BHP Billitons Corporate Finance Policies - Case Study Example

Company Research: BHP Billiton Name Course Instructor Date Business Description BHP Billiton was formed as a merger between Billiton and BHP. The company aims at operating in an efficient manner through the utilization of low cost assets. BHP Billiton is the largest firm in the world with diversified natural resources interests. The establishment engages in mineral exploration and production (Hubbard & Moore 2012, p12). The group has established itself in over 25 countries, and its headquarters are located in Melbourne Australia. BHP Billiton has over forty-one thousand employees. Company Products The primary focus of BHP Billiton includes aluminium, nickel, oil and gas, copper, metallurgical coal, iron ore, manganese, and energy coal. The firm also has interests in zinc, diamonds, gold, lead, uranium, and silver. Management BHP Billiton manages nine customer sector groups (CSGs) associated with the products BHP Billiton extracts and trade-ins. Recently, the company has introduced new operating models, and it anticipates the model will create a more agile company that will respond to the market challenge and opportunities that have risen with the dynamism of the global marketplace. The company intends to simplify its organisational operations and is focused on geographical operating regions. This move is supported by globalised functional services that have been established on top-notch expertise and scale. According to Hubbard and Moore (2012, p22), organizational structure is fundamental in driving the business in the right direction to achieve the company's goals and objectives. Organizational structure helps to demonstrate how the departments are arranged, how to deal with organisation's task, how decisions are made, and how to achieve a particular goal. In keeping with Murray, Murray, Poole and Jones (2006p 162), BHP Billiton’s organizational structure explains how the management are distributed to come up with effective business decisions. The company’s organizational structure is aligned with its functions. The establishment uses matrix structure which is a combination of divisional and functional organizational structure. In this case, information flows uniformly across the organisation and the decisions made are collective to all section of BHP Billiton. BHP Billiton's Corporate Finance Policies BHP Billiton's financial state is reliant on the market prices of its commodities (Mirza & Nandakumar 2012, p97). Nonetheless, the diversity of BHP Billiton business within natural resources has established a better horizon to the company. Even as BHP Billiton has a strong financial base, in the recent years the company has failed on various acquisitions due to the intervention by the competition commissions. The company’s corporate finance strategies are long-term intensification oriented. BHP Billiton’s huge money in petroleum sector has recently started to produce huge turnover margins. Particularly, BHP Billiton has expansive resources which provide sufficient cash flow for the company’s new developments and development plans. The company has offered regular dividends to its shareholders for many consecutive years due to their strong financial policies. Murray et al. (2006 p 166) states that BHP Billiton has a solid financial strength that is reflected in their credit rating. Also, the capital management program is focused on returning extra capital to the shareholders and reinvestment into the most viable financial projects with regular returns, with disregard to the strong balance sheet and economic climate. Information technology alignment Contemporarily, the world is developing fast, and there has been a dynamic change in information and technology platforms in the market.Taylor and Scambary (2006 p78)indicates that due to the globalization and the dynamic nature of the world market, it has been difficult for organizations to face competition and grab a competitive edge (Taylor & Scambary, 2006 p78). The information and technology sector has played a crucial role in driving business for the last few years and all organizations have introduced IT in their fast development agenda especially to have their online presence felt and make them globalised.BHP Billiton has established its online ventures and integrated IT with their business process. For the company to have a competitive edge and growth in the market, BHP Billiton’s corporate processes have been aligned with information technology. Technology affects the process of workforce planning because of technological changes in process of service delivery that leads to changing the way in which working operate in compliance with the needed technological skills. According to Sutherland and Jordaan (2014), technological advancement in an organization will affect the workforce planning leading to hiring personnel with technological skills or training the current workers to cope up with the technological changes. Business Strategy and Alignment BHP Billiton is a vast natural resources organization with too many complex projects. The organizations business strategy is among the most important factors that every establishment will endeavour to have to gain a competitive edge in the market (Taylor & Scambary, 2006). For BHP Billiton to achieve its goals and objectives, it has framed a business strategy in its core business components, and its strategy of activities has been aligned with information and technology. A new product line introduction leads to workforce management issues such as low manpower utilization in the entire production and use of unqualified workers as majority of the operation does not involve skills application