Strengths of BHP Billiton - Case Study Example

Executive Summary BHP Billiton which works in the mining industry has been able to grow as the company focused on being global and looked towards acquiring mines and other resources at different parts of the world. While looking to do so BHP Billiton ensured that they worked in the same line where they had the required experienced and looked towards developing their business so that risk were diversified and the opportunities of return increased. In addition to it a change in the organizational structure helped them to take better decisions and ensure better strategies for the future. BHP Billiton also ensured that they enter into long term contracts which helped them to ensure that they have a pool of loyal customers and ensured an opportunity where they could build new ventures and partners. The mechanism through which BHP Billiton looked towards improving their business and looked towards working on their core strength helped BHP Billiton to work on the global arena and ensured better development of the business. Table of Contents Introduction 3 Background about the company 3 Factors contributing towards the BHP globalization 4 Strength of BHP Billiton 5 International Business Activities undertaken by BHP Billiton 7 Significance of Transnationality Index for BHP Billiton 8 Importance of long term contracts for BHP Billiton 10 Conclusion 11 References 12 Introduction Success of a company is largely dependent on the strategy that the business looks towards using and developing its resources around it. Organizations which are able to find a mechanism through which they will be able to increase their market share and improve their rate of penetration will be able to bring a change in their strategy. To be able to garner the benefit from those it is important that organization determine the organizational structure through which maximum efficiency can be gained and will help to develop strategies accordingly. This report looks towards analyzing the strategy that were adopted by BHP Billiton and the manner in which the company transformed its business by laying stress on their core strengths. This helped BHP Billiton gain a global status and was able to perform in the most efficient manner. This report thereby highlights the manner in which BHP Billiton was able to work in different directions and shows the manner in which efficiency was gained in the overall system. This will help BHP Billiton to determine their strategy for the future and will thereby have an influence in the manner the company is performing and will help to develop strategies accordingly. Background about the company BHP Billiton works in the mining sector and started its operation in 1885 and works in the field of zinc, silver and lead mining. The company looked towards working on the fundamentals and looked towards developing their business based on their core strengths. The company looked towards developing its business by working on the global arena and looked towards working in the global market. In addition to it the company looked towards building its base and looked towards bringing a change in the organizational structure which helped them to ensure that decisions were taken faster and the overall process gained effectiveness. In addition to it BHP Billiton also looked towards diversifying their business and entered into other fields which helped them to gain effectiveness and reduced the level of risk. This thereby ensured that the entire business of BHP Billiton went through a transformation phase which helped the company gain effectiveness and improved the overall working conditions. This helped BHP Billiton to gain the required advantage they were looking at and helped the company to be able to devliver better performance and ensured brighter prospect for the future. Factors contributing towards the BHP globalization BHP Billiton looked towards globalization because of the wide opportunities that were present before the company. Since, BHP Billiton was performing well in the local market and the change of management with new people being employed provided an opportunity for the company to be able to move towards other regions of the world (Banfield and Rebecca, 2008). In addition to it the increasing demand for minerals and ore from the core of the earth and the lack of properly trained and experienced company provided an opportunity for BHP Billiton which the management was able to use and ensure development in the global arena. BHP Billiton has been able to gain from the Transnationality Index as it has helped them to improve their brand name and image and helped them to gain a global status as the different parameters based on which the performance is evaluated has seen widespread changes and improvements. This helped the company to be able to ensure that the strategies which were framed were acceptable. The fact that BHP Billiton has a global outlook it made it easy for the different players and companies to be easily able to identify themselves with the company which helped them to increase the penetration level. In addition to it the ability of the company to supply consistent quality and service helped BHP Billiton to build a good reputation which helped the company to be able to deal with the market better (Gray & Khalid, 2006). This provided an opportunity through which BHP Billiton was able to work on the global arena and develop a market for itself. Strength of BHP Billiton BHP Billiton looked towards banking on its strength which helped them develop from one phase to the other which ultimately transferred towards the success of the company. BHP Billiton highlighted different strengths which ensured long term prosperity and are as below The ability of the management to undergo change and bring a change in the organizational structure ensured that better decisions were taken. This helped the company to look towards