Part 1
1. Business background
BHP Billiton is mostly recognized for their mining business as they usually mine natural resources, then process and develop those resources and do marketing in various part of the globe (Franks et.al, 2010). The origin of the business is in Australia and it is one of the renowned mining companies of this country. Besides, they have expanded their activities to the United States, Chile, Peru, Brazil, etc where they gained recognition through their innovative service providing and other offerings. BHP Billiton mainly focuses on their petroleum unit which consists of gas operations, conventional oil and unconventional oil as they explore these resources through mining, develop and produce into finished goods, and market them in various parts of America, Australia, Trinidad and Tobago, etc. Besides, minerals mining are also in concern for the organization as it includes mining and developing of copper, zinc, coal, potash, and iron ore and spreading it to different regions. The headquarters of the company is in Melbourne in Australia. The company is determined as the second-largest mining company of the whole world due to its value services and revenue generation. The organization now has more than 65,000 employees who are working with efficiency for the organization and ensuring the company to lead the market and the industry.
2. Industry
It is the mining industry of Australia and the industry is very growing in the country as it has a huge impact on the economical growth of the country. It has created a lot of employment which helped the country to mitigate the issue of unemployment. Moreover, it has brought foreign investments which foster the economy of the country along with boosting its wealth (Penrose, 2017). Some valid sources are stating that the mineral industry contains near about 20 per cent of the whole economy which worth approximately 120 dollars billion. This mining industry and its products, services help the population to acquire electricity and building materials at a low cost, and also cooperate in the national development of the country. The products made from minerals and natural resources are very much essential for human being and their living. But these have some disadvantages too as it can destruct the natural balance of land and biosystem along with crating noise pollution, sound pollution, etc.
3. General Environment analysis
Economic environment – Australia has rich sources of natural resources as it is one of the major exporters of gold and iron ore (Van der Ploeg, 2011). It also exports energy in a form of coal and natural gas. It is counted as the largest sector of Australian economy and has a significant place in the World Economy. Australian GDP’s 8 percent is contributed by the mining industry (Downes et.al, 2014). In last financial year, the country has earned near about 175 billon dollars through its energy and natural resources exporting. On the other hand, near about 2 percent of Australian employment is provided by Australian mining and its export industry.
Physical Environment – Basically, mining does a lot of harm on the physical environment of the country as the soil, air, water is contaminated through its extractive activities. The technology used in mining affects badly the local region and its population. The sensitiveness of the local environment gets distorted through the activities of mining and also forms wasting of natural surface or the land where the mining is been operated. The extract from sulphide minerals transform into sulphuric acid and contaminate with water and affect it badly. Besides, while processing these minerals and natural resources pollutes the environment through its containing chemicals. So, the government of Australia has introduced some regulations and restrictions to minimize its bad effects that directly destroy the environment. The companies which are associated with mining are been directed to take safety measures and act with taking precaution for protecting the environment.
Socio-cultural Environment – The population of Australia is hugely dependant on the mining industry as the minerals and natural resources are been utilized for providing necessities and commodities to the people live here. Such as coals are been used for producing electricity for the population, diamonds and goals have a huge contribution to the lives of the people like it as a sign of beholding prestige and wealth. Metals that are mined through mining are been processed and used in making of mobile phones, computer, television which is an essential part of peoples’ communication aspects. However, it affects badly the health aspects of society but on the other side, it develops society and improves its culture through wealth creation and developing roads, transports, etc.
Global Environment – Mining is determined as the most destructive services as it extracts near about 27 millions of natural minerals and resources from the earth and exploits the balance of the environment. The rivers of the earth are also been affected by its erosion. But on the other hand, it is hugely necessary for the global population as its finished items utilized in developing roads, buildings, and also used in peoples’ living. The global economy is also impacted through its activities as manufacturing some of the technologies hugely needs it. So, it needs to be concerned that the prevalence of mining should be minimized and the safety measures should be reviewed regularly for minimizing its bad effects on the environment and on the human being.
