BHP Billiton is a mining and natural resources company that was formed through a merger in 2001. It has operations in 13 countries producing aluminum, manganese, nickel, coal, copper, iron ore, and petroleum. A SWOT analysis found that BHP Billiton has strong market position and diversification as strengths, while weaknesses include partnership constraints and accusations of corruption. The company has opportunities to expand in coal and copper, while threats include reduced demand from China and increased government regulations. BHP Billiton's success is due to its global locations, investments in technology, and diversified portfolio.
2. Executive Summary
• BHP Billiton is a mining/natural resource company that has been around for over a 160 years. BHP Billiton was a result of a merger
between two separate companies. When the two companies merged in 2001, BHP Billiton quickly became the leading global
resourcing company in metals and mining. BHP Billiton has a vast global presence in thirteen different countries. This has allowed BHP
Billiton to remain a top competitor in their field. The major competitors for BHP Billiton are Vale Inc., Rio Tinto and Teck Services. BHP
Billiton leads in safety, global expansion and market share. BHP also has a more diverse portfolio than any other mining company. BHP
has operations in Aluminum, Manganese, Nickel, Coal, Copper, Iron Ore, and Petroleum Potash.
• A professional analysis was conducted using many different internal and external evaluation methods and techniques. The SWOT
analysis findings indicate that BHP Billiton is strong in the market, as well as being heavily diversified. The opportunities that are
present for this company are in the expansion of coal and copper ore, investments to enhance organizational growth. While the
company’s weaknesses are partnership constraints, accusations of corruption which are under investigation and another large threat
for BHP Billiton is a reduction in demand from China. The fact that BHP Billiton has a strong position in the marketplace, is due to the
fact the company is more efficient at acquiring, extracting and selling its resources than it’s competitors.
• A review of BHP Billiton’s strategies and financial performance was conducted to project the future growth of the company. The
financial analysis showed that BHP Billiton is capable of substantial growth long in to the future. This was due to the current financial
and market position the company has; the advancement in technology that the company has invested in; the values in which the
company has in regards to its employees, and the ability to efficiently take on new projects that result in profits. BHP Billiton strategies
show that the company is capable of growth because they are dedicated to advancement of technology, and have the core
competencies to achieve a higher standard of success than their competitors.
3. History
• BHP Billiton was founded in June 2001 on the basis of a merger between two companies: Billiton and Broken Hill Proprietary.
Billiton’s roots date back to 1851 and derived its name from an island in Indonesia where the company started with a small tin
mine on the island. Billiton quickly grew into a global leader in the metals and mining sector and became a major producer of
aluminum, chrome, manganese, steaming coal, nickel, titanium and copper. Broken Hill Proprietary was founded in 1885 and
began as a silver, lead and zinc mining company in a town called Broken Hill Australia.
• The merger was structured as a dual-listed company merger. Both companies still technically exist as two separate companies
but share one board and one team of management based in Australia. In 2001 when the companies merged the pre-existing
listings on the London and Australian exchanges were maintained. Since this merger BHP Billiton has become the world’s
largest diversified resource company with operations spanning several continents. BHP currently has 41 assets in 13 countries
around the world. Because of the dual-listed style merger BHP Billiton is traded on many different exchanges and has a few
different ticker symbols but the main ticker symbol for the company for the New York Stock Exchange is BHP.
• BHP’s current corporate level strategy centers around continuous diversification in markets, geography and commodities. By
creating a diversified workforce that embraces openness, trust and teamwork BHP is reinforcing the value of trust and respect
it has among its employees. BHP aims to have a sociocultural advantage by building pride and loyalty in the workforce.
4. Vision and Mission Statement
BHP Billiton states that “Our purpose is to create long-term shareholder value through the discovery, acquisition,
development and marking of natural resources” (Our Charter).They also state that “Our strategy is to own and operate
large, long-life low-cost, expandable upstream assets diversified by commodity, geography and market (Our Charter).
BHP Billiton reaches these goals for their mission statement and strategies through their corevalues.
5. External Analysis (Pestel Model)
• Political: When it comes to BHP Billiton’s political aspirations, they choose to remain neutral in all the countries in which their company
works in. This means that they choose to not contribute to any funds of any political party, politician, or elected official in any country.
• Economic: Since BHP Billiton is in the oil market, they face difficulties within the market when it comes to the price of barrels of oil.
