The paper "BHP Billiton Strategic Management Concepts " is an outstanding example of a management case study. One of the strategic issues that the company has applied is to own and operate large, long life, low cost, upstream, expendable assets by commodity, market and geography. The company has carried this strategy for many years even before merging in 2001. It is a unique strategy by the management of the company has entrenched as a key driver of growth and market positioning. This strategy has enabled the company to register increasing margins for decades through economic cycles.
This is a strategy that will be discussed in detail in this report. Another strategic issue that company management has to address is demerger. This will also be discussed in detail in this essay. External Environmental Factors Impacting BHP Billiton BHP Billiton faces serious competition from well-established firms in the mining industry; there is a very strong rivalry among the competing firms in the mining industry. BHP Billiton faces stiff competition from firms such as Alcoa (AA), Alcan Inc, Rio Tinto, Anglo American (AAUK) and Companhia Vale do Rio Doce (RIO).
The fierce competition is due to the fact that all these firms compete for access to natural resources across several continents. In addition, there is competition for qualified mining staff as well. Increased costs of staffing have inflationary effects on labour wages (Macklin & Thompson, 2010). Moreover, there is competition among the mining firms of securing construction staff and transportation infrastructure for the building of new development phases. Notably, competition makes BHP Billiton unable to lower its prices for natural resources. The company is already pushed to the lower limits of pricing its natural resources and hence cannot stretch further in reducing the prices.
There are few expectations of pricing power for this company. Nevertheless, it has remained strong in spite of the rivalry in competition. The company has developed a successful reputation over the years; this gives it a clear edge over its competitors (Low, 2011). The power of emerging markets presents the company with a very good opportunity. For instance, there is a high demand for natural resources from developing countries such as China, India, Brazil and Russia.
These economies show better resilience to the mining industry with increasing demand for mining products to cater to the high economic growth rate. The developing countries are also emerging as global consumers for oil demand; their population plays a significant part in this demand. China and India are the two most populous countries in the world accounting for 30% of the world’ s population. Moreover, they continue to register strong economic growth and development of infrastructure development, this increases the demand for natural resources and oil products.
As such, BHP Billiton has a very good opportunity to supply iron ore, energy coal, metallurgical energy, oil and gas, aluminium, copper, nickel, uranium, manganese and silver. These products are in very high demand in emerging markets (Bonn & Fisher, 2011). BHP Billiton Internal Environment BHP Billiton is a well renowned natural resources company that provides quality and wide range of products. In addition, the company has a diversified portfolio of assets at its disposal. Encouragingly, BHP Billiton has a very good opportunity in exploration and development. The company has a wealth of expertise to explore and develop new mining opportunities in various continents.
It has the capacity to build and manage world-class commodities, product portfolios, successful extractions, and transport and market bulk commodities. This is a very good opportunity for the company to exploit. Exploration and development is a very good opportunity for BHP Billiton, this is because the demand for natural resources is increasing. Customers demand efficient, cost-effective and timely supply as well as delivery of quality commodities products with a high degree of customer service and expertise. The company has the capacity, ability and resources to deliver this to customers.
The strong leadership, skill and capability is an added advantage for the company in realising this opportunity (Mayes & Pini, 2010).
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