Corporate Growth Strategies and Corporate Social Responsibility of BHP Billiton - Case Study Example

RЕРОRT ОN СОRРОRАTЕ GRОWTH STRАTЕGIЕS АND СОRРОRАTЕ SОСIАL RЕSРОNSIBILITY ОF BНР BILLITОN Name Course Professor (Tutor) Institution Date Introduction BHP Billiton Limited was incorporated as a company way back in 1885 and registered in line with the state laws of Australia - ABN 49 004 028 077(BHP Billiton Annual Report, 2013). On the other hand, BHP Billiton Plc was incorporated much later in 1996, also, registered in both England and Wales where it was assigned the registration number 3196209. It is worth noting that since June 2001 the company has continued to operate under what is commonly referred to as DLC structure-Dual Listed Company (DLC). Under this rare arrangement, DLC structure, the original companies namely, BHP Billiton Limited and its sister BHP Billiton Plc execute their core mandate as a single economic unit. This entity is run by an amalgamated Board and management panel. It should be borne in mind that BHP Billiton Limited, as well as, BHP Billiton Plc have, over the years, maintained their distinct corporate uniqueness and kept their separate stock exchange listings (BHP Billiton Annual Report, 2013). This is with the unified management notwithstanding. BHP Billiton is rated among the world’s leading companies in exploration and exploitation of natural resources across the globe as indicated by BHP Billiton Annual Report (2013). The report observes that the company, BHP Billiton, is in the league of the global giants in the production of iron ore, energy coal, oil, gas among other metallic commodities. The market capitalization as at mid 2013 was approximated to be US$147.1 billion with a average operating currency flow of about US$18.3 billion and a gross revenue of US$66.0 billion (BHP Billiton, 2010). Cоrроrаtе Growth Strаtеgiеs To sustain the operations of the company and by extension see to it that the company executes its strategy a number of priorities have been singled out and subsequently executed (BHP Billiton Annual Report, 2013). The priorities combine both the corporate social responsibility and corporate growth strategies. First, the company has sought to fashion itself as a more prolific organization by simplifying its business model in a manner that promotes capital efficiency. The simplicity has been realized through reorganization of the management structure and provision for a direct communication line between the company’s businesses and the Chief Executive Officer. According to BHP Billiton Limited (2013) such an initiative has helped foster a culture of productivity among the people by imparting the right on-job skills. In addition, the company has sought to improve its productivity and sustain competitiveness in the global economy. Over time, hard work has been delegated to the machinery asset as the workforce changed tune and started to work smart in line with the company’s drive to expand its scale of production. Employees have had a better approach in executing their every-day activities and consequently helped maximize the value for shareholders and capital assets. Further, the group has chosen to deliberately spend on high-return development ventures throughout the economic phase as part of the wider capital management priority (BHP Billiton Annual Report, 2013). BHP Billiton has also managed to ground its credit rating and plough back excess capital to the shareholders. To augment this, the group’s objective has been to reduce both capital and exploration expenditure considerably from the whooping US$21.7 billion in the 2013 financial year to US$16.2 billion for the FY2014.The company projects the reduced capital expenditure to boost its quest to achieve a more sustainable growth margin on its incremental investments(BHP Billiton Limited, 2014). Nevertheless, BHP Billiton group has also gone ahead to reinvent the management of its portfolio as it shifts focus and concentration of its efforts towards world-class sinks. It is in this sector where the company has easily continued to enjoy economies of scale unparalleled competitive advantage against the backdrop of harsh global economy (BHP Billiton Limited, 2014). The shift has seen the group narrow down to Iron Ore, coal, Petroleum and Copper for optimum diversification to be realized. Since most of the company’s projects are naturally brownfield, it has been possible to significantly lower the associated risks. Owing to the successful implementation of divestment program whose total transactions amounted to US$6.5 billion, shareholders, in 2010 overwhelmingly embraced a proposed restructure in the operations of the company’s businesses (BHP Billiton Annual Report, 2013). Besides, BHP Billiton, has trained its eyes on improving and integrating further the prescribed labor relations in its operations to align with the requirements of the world’s Labor unions (BHP Billiton Limited, 2014). By so doing, the group, aimed at addressing the issues that were occasionally raised by worker’s unions touching on individuals’ rights and responsibilities. The company was able to craft workable and realistic collective bargaining agreements to safeguard the rights as well as the welfare of its employees. This was made possible by engaging directly with the respective unions. All prospective employees were also to be made aware of their right to choose a union of their choice and even the individual or collective work arrangements at their disposal before joining the company (Heslin, 2008). Another critical aspect that the company has already warmed up to, according to Heslin (2008), is embracing selective acquisitions and divestments. With a close reference to the performance data dated back to the year 2009, in which, the company divested from Yabulu Nickel & BMS Suriname with overwhelming positive results, similar decisions have in the recent past been made and implemented. Though in March 2010, the company completed the acquisition process of Athabasca Potash Company, no substantial material impacts have been made thus far as its core activities are constrained to practicability studies and examination. However, this hasn’t been a deterrent to the group especially bearing in mind that, BHP Billiton, has kept its eyes trained on long-term investments that have the capacity to offer value to the shareholders (Samy, 2009). Moreover, the company has considered its level of engagement with governments and regulators in the countries of operation –starting from the local, to regional, then national and even international levels as circumstances have occasionally demanded (Samy, 2009). The group of stakeholders in the company appears to have had a keen interest in regulatory and policy