different opportunities through which the business was able to develop its business model further. The company also persisted with the same line of business and looked towards diversifying in the same field which ensured that they were able to use the knowledge that they had (Hirono, 2001). This reduced the risk for the business and implied that the opportunities of return increases for the company in the near future. BHP Billiton had looked towards developing its international business by laying stress on the different areas which will help them to strengthen their core competency and will ensure that they are able to improve their business. BHP Billiton on this front has looked towards finding out a mechanism through which they are able to develop business partners and undertake different business opportunities so that overall effectiveness is gained within the system (Douma, Sytse, Rejie, and Kabir, 2003). The manner in which the transnationality index have improved shows widespread changes and growth in the performance of BHP Billiton which has helped them work as a company which is globally known. This has helped BHP Billiton to enter into better contracts and has helped to improve the overall working structure and style through which BHP Billiton has been able to improve their name and stature all around the world and will help the compnay to be able to perform better in the future as the company looks towards improving its working style in the globalized world (Patrick and Bruce, 2000). BHP Billiton has looked towards entering into long term contracts with steel makers in Japan, Korea and China where the rate for ore will be negotiated annually and determined accordingly. This strategy has been taken due to the fact that BHP Billiton through this mechanism has looked towards ensuring that they have regular customers to whom the ore can be supplied. This will facilitate the management to look into other directions through which they can diversify their business and can look into other business opportunities. Entering into contracts will also ensure that BHP Billiton has at least a few selected loyal customers to whom the company can supply their material (Klapper and Love, 2003). This will help to ensure that BHP Billiton will be able to develop a mechanism through which they will be able to ensure that they a fixed section of customer to whom BHP Billiton can look towards supplying their materials. The adaptability that BHP Billiton showed with the changing times ensured that they were able to match with the technological changes and bring about the required changes which enabled them to develop their business further. This helped BHP Billiton to keep with the changing times and ensured that a framework was developed through which BHP Billiton was able to bring changes and ensure that they were able to use the resources in the most effective manner. International Business Activities undertaken by BHP Billiton BHP Billiton had looked towards developing its international business by laying stress on the different areas which will help them to strengthen their core competency and will ensure that they are able to improve their business. BHP Billiton on this front has looked towards finding out a mechanism through which they are able to develop business partners and undertake different business opportunities so that overall effectiveness is gained within the system (Pfeffer, 1994). BHP Billiton has acquired Utah International Inc which has helped them to get access to mines which are located in New Mexico and Queensland along with a copper mine in Chile. This has helped BHP Billiton to be able to acquire some of the new building operations in different part of the world. In addition to it BHP Billiton has also developed local gas plant near the Australian coast which has helped them to enter into a different field and look towards exploration of oil. The company to further consolidate its position has looked towards developing its business and has ensured better strategies which have helped them to improve the mining business. BHP Billiton has seen improvements in different areas which has helped to improve exploration by ensuring better planned and equipments for copper in Chile & Peru, platinum in Zimbabwe, diamond in Canada, oil and gas in Irish Sea and Vietnam, along wit other precious metals at different part of the world. This has helped BHP Billiton work in different directions and has helped them to strengthen their business and has thereby ensured that BHP Billiton is able to work on different areas. This has also helped to diversify the risk and has helped them to build better strategies through which overall effectiveness has been gained and the manner in which BHP Billiton works over different regions of the world improves. Significance of Transnationality Index for BHP Billiton Transnationality Index helps to determine the performance of a company in the foreign market as the index looks towards presenting the assets base of the company in the foreign market, the sales of the company in the foreign market and the employment of foreign people compared to the local employment. This is an index which is issued by the UNCTAD and has its significance as it looks towards presenting the manner in which non financial companies have performed and the asset base that the company has in the foreign market. This helps to determine the manner in which an organization is able to perform in the global arena and has a significance in determining the success of the company in other market. The importance of this report increases as the business based on it looks towards ensuring that companies which are non financial TNCs get ranking and helps to improve their brand image and also facilitates comparison with companies which have financial TNCs (Budhwar and Aryee, 2008). This thereby helps to develop strategies and work in a manner which will further