Case Analysis and Application of Strategy Models: BHP and Business Strategies Assessment Answer
BHP and business strategies
The report has been well constructed with certain information about the functioning of BHP and its varied operations. The report formulates information about business strategies and how each of them differ in functioning and enables the business grow in an optimistic manner. A brief detailing about the report would formulate information on how the stakeholders of BHP uses these business strategies to manage the varied operations of the business.
BHP and business strategies
BHP is one of the most acknowledged companies with its headquarters in Australia especially regarded for mining metals, petroleum and a trading unit. The Company was established in the year 1885 and immersed into major popularity by 2017. The company was formed with the merge of two major companies Anglo-Dutch Billiton and Australian broken hill company limited. BHP emerged through a number of changes into the company’s manifestation (White & Josh, 2020). In 2001 the company merged with BHP Billiton and in 2002 it came on with steel products and then in 2003 the company emerged as Bluescope steel. Ken Mackenzie is the chairperson of the group while Mike Henry being the CEO. The company has a total revenue of 44.288 billion US dollars as recorded in 2019 with its total assets of 110 billion US$. In March 2005, BHP Billiton announced a US$7.3 billion agreed bid for WMC Resources, owners of the Olympic Dam copper, gold and uranium mine in South Australia, nickel operations in Western Australia and Queensland, and a Queensland fertilizer plant. The takeover achieved 90 per cent acceptance on 17 June 2005, and 100 per cent ownership was announced on 2 August 2005, achieved through the compulsory acquisition of the remaining 10 per cent of the shares.
Business strategies play a wider role in enhancing the profits of a certain business. The stakeholders of BHP uses varied business tactics to develop the scales of their business. These business strategies are used to evaluate external and internal factors which influence the business of BHP. Business strategies are one of the most prominent key points to uphold as the key within the operations of any business entity. Below formulated are some of the most prominent business entities used by the stakeholders of BHP to intensify the operations of the firm and evaluate the factors which influence them.
Besides other factors of the internal influences there are also sudden factors which result to be the external influences towards the operations of the company. The PESTEL analysis is a sudden form of business strategy which helps in evaluating the certain factors which impact on the rise and the profits of the company.
- One of the most sudden risks that BHP faces is the risk of military invasion. As BHP is a multinational operating company thus risk of a military invasion or sudden clashes of different groups promotes major risks towards the stakeholders of the company.
- Rise of political instability in Australian territory also promotes certain other risks towards the smoother functioning of the company.
- The sudden rise of corruption in the basic material sector also enlarges the type of risks that the company might face into its raw material supplies.
- The antitrust laws and the price regulations also hamper the rise of the basic resource and mechanism of basic materials for the company (Vintilă, Filip, Stan, & Ţenea, 2017).
- The inflation rate in the Australian economic system influences the operations of BHP. A rise in the rate of inflation hampers the growth standards and the profits of the company.
- Government intervention in the free market also influences the operations of BHP.
- Lowering of the capital in the local markets summons to a downward graph in the operations of BHP.
- Labor cost and the productivity of the economy has influenced the operations and the rise of profits for this business entity.
- An increase in the skills of the workforce accelerates the operations and intensifies the profits of the company.
- Social factors also play a major role in churning the operations and influencing the profits and the rise of the company. One of the most prominent social factors is that of the demographics and the skill level of population that influences the operations of BHP. The stakeholders intend to expand their infrastructure in a more versatile demographics and prone towards a skill levelled population.
- The class structure, hierarchy and the power structure of the company hamper the growth of the operations for the company as during class hierarchy favoritism takes place.
- The last but one of the most prominent outcome would be the encouragement of entrepreneurship which would result in better operations of the company.
- The rise of the technology and certain technological influences adverse to the growth of the operations of BHP. The technological developments of BHP have helped in engrossing its competition with other competitors.
- The rise in the technology of the company has influenced the product offering of the firm.
- An accelerating technology also induces the basic resource industry and increase the supply of raw materials.
- Technological diffusions hamper the smother operations of BHP.
- As BHP is a trading and a mining company thus sudden environmental factors result in an uprise in influencing the production of the company. Weather and climate change are the major factor which influences the operations of BHP (Fosher & Holly, 2018).
- Laws which regulates certain environmental pollution also stimulates the operations of the firm as mining influences certain environmental regulations.
- Waste management factors also hamper the operations of BHP because it cumulates to certain legal actions against it.
- Recycling of certain waste helps in better development of the products of the firm.
- The most engrossing of the external influences are the legal factors which hamper the business of the firm. The antitrust law in the basic resource industry hugely dominates the functioning of BHP.
- The discrimination law keeps a sharp vigilance on any type of discrimination done to the employees by the stakeholders of the company.
- The data protection and the employment law also functions well with the sudden operations of BHP as because the government takes a sharp look upon equal employment opportunities provided by the stakeholders of BHP and there is no racism upon these grounds.