This is because the market is unstable, allowing prices to drop for 147$ to 33$ like it did in 2008. Although the oil prices regained its
strength, they have begun to change in the current market creating a large amount of uncertainty.
• Social: BHP Billiton is well aware of the social issues that may rise during the construction, operation of different projects throughout
the world. This results in the company having appropriate management measures to reduce the impacts the project has socially and
maximize their benefits (EIS.,). BHP Billiton has obligations to the environment when it comes to social issues, therefore they are
continuing exploration for more regulatory standards and safety procedures (An Economic Analysis for BHP Billiton’s).
• Technology: Innovation is highly important when it comes to the oil business, and competing in the market place. With that being
stated, BHP Billiton has a technology park that is located in Australia, to focus its efforts on technology. By focusing on innovation and
technology it has lead BHP Billiton to stay in front of other businesses. This is because they have a large team of experts and
technology professionals. With this they have found that technology and innovation are key aspects for the company (Latest news).
• Environment: BHP Billiton Strives and aims to deliver long lasting benefits to environment as well as the communities by improving
natural resources. BHP Billiton owns and operates in a diverse range of markets around the globe and in different eco systems. BHP
Billiton recognizes the significant impact of operations and the effect if has on the environment. The BHP Billiton Trees for life program
in South Africa allows unemployed community members to provide for themselves through the cultivation of trees and to enhance the
environment through the plantation of more trees. Furthermore the program has shown significant positive results with seventy
thousand new trees being planted by participants who are trained to care for the trees and sell a portion of the trees to generate
income for the community while providing jobs.
• Legal: Since BHP Billiton has resources and stakes in multiple countries, they must keep different laws and regulations into
consideration when they are operating in different countries. BHP Billiton takes health, safety and risk into consideration when they are
different countries making sure the public health and employee’s health, safety and risk are being created and reviewed. (Health and
Safety at Work).
6. Industry Environment Five Factors
• Rivalry among Competing Firms (High): Rivalry between BHP Billiton and other competitors remains high, due to the fact that
they have two main rivalries in the market. The two main competitors are ALOCA INC. and VALE S/A (HOOVERS). BHP Billiton
remains highest among these competitors due to the fact that they are invested in multiple resources in the world and have a
team for innovation.
• Threats of New Entrants (Low): BHP Billiton has a low level of threats of new entrants due to advancements in technology or
innovation in the gas and oil market. Although they have threats of technology it would be hard for new companies to enter
the market place that BHP lies in because they have sustained themselves in more than one market
• Threat of Substitutes (Medium): The threat of substitutes in the markets that BHP Billiton lies in is somewhat small because
they have more than one resource that make the company more sustainable. The reason for this is because BHP Billiton does
their best to diversify their resources throughout the global economy.
• Bargaining power of buyers (Medium): The reason the bargaining power of buyers is medium is because BHP Billiton
can pass along any price increase to the buyers. This is due to strong demand and limited supplies of natural resources
in the market. Along with that there are not many substitutes available, which reduce the bargaining power of the
buyer.
• Bargaining power of suppliers (Medium): The bargaining power of suppliers for BHP Billiton is largely impacted by the
suppliers in labor, materials, energy, shipping and energy costs. When the company guarantees reduced capacity through
higher operations, the overall costs of the suppliers have increased too.
7. Competitive Environment
• Since BHP Billiton has merged in 2001, it has become the largest resourcing company in the world. It has maintained itself
throughout the years as the top competitor against other companies. BHP Billiton has three major competitors, Alcoa Inc., Rio
Tinto Limited, and Vale S/A. Due to BHP Billiton wanting a majority share in the market place they attempted a hostile takeover
of RIO Tinto Limited. When they attempted this takeover, they were considering there new percentage of how much iron ore
they would have. By taking over RIO Tinto Limited they would move up to 36.8% allowing them to have main control of the
market. If they were to do this it would be closely looked at by the Competition Directorate General in Europe because they
want to ensure that a company does not have roughly between 40% to 50% percent control in the market. This is because the
Competition Directorate General wants to ensure there is fair amount of competition in the market so one company cannot
control the prices (Analysis, Daniel Magnowski). Besides BHP Billiton’s three major competitors, it has a small list of other
competitors that are not considered a potential threat for them.
