This report answers the Management Concepts Assignment for the case study of BHP Billiton. In this assignment report mission, vision, strategy of company has been described. It is a well-known Anglo-Australian MNC of metals, mining, and ogpetroleum.
BHP Billiton is a well-known Anglo-Australian MNC of metals, mining, and petroleum. It has the headquarter in Melbourne. By visualizing the 2013 revenue estimates, it can be said that the company is the largest mining organization across the world and also in Australia. The company was established in 2001 via the merger process of Australian Broken Hill Proprietary Company Ltd (BHP) along with Anglo-Dutch Billiton Plc. The BHP Billiton Ltd. has been registered and it has similar financial share into the organization (Bhpbilliton, 2016). It has listed in ASX and as measured by market capitalization, it is the largest organization in Australia. It has many other branches and corporate offices across the world which is shown in location part.
Suppose that the Author has graduated from Deakin University and has been chosen for a graduate role in BHP Billiton. Thus, in the second stage, the Author has been asked to make a report on this organization. In this report, the purposes and mission of the company can be discussed. It will also demonstrate some external factors for the organization’s relevance. It also evaluates the Corporate Social Responsibility, cultures, and ethics of this organization. After finding the culture, the Author will get the personal insight and can choose the role which will be best suited.
Part 1: About the Company
Purpose of the organization
The company is a largest international resources company. The main purpose of the company is to create the long-run values of shareholders via the acquisition, discovery, marketing, and development of natural resources. Across the international operations, the company is committed to working in a true manner to BHP Billiton’s integrity, charter sustainability value, respect, simplicity, performance, and accountability. When the company involves in work, it tries to be succeeded not only in present days but also in future (Bhpbilliton, 2016).
The company is the biggest producers of commodities like iron ore, copper, metallurgical coal, uranium across the whole world and it has considerable interests in unconventional as well as conventional oil, energy coal, and gasses. The unrivaled collection of opportunities of high-quality growth will confirm that the company wants to meet the interchanging desires if the customers and the demand for resources of emerging economies in all the steps of growth.
The company’s portfolio diversification lasts to be the organization’s defined attribute. The asset base, quality of the people, and the unchanged strategy of operating and owning the large scale, low cost, long life, upstream and expandable diversified asset by geography, commodity and market along with the ability as well as commitment to invest via the cycle and deliver the project on proper time. These are the main mission of the company (Bhpbilliton, 2016).
The company is committed to the safety and health of the employees, the communities, and environment where the workers are operating. The long run mission of the company’s operation is to build a strong future relationship with the host communities to devote a positive contribution to the society by working together.
The corporate business strategy of the organization is followed by operating and owning assets expanded by geography, commodity and market. To gain this goal, the company focus on having a workforce which will reflect diversity in every section involving skills, gender, ethnicity and experience. Acceptance of openness, teamwork, trust, diversity and relationships can be beneficial for gaining this goal as it replicates the core value of the organization and focus on the society (Bhpbilliton, 2016). This is the strategy of the organization. Among the main efforts, the company has aimed to be inclusive as well as built pride, trustworthiness, and loyalty among the workforce.
Profit and Non-profit Orientation
The most important aspect of the company is nothing but the society. The company belongs to the community in which it is operating and striving to give an active and positive participation.
The company has generated some economic value for regions, nations and communities via the taxes, employment and royalties and also by buying local products and services. The company had made payments to the contractors and suppliers in last financial year estimated as more than US$ 16.1 billion. The amounts expensed in wages of employees and benefits were more than US$ 4.9 billion, the payments to the capital providers are calculated as over US$7.2 billion, income taxes and other taxes to the government were US$7.3 billion (Bhpbilliton, 2016)
Additionally, in the community program, the company had invested 1% of pre-tax profit voluntarily which was equal to the mean of last 3 years’ pre-tax profits. It had increased the quality of life and impacts lasted long in the community.
The revenue of the company as per 2015 estimates were A$61.2 billion. The operating income of the company was estimated at US$8.67 billion in 2015. Profit level was US$1.91 billion in 2015. Lastly, the total equity in 2015 was US$64.76 billion (Bhpbilliton, 2016).
