Competencies and Human Resource Management at BHP Company - Case Study Example

BHP Company - Competencies and Human Resource Management - Implications for Organizational Competitive Advantage Table of Contents Executive summary 1 Introduction 2 Strategies 2 Corporate strategy 2 Business strategy 3 Mission statement and core competencies 3 Business Practice criticisms 3 External environment 3 PESTEL analysis 4 SWOT analysis 4 Porter’s Five Forces 6 BHP Company culture and core values 7 References 8 BHP Company Report Executive summary The purpose of this report is to investigate how BHP Company has thrived so well in today’s competitive market. It was important to conduct this investigation in order to fully comprehend what BHP Company is doing different from other companies in the industrial metals and minerals industry hence making it more successful. The findings show that the management of BHP Company lay down objectives and strategies that aim targeted organizational goals. The company also maximizes on its strengths to ensure maximum profitability. The Australian Government is also in full support of the BHP’s Company existence since it generates huge revenue. In addition, it acts as a source of employment to the surrounding community. This translates to a high economy of the country. BHP is also highly successful and this minimizes their chance of failure since they dominate the marketplace. However, apart from being successful, the company has also faced criticism from campaigners who were against their operations on grounds that they caused detrimental effects to the environment. In the field of mining, accidents are rampant. BHP Company has faced challenges regarding mining accidents for instance, collapses of dams which lead to loss of life in the worst case scenario. Introduction An operation in an organization needs a plan to be built so as to achieve the targeted goals within a definite time. The plan is otherwise known as strategy. A successful strategy in management strategies are identified and carried out by managers and these leads to an overall better performance and advantaged competition for their respective companies. Among the world’s largest mining and resources companies, there is no doubt that BHP is on the list. Apparently, BHP is undisputed in today’s mining and resources companies. BHP is said to be highly competitive because it is more profitable compared to other companies in its industry. According to O’Shannassy (2008, p.176), BHP company has done a good job maintaining its competitive advantage. Strategy in management deals with the evaluation and controlling of a business. Though the future of a business is either predictable or unfeasible, it can be planned for. High levels of knowledge are required of the managers. They should analyze the competition and the general business environment. With substantial knowledge, the right decisions are made and the right course of action taken. In this study, SWOT and competition analysis are going to be conducted and proven to be of great importance to BHP Company. Strategies For a business organization to out and achieve its designed objectives it must have a plan, business strategy. Business strategy is mainly concerned with issues related to resources such as raising funds to build stores and allocation of resources according to priorities. The scope of businesses also falls under the business strategy. It determines what the company will produce and where. Teece, (2010, p.180) confirms that strategy is an important aspect of a business since it helps the business organization in competition preparation. BHP company’s strategies are well laid down thus maximum profits. Overtime, BHP Company has gradually developed a structured approach that enables it to improve productivity in a continuous manner and measure its performance by the use of metrics, simply integrated. Corporate strategy Corporate entails predicting and adapting (Freeman & Mcvea, 2001, p.6). Particular organizational goals are achieved through various ways in which the overall scope and direction of a corporation work together. To create the most value in a firm, portfolio approach is advised in any corporate strategy. Leaders in BHP Company focus on several important aspects of corporate strategy. The management determines the best way to allocate resource in various business units. Competent workers are evenly distributed across their chain. The type of management is based on priorities, where it is most needed. Opportunities are also critically analyzed and capital is allocated. BHP Company is also designed in a way that the head office decisions are made top down. Portfolio management manages the risk through diversification and seeds emerging opportunities that could be heavily invested if appropriate. It can also monitor competition and ensure that market trends are well balanced. Corporate strategies mainly focus on risk management and return across the firm. Optimization of these factors leads to the creation of a portfolio in BHP Company. Business strategy The look of a given company after some years is entirely determined by business strategy. If the strategy is clearly defined, achievement and development of growth will be easy. Goals will also be met both as an entrepreneur and business leader. BHP Company business strategy helps it to build its strengths, to make most of its strengths so as to keep afloat among competitors. It also clearly outlines the requirements that need to be met to hit a business target. Strategy choices can at times be determined by interactions between business organizations (Peng et al., 2008, p. 922). Mission statement and core competencies A mission statement describes why a given organization exists and what it stands for as Azaddin (2012, p.242) claimed. It is not just words; on the contrary, a mission statement is meaningful since it reveals the company’s purpose and