8. Key Success Factors
BHP Billiton’s success in maintaining in position in the market is relative to their dedication to create long-term
shareholder value, corporate governance and their focus on the environment and the communities where they
choose to operate in (BHP Billiton Plc Notice of Meeting).BHP Billiton has success because they focus intently on
their technology, compared to other companies. They show this by having a team of employees who are solely
focused on technology and innovation so they can continue to keep an edge on the current market situation and
the future. Another success factor that can be related to BHP Billiton is the fact that they focus heavily on being
and staying diversified.
9. External Factor Evaluation Matrix
External Factor Evaluation Matrix
Weights
Rating 1-
5 Weighted Score
Opportunities
- Locations 0.15 5 0.75
- Dependency on energy 0.15 5 0.75
- Stability and low cost of coal 0.08 3 0.24
- Economic Trends 0.1 3 0.3
- Maximizing Potential Assets 0.05 4 0.2
Threats
- Government Regulations 0.07 4 0.28
- Alternative Sources of Energy 0.15 5 0.75
- Health Hazards 0.05 2 0.1
- Environmental Impact 0.08 2 0.16
- Total # of Competitors 0.12 5 0.6
Totals:
10. External Factor Evaluation MatrixOpportunities
• Locations: Natural resources are found in almost every corner of the world, and the quantity of these resources are quite abundant. Securing rights to explore, mine and sell
these resources is an excellent reason to enter into this market. BHP Billiton has a huge opportunity due to the amount of locations the company has across the world. They
currently have 100 locations in 13 countries. Having so many locations throughout the world increases BHP’s opportunity to create more sales than that of its competitors.
For example, if BHP’s competitors don’t have the quantity of a certain resource that is desired by a customer and BHP has a vast amount of these materials, this could lead
customers to make BHP their go to source in the future for all their natural resources needed. These large amounts of inventories could in fact even give BHP a cost leadership
strategy on which the company could capitalize.
• Dependency On Energy: Since the economies of the world are increasing, the need for energy is increasing. Growing demand for energy is expected to increase worldwide by
more than 40% over the next 20 years while population growth is only expected to increase by 25% (Chevron, Energy supply and demand). This indicates that the demand for
energy is increasing at a faster rate than the growth rate of population. In other words the demand of energy per person is increasing with technology. “The world economy
needs ever-increasing amounts of energy to sustain economic growth, raise living standards and reduce poverty” (Energy and Mining). This affects BHP Billiton because they
help fuel the world with energy from their coal and petroleum divisions. These divisions increase the opportunity for BHP to capitalize on.
• Stability and Low Cost of Coal: BHP is the world’s largest producer of coal and because of the stability, desire and low cost of coal BHP has a huge opportunity to make money
in this market. With the current production levels worldwide coal will be readily available for use over the next 118 years where as oil and gas only have expected lives of 46
and 59 years respectively. Coal is readily available from a wide variety of sources, transported easily, and is one of the only sources of energy that can be easily stored in case
of emergencies. Coal is easily and inexpensively converted into electricity and can also be used as an alternative to oil. Coal reserves also allows countries to minimize their
exposure to oil price volatility. Coal is also the most economical of all fossil fuels. These factors listed are a prime example as to why the coal market is very appealing.
• Economic Trends: The growing number of developing nations is another opportunity BHP should consider. As a country becomes more industrialized that specific country’s
demand for minerals and energy increases. Since coal is the cheapest source of energy, a developing nations’ dependence on coal is going to be higher than that of a more
developed nation. Industrialization in any country also requires the use of a large amount of steel and iron in construction. Being able to identify these countries and exploit
the needs of these countries will give BHP the opportunity to increase sales in a specific region and also develop a relationship within that country.
• Maximizing Potential Assets: The ability for BHP to maximize potential assets is a great way for the company to be successful. This can be done two different ways: first is the
discovery of new resources and the second is the ability to effectively extract all these resources from the ground. In the Unites States alone it is estimated that there is about
2300 billion tons of coal and 570,000 tons of Copper yet to be discovered (Coal Reserves, National Mineral Resources Assessment). These figures refer to only two of a
number of resources that can be mined for and sold for profit. These figures also represent an estimate of undiscovered natural resources in the United States, so the number
of resources available worldwide are far greater than the numbers listed above. Effective mining is also constrained by three main factors; physical barriers, technological
innovation and environmental regulation. If BHP can find way or develop some sort of new technology to find more minerals in the exploration phase or extract a larger
percentage of the minerals out of the ground than that of their competitors this would give BHP an advantage over their competitors. For example, if BHP is able to mine
100,000 tons of a given mineral out of a mine when all of the competitors can only mine 80,000 tons BHP would be much more profitable due to the fact that BHP is more
efficient at mining any given mine.
