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Strategic Options for BHP Billiton

1.0 Introduction

BHP Billiton refers to a group of firms forming an organization to provide petro-technic solutions. BHP Billiton aims at delivering high quality practices harmonized consistently allied to global petroleum operations. It is acknowledged as the largest and diversified organization endowed with natural resources. They are utilized in large-scale production of low unit cost and long field life petroleum operations on a global platform. These operations include making steel, energy, and non-ferrous products as well as energy coal, petroleum and liquid natural gas. It has expanded across thirteen nations globally in commitment to achieve the ‘zero harm’ initiative on the environment and worldwide communities. However, the firm suffers from strategic issues in attempts to achieve these goals. For example, in 2009, BHP Billiton Petroleum Organization had to identify and adopt the best practices as well as management processes. This would ensure the firm enhanced its capacity with regards to systems rolled out globally as BHP Billiton Petroleum assets. More so, the firm would be consistent and standardized in commencing and promoting global operations (Adam, 2006). This dissertation will therefore discuss strategic issues and proposed solutions facing BHP Billiton. Consequently, it will provide a recommendation of the best strategic option likely to solve major strategic issues affecting the organization.

2.0 Strategic Issues

BHP Billiton aims at owning and operating low cost, long life, and expandable upstream assets. However, they ought to be diversified based on commodity, markets, and geography. As a result, the firm should invest in high quality and standardized resources in order to create significant growth and expansion rates. However, BHP Billiton should also predict business performance levels in order to emphasize on value creation. Increase in value benefits for the firm, shareholders, stakeholders, employees, customers, and global communities at large. However, the firm is yet to develop strategies allied to firm and community development on socioeconomic aspects. More so, the firm ought to ensure its operations promote and sustain safe and healthy environments globally. This involves reduced levels of pollution and preservation of environments and communities. This strategic issue can be allied to corporate social responsibilities. Although BHP Billiton strives to achieve its corporate social responsibilities, diverse global communities project different needs and wants. This proves challenging for BHP Billiton to meet and fulfill them (Jane, 2013).

The firm also desires to achieve sustainability. The BHP Billiton group is able to access natural resources while maintaining licenses to operate and utilize them. However, the sustainability development strategy has not been achieved. The firm has not identified measures to integrate safe, healthy, environmental conservation, and socioeconomic factors to undertake its operations. The decision making process at BHP Billiton has therefore faced challenges in identifying and adopting financial and non-financial dimensions to achieve sustainability. Consequently, the firm lacks risk management and governance strategies and processes to achieve socioeconomic growth, development, and expansion. As a result, the firm has faced challenges in improving qualities and standards of living among global communities. This is coupled with lack of self-sustaining environmental conservation measures, such as relying on biodiversity and reduced air, water, and noise pollution (BHPBOR, 2013).

The BHP Billiton has also acknowledged that outlined business actions and operations are not allied to the firm’s vision and mission. The firm values business success. However, it ensures the economic measures applied to achieve the business successes create value on social, environmental, and community aspects. For example, the firm should ensure it earns trust among employees, customers, contractors, suppliers, communities, and stakeholders. The firm believes this can promote BHP Billiton’s integrity, accountability, respect, sustainability, and performance based on simple high quality standardized operations (Jane, 2013).

Consequently, it can undertake operations aimed at enhancing energy efficiency in the world. More so, it can improve on biodiversity, indicators of quality of life among global persons, and reduce pollution levels. Thus, the firm faces a strategic issue in the identification of measures to achieve and sustain long lasting social, economic, and environmental benefits. BHP Billiton managers believe identifying performance requirements, accountability, processes, functions, and obligations can address these issues. Consequently, the organization can formulate and implement strategic solutions addressing these issues. However, BHP Billiton’s business and marketing functions ought to comply with the requirements identified through the strategic solutions. Consequently, the firm can achieve and sustain accountability, growth, development, reliability, respect, and integrity across organizational operations (Jane, 2013).