frameworks at all these levels in the life cycle of any project making use of natural resources. Of significance also, has been the access to the market, stewardship of the product, performance of the environment, and social policy besides the economic regimes pertinent to the natural resources mining sector. According to Samy (2009) BHP Billiton Limited has already articulated its views to various levels of governments on matters that affect the interests of the group and its operations. In this, the company was after conducting its affairs in a manner that upholds the highest principles of ethics in compliance with the rule of law and devoid of political coercions. Cоrроrаtе Sосiаl Rеsроnsibility Being the large global organization, that BHP Billiton is, the company has extended its tentacles to not only boost local enterprises but also regional businesses by enhancing their capacity to develop (BHP Billiton Annual Report, 2013). It is in this same vein, that the company consistently supported long-term growth of its suppliers from within the respective host communities. No doubt, the projected and far-reaching economic involvement through capacity building has brought about the much needed entrepreneurial revolution. Moreover, the company’s procurement plans have been realigned to provide a chance for financial participation of locally incubated small-to-medium ventures. As expected, this measure has bridged the discrepancy between capacity of the locals to deliver and the company’s supply requirements (Brenna, 2014). Importantly, the contribution to the livelihoods of the locals has been enhanced and so has been the license of the company to continue with its operations. According to Brenna (2014) various mentorship and tutoring programs by BHP Billiton Company are well underway to improve access to quality education among the host communities. One of the successful initiatives thus far has been, El Plan de Apoyo Educativo, through which thousands of students have been offered scholarships to pursue secondary and also training in tertiary institutions in Colombia. The educational plan initiatives are wired to benefit the low-income and vulnerable backgrounds in the company’s places of operation. Such programs have been extended and successfully implemented in various continents including Africa where the company has made inroads to South Africa through Hotazel Learner Incubator Program (Brenna, 2014). One key area in making sure that the company lives up to its commitments has been through deliberate attempts to not only improve but also guarantee the health and safety of the people involved in its operations. According to Heslin (2009), BHP Billiton Company envisions making this component a reality by consistently ensuring that the working environment of the employees is kept free from all forms of potential causes of injuries or illnesses. To stamp the company’s commitment to healthcare, BHP Billiton has offered to train healthcare staff in all countries from which it operates-this is meant suppress cases of maternal and child health issues. In partnership with an Australian based society, Royal Life Saving, the company has ensured water safety through a programme dubbed “keep watch”. Further, the company has moved to identify and manage all forms of material risks, geographical location of the workers and surrounding communities notwithstanding. According to Mac Leo (2006), the company has also managed to prop up sustainable progress of its host communities. To guarantee this, the group had to carefully revise its operations to provide for long-term and amiable relationships with the hosting people. Through its social arm, Sowing Seeds of Success, the company managed to re-establish biodiversity values among the people thereby promoting conservation of ecosystems. The bottom line of this undertaking has been to make a constructive contribution in the lives of not only the individuals who reside near the company’s location of operations but also to the society at large. As component of this noble commitment, BHP Billiton has, on its own free will channeled about one per cent (1%) of the gross pre-tax profit to community projects geared at enhancing the quality of life. The company has established joint initiative with the local community christened-Arid Recovery –to restore the productivity of lands within dry zones in Australia. Further, the group has been engaging the locals in identifying the best way through which the stalled projects can be implemented to the fullest and in the best interest of all the stakeholders (BHP Billiton Annual Report, 2013). Conclusion In sum the company’s stakeholders group should keep a keen eye on an assorted range of items relating to the company’s sectors of operation especially on environmental legislation, safety and health standards required-the fundamental aspects on which it’s continued existence depend. It would be paramount that the company seeks to ensure transparency in the management of its charity programs so that the benefits are enjoyed by only vulnerable members of the society as envisioned.BHP Billiton, as an organization, should also endeavor to engage both commodity –specific and sector-oriented associations in pursuit of the objectives contained in its charter. In addressing global challenges like green house gas emissions it will be prudent for the company to partner with like-minded to improve on its margin of success and sustain the scheme. Further, the group can seek to have representatives on specific decision-making organs. Such a move will be particularly important for projects involving industry relations at both national and international levels. References BHP Billiton 2010). Our strategy delivers: Sustainability Supplementary Information KPMG, Melbourne: Available at: http://www.bhpbilliton.com BHP Billiton Limited (2014). 52nd Australia-Japan Joint Business Conference. BHP Billiton Limited. Retrieved from: http://www.bhpbilliton.com BHP Billiton Limited (2013). Our shared values: Annual Report. BHP Billiton annual report 2013. Retrieved from: http://www.bhpbilliton.com BHP Billiton Limited (2014). Value through performance: Strategic Report. Melbourne, Australia Brennan L., Binney W., McCrohan J., Lancaster N. (2014) Implementation of environmental sustainability in business: suggestions for improvement. Georgia State University HESLIN1 P. OCHOAU J. (2008) Understanding and developing strategic corporate social responsibility Organizational Dynamics, Vol. 37, No. 2 Mac Leo A. (2006). BHP Billiton. BHP Billiton, MarketBuster Samy M., Odemilin G., Bampton R. (2009). Corporate social responsibility: A strategy for sustainable business success. 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