11. External Evaluation continued
Threats
• Government Regulation: Government regulations are different from one country to the next. These differences make BHP Billiton take into consideration the different effects that a
change in regulation could have on the company. Any new regulation that either the EPA or another environmental regulatory agency has enacted could potentially affect BHP
Billiton’s operations and profits. This occurs because these agencies put strict regulations on current emissions of coal mining which could affect the price of coal, which is the number
one resource of BHP Billiton (Regulations harming more than just the coal industry). If government regulations/restrictions were to change this usually results in a large expense to
BHP because the company will usually be required to increase clean-up or reduce pollutions or increase safety in some costly way.
• Alternative Sources of Energy: Alternative energy is an increasing threat for all energy companies. The earth has a limited amount of non-renewable resources and when those
resources are gone the dependency on renewable resources will increase. The use of Solar, Wind and Nuclear power will become increasingly dominant as companies use up all of the
earth’s natural resources. Alternative sources of energy are also usually more environmentally friendly which makes them more desirable in some ways. Alternative resources of
energy could change the face of the energy industry as advancement in technology continues to grow, allowing the alternative sources of energy to become more efficient.
• Health Hazards: BHP faces a large threat due to the vast amounts of health hazards facing its employees and surrounding communities. Mining poses 5 basic health hazards, the first
one is physical hazards. These are hazards associated with the actual physical work performed by miners. Miners and members of surrounding communities are also at high risk from
chemical hazards resulting from the byproducts of operations. These hazards are either dispersed through water or air pollution. Malaria, Dengue Fever and Legionella from the run
off of the cooling towers at mining sites are some of the types of biological hazards that employees and surrounding inhabitants face. The last two types of hazards facing this
industry are ergonomic hazards and psychosocial hazards. Constant shoulder injuries from holding objects overhead are a very common type of ergonomic hazard. Drug and alcohol
abuse are the most common type of psychosocial hazard (Occupational health hazards in mining). The resulting affect that health hazards have on the mining industry are an
extremely important threat to be considered. Health hazards would be considered a huge threat to the company because this would greatly increase the costs associated with health
and liability insurance costs. These threats also expose the company to a risk of a lawsuit.
• Environmental Impact of Mining: The environmental impacts facing a mining company is extremely substantial for a number of reasons. Mining affects the environment in a number
of ways. Some of the main concerns are water pollution, hazardous effects on biodiversity and deforestation. In well regulated mines, companies take great care to prevent water
contamination for fear of lawsuits and bad publicity. Companies often employ hydrologists and geologists to take careful measurements and constantly monitor water for
contamination. Deforestation also causes disruption in the biodiversity of the organisms in the direct and surrounding areas. Deforestation also requires the removal of local habitat
including the forest and it inhabitants which could lead to extinction of certain species. On top of the cost of removal of the forest almost all communities in most nations require the
replanting of trees and plants indigenous to that region. To ensure that companies restore mined land for future use many governments and regulatory authorities require that
mining companies post a bond to be held in escrow until the proper cleanup and reclamation procedures have been performed.(Environmental Impact of Mining Wiki)
• Total Number of Competitors: BHP is not only a metal and minerals company, BHP is also considered an energy company because of its petroleum operations. The total number of
mining companies is estimated to be over 1700 (75% of the World’s Mining Companies Are Based in Canada). The extremely large number of petroleum companies combined with the
total number of mining companies leads to a fierce level of competition that BHP faces. With this fierce level of competition BHP always needs to try to stay one step ahead of its
competitors by establishing strategies which will ensure the continued success of the company. As long as BHP can implement these strategies effectively, BHP will retain its title as
“Worlds’ Largest Resourcing Company”.
