Strategic Management Small Mining Companies

Question: Describe about the Strategic Management for Small Mining Companies. Answer: Introduction The strategic management is a process through which the top managers of a company can able to take any decisions on behalf of the employer or owner to achieve the organizational goals (Hill et al., 2014). It is said that the company has a competitive advantage when they have higher profitability than the average of profitability of other companies within the same industry. It is a bundle of activities and decisions which are taken by a manager to improve the organizational performance (Ward Peppard, 2016). By the help of SWOT analysis, they can easily able to gather knowledge about the strength, weakness, opportunities, and threats of that particular organization within the environment. In this report, the researchers give an explanation about the strategic management of BHP Billiton Limited Company. Main Context Company Background The BHP Billiton Limited Company has been formed by merging the two organizations that are the BHP and Billiton. These two are small mining companies which are founded in the middle of the year of the 1800s. After merging these two companies the BHP Billiton Limited has become the leading company in diversified resource industry through all over the world. The history of Broken Hill Proprietarys (BHPs) is they started their business in silver, zinc and lead mine in Broken Hill, which is situated in Australia. In the year of 1885, the BHP engage themselves in the development, marketing, production and discovery of copper, iron ore, diamonds, oil and gas, lead, zinc, silver and other range of several natural resources. They also lead the market in the production of value-added flat steel products. The history of Billiton is that they started their business in a tin mine in a small area named Billiton, which is situated on an island of Indonesia. In the year of 1851, they first founded their company. After few years they become the leading company in metal and mining sector through all over the world (Hitt et al., 2012). They became the chief producer of aluminum and alumina, steaming coal, manganese ores and alloys, titanium and nickel. They have also developed a growing and substantial copper portfolio. The BHP Billiton Limited sold their products worldwide through Singapore and Houston. The global headquarters of this company are situated in Melbourne, Australia. The size and business scope help them to make a meaningful contribution to their communities and their operations which have a long-term nature. For this reason, the BHP Billiton Limited can able to build collaborative relationships within the community. External environmental analysis PESTLE analysis Political factor BHP Billiton is a leading resource company throughout the globe. For this reason, they have to face several political risk factors which affect their business in all markets. The political factors greatly affect the business and have a great impact at the time of issuing the business license, growth options, world class assets and project pipeline. Due to changing decisions of the government regarding the taxes also affect the business. Economic factor BHP Billiton also affected by several economic factors such as operation cost, labor cost, and inflation in energy cost, material cost and exploration expenses. Due to this reason, the economic factors have a great impact and affect the company profitability, expansion plans and development projects (Eden Ackermann, 2013). The company basically depends on the strength of the price of global commodities which are correlated along with the health of global economy. The company also gets affected due to the general economic risk and fluctuating currency valuation in the field of world industrial economies. Socio-cultural factor BHP Billiton also affected by the socio-cultural factors at the time of maintaining the relationships along with the stakeholders and also at the time of maintaining other operational relationships (Slack, 2015). These factors demand that the company should support the local communities financially and also provide a resource for some developmental infrastructures such as roads, housing, and schools. Some of the times the company also needed social approvals for their new project of mining and development. Technological factor BHP Billiton has a large impact of technological factors in their business. They need to introduce advanced technology within their business for an efficient mining, discovery of energy and mining assets and exploration (Rothaermel, 2015). Basically for exploration the company has to depend on the technology largely. The investment in technology is the most important expenditure of BHP Billiton Limited Company. Legal factor For BHP Billiton Limited Company, the legal factors are the most important risk factor. The company has faced several legal issues because they cause environmental damage at Southwest Copper operations in the area of Arizona. The company also lost a Federal