Technological environment – Technology plays a huge role in the mining industry as the full process of mining from start to end is oriented through the orientation of technologies. Such as, technology helps to determine where natural resources, minerals are been stored heavily, where digging will be less effecting to the environment and incur less pollution. Moreover, mining instruments, transports, infrastructures also are been controlled and operated through technologies. It has given pace to the industry and ensures that the activities done in mining are less harmful for the population and for the environment as well. Besides, technologies are used on the research activities of this industry and also assist on developing the industry.
Political/ Legal Environment – The political environment is stable and peaceful in Australia, and the legal aspects are transparent as well. The government always focuses on protecting the country and its environment through initiating rules and regulations. The laws of the country also restricted the mining industry to some limitation for preventing their illegal activities that affect the natural balance of the environment. The government always monitors on the activities of the mining companies and ensures that no breaking of laws is happening. They also support the industry for developing with introducing new schemes and policies but only after ensuring maximum safety of processing the activities of mining.
Demographic environment – The population of the country have hugely benefitted by this mining industry as it improved their standard of living life through providing them employment, necessities and commodities that are made through the extract from mining. Moreover, it has developed the transport system of the country and provided convenience to the people love here. Besides, it has strengthened the economy of the country which impacts directly or indirectly on the life living of the population.
4. The industry environment
Supplier power – Supplier power can be stated as the pressuring power of suppliers for increasing prices, lowering stock, quality reduction, etc. From that context, the supplier power of mining industry is quite high in the market but there has too much availability of suppliers as well which resists them to take instant decisions for the raising price or lowering quality. As the country is full natural resources, so the big player of the industry assures high availability of services every time consumers need it.
Buyer power – The mining industry provides a lot to necessities and commodities of people so the buyers are always in huge demand for fulfilling their necessities. Moreover, as there has much availability to the buyer, so the buyers feel free to change their seller and bargain with the sellers. Because they are aware that they will end up getting the services they are wanting to due to high availability of prices and products in the market.
Potential entrants, substitute products, and rivalry among competitors – As the country is high with national resources so there has enough space for entering this industry as the resources are stored inefficient manner. Substitute products such as shale gas instead of coal, pig iron instead of nickel, plastics, aluminium instead of copper, etc reducing the demands of natural resources gradually. But the issue is these artificial resources become a threat for polluting more than mining extractions and the government is restricting these products in some places which are assertive for the new and potential entrants in the mining industry. The rivalry is limited between the competitors as the government has limited the entry of new entrants with new rules and regulation for protecting the environment and reducing the illegal activities of the big firms.
5. Competitive Environment
The industry is leading by BHP billion and with fewer competitors such as Alcoa Inclusives, Rio Tinto, etc. Though, these competitors are not strong enough to compete with the leading organization as BHP has a huge percentage of market shares and their cost efficiency is more strategic than other competitors present in the market. The only strategy to survive in this industry is to focus on the pricing strategy and satisfying the government regulations.
6. Opportunities and threats
As the mining industry is contributing hugely in the Australian economy so the government provides huge facilities to this industry (Connolly et.al, 2011). The workforce in this industry is also sufficient. So, organizations of this industry have a huge opportunity to utilize these opportunities for their expansion purposes.
As the environment is been destroyed and destructed by this mining industry so the government has also initiated some restrictions, this can create issues for the organizations to run their activities for mining. Besides, the substitute products are less in cost and appealing the global population which can also reduce the demand of the mining industry.
Part 2
1. The firm’s resources
Tangible – As of December 2017, the tangible assets of BHP Billiton 110874 million dollars. The growth of assets is indicating an increase of 3.83 per cent from the last financial year. The company has a huge amount of machinery and equipment for processing their mining resources such as European Type Jaw Crusher, HPT Hydraulic Cone Crusher, Impact Crusher, machinery for mining magnetite ore, iron ore, etc. The inventories of BHP Billiton shows an amount of $3,847 million as of December 2017.
Intangible – The Company has near about 6000 millions dollar intangible assets including goodwill, impairment charges and accumulated amortization. The growth rate of intangible assets is increasing day by day of the organization.