12. Competitive Profile Matrix
• Competitive Profile Matrix (CPM) was used to ascertain the strategic standing of different firms in the resourcing market. These ranged from BHP
Billiton, Rio Tinto, Vale and Teck Resources. BHP Billiton received the highest score of 4.27, on the competitive profile matrix; slightly ahead of
Rio Tinto. This score indicates that BHP Billiton has a strong global presence, market share, number or resources and market share. Although it
has the highest score compared to the other companies, it is in a tight competition with Rio Tinto. By increasing the amount of resources that
BHP Billiton can retain, BHP Billiton will have a larger competitive edge than the other companies. By retaining more resources, BHP Billiton will
have a larger amount in market share than the other companies as well.
• The numbers in the Competitive Profile Matrix are used to evaluate a company’s position in the current market place. The different rates can
range from 0.00 to 1, 1 is the highest value in this case. If a company has higher rate than another company that means that they have a better
position with the success factor. For example, Teck Resources is scored at a 1 on the number of resources they contain because they have the
most resources out of the four companies. While BHP Billiton has a score of 0.09, due to the company having the largest portion of the market
share.
BHP
Billiton
Rio
Tinto Vale
Teck
Resources
Critical Success
Factors
Weight
s Rating Score Rating Score Rating
Scor
e Rating Score
Number of
Countries
Located In 0.3 5 1.5 4 1.2 4 1.2 3 0.9
Safety 0.05 4 0.02 5 0.025 1 0.05 3 0.15
Number of
Resources 0.5 4 2 5 2.5 4 2 2 1
Global Expansion 0.06 5 0.3 3 0.18 3 0.18 2 0.12
Market Share 0.09 5 0.45 4 0.36 4 0.36 3 0.27
Total 1 4.27 4.265 3.79 2.44
13. Core Capabilities VRINE Analysis
• Value: BHP Billiton has a large gathering of resources and capabilities that can add towards to the company’s competitive advantage.
BHP Billiton resources include numerous patents for trade equipment, with patents pending for technique specific resource extraction.
BHP Billiton’s strategic placement of numerous global operations allows for them to provide more timely resource services to
customers both foreign and domestic. The combination of tangible and intangible assets helps return value to shareholders and their
operating community.
• Rarity: BHP Billiton’s operations and capabilities are rare, due to BHP being so diversified in what their company has to offer. Including
patents, faster extracting time to deliver to their customers. They promote sustainability by boosting their land management
effectivity, reducing plant and rig generated greenhouse gas emissions and thoroughly vetting their land reclamation efforts. BHP seeks
to deal with scarce resources in various geographic locations while returning value to both shareholders and their local community,
while operating responsibly therein.
• Inimitable/ Non substitutable: BHP Billiton has created a unique corporate culture of hiring locally and training to internationally
benchmarked standards. Because of it’s pioneering of these local relationships, competitors’ barriers to entry in that respective
location and effective integration with locals, a competitors ability to do so would be severely hindered. This also means that Billiton
has the ability to brand themselves as a household name within those communities, which has, throughout history, proven to be an
effective way to retaining and maintaining a consistent workforce. This also allows costs to remain low, without sacrificing Billiton’s
capacity to compensate their labor force at a high level.
• Exploitable: BHP has the capacity to exploit the resources available to them based upon both exclusive geographic location and
effective asset allocation as per their balance sheet. Their expertise and experience in their respective industrial field make them ready
and willing to execute their mission with regards to resource mining and subsequent distribution. Within their aforementioned patents
filings are multiple equipment items which with potential to greatly increase their ability to maximize the extraction potential at each
of their locations. This ability to exploit the resources available to them has a positive impact on revenues, and a minimizing effect on
the amount of resource they may waste as a result of ineffective extraction or premature site capping.
14. Internal Factor Evaluation Matrix
Strengths
• Strong Market Position: BHP Billiton is a very established company that is known all over the world for its major commodities along
with oil and gas. BHP Billiton is among the world’s largest refineries and has been that way since they started in 2001. BHP’s initial
business foray included tin and lead smelting and led to all of the things they have to offer today. By creating the type of company
they have now they have made it to the top of the food chain when it comes to global refineries. They already have a great name for
themselves in this industry, so all that they have to do is expand and grow.