Court Decision in Australia for pertaining to the rail infrastructure for two numbers of iron ore mines in Western Australia. Environmental factor BHP Billiton has to follow the public policies and regulation regarding the factors of the environment incorporating the 1997 Kyoto Protocol, the Asia-Pacific Partnership on Climate and Clean development, Union Emissions Trading System, clean emissions, and renewal and recycling energy because it is a resource company (Mellahi Frynas, 2015). The company continuously receives pressure from the NGOs and the governmental groups. The company always tries to follow a sustainable development and a practice which tends to "zero harm". Porters five forces model Bargaining power of buyers The bargaining power of the buyers is very low in this company because they have low supply and high demand within the market. In several cases, there do not have any alternative source from where large quantity resource is supplied (Stead, 2013). For this reason, the bargaining power of the buyers is getting reduced. Bargaining power of suppliers The company has high-level bargaining power because in this industry the suppliers have the total bargaining power. The company can able to reduce the costs from the side of suppliers. There are very few substitutes which can able to enhance the strong bargaining power of the suppliers. Threat of new entrants The threat of new entrant in this industry is very low. There do not have availability of natural resource through all over the world (Goetsch Davis, 2014). Due to these factors, a barrier takes place at the time of entering any new company into this mining industry. Few companies are come into this business by forming joint venture alliances. Threat of substitutes The threat of substitutes is also low in the company. It does not cause any challenge for BHP Billiton because there do not have many substitutes for the products of raw materials. Rivalry among competing sellers The rivalry between the competition sellers is very strong. This rivalry takes place because the mining and oil companies are competing with one another to access natural resource throughout the continents (Dobbin Baum, 2014). There also has a competition for the qualified mining staff. Though the mining companies have an active competition between the sellers in the global market, the BHP Billiton has become the leading company in this industry. Conclusion In this research paper, the researchers highlight the environmental factors which affect the strategic management process of BHP Billiton Limited Company. Actually, strategic management is a type of planning by the help of which the top managers of an organization can able to identify the predictable and unfeasible contingencies within the business process. The top managers should have a clear idea and knowledge about the environment of a competitive organization so that they can able to make right decisions regarding the whole business process which helps the organization to achieve a great success and profitability. References Hill, C. W., Jones, G. R., Schilling, M. A. (2014).Strategic management: theory: an integrated approach. Cengage Learning. https://books.google.co.in/books?hl=enlr=id=Qy8aCgAAQBAJoi=fndpg=PP1dq=strategic+managementots=o8rEVgLYyysig=lvEUL9ehVrlX9jKW8xz3y5C9SMg Ward, J., Peppard, J. (2016).The Strategic Management of Information Systems: Building a Digital Strategy. John Wiley Sons. https://books.google.co.in/books?hl=enlr=id=JGG-CgAAQBAJoi=fndpg=PP9dq=strategic+managementots=HdYm75Otw2sig=2xu15G7Gv3GWlMZzCtYQlGdN40g Hitt, M. A., Ireland, R. D., Hoskisson, R. E. (2012).Strategic management cases: competitiveness and globalization. Cengage Learning. https://books.google.co.in/books?hl=enlr=id=qaIKAAAAQBAJoi=fndpg=PR2dq=strategic+managementots=Elvdvi2NIwsig=rhZ3gezfbLGt3Dtva4H4MkzOyYk Eden, C., Ackermann, F. (2013).Making strategy: The journey of strategic management. Sage. https://books.google.co.in/books?hl=enlr=id=UnYWfXigU4UCoi=fndpg=PP1dq=strategic+managementots=FCD76xw4-ysig=DP0zQsf8A0IrfAcuM4sqeaZU7QM Slack, N. (2015).Operations strategy. John Wiley Sons, Ltd. https://onlinelibrary.wiley.com/doi/10.1002/9781118785317.weom100160/full Rothaermel, F. T. (2015).Strategic management. McGraw-Hill. https://onlineug.business.siu.edu/_common/documents/syllabi/2014/fall-b/mgmt481-keller.pdf Mellahi, K., Frynas, G. (2015).Global strategic management. Oxford University Press. https://wrap.warwick.ac.uk/75120/ Stead, J. G., Stead, W. E. (2013).Sustainable strategic management. ME Sharpe. https://books.google.co.in/books?hl=enlr=id=4eA-AAAAQBAJoi=fndpg=PR7dq=strategic+managementots=gakanac7Hesig=5rRtgC_lzd8NkAbzP7cWvZFoZgo#v=onepageq=strategic%20managementf=false Goetsch, D. L., Davis, S. B. (2014).Quality management for organizational excellence. pearson. https://abufara.com/abufara.net/images/abook_file/back/Ch1.pdf Dobbin, F., Baum, J. A. (2014). Introduction: Economics meets sociology in strategic management.Advances in strategic management,17. https://papers.ssrn.com/sol3/Papers.cfm?abstract_id=2412070