3.0 Strategy Options

The first strategy option should involve identification of the firm’s corporate social responsibilities. BHP Billiton’s corporate social responsibility forum was initially established in 1999. It comprised of a body of advisories, civil society leaders, and stakeholders within the petroleum sector. They liaised with the firm’s executive team to implement measures aimed at achieving sustainability. The stakeholders would hold a programmed forum to engage in discussion identifying significant viewpoints to record socioeconomic growth and development. The viewpoints had to address current and future issues affecting global communities from utilizing various opportunities to record social, environmental, and economic sustainability. The civil society leaders provided diverse perspectives on pre-existing and emerging issues allied to sustainability. However, the company has undergone tremendous changes on technological, operational, and functional aspects. For example, governance processes at BHP Billiton changed in 2009 to ensure civil society members identified with current diverse views and concerns among global communities. In 2013, the firm held an annual sustainability forum to discuss climatic, social, and environmental issues (Andrew, 2014).

Thus, a new corporate social responsibility forum ought to be formed and empowered to deal with the new and diverse issues affecting global communities. BHP Billiton partners from public and private sectors ought to be tasked with formulating human, environmental, safety, recreational, and community based needs. Consequently, the BHP Billiton organization can provide financial and non-financial resources to implement them. For example, a group of employees can be tasked with visiting local communities identifying their needs. Consequently, the firm can work towards either directly or indirectly meeting and fulfilling them based on the needs’ urgency and the organization’s abilities. For example, contractors across global locations can provide resources and skills to improve supply of water, electricity, and improve infrastructures. This can improve community’s standards of living, qualities of infrastructures, and environmental resources for sustainable living (Marius, 2010).

Thus, the second option ought to be allied towards the firm’s need to operate based on low cost and high quality operations. This should be coupled with emphasis towards employees’ safeties and health conditions. For example, employees should not be required to work in highly risky conditions in order to control fatalities. Employees can feel appreciated and valued. This can encourage and motivate them to achieve the firm’s mission, vision, and objectives allied to creation of value utilizing high quality resources at low costs. As a result, stakeholders’ needs are bound to be achieved encouraging further growth and development at the BHP Billiton Organization. More so, employees can ensure their activities within the firm preserve and conserve the environment. For example, they can undertake projects requiring low water volume and quantities with low levels of pollution (Marius, 2010).

The community development management strategy at the BHP Billiton has not been achieved. This is mainly because the firm procures assets locally without fostering community development. In 2013, Andrew Mackenzie through the annual report affirmed local communities require further development projects. Thus, the firm should control its activities and strive towards growing profit margins before tax. As a result, a certain percentage of the profits can be utilized towards investment projects among local communities. For example, the BHP Billiton Foundation can increase its annual investment kitty. Consequently, it can be managed and applied towards educating local members of the community. More so, locals can be awarded loans to start small business ventures to earn a living. Thus, a community development program or foundation funded by BHP Billiton is crucial in improving education standards, employment opportunities, and standards of living (Andrew, 2014).

BHP Billiton believes consistent and ethical governance measures can lead to superior socioeconomic results. Although the firm is subjected to diverse laws and regulations across global nations, it ought to maintain consistent and ethical manner of conducting operations. It ought to uphold international guidelines and principles of running a business within the energy sector. Ethical business operations can achieve a particular’s national standards with regards to the legal requirements. Thus, the best strategic option should involve BHP Billiton regularly reviewing the firm’s performance progress reports. It ought to set goals and targets in order to measure performance levels. Consequently, it can identify crucial steps towards a consistently improving and efficient organization undertaking international business operations effectively, legally, and ethically. Through ethics and consistent governance, BHP Billiton can also achieve sustainability. Transparent, high quality, and standardized governance systems can assist an organization to apply authority in order to control and monitor performance levels. More so, it can establish a sustainability committee to ensure firm operations are sustainably safe, healthy, and environmentally friendly (Adam, 2006).