help to consolidate the market in every region. BHP Billiton has been able to gain from the Transnationality Index as it has helped them to improve their brand name and image and helped them to gain a global status as the different parameters based on which the performance is evaluated has seen widespread changes and improvements. It is seen that based on the three indexes BHP Billiton accounted for around 67% of its total assets as foreign assets, 90% of its sales as foreign sales and 75% of its employment. This has seen a wide change in comparison to the composite score seen in 1992 which was 30.5 and went to 74.5. This has helped BHP Billiton to gain a global status as the 26th globally recognized non financial company. This has thereby further substantiated the fact that the performance of BHP Billiton has improved and the company has truly gained a global stature. The manner in which the transnationality index have improved shows widespread changes and growth in the performance of BHP Billiton which has helped them work as a company which is globally known. This has helped BHP Billiton to enter into better contracts and has helped to improve the overall working structure and style through which BHP Billiton has been able to improve their name and stature all around the world and will help the company to be able to perform better in the future as the company looks towards improving its working style in the globalized world (Pauwe, 2009). Importance of long term contracts for BHP Billiton BHP Billiton has looked towards entering into long term contracts with steel makers in Japan, Korea and China where the rate for ore will be negotiated annually and determined accordingly. This strategy has been taken due to the fact that BHP Billiton through this mechanism has looked towards ensuring that they have regular customers to whom the ore can be supplied. This will facilitate the management to look into other directions through which they can diversify their business and can look into other business opportunities. Entering into contracts will also ensure that BHP Billiton has at least a few selected loyal customers to whom the company can supply their material. This will help to ensure that BHP Billiton will be able to develop a mechanism through which they will be able to ensure that they a fixed section of customer to whom BHP Billiton can look towards supplying their materials. In addition to it BHP Billiton has also looked towards ensuring that the business looks towards negotiating the rate in the beginning of the year which will thereby ensure that they don’t have to deal with the additional pressure of fluctuations and will help to determine the price of ore early and ensure that they are according to the prevailing ground realities (Armstrong, 2006). This will also help the different customers of BHP Billiton to be able to ensure that they are able to get a source through which the goods will be supplied and can be sure of the quality of goods that will be supplied to them. This will ensure that the suppliers are able to get a consistent supply of materials and will be able to ensure that they don’t have to search for the materials. The only risk here is relating to the quality and the changes in price which might result in the suppliers searching for other manufacturers and might have an impact on the stock holding of BHP Billiton (Porter, 2005). Thus entering into contracts will be beneficial for both the company and its suppliers and will also help to determine the strategy and pattern through which the business will be able to gain efficiency. Conclusion BHP Billiton has been able to grow as the company focused on being global and looked towards acquiring mines and other resources at different parts of the world. While looking to do so BHP Billiton ensured that they worked in the same line where they had the required experienced and looked towards developing their business so that risk were diversified and the opportunities of return increased. In addition to it a change in the organizational structure helped them to take better decisions and ensure better strategies for the future. BHP Billiton also ensured that they enter into long term contracts which helped them to ensure that they have a pool of loyal customers and ensured an opportunity where they could build new ventures and partners. This has ensured that the company has been able to deliver on high standards and working in a similar fashion will ensure better opportunities in the future. References Armstrong, M. 2006. A Handbook of Human Resource Management Practice (10th ed.). London: Kogan Page Banfield, P. and Rebecca, K. 2008. Introduction to Human Resource Management .Oxford. Oxford University Press Budhwar, P. and Aryee, S. 2008. Strategic Human Resource Management: Building Research through practice. London. CIPD. Douma, Sytse, Rejie George, and Kabir, 2003. Foreign and Domestic Ownership, Business Groups, and Firm Performance: Evidence from Large Emerging Market, Working Paper, Tilburg University Gray, R. & Khalid, B. 2006. A logistic and supply chain approach to efficiency. Research methodology in supply chain management, Part 4, pp. 21-23 Hirono, R. 2001. Economic Growth and Restructuring in Post-war Japan – Contributions of Industrial and Technology Policies. Singapore University Press Klapper, L. F., and Love, I. 2003. Corporate Governance, Investor Protection, and Performance in Emerging Markets, Journal of Corporate Finance 195, 1-26 Porter, M.E. 2005. Competitive advantage: creating and sustaining superior performance, The Free Press, NY, pp. 557 Patrick, J. and Bruce, H. 2000. Training and Development. Management. Barron's Educational Series. pp. 225. Pauwe, J. 2009. HRM and Performance: Achievement, Methodological Issues and Prospects. Journal of Management Studies, 46 (1) Pfeffer, J. 1994. Competitive advantage through people. Harvard Business School Press Read More