• Diversification: BHP Billiton has diversified themselves extremely well from other refineries. Not only do they have substantial interest
in oil and gas but they also refine: Aluminum, Coal, Copper, Iron Ore, Manganese, Nickel, Silver and Uranium. BHP also refine
Petroleum and Potash. Potash is a globally traded commodity that is mainly used in fertilizer and BHP Billiton has over 14,500 square
kilometers of highly prospective ground in the Saskatchewan Basin. BHP focuses on low costs and their employers. They want their
workers to feel wanted so that they will maximize their performance. They also take great pride in the safety of their workers and
always make sure they are in the best work environment possible. BHP mentions on their website that they never take performance
for granted and try to do the best that they can so that the future generations of BHP Billiton will have what they need to be
successful. Most oil refineries are money hungry and want to sale a lot. But BHP focuses on low costs and believes that they will sell
more even at a lower cost and still lead the refinery industry.
• Development and Growth: Since BHP focuses on long-life, low-cost and expandable strategy, this will give them good opportunities to
grow. “To succeed, we need a workforce that reflects our values and the communities in which we operate. We aim to recruit from
our host communities, to attract high caliber people who are committed to the success of our organization and thrive on working in
high performing teams.”(BHP). To grow in any environment a company has to be ready to change and meet the needs of the
community and those around them. The things that they produce today not only help them now but will help the company further
down the road to be as successful as they can be and help become the number 1 company in the world. In 2010 BHP Biliton bought
Athabasca Potash for $320m and it is stated that by 2020 BHP could produce 15% of the world’s potash demand. This is the perfect
example for growth and development. This is just the Potash they offer, now think about how successful they would be if they did this
with all of the commodities they offer. It would make them unstoppable. BHP has sales of $67.67B and a market cap of $182.32B.
15. Internal Factor Evaluation
Weaknesses
• Commodity Trading: This is a weakness because BHP trades in a volatile commodity
market. This could be ok but it makes it hard for financial management and it
makes it hard to see how the company’s cash flows in the future will be.
Commodity trading is really good if the market is good but if the market isn’t doing
so well then you cash flow won’t be as good. The company makes its money from
trading and selling but in a volatile market it is hard to get a future revenue value.
• Economy: I think this is weakness of BHP because if the market isn’t doing good
then they will see a decrease in profitability. Since they make their money by
trading and selling they have to meet their quota of trading and selling for them to
make money. If the Economy is down BHP gets handcuffed because they set their
prices due to the global market. If the market is booming and their commodities
are in high demand then the company will have great cash inflows. Companies like
BHP Billiton are always needed but for a company this big they have to have enough
to pay the employees and break even for them to be successful.
16. Financial Analysis
Current Financial State
Despite the fact that the entire industry has experienced large swings in returns over
the last 5 years, BHP still has a very strong financial position in the industrial metals
and minerals industry. BHP has seen a large fluctuation in growth. Sales, Net Income
and Net Profit Margin have all experienced some sort of decrease over the 5 year
period but these numbers were then followed by increases to show positive,
continuous growth. BHP is the only firm of its main competitors to never experience a
loss (Net Income) during a period. BHP is also the only firm that reinvested a large
amount of money into Property, Plant and Equipment for expanding operations
during this period of fluctuation. BHP’s profitability and strength is further reinforced
by the fact that the company has been able to consistently pay a dividend to common
shareholders every 6 months over the last 5 years. BHP’s strength against the industry
is shown by its Total Revenue. Average revenue for the entire industry during 2014
was reported as 44.17 million dollars and BHP had reported revenues of over 67
billion dollars that year.
17. Strategy Implementation
• For BHP Billiton to become the number one commodity producing company in the world, they would need to go into more countries than what they are
currently in and find a way to extract all of the commodity as they can. For example, when extracting coal there is a lot of left over coal that is just wasted
because BHP nor any other mining company has the equipment to get it all. Yes, there are giant machines that specialize in coal removal but what about
the stuff that isn’t extracted. If BHP could find a way to make a machine that can get all of the coal so that there isn’t anything left over then they could
make a lot more profit in the end. BHP would definitely have the upper hand in the coal mining world and would be able to sell the idea to a ton of other
mining companies. Out of 100% BHP probably gets 80-85% of the coal they are going after, so if they found a way to maximize the amount of coal being
brought out and produced. Also, BHP could focus on corporate governance and could try and make more worldwide partners that could bring BHP a lot
more revenue for years to come. Corporate governance can help because if you have the right people that are partners or investors then you have a
competitive advantage over other competing companies. By being extremely diversified and having the right people back you up then the sky is the limit as
far as revenue potential. The Board of Directors are the main governance of BHP and if they believe that the company will gain an advantage then they
would probably not shy away.