2. Capabilities
According to Darling (2011), BHP Billiton is known worldwide for its excellent services related to oil and gas. Besides, they have several patents that strengthen the financial part of the organization. Their refineries department does a great job through marketing and promoting their final goods to a different part of the world. Besides gals and old refineries, they are also into refining aluminium, copper, iron ore, etc which makes them one of the most renowned refinery companies of the world. Their business always focuses on diversification which makes them innovative than other business presence in this industry. BHP Billiton also refines potash which is exported to different countries as Potash has huge demand all over the world due to its fertilizing effects on agriculture. Besides, the organization also takes part in refining petroleum and produces finished goods from petroleum and exports these goods in different parts of the world. The company focuses on selling its products and services at low costs and believes to make an expansion of its entity through this strategy by increasing its customer base and holding them. An assessment is showing that by 2020 the company will become 20 per cent holder of potash export. Moreover, the company always ensures safety and security for their employees and assists them in every step so that workforce of the organization becomes performing and well competent.
3. Core Competency analysis
BHP Billion has near about 100 locations in 13 countries which help to build their stock sufficient with mining resources and deliver it to their customers (Villaescusa et.al, 2011). It enables them to be the most valued seller than its competitors. And on the other side, they are the largest coal miners over the world and also sell coals at a low price which gives them a huge competitive advantage. The country where they belong to is becoming more industrialized which gives them an opportunity to grow. Moreover, the demand for oil and gas has also increased which tend them to hold a huge percentage of market capping. They are always a concern for their shareholders and try to increase the value of an investment and provide them with maximum return possible. They indulge in technological advancement and creating new patterns for speeding up their productivity.
The four tests for a core competency can be stated as reviewing whether the company dominating market share or not, whether the company providing competitive advantage than their competitors or not, whether the organization increasing their value or not, and whether the entity is creating difficulties for their competitors or not. So, according to these four tests for core competency, BHP Billiton also holds a huge market capping than their competitors, their value is increasing inevitably, their prevalence in land occupancy and pricing strategy is creating difficulties for their competitors for imitating them.
4. Suitable information system
BHP Billiton can use transaction processing system for processing their all transaction as it gives them appropriate storing and recording of their all transactions. It will be worked through input data in itself about the whole details of transaction made, then the system automatically computes and provide results which will help the company to make effective decisions regarding their made transactions. Moreover, they can review, access, and update these records on their needs and consequently it provides them with a competitive advantage. Besides, the data which are been stored in this system will be more secure and authorized which will solve the information leakage issues of the organization.
The company can use Adabas software for their transaction processing as it provides reliability and high functionality for storing and input their business transactions along with ultra-high features and performances.
5. Evaluation and recommendation
The software will help the organization to record their all transaction with security as the company transact daily in a huge proportionate. So, it will record those transactions with high confidentiality and assist the company in evaluating their business growth and financial. Moreover, this system will help them in making any critical decision for the organization, and also help the organization on assessing risk and understanding the market demand. Besides, it will cut the cost of computing transactions and saves a lot of time of the organization with its various related functions. Not only that, but it will also be accessed only through authorized personnel which will increases the confidentiality of the organization on the context of protecting data. Its cloud storage will also help the organization to store all of their branches data and information to be shared with internal and stored in dedicated storage along with cloning it for further needs.
The system should be authorized to reliable personnel and they should be trained appropriately for handling the transaction processing system which will reduce the chances of making errors through operating and recording important transactions.
References
Franks, D.M., Brereton, D. and Moran, C.J., 2010. Impact Assessment and Project Appraisal, 28(4), pp.299-312.
Penrose, E.T., 2017. Foreign Investment and the Growth of the Firm 1. In International Business (pp. 33-48).
Van der Ploeg, F., 2011. Journal of Economic Literature, 49(2), pp.366-420.
Downes, P.M., Hanslow, K. and Tulip, P., 2014. The effect of the mining boom on the Australian economy.
Connolly, E. and Orsmond, D., 2011. The mining industry: from bust to boom. Economic Analysis Department, Reserve Bank of Australia.
Darling, P. ed., 2011. SME mining engineering handbook (Vol. 1).
Villaescusa, E., Windsor, C.R. and Machuca, L., 2011. Stress measurements from oriented core–a decade of results. WA School of Mines–Curtin University.
