They operate their production safely and they believe that they are the businesses that have minimal injuries, fatalities or illnesses. It all succeeded due to a strong leadership that could handle and minimizes all the risks. Their operational systems are diversified geographically and commodity, which measures that they are the part of the local societies. Their main goal is to responsibly minimize the negative environmental and social impacts and to maximize the benefits towards each individual in the societies as their companies operate.
Furthermore, this paper will analyze the current strategy used by BHP Billiton, critiques, and some recommendations.
BHP Billiton mergers and acquisitions
In 2005, BHP Billiton announced an acquisition with WMC resources companies with a bid of US$ 7. 3 billion that owns the Olympic Dam copper, gold and uranium mine in South Australia, a fertilizer plant in Queensland, and also nickel uranium in Western Australia. Then, in the end of 2007, BHP Billiton tried to buy Rio Tinto Group their major rival in mining and the third largest iron ore producers in the world.
The purpose is to accelerate their business growth and market capitalization in iron ore. BHP Billiton tried to buy Rio Tinto group in all share-deal with the bid of US$ 3. 34 of each share of Rio Tinto group and it was rejected and considered as “undervaluing” the company. At last, in the end of year 2008 BHP Billiton withdraws the bid due to a global recession. Until recently, in year 2011, BHP Billiton successfully joint venture with Rio Tinto group in the iron ore production.
It is the biggest joint venture ever in Australia and has been rumored for over a month by media. Lastly, in January 2010, BHP Billiton dealt with Athabasca Potash the potash producer for US$ 320 million agreement. It is expected to produce 15% of the world’s potash in year 2020.
BHP Billiton current marketing strategy 2004 centralized
SWOT Analysis Strength
Being the largest mining company in the world, BHP Billiton has an access in the global capital markets, has competitive market position, and the ability to grow in the market.
Moreover, as a giant company in the mining industry, they have more benefits in term of providing good quality of products, affordable price, and the value of their assets comparing with smaller companies. BHP Billiton can set the price in the global market, but the smaller companies are not able to set the price, as they are price taker and not price maker (price setter). Their main focus is to create effective strategic framework that capitalizes on the strong market consumer direction, cash optimization from their assets, and maximizing their financial strength.
By doing so, the company not only becomes effective, but also efficient and furthermore, it strengthens their business position in the global market. The other strength of BHP Billiton is their development expertise. Development expertise refers to professionals that are formed to be R&D (Research and Development) division, which their duty is to develop new products to meet the market demands and give the best products for the clients. Hence, it is their competitive advantages that distinct them from their competitors.
Furthermore, with the diversity of their products, they are able to mitigate their productions easily to other countries / nations since their productions are well distributed over the world. Additionally, BHP Billiton is able to tackle all the possible challenges from their competitors by implementing effective strategies and approaches. This particular strength is considered as the most powerful ability of BHP Billiton that can help them to maintain their performance in the business and guard their crown over the competitors.
As BHP Billiton has become a giant company in the industry, there is no reason to avoid any weaknesses besides from their strengths. Labeled as the price setter of the mining industry in the world, their decision regarding the price of the mining can make a big impact in term of the currencies (Australian Dollar). The currencies can be fluctuated irregular when BHP Billiton increases the price or decreases the price of their products. Moreover, it can affect the price of metal and petroleum all over the world. The other weakness is the management strain.
Due to size of the company, their entire management system can be affected. It is because when they are changing their management system from decentralized to centralized, it needs a long time to adapt with the new system, which cost a lot of time and money for the company. It is true that the company has a strong financial status, but they also have financial risk when there is market depression and global economic crisis (economic down turn). They might not be able to maintain their financial strength in the long term.
Based on their strengths, it is noted that there are a lot of opportunities for BHP Billiton. They are able to increase their purchasing power as their profit has been increased due to merge with some other big companies. The other opportunity is to discontinue their divisions in the company, which is not able to generate any more profits and earnings to the company. By cutting unimportant cost, the company will be able to operate effectively and efficiently. Effective means that the company is able to have more stable competitive positions in the global market regarding on various products they offer to the customers.
The demands of many importing countries on the manufacturing industry like BHP Billiton of steel, aluminum and other metallurgical and metal ores are high and intense. One example is China and India which are countries that had an explosive, rapid, and dramatic economic growth that continues to establish industrialized expansion. With such economic growth and with intense development to establish an industrialized society is needed with materials that has something to do with metal ores, aluminum, manganese and others.
Cite this essay
BHP Billiton. (2018, Oct 23). Retrieved from https://studymoose.com/bhp-billiton-essay