Strategic Environmental Scanning And Organization Essay

Question:

Discuss about the Strategic Environmental Scanning and Organization.

Answer:

Introduction

BHP Billiton is an Australia based metal and petroleum company which had been also tagged as largest mining company in 2015 around the world. It was founded in 1885 and company is in the public limited sector. Moreover, the company deals in mining of various mineral resources such as copper, coal, iron ore, potash and petroleum along with the fact that established in 25 countries (BHP Billiton, 2017).

There are various performance indicators that help the company in competing with the opponent organizations at a global level. Firstly, long-term credit rating that is associated with the credit risk and rating aspect to meet the financial obligations with the ability and desire to achieve best grade (BHP Billiton, 2014). The company always tries and represents ‘A+’ credit rating in the standards and poor’s indicator as well as ‘A1’ in Moody’s in long-term credit rating. Secondly, underlying EBIT is indicator related to revenue with the net finance costs, taxation and any exceptional items where company successfully increases commissioning and decrease commodity prices also raise the depreciation and amortization expenses as an impact of inflation on cost (BHP Billiton, 2014). Lastly, total shareholder return enables the company on persistent return to shareholders and dividend holders of both share prices and dividend payments. It provides comparison of company’s performance with other competitors.

Internal Environmental Analysis

BHP billion also has a product portfolio in liquefied petroleum, aluminum and other precious metals like gold and silver. The company approaches in market with the product diversification strategy to capture the position in wide market. BHP Billiton has always shown the upward trend in commodity market of mining industry (BHP Billiton, 2017). The administration of tangible assets are being effectively managed by the company, however, optimum utilization of assets are not a strong skill of the company. For measurement of the financial performance of the company, it implements the balanced scorecard technique. In case of core competency, it consists of aspects like learning prospects, internal business processes, growth and development opportunities and prospective customers/clients (Babatunde and Adebisi, 2012). In addition to this, the company operates its business in a very large area and leads in the market of mining with the capability to move its basic resources and skills to anywhere in the world.

Resources of the company are divided into two parts tangible and intangible, which can or cannot be physically visible correspondingly (Mackenzie, 2016). Apart from that brand name of the company is very useful resource for the company, quality of products and creativeness in managing and capability are intangible resources while skilled labor, advanced drilling machineries, plants and hydraulic pumps are imperative resources of BHP Billiton. Main capabilities examples entail quality service delivery, standards operating model which manages internal and external affairs of the organization systematically plus BHP Billiton has various strategies and trained experts to handle any challenging and adverse situation (Mackenzie, 2016). Lastly, the core competencies of the company are such as portfolio of tier 1 liquid opportunities with conventional deep water. Next is drilling of Caribbean and Gulf of Mexico along with this, wells and hydrocarbons in Gulf of Mexico and Shenzi North respectively.

VRIO analysis of BHP Billiton

A VRIO analysis offers an insight on the strategic approach implemented by the companies and their conceptual framework to carry out the essential management part (Schermerhorn, 2011). It provides the exploration of capabilities and availability of resources in the organization. In case of BHP Billiton VRIO analysis has been examined to explore all the aspects related to the Value, Rarity, Immutability, and Organization as follows:

Value: The parameters and opportunities that checks on the availability of resources and ability to use these resources optimized are being explored in this section. It also provides the scenario that describes market position of the company with the influencing factors that act as strength in the organization (Henry, 2011). In other words it exposes the positive aspects of the company which resists threat of a particular process in the market. BHP Billiton has a very effective supply chain and successfully handles its resource management. Thus, resource capability as to compete in the market cannot be achieved by any other competitor with the same rates in the same market.

Rarity- The company is imperatively access and capable of resourcing the wide range of assets to take the competitive advantage over other competitors (Henry, 2011). Thus, being resourceful and availability of ample of different assets to offer in the market of mining industry gives a dominating position to the BHP Billiton.

Immutability- It facilitates the analysis of internal environment of any organization which determines the capabilities framework of VIRO analysis. In the context of BHP Billiton capability related to procurement and creation of resources and sufficiency of cost disadvantage in case of resources are major aspects in the following case. Valuable and high level resources collection is very difficult from other companies in comparison to BHP Billiton (BHP Billiton, 2017). Therefore, the company has two choices as ensuring optimum utilization of the resources available to the company or grabbing external opportunities in the market.

Organization- This last procedure is to make the optimum utilization of the resources and organize resource availability in the organization comes in this section. The sustained competitive advantage is being enjoyed by the company because of the large scale mining or production of metals from a very long time. Managerial decision is consisting of Informal and formal modes in the BHP Billiton where control and management system integrated with the strategic management in the organization (BHP Billiton, 2017).

Thus, these factors help the company in the stability and maintaining their position of the organization in the market (Henry, 2011). These factors like capability to arrange the resources and several amount of differentiated assets assists the company to achieve competitive advantage.

Value Chain analysis

The supply chain and value chain analysis are the most basic and fundamental operations of the company. It acts as a decision supporting tools and ensures the competitive edge over other competitors. Along with this, it maintains and supplies of valuable products and services of the company plus helps in operations, functions and performance of the organization to attain its goals and objectives (Sadler, 2003). In case of BHP Billiton, supply chain management entails various processes such as extraction of raw material, mining, manufacturing or procedure to convert raw material into final goods.

At the very beginning as a primary activity all the extracted metals or raw material direct form the mining are shifted to the manufacturing site, where metals extracted from mines like silver ores, manganese, iron ore and metallurgical coal (BHP Billiton, 2017). The BHP Billiton focuses on the administration and management of operation of conversion of raw material in finished work.

