Generally speaking, the paper 'BHP Billiton Strategic Management" is a good example of a management case study. This article analyses the fundamentals of strategic management. Essentially, the paper examines the leadership of BHP Billiton in regard to the management practices as well as their longevity. With respect to the contemporary business environment, which is basically characterized by stiff competition, globalization, technological inventions, innovativeness and emerging trends in marketing among other factors, it is very critical for business organizations to examine their core management techniques. Strategic management refers to actions and decisions that are undertaken by firms to enable sustain their existence in a highly competitive environment.
The analysis highlights the strategic goals of the organization with regard to both internal and external environments as well as the objectives, the vision, mission and values of the organization. BHP Billiton’ s Core strategic Management Concepts The major strategy of BHP Billiton is based on diversification. Diversification refers to the strategic expansion of the scope of an organization to involve a wide range of products. Santarelli and Tran (2010), observe that product diversification refers to the exploration of new markets through the provision of new products.
In other words, according to Froot and Jeremy (1998), diversification entails the degree to which firms are willing to be involved in new markets. It can also mean the readiness to add products that are either related or similar to the ones in the markets. This can be strategically achieved in two ways which include revaluation of the production processes to enhance the generation of new products or services. Basically, this entails elevation of the managerial competencies that are in place.
At the time of the merger in 2001 both BHP, one of the key players in Australia’ s mining and oil industry and Billiton, a UK based mining company, combined their board of directors to form a strong conglomerate of leadership. Under such circumstance, it is noteworthy to observe that the managerial competencies of the subsequent merger were highly enhanced. From the BHP Billiton’ s 2014 Strategic Report, it is well articulated that the aim of the company is to provide diversified low-cost products, to explore diverse markets and a wide range of geographical settings.
In order to plan their activities so as to enhance the achievement of these objectives, the company requires streamlining its operations. Such alignment enables correspondence between the production processes and the organizational goals (Prahalad and Gary 1990). BHP Billiton ensures that they work towards the achievement of these goals by ensuring that every aspect of the organization is matched with their intended outcome. The company acknowledges that the demands of their consumers are ever-changing. As such, they ensuring that they have a diversified portfolio that meets such changing demands.
For instance, the company hires employees who are diversification focused. The diversification strategy is often faced by some challenges (Vannoni 2000). It is a common knowledge that as much as a business organization may be successful, there is no guarantee that it will definitely succeed in every venture it pursues. In addition, this strategy has severely threatened the lack of or shortage of infrastructure. This implies that diversification requires additional resources which may escalate to the point that it compromises the value of the venture (Gordon 2007). It is evident that as a result of the diversification strategy, the BHP Billiton requires additional resources amounting to $U2.6 billion annually in costs to sustain their profitability (Bart Bontis and Taggar2001).
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