philosophy. A mission statement inspires the stakeholders of a business organization. It provides a focus for specific goals by rallying the organization members. However, not all mission statements are effective in business firms. Today’s market is very competitive; therefore, BHP’s Company mission statement is customer-centered in order to retain them. Tahir and Howard (2003, p.257) stated that mission statement contributes to a successful organization. The case is the same in BHP Company. Their mission is clear and the organization is doing everything they can to accomplish it. BHP Company expansion on global platform made it necessary to implement a balance scorecard, which comes in handy during both the measurement and supplementing the business performance, especially financially. Therefore, core competencies are involved in the measurement of customers’ perspectives criteria, learning, growth and internal business processes. Business Practice criticisms Some of the BHP’s Company operations were criticized since they cause environmental harm. Campaigners were against BHP’s Company operations and in some cases there were a number of protests. Collapse of dams, for instance, in Brazil where BHP Company is part of the ownership lead to protests. Some victims claimed they were not compensated. Such protest impacts BHP’s operations negatively. Accusations were made that BHP Company does not treat their employees accordingly. With such remarks spreading, it will be harder for BHP Company to get competent workers and the turnover rates will significantly increase. External environment All the outside factors that impact businesses’ operations are composed in the external environment. An urgent action or reaction is needed to maintain the flow of operations. The external environment is divided into two that is macro-environment and micro-environment. It comprises; the government, industry associates, customers, competitors, suppliers and other social factors, they all influence the company’s decisions (Yajiong, Liang & Boulton, 2008, p.71). Microenvironment factors impact a company’s operations directly while macro-environment factors cannot be controlled by the company. In this case, BHP’s success solely depends on how quick it can adapt to the changes. Some of the external factors include climate, economy, technology, political, legal, competition, and media. The aim of external factors analysis summary is to evaluate the external environment of the business. Regardless of social factors being favorable, other factors such a legal, political and economic show significant threat. That being said though, BHP has some strength too that counteract external influences that cannot be controlled. The company is flexible and changes with time. To exploit new opportunities, BHP Company set up a reliable management that could make the right decisions for the company. PESTEL analysis The framework of PESTEL analysis elaborates the social aspects and trends that influence Starbucks’ customers and the whole business organization. The following are PESTEL factors that impacts Starbucks; 1. Political – The political atmosphere is in favor of BHP Company. The Company conducts its operations under a favorable political environment. The Western Government of Australia offers support to the company because it contributes greatly to the economy of the country. 2. Environmental – Australia provides an environment that is favorable ensuring BHP Company sails smoothly. Employees’ exhaustion level is moderate. Operations are streamlined because the workforce is efficient. 3. Social – the culture of the society can impact the environment of the organization. BHP Company marketers understand their customers depending on their beliefs. Level of education and attitudes determines how BHP Company designs their message when marketing their products. 4. Technological – a company should readily adapt to the changes in technology. It affects how operations are carried out and in most cases it makes them easier. BHP Company uses social media to market their products. Gallaugher and Ransbotham, (2010, p.198) clarified that social media enables a business organization to know the customers’ views and opinions. 5. Economical – factors such as the rate of foreign exchange matter. The economy of the country’s economy is also considered since it directly affects the customer’s buying power. Low economy may cripple BHP’s Company operations. 6. Legal – Organizations’ rights should be protected by capable legal frameworks. BHP Company has a copyright and protects its resources. Resources are vital in any organization. Sidney, (2003, p.993) affirms that a long time commitment to specialized resources is required in capabilities. SWOT analysis Strengths 1. Strong relationship with dealer – The dealers provide training to the sales team so that they can help the customers comprehend how to fully benefit from the company’s products. Dealers also promote the products. 2. Good revenue – BHP Company is able to fetch good returns which enable it to expand even more. 3. Automation – with automated activities, BHP Company has been able to focus on products that are highly demanded. 4. Highly successful – BHP Company thrives in today’s market making it successful. Weaknesses 1. Low level of innovation – Though BHP Company allocates some funds towards research and development; the leading companies are more innovative. 2. Day’s inventory – unlike its competitors, BHP Company day’s inventory is higher. The company’s capital is allocated to expansion of channels which can impact the future growth. 3. Poor integration – BHP Company has failed to integrate firms with various work culture. 4. Poor financial planning – Most of BHP Company assets are liquefied indicating that the company overspends. Opportunities 1. Acquisitions and alliance – the easiest way for companies to grow tis through collaboration. Therefore, BHP Company has an opportunity to grow by the means of acquisitions and alliances. 