In order to address the firm’s lack of risk management, BHP Billiton ought to focus on its business practices. The BHP Billiton Code of Business Conduct upholds the firm’s commitment towards ethical business operations. This is allied towards the organization’s mission to operate as an accountable, respected, and integrity firm. For example, to enhance energy efficiency in the world, BHP Billiton ought to focus on global risks hindering this strategy. Rigorous assessments should be conducted regularly across global nations to identify relevant regulations, legislatives, and frameworks to apply locally, regionally, nationally, and internationally to achieve energy efficiency. Global nations recording higher risks, such as restrictive trade laws and low business impacts can assist in development of new and tolerable risk profiles. Consequently, the profiles can be customized to suit a particular global region in order to reduce risks, enhance business operations, and achieve sustainability through consistent governance (Marius, 2010).

4.0 Best Strategy Option

The following options represent the best strategic solutions BHP Billiton can rely on to solve the issues identified. First, BHP Billiton should adopt an anti-corruption culture of undertaking business operations. This is allied to the firm’s code of business conduct. It prohibits BHP Billiton from engaging in illegal and corrupted business activities. Thus, the firm can develop a positive reputation globally as an ethical organization engaged in principled business operations. Coupled with diligence, integrity, maintenance of reasonable, accurate and accountable governance measures, the firm can neither be sued nor accused of legal violations. As a result, the BHP Billiton organizational objective to be acknowledged as an organization allied to integrity, respect, and ethics can be achieved and sustained (Andrew, 2014).

Responsible use and management of resources achieves product stewardship. Environmental conservations, promotion of employees’ safeties and health as well as improvement of living standards among local community members ought to be achieved. Ensuring products supplied by BHP Billiton have specific safety data sheets can mitigate safety and health issues affecting social, economic, and environmental factors among community members. For example, advocating for reuse and recycle of designed products can facilitate the sustainability issue by mitigating irresponsible disposal and pollutions. As a result, BHP Billiton’s closure planning and development project aimed at rehabilitating and remediating resources can be sustained. More so, costs of acquiring resources can decrease. Rehabilitation provisions however should be transparently detailed and accounted for. Regular audit reports on the other hand should be presented to the closure planning committee in order to identify various weaknesses within the program. Consequently, improvements can be devised and implemented. However, the governance process ought to be consistently reliable and transparent (Andrew, 2013).

Taxes are collected to improve governance measures across global nations. BHP Billiton should therefore strive to meet its taxation responsibilities. This guarantees business operations and initiatives among global nations by the firm are achieved and sustained. More so, reporting its taxes transparently proves BHP Billiton is supportive and committed towards implementation of national level work plans among host countries to achieve socioeconomic growth and development. Reporting royalties and tax payments based on development of resources on a global platform affirms the firm is valuable, respectable, ethical, and transparent. Consequently, it earns a positive reputation, brand and consumer loyalty, as well as enhanced investment opportunities (BHPBOR, 2013).

BHP Billiton relies on operations allied to extractions, processing, and logistics across offshore and onshore global geographic fields. This affirms the firm can suffer from either natural or artificial operational accidents. Artificial operational accidents include fires and explosions, loss of power supply, pitwall failures, port and shipping accidents, loss of well control, mechanical failures, and railroad incidents among others. Conversely, natural operational accidents include hurricanes, earthquakes, tsunamis, and floods. The risk management approach at BHP Billiton involves payment of insurance premiums guaranteeing loss recovery from filing insurance claims. However, the experience of losing properties, resources, personnel, and financial as well as non-financial assets interrupts operations within the firm. In order to ensure the business achieves business continuity, BHP Billiton should account for unforeseen protection costs arising from such events. Consequently, the firm can avoid financial losses, especially through third party claims as they exceed liability insurance policy limit (Marius, 2012).

BHP Billiton believes the most crucial asset and resource at the firm involves human capital. This includes employees, stakeholders, contractors, and customers. They supply the organization with products, assets, and resources allied to firm operations. More so, they achieve marketing targets by developing high quality products and engaging standardized promotions to advertise and expand customer awareness. Technical leadership is therefore crucial in managing human capital. It should focus on creation and management of optimal value among human capital resources. This should be the central focus towards the success of business operations within BHP Billiton. As a result, the firm should strive in ensuring risks are prevented and controlled across workstations in the organization (Adam, 2006).