Porter’s five forces
Porter’s five forces are also one of the most engaging business strategies that is hugely acclaimed by the stakeholders of BHP. Below formulated are the certain periods via which Potter’s five forces works well in analyzing the operations of BHP.
The threat of new entries
- The first fact is that the stakeholders of BHP could well tackle the threat of new entries by evaluating new products into the market and thus enlarging the scope of better business for the firm.
- BHP stakeholders can well efficiently build an economic scale which can lower the fixed cost of the product.
- Enlarging capacities and investing in research and development could well efficiently recognize a better-growing opportunity for BHP and its internal services. BHP should redefine its standards regularly and thus it would certainly block the entry to the engaging new firms into the industry.
Bargaining power of the suppliers
- The bargaining power of the suppliers could also be well tackled by the firm by implementing certain formulated steps. The first of the fact is to engage in the building of a regular supply chain.
- The second of the fact is to implement new product designs with a better and new price.
- Engrossing with dedicated and well efficient suppliers who could be quite dependable and supply timely.
Bargaining power of buyers
- The bargaining power of buyers could also be well managed and better tackled by the industry inducing certain synchronized steps. The first of the step is that the firm could enable by growing up a large base of suppliers which would help it to reduce the bargaining power of the buyers and enhance in different sets of opportunities.
- The rapid innovation of new products with better designs and technology even in cases of trading would rapidly influence the operations and reduce the bargaining power of the consumers (Van Pelt, 2010).
- The launch of the new products would also reduce the defection of new customers.
Rivalry by competitors
- The rivalry of competitors could well be tackled by the stakeholders of BHP inducing in certain following ways. The first of the case is that by building up a sustainable differentiation. This will help the firm in better engross and reduce the competition.
- Another factor is that the rivalry could also be well sustained by building scale in the competition.
- The last but the most prominent factor is that collaboration of BHP with its competitors will enhance a better market for the firm.
The stakeholders of BHP uses the balanced scorecard model of business strategies to evaluate the functioning and the operations of the staff and the employees within the business entity. The stakeholders of BHP analyses their business strategies upon the functioning of their staff using the major four, perspectives of the balanced scorecard model. The management analyzes their business strategies using financial, customer, internal process and learning and growth. Below formulated are the basic perspectives via which the balanced scorecard is used to analyses the business strategies of BHP.
- The stakeholders of BHP evaluates the cost saving structure by using the balanced scorecard to determine a specific rate to reduce production cost. This is done by evaluating the records of the most skilled employees (Saraswathi, Rajan, & Sindhu, 2019).
- Revenue sources and the increasing opportunities in the profit margin of BHP are well evaluated using the balanced scorecard margin.
- The customer perspective is also well analyzed using the balanced scorecard model. Evaluating the operations of the staffs and the employees the stakeholders analyses the customer satisfaction based upon the operations of the firm.
- Market share and brand awareness is also one of the most symbolized steps which is analyzed based upon the customer satisfaction using the balanced scorecard model.
The function of the internal process and its operations is also done with the help of the balanced scorecard model. The internal process is maintained and observed based upon the process improvements like streamlining. The balanced scorecard is also used to check upon the quality optimization process like reducing and management of waste. The capacity utilization is also well analyzed using the balanced scorecard model. The stakeholders of BHP analyzes the capacity utilization by inducing efficient technology.
Learning and growth
The final perspective of the balanced scorecards is used to analyze the learning and the growth of the employees from the operations of BHP. The results of the balanced scorecard is used to examine the skills, talent and the knowledge of the working employees whereas the database, information systems, networks and technology is used to analyze the information capital. The balanced scorecard is also used in evaluating the culture, leadership and the employee alignment.
Steps to use the balanced scorecard
As in according to the diagram the stakeholders of BHP uses the balanced scorecard in synchronized strategic manner. Listed below are the steps in which the stakeholders of BHP analyzes the balanced scorecard under its varied perspectives.
- The financial perspective is evaluated with the staff accomplishment of broadening of the revenue income. It also records the operating financial efficiency.
- The business perspectives are evaluated under the development of new products and customer segmentation. It also provides a rapid response and a shift towards the appropriate channel.
- The hiring perspective is evaluated under the training of new technical employees as well as implementing cross training and improving product efficiency.
- The last is the customer’s perspective which is evaluated under the customer satisfaction and customer experience.
This is one of the most acknowledged business strategy management models and a planning tool which would help the executive, senior manager and the other stakeholders of BHP to initialize the future growth of the company. The mangers of BHP uses this matrix in its four most basic perspectives. The market development, diversification, penetration and product development (Meldrum & McDonald, 2007).
- The market penetration is where the stakeholders analyses the expanding of the sales into the existing market. It legitimizes the product works and how the functioning of the market would be for the future of BHP.
