COMPANY PROFILE - BHP Billiton
Business Sector : Metals and Mining
Operating Geography : Australia & NZ, Global
About BHP Billiton : BHP Billiton is an Anglo-Australian mining behemoth formed as a merger between BHP and Billiton, which were two mining companies formed in mid-1800s. It is headquartered in Australia and operates in over 25 countries with more than 40,000 employees.
BHP Billiton Revenue : AU $61.2 billion (US$44.6 billion) - FY 2015
Competitive Analysis of BHP Billiton
|1. Strong financial performance|
3. International presence
4. Marketing position
5. Association with social presence
|1. Past history of mishaps
2. Unskilled/semi-skilled human resources
3. Corporate communication
|1. Mergers and acquisitions|
2. Expanding operations
3. Global ventures
4. Innovations in marketing
|1. Fluctuations in demand
2. Increasing competition
3. Increasing costs
4. Political threats
Detailed SWOT Analysis of BHP Billiton
1. Diversification: BHP Billiton is one of the most renowned companies when it comes the portfolio of the natural resources. The company supplies various resources including copper, uranium, lead, silver, etc. It also produces iron ore, metallurgical coal and manganese in a large scale with operations spanning Australia, South Africa and Brazil. It has worldwide operations. The company is a provider of thermal coal which is used in the electric power generation as well as general industry concerns.
2. Strong Financial Performance: BHP Billiton has manifested a strong financial returns to its stakeholders through aggressive capital buy back campaigns. The solvency ratios, profitability ratios also exhibit a strong hold on the market. The credit rating of the company also proves the credibility of the company in terms of its financial performance.
3. International Presence: BHP Billiton has its operations across eight countries in Australia, South Africa, the USA and South America. This, in turn, has enhanced the international image of the country, thus differentiating it from the competitors.
4. Market Positioning: BHP Billiton is the largest company in Australia when it comes to market capitalization. This further enhances the faith of its stakeholders towards the company.
5. Association with Social Causes: BHP Billiton is involved in a lot of CSR activities which has enhanced the image of the company as a whole. This has inculcated a lot of trust towards the company which adds a competitive edge to the company.
1. Past History of Mishaps: Due to some recent incidents, the company is facing a lot of restrictions by the law of the land. For example, Acts like Rail Safety Act, etc. have proved to be a deterrence in operational efficiency. These rule and regulations involve enhancing traffic management standards and suspending all non-essential work outside daylight hours. These have significantly reduced the efficiency of the operational activities.
2. Unskilled/ Semiskilled Human Resources: BHP Billiton is facing a dearth of well-trained human Recourses which is hampering the pace of the development of the company. The mining sector, especially, is facing efficiency problems due to lack of skilled human resources.
3. Corporate Communication: One of the major weaknesses of the company is the communication system of the company. The efficiency of the staff involved in the corporate communications department is not up to the mark and can be detrimental to the growth of the company.
1. Mergers and Acquisitions: One of the time tested and proven ways to grow is to collaborate. Thus, there is a huge opportunity for BHP Billiton to grow in size by mergers and acquisitions. The company can acquire related small companies and gain a competitive edge both in terms of human and non-human resources.
2. Expanding Operations: The Company’s financial position and overall credibility can be exploited to expand the existing operations.
3. Global Ventures: Since the company has its presence in a lot of countries, it can collaborate with the local players there to grow. This will enhance the image of the company in the respective countries.
4. Innovations in Marketing: In today’s competitive world, it is imperative to constantly innovate in order to survive. Though BHP Billiton is B2B Company, proper marketing though effective channels is very important to sustain and grow.
1. Fluctuations in Demand: Since the developing economies like China, India are developing at an ever increasing rate by manufacturing in-house, the demand at BHP Billiton is increasingly fluctuating. This can prove to be a major threat to the company.
2. Increasing competition: BHP Billiton is facing stiff competition from various other organizations like Anglo American plc, ExxonMobil Corporation, Chevron Corporation, Nippon Steel Corporation, etc. This can be proved to be a major threat in the coming years.
3. Increasing costs: The cost of various raw materials used by the company is increasing at a fast rate. This will further increase the cost of production, which will further decrease the overall profitability.
4. Political Threats: The threats from the present government, especially after the occurrence of some mishaps, can prove to be detrimental to the smooth functioning of the company.
|1. Favourable political ambiance||1. Prices of raw materials
2. Availability of capital
3. Existing business
|1. Local rapport|
2. Establishing infrastructure
|1. Edge over competitors|
|1. Varying relations||1. Smooth sailing environment|
Detailed PESTLE Analysis of BHP Billiton
1. Favourable political ambiance: The political environment under which BHP Billiton operates is more or less in its favour. It has a huge support from Government of Western Australia. Since it is the biggest company in terms of market capitalisation, the government always supports it as it leads to the development of the country as a whole.
1. Prices of raw materials: The price of Nickel and the production from Ravensthorpe as nickel is one of the major raw materials used by the company, the price has a huge impact on the overall profitability of the company. This falls in the favour of the company. Further, the production which happens at Ravensthorpe is also quite beneficial for the company.
2. Availability of Capital: Since the company is largest in terms of its market capitalization, it enjoys a good credit rating by top credit rating firms of the world. Hence, capital is easily available and at a cost which is lower than the prevailing rates in the market. This helps the company to improve its bottom line.
3. Existing business: The existing business of mine and many others have been proved quite profitable. This has helped the company create a brand image which has helped it in the long run.
1. Local Rapport: For any business to succeed, it is very important for it to get the support of the local player. Also, a company should always keep in mind the needs, requirements, rules and regulations of the land in which it is operating. BHP Billiton has a good rapport with the local people and the local government as it has helped in the development of the surrounding areas a lot. 2. Establishing infrastructure: It has established the infrastructure of Ravensthorpe and has also employed lots of local people. Also, it has always maintained good relations with the local communities. This has enhanced the brand image and reputation of the company which has worked to its advantage.
1. Edge over competitors: BHP Billiton is a company which has a lot to with the technology in order to further its business. The technological environment of the company is such that the combination of Pressure acid leach and atmospheric leads to the extraction techniques in order to optimize Nickel extraction. This gives a major competitive edge to the company and helps to improve the overall profitability of the company.
1. Varying relations: The company has always complied with the laws of the country and this is the reason why the local as well as the national government is so supportive towards the company. But, there have been some recent mishaps in the factory premises which have caused a conflict between the government and the company. This may prove to be a deterrent towards the smooth working of the company.
1. Smooth sailing environment: The environment of Australia is quite conductive for BHP Billiton to carry on its operations smoothly. The weather is such that the exhaustion levels of the employees is not too high. This improves the overall efficiency of the whole work force. This has always been an advantage for the company and has helped it to streamline its operations.