In the UK, the production unit of oil and gas can be seen along with the corporate office. The location of the corporate office is the North Sea and the Irish Sea in the United Kingdom. The location of the corporate office is Neat House Place, London, UK. Next location can be seen in Algeria. The Algeria joint interest unit for oil and gas is situated at Berkine Basin. The Pakistan production unit for oil and gas is at Zamzama. The marketing head office is in Singapore. The global information center of the company is situated at Kurala Lumpur, Malaysia. The oil and gas production unit in Australia is situated at Offshore Victoria and in Bass Strait, Western Australia. The Iron Ore in Western Australia is present at Perth, Western Australia. The production unit of copper is in Adelaide, South Australia (Bhpbilliton, 2016). The energy coal production unit is in New South Wales, Australia, and the coal head office is situated at Eagle street, Australia. The copper production units present at San Macros, North central Peru, Chile, and headquarter is at Las Condes. Coal office is present at Mexico and in Columbia. Oil and Gas offices are present at Texas, Offshore, Gulf of Mexico, US, Trinidad. Iron Ore office is in Brazil. Hence, it can be seen that the company branches are distributed across the world.
Part 2: External Environmental Factor
In this section, the Author can describe some external environmental factors which have a noticeable impact on the company’s financial statement and operation. External environmental factors can be general factors, industrial factors, and competitiveness. The external atmosphere demonstrates some uncontrollable forces outside the company. These can affect the business significantly (Lee, 2011). The company should adapt the strategy to control those effects so that it cannot hamper the internal environment of the organization. These factors will affect the company. Specifically, the importance is the threats and opportunities that are faced by the organization. The three factors are:
Generally, the demography helps to understand people, such as sex, age, marital status, family size, occupation etc. These factors cannot be controllable but an accurate forecast of those factors move a long way to allowing the company in forecasting future pattern and the products consumption.
The competition implies to the companies of a similar number of competitive commodity brands, capitalizations and size in this natural resource company. Being a marketer, the company may not have a direct impact on the competitors, however, it is very crucial to visualize the activities of the competitors. After that, the company can make the perceive effective strategies by utilizing the controllable variables. In Australia, Rio Tinto and Fortescue gave a solid competition to the BHP Billiton. the total iron ore production has increased in 2015 by 14% which is a record of 233 million tons. It can be seen that the revenue generated from iron ore has reduced by US$6.6 billion to US$14.4 billion. The cash costs of iron ore in Australia has been decreased by 31%. The main reason behind this downfall is the presence of competition in Australia and Rio Tinto has given a good fight to BHP. Therefore, the Iron Ore in Western Australia is working on various expansion projects to provide a unified operation with a lower capacity of almost 220 million tons in each year. These substantially completed projects involve the expansion of Jimblebar mines and a further development of Port Hedland can be done. To enable the blending of iron ore, the rail yards, and port blending facilities can be developed (Bhpbilliton, 2016).
Another important factor is government policies which can affect the business process. The policies of government refer to some legal aspects and laws that will guild the land. The government regulations last long and affect the operations of the company in marketing. The restriction of government on importation for a specific commodity will affect the company. Other alteration in tax or policies will affect the company’s behavior.
From the financial statement report it can be seen that in 2015, the company has paid almost US$7.3 billion in taxes and other payments along with royalties to the government. The adjusted effective tax rate has been estimated as 31.8% which is greater than mean corporate income tax (25%). In 2015, it has increased to 45% from 31.8%. It has lowered the profit after tax.
CSR and Ethics of BHP
CSR or Corporate Social Responsibility basically refers to a practice of business which includes the participation in the beneficial incentives of the society. Thus, CSR is becoming the mainstream as forward moving organizations insert sustainability into their core operations of the business to generate shared value for society as well as for the venture (Coombs and Holladay, 2012)
From 1999, the report of BHP Forum on CSR has been playing an essential role to help the organization in making informed decisions and also to bring development in the proper sustainability standards. The forum has challenged the thinking process of the organization and has served various perspectives to ensure better results for the environment and the society too (London, 2012). The CSR Forum is comprising of nine respected leaders from civil society, topmost members of a team of executive leadership, the organization’s Group Health, Environment, safety and Group Corporate Affairs function representatives. By taking the help of the forum, the company has gained insight into emerging and current priorities and also sometimes involve in the difficult debates on sustainability topics. The CSR of the company enables better understanding and also considers vast social implications of the activities undertaken by the organization to take vital decisions (Gond and Moon, 2012).
It can be seen that the company is committed towards health & safety issues of the employees, the people of the society in which they are operating. The company wants to build a long-term relationship with the people of the host country and tries to provide a positive influence to the people lives who are living in near places or society (Bhpbilliton, 2016). Thus, the company can bring social welfare very easily by enhancing the lives of the society. CSR is completely fulfilled by the company.
Business ethics is commonly known as corporate ethics which is basically a state of professional ethics or applied ethics that evaluates the raised ethical norms and moral problems in a corporate circumstance. It can be applied to all the aspects of conducting a business and is having relevance to the individual conduct along with the total organization (Collins, 2012).