- The product development is quite more functional as in this matrix the internal stakeholders inspects upon new product implementation.
- The market development is on the other matrix where to stabilize the future of BHP the stakeholders formulates the existing product into an entirely new market. This is done by implementing new features to the existing products of BHP.
- The process of diversification is the most risky of the steps into the whole business matrix where the stakeholders introduces a completely new product in a set lot of a new market.
The Ansoff Matrix is evaluated by the stakeholders of BHP under the following ways through which each and every segment could be well analyzed and evaluated.
- The first is case is that the market development is being analyzed with the PEST analyses as well as the CAGE distance framework. This uses different sales channels and online direct sales. It is a way of market segmentation to target different sets of customers.
- The diversification strategy is analyzed to enhance the main advantage of the business into a different set of market.
- The market penetration is developed by the use of the Boston matrix as well as varied marketing strategies and loyalty schemes and launching of prices.
- The product development is based upon the customer service, customer satisfaction and repacking of existing products.
The strength, weakness and the opportunities of BHP are analyzed to create further content for the business group to enhance and empower their business agenda. The stakeholders of BHP evaluates these internal factors to evaluate the things which go on par with the business operations and influences the business on a varied scale. Below formulated are some of the most crucial internal factors which highly influences the business of BHP group (Křupka, Kantorová, & Haile, 2018).
- The BHP group is highly successful with all its products in the global market.
- The stakeholders of BHP has an inbuilt training facility promoted by the dealers and the distributors which helps in influencing the sales team to engage better customer benefit.
- The BHP has a strong sense of merge with certain other complimentary firms and thus has implemented a sound technology to summon smoother operations.
- The records state that the company has a superb rate of expansion and thus has induced an accelerating economic cycle.
- The operations of the company are quite flexible and thus automation upon its activities has enabled the operations of BHP to register their scales according to the customer demand.
- The last but the most prominent strength of the company is that it rises to the innovation of new products.
- Rise of the competitors into the industry is high which certainly impacts the capital investment of the company. This can also rise up towards a major impact in the long term growth of the company.
- The model of the organization is compatible with the present business model and thus it limits the growth of the business and the expansion of its adjacent products.
- The R & D team is not highly compatible to cope up with the modernizations of the industry and thus have not been able to well compete with the leading investors of the business.
- The profits and the net contribution of the firm are quite below the industry level.
- BHP needs more of its investment into the field of technology to rise up with better processing and tackle competitors smoothly.
- Recent studies have recorded that the stakeholders of BHP are not efficiently using their assets. The firm needs to engage its cash flow in a more efficient manner.
- The new environmental policies help BHP to enumerate immense growth in its technological cycle. It delivers greater opportunity for BHP to rise towards greater opportunity in technology resulting in the expansion of its products.
- BHP has invested in online platforms resulting in a broader scale of advertisement and thus helping in engulfing new clients.
- The government green drive contract has also opened new opportunities for the company to engage in new federal government projects.
- Decreasing the cost of transportation in Australia has helped the stakeholders of BHP to expand its import and export of its products. This has resulted in the lowering of prices and heightening of profits for the company.
- The rise of the economy and customer spreading has engaged in new opportunities for BHP to rise up gain market and customer expansion.
- One of the major threat that the company faces is of the social movements for a hike in salaries by the employees. This proves to be a major threat to the profits of the company.
- As BHP is a trading unit thus a rise in the discovery of raw materials can prove to be a major threat for the company.
- With the rise of an intense competition like Rio Tinto and Cloud Peak energy, the stability of profits towards an optimistic growth of the company has been proved immensely deteriorating.
- The rise in the number of local distributors also poses a threat to BHP as the rise in the competition provides a higher margin to them.
- A sudden change in consumer behavior could also result to be a major threat to the physical infrastructure and the supply chain model of the company.
- Inducing of newer technologies by the competitors also proves to be a rising threat towards the development of the company.
This is one of the best business strategy models that is used the stakeholders of BHP to identify the necessary gaps in the market. This represents a goal for new activities in general, and new products in particular. The planning gap can be divided into three main elements: usage gap, existing gap, and product gap (Vern C. Hayden, 2003 ).
- The usage gap is depended on the market usage and the existing gap. The usage gap is depended on the potential rise of the company
- The existing gap is depended on the places BHP still needs to recover and refurbish itself to rise up to the level of competition with its competitors.
- The product gap is the varied places where BHP needs to emphasize and enhance more on the product development.
Thus the report has well summoned that process and the business strategies that the stakeholders of BHP induces to better enhance the processing of the business operations of the firm. Another of the fact is that the report well constructs the functioning of each business stagey and how well it could be used in operating the business and the functioning of BHP enhancing its profits. The report has outcaste the varied functioning of each of the business stages and how well they differ to enhance the operations of BHP.