The paper "BHP Billiton - Core Strategic Management Concepts" is a good example of a management case study. BHP Billiton Group is a company that deals in mineral exploration. Its operations are majorly based on oil, gas, aluminium, copper, nickel, iron ore, manganese, gold, zinc, silver and diamond. This company work under a joint venture comprising of BHP Billiton Limited and BHP Billiton Plc (Hanson et al, 2014). The company does mineral exploration and mining in 25 countries across the globe. Its major activities take place in Melbourne, Australia which is its headquarter.
The company has a number of employees ranging from 41,000 to 50,000 employees. This report is focusing on the analysis of strategic management of this company to determine environmental issues and internal issues which affect the operations of this company (Palepu et al, 2012). The analysis involves environmental and situational scanning of the company operations to help in making a strategic choice. 2.0 Core strategic management concepts The core management concept of BHP Billiton is merger and acquisition which this company uses as its main growth strategy to ensure that it has the good market position and gain sustainable competitive advantage (Dodd & Graham, 2008).
These two growth strategies are examined on the basis of Ansoff matrix including market development, market penetration, product development and diversification. Merger-BHP and Billiton The amalgamation of these two companies ensures that this company becomes the leading mineral exploration and mining company in the World currently called BHP Billiton. This made the merger to have more than $38 billion enterprise value and also enable it to have stable capital outlay to finance its mining operations (Hanson et al, 2014).
The amalgamation enables the company to acquire financial strength, international outlook and increase in expertise to create more expansion opportunities to the company. The reason for the merger is due to the fact that the two companies have a common interest since BHP deals in oil and gas and others while Billiton only operates in petroleum, copper, and steel. Acquisition This growth strategy is also used in BHP Billiton (Palepu et al, 2012). It also enables this company to increase its capital base by acquiring small companies at a cost.
The acquisition helps it to gain 100% control of companies such as Burr project and various additional potash exploration properties in Saskatchewan, Canada. This increases the exploration area of this company to approximately 14,000 km2. This strategy also increases the resource base and also influenced its future growth in other locations where there is an economic crisis of potash (Dodd & Graham, 2008). This company also acquired WMC Resources at a cost of A$7.85 per share. The purpose of this action is to have high economies of scale that result from a large corporation, have a long life and also to have low-cost assets.
The aim of this is also to have market penetration in China. 3.0 PESTLE Analysis Political Factors This company is an international company that is exposed to high political risk in all the regions it operates (Palepu et al, 2012). Political factor greatly affects the operations of this company such as licensing, taxation and government stability ensure that the company achieved its growth strategies. It has to pay corporation tax which depends on the tax system of the country. Economic Factors BHP Billiton is also affected by economic factors such as inflation which is a serious risk in the energy sector.
The operations of this company are also affected by exploration expenses, labor cost and mining cost (Hanson et al, 2014). The increase in these economic factors may have an adverse effect on the expansion plan and performance in general. The weakness in global economies is also causing a decline in demand in commodities and as a result, can lead to a reduction in price. Socio-Cultural Factors This company is also affected by socio-cultural factors which involve developing strong cultural and social relationships with all its stakeholders.
It demands that this company should involve in the support of local communities and also finance public amenities such as schools and roads (Dodd & Graham, 2008). This company ensures that it provides good work condition to its employees with the aim of motivating them to work towards the achievement of the company objectives. Environmental Factors BHP Billiton is one of the main producers of energy which produce gases and other substances which can pollute the environment. In the mining process, there is the emission of carbon dioxide that originates from fossil-based energy which forms parts of the cause of global warming and greenhouse effect (Palepu et al, 2012).
There are regulations which are meant to address the effect of climate change and this company must adhere to them to operate in countries with such measures. BHP Billiton is subject to EU ETS which look into factors that address climate change. Some countries like Australia have come up with a natural emission trading scheme and mandatory renewable energy which is expected to reduce the effect of gases of 20%. 4.0 SWOT Analysis The purpose of SWOT analysis is to determine the strengths, weaknesses, opportunities and threats of the company.
It will ensure that the results of SWOT analysis translate conclusions into strategic actions which allow this company to exploit the available opportunities and protect itself from threats. Strengths Strong market position BHP Billiton has a good market position. This is because it has good international relations with more than 25 countries (Hanson et al, 2014). The CSG organization structure enables it to acquire and manage high performing mineral resource in different countries across the globe.
Easy access and a strong leadership position in various market segments provide it with a strong competitive advantage. Diversified revenue stream This company has a diversified revenue stream (Dodd & Graham, 2008). This relates to business lines and geographies since it operates in different countries across the globe. It raises revenues from nine different business segments.
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