and can be modified to a great extent (Grant et al., 2013). To run the operation, labours with high skill is required to control the machines and the tools of the industry, which makes the expenditure high in the cost of wages.
Figure 1: Australian exchange rates in terms of trade
Source: (Anderson, 2017)
From the above graph, it can clearly be identified that there has been a fall in in the exchange rate in in Australia’s terms of trade. The decline has continued into 2016, as the terms of trade has dipping to 80.5 in the June quarter of 2016, which is the lowest level in the decade.
Figure 2: Business Investment by Industry, June 2006 to June 2016
Source: (Anderson, 2017)
The following data is the real trend data of the business investment in Australia. It can be clearly identified from the above graph that there has been continuation in the falling of the business investment mainly in mining. Business Investment in mining was $54.2 in 205-26, whereas it was $74.8 billion in 2014-15. This clearly indicates a drop of 29.9 per cent(Anderson, 2017). The future business investment and its impact on the domestic economy is still a concern for Australia.
As per the Trading Economics global macro models and analysts expectation the production of steel in Australia is expected to be 450.59 thousand tonnes within the end of this quarter. Looking towards the future, it has been estimated that the production of steel in Australia will stand at 453.63 with 12 months times. It has been analysed that the production of steel in Australia is estimated to trend about 453.69 thousand tonnes in the year 2020 as per the econometric models.
The policy of this business is to own and run large, long life, low cost, upstream properties spread by commodity, market and geography. This firm have an easy and diverse portfolio of tier one assets about the world, with low cost options for future development and creating new values (Grant et al., 2013). This applies values and culture, emphasise security and productivity, deploy technology and exert capital discipline for extracting the most value and the maximum returns from the assets. Its effective model allows leveraging expertise across its business, with multifunctional terms expertise across the group for sharing best practice, make harmless and focus on solving problems together. Its producers are over the world top producer of major commodities involving iron ore, metallurgical coal and cooper. This company also have substantial interests in production on oil, energy coal and gas.
Consistent with company strategy, it has a plan to develop the value of BHP. This plan is focused on six important parts:
- Cost efficiencies- focused on more gains
- Latent capacity- smart returns, normal risk
- Major projects- timed for value and revenues
- Exploration- progressive result reduce risk future wells
- Technology- develop security, minimum cost and unlocks resource
- Onshore- value and flexibility
The aim of company capital allocation framework is to maximise the potential value of every dollar earn for company shareholder.
Strength: BHP Billiton is one of the largest resources companies. This firm supplies many capitals including copper, uranium, lead and silver etc. it also crops Iron ore, metallurgical coal and manganese in Australia, South Africa and Brazil. This corporation provides thermal coal which is very useful and it is used in the electric power generation and general industry anxieties. This company has shown strong financial returns to its stakeholders (Grant et al., 2013). The profitability ratios show a strong hold on the market. BHP Billiton operates crossways eight countries in Australia, South Africa, the USA and South America. So it has increased the global image of the nation. In case of market capitalization, it is the largest company. This increases the trust of its investors towards the firm. This firm is involved in many CSR activities which has increased the image of the company. These are the strengths of the company.
Weakness: The firm is facing many restrictions by the rule of the land. These rules and regulations include increasing traffic organisation standards and to suspend all the work which is non- essential outside sunshine hours. These have compact the efficiency of many events (Anon, 2017). Communication system of the company is one of the main faintness of the company. One of the ways for growing is to collaborate.
Opportunities: So there are many opportunities for Bill Billiton to raise in size by unions and attainments. This company may obtain related small firms. This company increase a competitive control in terms of social and also in non-human capitals. The monetary condition of the company and general reliability may be broken for expanding the current operations. It may co-operate with the local competitors there for growing. This will increase the image of the firm in many nations. In this modest world, it is essential to continuously discover in order to endure (Bhp.com, 2017). So proper marketing through effective channels is very necessary for growing in this company.
Threats: The BHP Billiton is fronting rivalry from many administrations like Anglo American plc, ExxonMobil Corporation, and Nippon Corporation etc. This may be the major threat in the upcoming centuries. The cost of the raw supplies which is used by the firm is growing at a very fast rate. This will increase the production cost which results to increase the general success.
The PESTEL analysis of Bill Billiton is strategic tool for analysing the macro environment. PESTEL analysis stands for radical, Economic, Social, Technological, Ecological and lawful factors which impact the instruction environment of Bill Billiton.
Political factors play an important role to determine the factors which may impact the long term profitability of BHP Billiton in a country or in market (Bhp.com, 2017). This company is operating in industrial metals and minerals in many countries. BHP Billiton analyse some factors before exploiting in a market.
- Governmental solidity and importance of metals and minerals in economy of the country
- Legal framework
- Level of corruption
- Business regulations
- Employees benefits
- Tax rates and incentives
- Anti-trust laws related to industrial metals and minerals.
The factors of macro environment like inflation rates, saving rates, interest rate, and foreign exchange rates regulate the demand and asset in an economy (Anon, 2016). Macro atmosphere factors like struggle norms which effect the competitive advantage of the company. Some economic factors which BHP Billiton should analyse are:
- Type of economic system means what type of monetary system there is and how stable it is.
- Exchange rates and stability
- Efficiency of financial markets
- Education level of the economy
- Labour cost and production cost
- Commercial cycle stage
- Financial growth rate
- Joblessness rate
- Interest rate
- Inflation rate
The culture of the society also impacts the nation of a group in an environment. Arrogances of the population play an important role in how the dealers of BHP Billiton will understand the consumers of the market (Anon, 2016). Social factors which BHP Billiton should analyse are:
- Skill levels of the population
- Class structure and hierarchy
- Education level in this company
- Culture which includes gender, roles and social conventions etc.
- Attitudes which include health, environment and consciousness etc.
- Leisure interests
Technology is growing very fast across the world. Over the last five years the company has been growing very fast (Anon, 2016). Skill analysis includes understanding of many effects-
- Fresh technological growths by BHP Billiton opponents
- Effect of skill on product contribution
- Effect on cost assembly
- Rate of technical diffusion
As different marks consist different environmental standards that can impact the profitability of a company (Anon, 2010). Some of the ecological factors which a company should reflect are:
- Climate change
- Rules which regulate environmental effluence
- Air and water effluence guidelines in metals and mineral industry
- Leftover management
- Support for renewable energy
Some of the legal factors which BHP Billiton leadership should analyse
- Anti-trust law in the company
- Discrimination law
- Employment law
- Costumer protection
- Health and safety law
- Data protection
It has been found from the discussion that BHP Billiton is one of the greatest leading resources Company. This company extract and process minerals, oil and gas, and more than 60,000 workers and contractors works in Australia and America. The flow of capital to investment opportunities will be smooth in Australia, if they can be able to make the balance between risks and return right. As per the Trading Economics global macro models and analysts expectation the production of steel in Australia is expected to be 450.59 thousand tonnes within the end of this quarter. This firm have an easy and diverse portfolio of tier one assets about the world, with low cost options for future development and creating new values. This company provides thermal coal which is very useful and it is used in the electric power group and general manufacturing anxieties.
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