For example, reduction of noise and exhaust gases emitted and consumed by employees should be vital to preserve their health conditions. Additional protective measures, such as wearing gas masks and other defensive gears should be adopted. Consequently, employee and community based healthcare risks can be significantly prevented, reduced, and controlled. BHP Billiton’s core values towards safety and strong performance levels should therefore be integrated (Marius, 2010).

In order to make positive contributions in the society, BHP Billiton ought to own and operate diverse business operations. This guarantees the firm will provide diverse changes among global societies. For example, climatic changes are attributed to emission of harmful gases. Green housing activities are therefore major contributors to climate change. The most effective strategy to address this issue should involve BHP Billiton reducing emissions. Energy efficiency, environmental conservation, and healthy and safe living conditions can be achieved. However, BHP Billiton should mitigate business operations escalating internal and external risks affecting global communities and standards of living. The firm can hold regular, honest, and open dialogues with community members to assist BHP Billiton identify its impacts on the people (Marius, 2010).

Consequently, it can minimize adverse impacts and enhance positive and beneficial opportunities. For example, it can acknowledge the members interests, such as schools and hospitals. However, it should also acknowledge high levels of water, air, and noise pollution affect communities adversely. As a result, BHP Billiton’s operations can be strategized to ensure pollution is reduced and profit margins increased. The profits can be utilized in addressing local and indigenous communities’ needs building a win-win relationship with the members. More so, living conditions among community members can improve. Conversely, standards of education and healthcare are bound to improve consistently ensuring members of the society access and receive high quality services (BHPBOR, 2013).

The figure above indicates BHP Billiton’s main areas of focus in developing strategic options and solutions (Andrew, 2013).

5.0 Conclusion

An organization succeeds, grows, and expands due to business operations being managed by a consistent, ethical, and reliable governance system. The system ensures the firm undertakes business operations allied to its goals and objectives. It also ensures the firm does not engage in illegal and unethical activities. More so, it safeguards organization’s employees, stakeholders, investors, contractors, suppliers, and local communities. Creating a safe and healthy working environment is therefore vital towards development of highly motivated, valued, and supportive employees. Consequently, the firm can achieve its short and long-term goals. More so, unique skills, talents, perspectives, and experiences among persons steering the firm to success can be critically applied to formulate strategic solutions strengthening the organization’s diversity. Thus, BHP Billiton should ensure the consistent governance system promotes fairness, respect, integrity, and maximization of potential opportunities. Consequently, it can protect employees, stakeholders, and consumers while maintaining safe business operations. The strategic issues at BHP Billiton are allied to people, communities, governance, and the environment. The solutions should therefore be towards improving living standards, maintaining integrity and transparency, sustaining biodiversity, and respecting civil and human rights. As a result, the firm can develop the people and global societies, manage resources among communities crucial for human survival, and record positive impacts globally.

6.0 References

Adam, M. (2006). BHP Billiton Resourcing the Future: MarketBuster, Equity Research Annual Report.

Andrew, M. (2013). BHP Billiton Resourcing the Future, Our Shared Values, BHP Billiton’s Sustainability Report. 

Andrew, M. (2014). BHP Billiton Resourcing the Future: Value through Performance, BHP Billiton’s Sustainability Report. 

BHP Billiton Operational Review (BHPBOR). (2013). BHP Billiton Resourcing the Future: BHP Billiton Operational Review for the Quarter ended 30 September 2013, Operational Review Report.

Jane, M. (2013). BHP Billiton Limited Annual General Meeting, Annual General Meeting Report.

Marius, K. (2010). BHP Billiton: Our Strategy Delivers, BHP Billiton Sustainability Annual Report.

Marius, K. (2010). BHP Billiton: Our Sustainability Framework, BHP Billiton Sustainability Annual Report.

Marius, K. (2012). BHP Billiton Resourcing the Future: A Well Defined Strategy, BHP Billiton’s Sustainability Report.