BHP Billiton and Strategic Choices

BHP Billiton and Strategic Choices

As a mechanism for gaining market dominance and success, BHP Billiton has adopted various organizational strategic choices. These choices include the product diversification by commodity geography and market. In this case, the company has nine customer segment groups and adopted horizontal integration into the potash and shale. The company also comprehensively utilizes the porters five-cost leadership strategy, where it has standardized goods, lower cost, and product differentiation. More importantly, the company exercises significant economies of scale, which helps to produce and offer goods at a reduced cost. Additionally, the company has also incorporated the internationalization strategy, where it operates in 26 countries, which are controlled by its home office. The entry into the international markets is effected in two main ways (Price, 2015). The acquisition strategy, such as the acquisition of Petrohawk Energy Corporation in 2011. The other strategy is expansion.

There are several external and internal factors affecting the company’s strategy. Internally, the company is strong in its equipment and enjoys a significant position in the mining and metal industry. It also generates revenue from nine business segments, including petroleum, base metal, aluminium and energy (Roe, 2013).

According to Chan (2012), BHP Billiton faces intense competition in the mining and metal industry. The industry tends towards concentration, where multinational companies dominate each segment. Additionally, it is considered a cyclical industry, which implies that there is the low possibility of sustaining the current high growth rate. The industry margins are influenced by the changes in the prices of the raw materials, and energy, which contributes to the major cost (Su, Yi, Hooper & Dutta, 2013). Significant competition is experienced from Newmont Mining, a global US-based gold producer, and the Xstrata, a natural resources company from the UK.

To enhance its market success, the company should adopt extensive market segmentation and product differentiation. This would help in reducing the level of competition and increasing revenue (Adhariani, Sciulli & Clift, 2014).

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