• Have computerized systems that can track quotas: on a day-to-day basis so that BHP will know exactly what they can improve on or fix. BHP needs to know
if the company as a whole is working at the maximum potential that they are capable of. Quotas are an important part of business because it tracks where
the company wants to be to where they are now. So having an advanced computer system in place makes BHP’s foreseeable future bright. BHP could also
set up some kind of a program that can maximize the R&D of the company. Research and Development is one of the biggest aspects to a company such as
BHP Billiton because if they do not find the commodities then they cannot make money. BHP has already established themselves as a premiers mining
company and have a very successful system in place as far as exploration goes. But no company including BHP has a lifelong advantage. Many mining
companies have the same capabilities but may not have as much income to support the systems they might need. If BHP could find a way to set
themselves apart from the competing mining companies then they would have the advantage. They need to come up with a system that can really take the
exploration aspect of the company to the next level. Whether it be drills or underground sonar/cartography, spending the money to help the exploration of
your company is well worth it. Who knows, if BHP hired a scientist to or inventor to come up with a new way to explore underground BHP could sell the
invention to all of the other mining companies around the world and increase their total revenue by a handsome amount.
• Contingency plans are another good thing for a company to have in place. The main purpose of a contingency plan is for the company to have a plan set up
for something that could happen in the future. It could be a plan for something that has happened that helps the company succeed. So once BHP makes it
to where they want to be in the future they already have a plan in place to help go in the same direction as they have already gone. A contingency plan can
also be a plan set up for something that could go wrong in the future so that the company can “stop the bleeding”. If BHP has this type of a plan set up,
they do not have to worry about going farther in the whole once something does go wrong.
18. Strategy Evaluation and Control
• Standards/Targets: Based on the recommended strategies and implementations to improve the amount of natural resources BHP
Billiton currently has, certain guidelines have been identified to help implement these strategies. These include targets and standards
for BHP Billiton to be successful in the areas of gaining new extraction sites, and extracting more commodities. The objectives are
projected for the next three years for operational, market and financial. Once the standards and targets are implemented correctly
BHP will start to see the difference that it will make in the revenue brought in by the company’s projections.
• Operational: If BHP Billiton were to increase the number of physical locations and expand into areas such as China, Africa, Russia and
Canada they could expand their commodities by twenty percent within the next three years. Target goals for operations would be to
extract more commodities from the new physical locations by twenty-eight percent. By doing so, BHP would have the upper hand in
the global resources market and could keep the advantage for a longer period of time due to the fact that they have increased their
commodities by twenty percent.
• Market: BHP Billiton’s projected global resources advancements would allow the stock price to increase to fifty dollars per share. By
acquiring new locations to extract more commodities this will allow the company to become more stable in the market place. This is
due to the fact, that they would have more availability to resources than they do at this point in time. The projection for BHP Billiton in
three years allows them to maintain their position in the marketplace as the company acquires more commodities than they have in
the previous three years.
• Financial: To ensure a positive financial return for BHP Billiton, the company should ensure that the working capital remains adequate.
In 2014 BHP’s working capital was at 4.23 Billion dollars. During 2014, BHP was third in working capital among its largest competitors.
By 2017, the increase of twenty percent in commodities could allow the company to be in a better position to compete when it comes
to working capital.
19. Conclusion
The recommended strategies should improve the financial and market status of BHP Billiton by gaining more
commodities through new extraction locations throughout the globe. In order to successfully implement these
recommendations, BHP Billiton will have to acquire and expand the company more than it already has. The
company can expand in current locations as well as attempt to acquire new locations in different countries that
they are not currently in. BHP Billiton can do this by locating different areas that have commodities that the
company currently extracts or they can extract different commodities to gain advancement in the market place
like Rio Tinto. BHP Billiton’s expansion will also dictate more locations to specifically advance in technology
through research and development. Due to the fact that BHP Billiton is already globally recognized it will not be
hard for the company to continue to expand and gain new locations. This is because the company would already
know the expectations of global expansions and how host countries can potentially work against the company or
for the company. The recommended strategies and implementation of the strategies will allow the company to
continue to grow and remain among the world’s largest resourcing company.
