Strategies of BHP Billiton Limited - Assignment Example

BHP Billiton Limited BHP Billiton Limited is a diversified natural resources company that is well established internationally. Its principle business lines are mineral explorations and production including gold, iron ore, coal, ferroalloys, titanium, copper concentrates and nickel as well as exploration, production and refining of petroleum (Orecchini 2011). It has three strategies; Building on its diverse reserve base and ensures that the best practices are shared quickly across its operations To maintain a steady pipeline of Greenfield projects for its internal growth To help increase its pipeline by staying close to its customers (Hansmann, Mieg & Frischknecht 2012) Question 1 a) BHP Billiton External and Internal Stakeholders In Order of Priority and Interest Company management Government Customers Suppliers Project team Community Shareholders Employees Contractors and subcontractors Competition b) The Financial and or Emotional Interest of the Shareholders The government – the government and BHP Billiton are interdependent. The company plays a very significant role as an economic facilitator as well as arbiter of structured growth. On the other hand, the government is the regulator of the environment; it ensures that BHP Billiton follows the due process in caring for the environment. It also ensures that the company must carry out lawful and legal activities. It ensures that the company respects the rights of the community around which it operates. The government gets taxes from the company profits and uses it to develop infrastructure and other areas of the economy (Darnall & Edwards 2006). Customers – the customers bargaining power is essential to the company. Customers are able to get information and this helps them to make informed decisions, this makes them quite powerful. Customers are concerned that the products they purchase from the company might not be environmental friendly. Customers want to purchase products that are environmental friendly as they are directly affected by the changes in the environment; this is emotional interest as they are concerned how the products will negatively affect the environment and whether the company has put in appropriate measures to manage the environment under its scope (Grolleau, Mzoughi & Thomas 2007). Suppliers – the suppliers play a very essential role as external stakeholders of the company because of their powerful bargaining power. The cost at which the supplies provide resources for production determines the unit cost. The price of the raw materials culminates the bargaining power of the suppliers. The suppliers are concerned about the mechanisms that BHP Billiton has put in place to manage the environment. This is of particular interest to the suppliers because of their supplies; they do not want their supplies to be harmful to the environment. The suppliers invest huge financial input in their raw materials in order to conform to the environmental regulations of the company (Radonjič & Tominc 2007). Competition – BHP Billiton has very many and able competitors, the competition is very high. Apparently, there is very low product differentiation of the products. As such, the companies find a new way of differentiation such as unit price, environmental management and the amount of profit they make. BHP Billiton has developed a reputation over the years; this has made the company to edge over the competitors. The competitors are eager to learn how BHP Billiton manages its environment; they want to borrow from the company's the environmental management system in order to improve environmental management (Vachon & Klassen 2008). Community – the company has a responsibility to ensure that its operations do not affect the community in areas where it has operations. Importantly, the company has a responsibility of giving back to the community as a result of using their habitat. The community has moral rights which are normative, important and justifiable. The community has a right to be informed of the harms and risks that the company operations will expose them. The community stands as one of the biggest beneficially of financial interest from the company. BHP Billiton invests huge financial resources in the communities aimed at ensuring environmental safety and benefiting the community (Waage 2007). Employees – employees are interest stakeholders to the company. They provide their skills, ideas, expertise and technical knowhow to the company in exchange of employment opportunities. They possess knowledge and skills; this is their source of influence. Employees ensure that the company implements sustainable environmental management system, they are concerned about the effects of the company products to the environment (Feldmanet al., 1997). As such, they ensure that they formulate and implement viable systems to manage the environment, this is emotional interest. Shareholders – they are interest stakeholders to the company. They invest their financial resources in the company in return for share of its profits. They own the company and they run it through agents (top management and directors). They exert pressure to the top management to ensure that the company has effective environmental management system (Darnall, Jolley & Handfield 2008). Company top management – BHP Billiton top management direct the development and strategy of the company. It is responsible for ensuring that it hires the best possible staff to carry out projects. It is also responsible for acquiring resources and raw materials for ensuring smooth flow of operations and quality products. The visibility of the top management of the company enhances the professional standing of the company. The position and authority of the top management is their source of influence, this makes them to be very powerful stakeholders. The top management ensures that there are adequate financial resources and best employees to manage the environment (Komiyama & Takeuchi 2006). Project team –The project manager is supposed to provide direction, leadership and above all support the team members in accomplishing their tasks (Gibson 2006). The project team ensures that their activities do not contravene the company standards and terms concerning the environmental management; this is emotional interest. Contractors and subcontractors - The contractors and subcontractors are interest internal stakeholders of the company. They must adhere to the company's environmental management system. As such, they put in huge capital outlay to conform to the company's environmental management system as Morrison-Saunders & Therivel (2006) asserts. C) The Stakeholders’ Views The views of the stakeholders are positive. The stakeholders want to ensure that the company has adequate and effective system of managing the environment. The competitors want to borrow from the company's system on how they can improve their own environmental management; this means that the company has set a bar above the competitors. D) Environmental, Social and Economic Relevance of Stakeholders to BHP Billiton The government – for economic sustainability, the government must ensure that there is fare exploitation of the resources from the environment. This would avoid more consumption than there is from the environment. The government should ensure a sustainable economic model for ensuring efficient