but rather a repetitive flow of production processes. Many Companies have as a result manipulated workforce by hiring less qualified employees and train them on specific stages of the production line and in return, paying them low wages lead to an issue of personnel exploitation. Employee Benefits According to BHP Billiton Group Market line (2016, p6), BHP Billiton is dedicated to developing a diverse workforce and to provide a working environment where all employees are treated with mutual respect and have the opening to contribute to the business success and realise their full potential. Factually, that is, recognising and capturing unique skills, perspectives, and experience are essential to the combined success of BHP Billiton. The company provides employment based on merit where all applicants for employments are evaluated according to the related skills, aptitudes, and qualification ability. In BHP Billiton, employment decisions founded on the attributes other than the person’s ability to undertake their duties are stringently prohibited. BHP Billiton has commitments to health, environment responsibility, safety and sustainable development as part of the measures taken to motivate employees. Employees in BHP Billiton have relationships centred on the creation of value for all parties (Publications, 2009, p13). The company also has a program of developing and retaining talented employees. According to (Holt 2001), the regulation places a legal responsibility on employers to provide adequate and appropriate equipment, facilities and persons to ensure their employees receive immediate attention if they fall ill or get injured at work. Construction sites are high risk places of work, where workers are exposed to danger that could cause serious injury or illness that may necessitate first aid. The associated approved code of practice to this regulation includes, first aid in the workplace code, provides actionable advice on how to provide adequate first aid and first aid facilities at the workplace. Interviewing employees: Since employees are the ones responsible for the day to day implementation of the required tasks to perform various jobs at the site, they are well aware of the risks associated with those tasks. Having brainstorming sessions and formal group discussions with the employees will uncover what they come across on their day to day activities. This is a very effective method of hazard identification as hazards are majorly identified from the work processes and the tools that the employees use. BHP Billiton has a diversity program that stresses on commitment in nurturing respect and inclusion as a way of securing a competitive advantage for promoting collaboration across different employee experiences and backgrounds. The Company recruits employees from different parts of the world, across gender, races, physical abilities, ethnicity, political differences and religious beliefs. Additionally, the Company’s diversity program call for embracing different ideas, approaches and experiences as a way of coming up with an intellectual diversity . Income Statement According to BHP Billiton Group (2016, p6), the company has created an autonomous global metals and mining company founded on the selection of its mineral assets. In this regard, South 32 has been damaged with the listings on London Stock Exchange, the JSE, and the Australian Securities Exchange. The company also paid the U.S Securities and Exchange Commission due to the desecration of the Foreign Corrupt Practices Act associated with the 2008 Olympics that took place in Beijing. Balance sheet According to the table above, the total assets are 140.94 B for the financial year that ended 2015. The assets assist in firms operation, or to increase BHP economic value. It is worth noting that information technology related stock may not have many assets since the value of the BHP companies are derived from approaching earning prospects. The firms liabilities comprise of the current liabilities i.e. amount payable to suppliers, short term loans, and any other outstanding payments. Contrary, the long-term liability takes into consideration for loan term loans used in large projects funding. As such, the cumulative liability for the BHP stands at 57.24 B. Besides, the shareholders equity fall under liabilities because it is the money BHP owes the holders of its stock. Financial ratios According to BHP balance sheet, the current ratio of the corporate is higher compared to other firms in the industry. It is an indication of the liquidity strength of the company for it can provide emolument to its provisional compulsions without fail. Also, as illustrated in the chart above, the company performance over the past three years has improved. Bibliography Alexander, C. 2008. Market risk analysis. Chichester, England Hoboken, NJ: Wiley BHP Billiton Group Market line. 2016. BHP Billiton Group.: Find Articles, E-books in One Search. Retrieved April 12, 2016. BHP Billiton Limited (BHP) Balance Sheet. 2015. Retrieved April 12, 2016, Hubbard, T., & Moore, M. 2012. BHP Billiton: Mining Potash. Mirza, A. & Nandakumar, A. 2012. Wiley international trends in financial reporting under IFRS: including comparisons with US GAAP, China, and India account standards. Hoboken, New Jersey: John Wiley & Sons. Murray, P., Murray, P., Poole, D., & Jones, G. 2006. Contemporary Issues in Management and Organisational Behaviour. South Melbourne: Thomson Learning. Publications, U. 2009. Global mining and mineral industry government. S.l: Intl Business Pubns Usa. Taylor, J. & Scambary, B. (2006). Indigenous people and the Pilbara mining boom a baseline for regional participation. Canberra: ANU E Press. Read More