to regulate the tangible assets. BHP Billiton is expanding the operations of its business on the global platforms by implementing the balanced scorecard concept which is assisting it in complementing the analysis of the financial performance of the business (Eden Ackermann, 2013). The resources and the core competencies are the measuring criteria of the customers' perspectives, learning, and growth along with the internal business process. As per Freeman McVea, the resources of an organization denote to the human resource, physical resource, financial resource, and the information resources that are brought together in the orientation of the objectives of the organization for the accomplishments of the goals. The managers of any organizations are primarily responsible for the management and acquiring the resources in order to achieve the goals (Freeman McVea, 2015). The physical resources that BHP Billiton has are silver, zinc, lead mines in the Broken Hill near South Wales in Australia. The company also has an efficient and effective team of managers and employees to support it in its business without them BHP Billiton would not be able to make it far in the global market. Core competencies are the unique set of skills or technologies that are used by organizations to create a distinct customers value. The unique capabilities of the organization mainly refer to the personified in the collective knowledge of the individuals working in the organization along with organizational systems that have significant implications on the manner of the interaction of the employees (Frynas Mellahi, 2015). The core competencies of BHP Billiton change and adjust with the changes and developments of the company. The core competencies of BHP Billiton don do not remain rigid with time and the company can optimum utilization of the given resources and associated them to the new scope and opportunities provided by the environment. The resources of BHP Billiton are the inputs as the core competencies of the production process which include the capabilities associated with the skills used for the integration of the team of resources so that they can be utilized in a more efficient and effective manner (Hill, Jones Schilling, 2014). The development of a Western Australian Iron Ore biodiversity strategy and the incorporation of the continual environment studies in its operation process along with state of the art infrastructure and machinery are considered to be among the core competencies of BHP Billiton. The core competencies of BHP Billiton includes the techniques that the company has developed in the Eagle Ford and the development plan that is called for the subsea wells that are connected via pipelines and monitoring and control umbilicals to the onshore gas plants. Theses infrastructures are much stable to be operated during the cyclonic storms and any kind of climatic and weather conditions (Hitt, Ireland Hoskisson, 2015). The capabilities of an organization are referred to the ability of the company to manage the resources such as the human resource in an efficient manner in order to gain a competitive advantage over its competitors. The organizational capabilities of a company must be in orientation towards the ability of the company to meet the demands of the clients and the customers. The core competencies of BHO Billiton include the simplification of the portfolio, discipline regarding capital and productivity (Morden, 2016). VRIO Analysis: The VRIO analysis is performed in order to determine the conceptual framework of the strategic scheme of BHP Billiton. The primary objective of the conduction of such analysis is to determine the capability worth or resources of BHP Billiton. Value: As per Peteraf, Gamble Thompson Jr, the most important question that is raised if the ability of BHP Billiton is there to make most effective use of the resources available to it or does it make efforts to exploit and explore the opportunities. It also focuses on the inflicting threat that is posed to it regarding its position in the market. If the company is incapable of posing threat in the global market then it may lead to exposal of its weaknesses (Peteraf, Gamble Thompson Jr, 2014). In the context of BHP Billiton, the abundance of assets and resources is considered as the strengths in the industry of mining and other companies which are its competitors who might be considering themselves as threats in opposition to the capabilities of resources of BHP Billiton. Rarity: BHP Billiton is recognized as one of the mining companies which have the competitive advantage. This company does not have insufficiency of capabilities and resources. Thus, it has advantages from other competitors because of its huge range of resources and assets (Rothaermel, 2015). Immutability: The cases of compatibility are illustrated via the structure of the analysis which represents the internal environment of the BHO Billiton. This determines the sufficiency of costs disadvantage in aspects of the capabilities and resources in the procuring and development of resources and assets in comparison to the competitors (Simon, Fischbach Schoder, 2014). The mining companies such as the BHP Billiton have valuable and rich resources can be difficult to match for other