2. Expansion – BHP Company’s financial status allows it to expand without any breakdown. Its existing operations can be expanded thus more market. Pablos et al., (2008, p.49) alleged that the resources of an organization boost them during market competition. 3. International growth – BHP Company is present in a lot of countries, therefore, it can establish a global market. The image of the company will be significantly enhanced. 4. Innovations – The market today is very competitive but once innovation sets in, survival in it is guaranteed. Threats 1. Demand fluctuation – Developing manufacturing countries such as China are potential threats to BHP Company since they manufacture in-house. This makes the demand at BHP Company fluctuate. 2. Competition – Organizations such as Anglo American offer stiff competition. In the coming years such companies can prove to be major threats. 3. Costs – Increase in the cost of raw materials results to an overall increase in the cost of production. As a result of this, profitability will decrease. 4. Politics – BHP Company will fail to run smoothly if it is negatively affected by political factors such as mishap occurrence which is a threat from the government. Porter’s Five Forces Dynamics were fully comprehended by BHP Company, therefore, they thrived and always compete both intensively and effectively in today’s market. Porter’s Five Forces framework was made by Michael Porter who was an American management writer. A company uses Porter’s five Forces in the understanding of both threats and opportunities. The five forces are relevant in an organization since it determines potential threats. The five fundamental forces include: 1. Substitutes’ threats. 2. Rivalry intensity. 3. Threat of new entrants. 4. Suppliers’ bargaining power. 5. Buyers’ bargaining power. Substitutes’ threats Other companies provide similar products and services as BHP Company in industrial and mineral industries. This impacts the profitability, negatively. When value proposition is offered, the chance of substitution is higher in this case. Rivalry intensity Rivalry is common among the industrial metals and minerals industries and it is both intense and inevitable. As a result of rivalry, the prices lower and profitability decreases. BHP Company survives in a competitive environment thought the related organizations offer stiff competition. Threat of new entrants New entrants in industrial metals and minerals leads to change of ways on how things were previously done and puts a lot of pressure on BHP Company since they have to lower their prices, provide better services to their customers and reduce costs. These challenges must be well managed for BHP Company to maintain its competitive advantage. Suppliers bargaining power Most industrial metals and minerals industries acquire their raw materials from different suppliers. BHP Company market can be negatively affected if the suppliers are in a dominant position. Suppliers who are powerful to use this advantage during negotiation to get the highest amount they can from industrial metals and minerals industries. Generally, the higher the suppliers’ bargaining power the lesser the profitability. Buyers’ bargaining power More often than not, there is always a pressing demand from buyers. Most buyers want to get the best product they can possibly get with a minimum price. In the long run, if such requests are fulfilled, BHP Company profitability will be negatively impacted. The customer base enlargement and reduction of buyers’ bargaining power is necessary. If this is not the case, the possibility of buyers requesting either a discount or offer is realistic. BHP Company culture and core values At BHP Company, sustainability is an important aspect. The company puts safety and good health first by showing great support towards the community and taking good care of the environment. BHP Company is also associated with values such as integrity, simplicity, respect and accountability. In addition, BHP Company prioritizes its operations. Moral Principles are highly regarded in BHP Company and a lot of dedication is shown towards it. Individualism is discouraged since every employee is a team player. Financial committee has the obligation to ensure that the organization is secured and runs smoothly. There is job security in BHP Company which makes employee turnover rate low. The functions in each unit depend on the style of leadership the management wants to employ. The environment allows free social interaction among employees which leads to an overall better performance. The management is also very transparent hence the company is built on complete trust. Recommendations and Conclusion BHP has proven to be not only a great organization but also a successful one. Its competitors find it hard to catch up with BHP Company since it offers a stiff competition. BHP is advantaged because the company produces quality products. However, apart from being successful and popular, BHP Company should consider the following; 1. Proper marketing through effective channels so as to sustain their growth and maintain their competitive advantage. 2. Products and services innovation attracts new customers and retains the old ones. 3. BHP Company can experiment how to design the same product using different raw materials. This will prove to be of great importance when the price of a particular raw material increases. 4. BHP Company should build a large customer base since it will lead to the reduction of buyers’ bargaining power and will relatively increase profitability. 5. To survive in the competitive environment, BHP Company needs to employ the differentiation strategy and this move will draw a clear distinction between BHP Company and the rest of the companies within the industry. 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