allocation of resources. For environmental sustainability, the government must be on the forefront in protecting the environment from corporate exploitation and neglect. For social sustainability, the government must ensure that there are no social disruptions. It must ensure that no disruptions that threaten the well-being of the society. It has a responsibility for taking action against human inequality, poverty reduction and social injustice (Orecchini 2011). Customers – they are by far the most important players in the environment. The customers must promote sustainable environmental management by holding the government, BHP Billiton and the other stakeholders in to account. They should only purchase from companies that promote economic production and use of resources. They should also be loyal to firms that promote social equality through sponsoring of various community initiatives. Either, they must purchase from firms that have better waste management (Darnall & Edwards 2006). Suppliers – They should supply materials that are renewable and that encourage better waste management. They should also support social environment by being ethically responsible. They should sponsor initiatives such as poverty reduction, education programs in the society. This would move to promote social equity (Beheiry et al., 2006). Company management – It must maintain an economic growth as well as healthy balance with the ecosystem. For environmental sustainability, the top management must ensure that the company supports initiatives like use of renewable energy and reduction of fossil fuel consumption and emissions. The top management must ensure that the company activities do not affect negatively the social life and welfare of the society in areas where it has operations (Lozano 2008). Question 2 Feedback on the Sustainability Message Company Management We endeavor to use the company's resources responsibly. This is guided by the company's guiding principles of sustainability. Sustainability is at the heart of BHP Billiton’s long term success. BHP Billiton persistently endeavors to be at the frontline of corporate sustainability best practices. To ensure compliance, the company is a member of the global community on sustainability as well as global reporting initiative. Suppliers With firsthand information about the challenges and concerns that customers face, we endeavor to supply materials and products that not only promote sustainable environment but also that are solutions to the challenges faced by the customers. Our purpose is to protect and provide what is safe. References Beheiry, S. M., Chong, W. K., & Haas, C. T, 2006, examining the business impact of owner commitment to sustainability: Journal of Construction Engineering and Management, 132(4), 384-392. Darnall, N, & Edwards, D, 2006, predicting the cost of environmental management system adoption: the role of capabilities, resources and ownership structure; Strategic Management Journal, 27(4), 301-320. Darnall, N, Jolley, G, J, & Handfield, R, 2008, Environmental management systems and green supply chain management: complements for sustainability: Business Strategy and the Environment, 17(1), 30-45. Feldman, S. J., Soyka, P. A., & Ameer, P, G, 1997, Does improving a firm's environmental management system and environmental performance result in a higher stock price; The Journal of Investing, 6(4), 87-97. Gibson, R, B, 2006, beyond the pillars: sustainability assessment as a framework for effective integration of social, economic and ecological considerations in significant decision-making; Journal of Environmental Assessment Policy and Management, 8(03), 259-280. Grolleau, G, Mzoughi, N, & Thomas, A, 2007, what drives agrifood firms to register for an Environmental Management System: European Review of Agricultural Economics, 34(2), 233-255. Hansmann, R., Mieg, H, A, & Frischknecht, P, 2012, Principal sustainability components: empirical analysis of synergies between the three pillars of sustainability: International Journal of Sustainable Development & World Ecology, 19(5), 451-459. Komiyama, H, & Takeuchi, K, 2006, Sustainability science: building a new discipline; Sustainability science, 1(1), 1-6. Lozano, R, 2008, Envisioning sustainability three-dimensionally: Journal of Cleaner Production, 16(17), 1838-1846. Morrison-Saunders, A., & Therivel, R, 2006, Sustainability integration and assessment: Journal of Environmental Assessment Policy and Management,8 (03), 281-298. Orecchini, F, 2011, Energy sustainability pillars: International Journal of Hydrogen Energy, 36(13), 7748-7749. Radonjič, G., & Tominc, P, 2007, the role of environmental management system on introduction of new technologies in the metal and chemical/paper/plastics industries: Journal of Cleaner Production, 15(15), 1482-1493. Vachon, S, & Klassen, R, D, 2008, Environmental management and manufacturing performance: The role of collaboration in the supply chain; International journal of production economics, 111(2), 299-315. Waage, S, A, 2007, Re-considering product design: a practical “road-map” for integration of sustainability issues; Journal of Cleaner production, 15(7), 638-649. Appendix 1 Question 3 Sustainability Issues: Environmental, Social and Economic Environmental Sustainability Organizations should have processes, activities and systems that reduce environmental impacts on a company's products, facilities and operations. Organizations should use renewable resources. Importantly; the rate of use should not beat the rate of generation of resources. In addition, waste generation from activities and operations should not surpass the assimilative capability of the environment. To red cue the depletion of nonrenewable resources, organizations should them with resources. These measures are very important in environmental sustainability (Beheiry et al., 2006). Social Sustainability The social sustainability helps residents and organisations to raise awareness about the social needs of the community. This engages both the community partners and citizens in planning and acting in response to the societal needs. The purpose of social sustainability is to advance the welfare of the whole community. Together, the community and organizations build social capital in the society between groups and individuals. This enables collaborative action on carrying out projects of common interest. The social sustainability supports initiatives such as employment opportunities, generation of income, literacy, access to better healthcare and proper housing. These initiatives are really helpful to the society. Notably, the social sustainability has effects to the employee performance and consumer behaviour ((Gibson 2006). Economic Sustainability This is focused on ensuring equitable distribution of resources. Promoting growth that strips down to the society. Organizations should formulate and implement strategies that promote better utilisation of economic resources. They should have sustainable economic model that supports equitable distribution as well as efficient allocation of resources. The primary idea in economic sustainability is to promote the use of the resources in a responsible and efficient manner that provides long term benefits and that establishes profitability. This is especially important because a profitable entity has higher chances of remaining stable and has perpetuity (Waage 2007). Read More