global competitors so as to gain advantage. Organization: BHP Billiton after incorporating the concept rarity, value and immutability of the assets, capabilities, and resources has stepped into the next procedure to organize the company in an appropriate and efficient manner to make optimum use of the capabilities. Value chain analysis: The value chain analysis of BHP Billiton facilitates the physical representation of several processes for the BHP Billiton which involves mining and extraction of the raw materials and providing the conclusion the process by providing the final product known as the value chain. Primary activities: The Facilitation of the assortment of the inbound movements of metallurgical coal, minerals, manganese, iron and silver ore from the mining is site to site of manufacturing. Support activities: This procedure of procurement of the raw material like the silver extracts diamonds, metallurgical coal, manganese, and iron ore from the mining sites to the manufacturing units where the equipment and plants are situated (Stead Stead, 2013). The technical unit in collaboration with the processing unit is associated with pertaining equipment like software, technological and hardware knowledge which is presented by BHP Billiton in transforming the inputs into final products. The activities such as finance and accounting control the quality and public relations support BHP Billiton. Margin: Margin is basically the difference between the products selling price to its production price. In other way it can be said that its the ratio between companys revenues and expenses. Coming to BHP Billiton, keeping track on margin is very necessary because it will show that company is profitable or not (Stead Stead, 2013). Culture: The corporate culture denotes to the ideas and beliefs that the Company has and the manner in which these affect the process of business and the behaviour of the employees. BHP Billiton works towards the supremacy and initiatives in promoting a culture that honours and values the high moral principles, business and individual admiration and integrity for others. ICEBERG analogy As per ICEBERG analogy, Culture is divided into 2 parts named as internal unconscious part and external conscious part (Bayne, 2015). External conscious part represents those things which can be seen physically. Some of the examples are dance, art, music, dressing sense, language, behaviour towards employers. But on the other hand internal conscious part represents which cant be seen physically such as beliefs, values, motivations, social rules etc. (Bayne, 2015). Strategic issues in management: Uncertainty: It can be denoted as an issue in the daily business. It is comprehensive as the individual incapability to predict some aspects in precise. The managers need to deal with various kinds of uncertainty in the world of fluctuating market (Teece Shuen, 2016, May). The organizations face ambiguity in the environment of the organization macro-economic form, social, technological, environmental and political limitations in which the functioning of BHP Billiton is taking place. Complexity: It determines the factors which have to be considered by BHP Billiton while preparing the strategies. The major strategic issue in business is the primary alteration in the regulations than the expectations. Conclusion: Rapid globalization, growing and accelerating innovation and competition associate to the complexities, ambiguity, and volatility of the company. BHP Billiton requires more approaches to confronting the barriers of intricacy in business which should be based on the strategic planning. Internal analysis helps to find out the companys cost position, competitive nature and competency in the market place. Conducting internal analysis helps to provide useful information about the organisation. By examining the mineral and developing the business is a risky task even if the BHP Company is huge though it has support from the government. The litigation fee for the oil spill can charge them with the indefinite costs along with the clearing costs when there is a change in the demand of the customer is affecting the commodity prices because of which the income ways of BHP will become unstable. Hence, as a result, the BHP should formulate the strategies in such a way that the management will not face any risk in the future with respect to the competitive advantage and the current issues. References Barney, J. B., Hesterly, W. (2015).Strategic management and competitive advantage concepts and cases. Pearson. Bettis, R. A., Gambardella, A., Helfat, C., Mitchell, W. (2015). Qualitative empirical research in strategic management.Strategic Management Journal,36(5), 637-639. Bayne, K. (2015). Identifying Cultural Influences on Language Teaching-Learning Materials Through the IcebergAnalogy. Chen, C. M., Delmas, M. A., Lieberman, M. B. (2015). Production frontier methodologies and efficiency as a performance measure in strategic management research.Strategic Management Journal,36(1), 19-36. Eden, C., Ackermann, F. (2013).Making strategy: The journey of strategic management. Sage. Freeman, R. E., McVea, J. A. (2015). A Stakeholder Approach to Strategic Management (No. 01-02). 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