As a supportive activity, these metals are then procured for the finished process and transferred to the manufacturing site (Harrison and St. John, 2013). Manufacturing sites has plants and equipment that renovate raw material to finished goods. In addition to this, BHP Billiton has introduced software’s, hardware and technological knowhow to assist the extraction and conversion process of finished goods in the manufacturing units (BHP Billiton, 2014). Accounting and financing and controlling maintaining communication and public relation as a secondary supportive activity of BHP Billion.

Supply chain management is an imperial part of the BHP Billiton because it is mainly based on the operation and functions of manufacturing and converting raw product into final product. Hence, as a strategic approach in the functions of manufacturing department high quality supply chain or value chain integration gives easy and appropriate results (Morden, 2016). Value chain of organization controls and preserve the distribution channels, allocation of resources and the supply chains. With the effective execution of strategies and value chain processes, performance of the BHP Billiton has been improved and there are many new addition and technology changes that provide growth in the machinery standards of the company too (BHP Billiton, 2017). Furthermore, the challenges related to financial viability in the business operations act as encouraging aspects for the organization.

BHP Billiton holds values, beliefs and respects in the work culture in the internal environment of the organization (BHP Billiton, 2014). Moral principles, business integrity, individual consideration and motivation and appreciation of workers are entailed in the organizational culture to inspire and encourage the workforce for greater productivity and performance. The culture of BHP Billiton emphasizes on the individual as well as organizational goals to develop and flourish in the market (Mackenzie, et al., 2012). Business security and audits are the duties of financial committee of the company. Thereby, accounting of the company is also handled by the professionals as a transplant and clear recording of financial performance.

Conversely, the company has independent director policies and strategic customized approaches to deal with the long-term incentive plan for the executive leadership (Stead, 2014). All of the operations and functions of the company are closely watched and consented by the managers of the company (Gr?nig and K?hn, 2015). It is also describes essential business activity that involves consents of the managers which is highly impacted by the social environment regarding obligatory performances (Thompson and Martin, 2010). It encourages transparency and clarity in accounting and financial management which also gives advantage in industry and community.

Strategic Issues in the Management

The strategic issues of the company are defined in four parts which will explain each section problem in brief that is uncertainty, volatility, complexity and ambiguity as follows:

Uncertainty: It is daily routine business problems (Robbins, 2013). It is associated with the incapability to see risks in the market which can drastically affect the organization. There are various types of uncertainties such as political, technical, macro-environment and social limitations due to internationalization and globalization in the market. Along with this, BHP Billiton also faces uncertainty problems but quickly resolve these issue with the help of high professionals and experts I the company (BHP Billiton, 2017).

Volatility- it is comprised of difficulties in the price stability in the process of conversion form the raw goods to final production. Along with this, BHP Billiton faces challenges in the price of raw material of precious mate due to globalised market prices, government policies and imposing rules as well as external environmental change (BHP Billiton, 2017). It is also relevant with the changes in the strategies company follows for the price fixation.

Complexity: it regarded as major strategic difficulties in the management and leadership change. Time to time BHP Billiton also faces these challenges to improve the current situation and as a growth and development aspect (Jia and Tomasic, 2009).

Ambiguity: the impact of environmental issues comes in the BHP Billiton which is high level problem and member of top level management has to watch over these issues. Green gas and toxic gas release is the main concern in BHP Billiton (BHP Billiton, 2014). This issue is being monitored by the company’s experts and technological department to minimize the environmental harm.

Conclusion

From the above text, it can be inferred that BHP Billion is a leading company in the mining sector and continuously expanding its business worldwide. The company has attained the competitive advantage because of its ability of resource management in the minimized cost. The company is dealing with various precious, semi-precious metals along with the petroleum, iron, manganese and aluminum mining. The company has a process that changes raw material into finished goods carried on with the technology integrated in the manufacturing units. Additionally, the company is facing environmental issue as strategic problem which is in progress being handled by experts and professionals.

Reference

Babatunde, B. O., and Adebisi, A. O. 2012. Strategic Environmental Scanning and Organization Performance in a Competitive Business Environment. Economic Insights – Trends and Challenges 64(1), pp. 24 – 34.

BHP Billiton. 2014. Investors Report. [Online].Available at: [Accessed on: 10 May 2017].

BHP Billiton. 2017. About Us. [Online].Available at: [Accessed on: 10 May 2017].

BHP Billiton. 2017. BHP Billiton executives warned they could face charges if they shift company out of Australia [Online].Available at: [Accessed on: 10 May 2017].

Gr?nig, R., and K?hn, R. 2015. The Strategy Planning Process: Analyses, Options, Projects. Springer.

Harrison, J. S., and St. John, C. H. 2013. Foundations in Strategic Management. 6th ed. Cengage Learning.

Henry, A. 2011. Understanding Strategic Management. OUP Oxford.

Jia, X., and Tomasic, R. 2009. Corporate Governance and Resource Security in China: The Transformation of China's Global Resources Companies. Routledge.

Mackenzie, A. 2016. BHP Billiton outlines strategy to grow value. [Online].Available at: [Accessed on: 13 May 2017].

Mackenzie, B., et al. 2012. IFRS 2013: Interpretation and Application of International Financial Reporting Standards.10th ed. John Wiley & Sons.

Morden, T. 2016. Principles of Strategic Management. 3rd ed. Routledge.

Robbins, S. 2013. Management: the Essentials. Pearson Higher Education AU.

Sadler, P. 2003. Strategic Management. Kogan Page Publishers.

Schermerhorn, J. R. 2011. Exploring Management. John Wiley & Sons.

Stead, W. E. 2014. Sustainable Strategic Management. Routledge.

Thompson, J. L. and Martin, F. 2010. Strategic Management: Awareness & Change. Cengage Learning EMEA.

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