Essays on BHP Billiton Group Macro Environment Case Study

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The paper "BHP Billiton Group Macro Environment" is a great example of a business case study.   The chosen firm to be used in this analysis is BHP Billiton Group and the company is well known all over the globe and among the world largest diversified resources company. The company is an Anglo-Australian multinational that deals with mining, metals and petroleum and it is a dual-listed company with headquarters in Melbourne, Australia. The company came along as a merger between the Australian Broken Hill Proprietary company and the Anglo-Dutch Billiton plc (ABC News, 2014).

The company aims at creating long-term value and they plan to achieve these through the discovery, development as well as the conversion of the natural resources and at the same time offering innovative market-focused and customer-focused solutions (BHP Billiton, 2017c). Macro-environment With the aim of complementing the understanding of the macro environment for commodities, it is deemed beneficial for companies to undertake an external analysis of their market and this can be best be achieved through the PESTLE Analysis (Johnson, Scholes and Whittington 2008). The various elements that make up the PESTEL Analysis tend to have an impact on the strategic drivers of the company. Economic In relation to the economic factors, BHP Billiton is vulnerable to factors such as the inflation in the costs of energy, labor costs, material costs and the operating costs.

These kinds of increase are more likely to influence the expansion efforts of the company, the company profitability as well as the development projects (Gillespie, 2007). BHP Billiton is also likely to be affected by major weakness to the global economies, this could lead to fall of the demand of commodities, this would lead to increased supply, and reduction in prices and this will have major impacts on the profitability of the company. Political BHP Billiton is a worldwide resource company and this makes it very susceptible to the various political risks in the various markets.

The political factors tend to have a noteworthy impact on the key drivers outlined by a company and this may include the pipeline of projects, license to operate and their growth options. Based on the fact that BHP is a global company they have committed a lot of capital to both exploration and development projects even in countries where the political instability.

By operating in emerging markets BHP faces risks related to terrorism, civil unrest, changes in the policies of the government, nationalization as well as the nullification of their contracts, permits and lease agreements. Technological Companies operating in the current business environment needs to make use of technological innovations to compete favorably in their area of business. BHP relies greatly on the technical factors to ensure that there is efficient exploration, mining and discovery of new mining and energy assets.

Thus as it has done in the past the company still need to rely heavily on innovative ways for exploration. By investing greatly in technology, they will be better placed in the market. Legal Based on the nature of their business, BHP Billiton is likely to face a number of legal issues. In the past, the company has found itself in the wrong side with the law and due to this; they have incurred legal liabilities in some cases since their activities have caused environmental damage, for example, in Southwest Copper operations.

These kinds of cases are more likely to have some financial implications and affect the performance of the company in general. Thus, in all their operations BHP Billiton needs to ensure that it operates based on the set rules and guidelines.

References

ABC News (2014). BHP-Billiton merger confirmed. Retrieved from http://www.abc.net.au/7.30/stories/s262552.htm

BHP Billiton (2017a). Environmental sustainability. Retrieved from http://www.bhp.com/community/environmental-sustainability

BHP Billiton (2017b). Human capability and social inclusion. Retrieved from http://www.bhp.com/community/social-inclusion

BHP Billiton (2017c). Our Business. Retrieved from http://www.bhp.com/our-businesses

Gillespie, A. (2007). PESTEL analysis of the macro-environment. Foundations of Economics, USA: Oxford University Press.

Grant, R. (2008). Contemporary Strategy Analysis. Malden: Blackwell Publishing.

Hambrick, D. & Fredrickson, J. (2001). Are you sure, you have a strategy? Academy of Management Executive, 19, 4.

Johnson, G., Scholes, K and Whittington, R. (2008). Exploring Corporate Strategy: Text and Cases. Harlow: Financial Times Prentice Hall.

Porter, M. (1990). The Competitive Advantage of Nations. London: Free Press.

Porter, M. (2004). Competitive advantage: creating and sustaining superior performance. New York: Free Press.

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