The each and every operations of the company have been done with integrity. It can be seen that the company does that which is right and what they can do. The organization maintains a standard for commitment towards integrated work and always tries to respect the guidance of someone who works for the company. The guidance can be seen in daily works and it demonstrates of applying practicality in the values and commitments. The company has encouraged a workplace in which employees can speak and ask for something which elements they do not know or not sure about any situation. The additional responsibilities have been placed on the managers and supervisors to ensure better work knowledge to the contractors and employees along with to apply code in almost everything they try to do. Not only that, the company members try to solve all the queries of the outsiders.
Ethical point is very crucial for BHP Billiton to conduct a business. It helps to conduct advisory services that are available to help in resolving all types queries and issues related to the business. The company is totally committed to their work with integrity and it has prohibited any types of unethical engagement and behaviors specifically (Bhpbilliton, 2016). The approach of the company to ethical compliance regularly and conducts is no different. From the last two decades, the company has expanded into different locations across the world as they have maintained ethics.
Thus, it can be evaluated that BHP has the expectation to comply fully with safety regulations, laws, monetary and fiscal reporting status along with all civil laws. Those legal aspects enhanced the ethical decision making of the company and also protect the employees. The company has maintained a fair operation and maintaining individual values to enhance their profit. From the point of view of ethics of BHP, it can be said that it is maintained in the company.
The culture of an organization is said to be a process of shared values, assumptions, and beliefs which are governed that how the employees will behave in the workplace. The strong influences can be seen by the shared values on the persons of the workplace. It will demonstrate the facts like how they act, dress and perform the tasks.
From the personal insight quiz, I got my score 26. It implies that I prefer the flexible, humanistic, informal and innovative culture. I felt that the self-assessment is really accurate as it gives the appropriate result in which I will be comfortable (Personal Insight, 2012). I think that efficiency and effectiveness are associated with my personality traits to work in an informal culture which must be flexible for me. In informal culture, I can get more freedom to work more comfortably and can enjoy the flexibility to complete the given task in various ways. I don’t think that the outcome surprised me. With my job experience, I think will be best fitted in the informal work culture. So, I must join in a company in which I can show my creativity and own pace for the given projects.
Personal insight and culture of BHP
It is discussed that the mixture of formal and informal culture has been followed by the BHP Billiton. The company has celebrated different festivals, has arranged cultural programs and events. In Chile, the company aimed to enhance the access of the community to high-quality cultural activities as well as to foster decentralization culturally through innovation in the project related tasks. The company always focus on leadership. I think if I join the organization, I will be best fitted for the role of team leader in the branch of Chile where I can perform the tasks as per my choice. The innovative ideas and strategies can be chosen by me and I can help my team in completing the tasks in a creative way. As I like informal scenario, I can enjoy the festivals, cultural programs arranged by the company (Prenhall, 2016).
For other branches, I don’t think I will be best fitted as the company mostly follow the formal culture and I like informal culture. Informal work culture will allow me to perform the task as per my choice and my creativity techniques. Being a well-known and old organization, BHP is very formal. So, I think I should join any start-up firm where I can work freely and can have a chance to prove myself. In this organization, I always hear the instructions of the supervisors which I do not like much. I prefer to work as per my knowledge. When I will work under my supervisor, it will not be comfortable for myself to work freely.
It can be concluded that the readers will get a clear insight into the culture, ethics and CSR of BHP Billiton. In the first part, the purpose and mission of company are discussed. The various locations across the world will help to understand how much branches it has for oil and gas, copper, iron ore etc. The first part is also consisting of profits and non-profits orientation of the company. It can be said that throughout the international operations, the organization is dedicated to working in a correct manner to the company’s integrity, respect, performance, simplicity, and accountability. The corporate strategy of BHP is to follow the operating and owning assets lengthened by geography, product and market. To achieve this objective, the corporation focuses on having a labor force which will replicate diversity in each section by linking skills, experience ethnicity and gender. In the second part, three external factors are discussed which affect the organization. These three factors are- demographic factors which are changing with time, competition and government intervention. In the third part, the Corporate Social Responsibility is discussed and the main logic of CSR has been incorporated with the company’s CSR to do an evaluation. The ethical consideration is also included and discussed from the point of view of the organization. From the evaluation, it can be seen that both CSR and ethics are maintained in this organization. In the fourth section, the personal insight quiz has been used to show what will be the best organizational culture for the Author. After getting the score, it has been discussed that whether the Author is fitted into the company along with company culture or not. After the evaluation, it can be argued that the Author will be best fitted in the informal culture as comfort and flexibility can be seen in the informal sector.
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