Task:Each student will write a strategic analysis report of NOT more than 2500 words. The report should demonstrate that the student has thoroughly researched their topic. Students should use examples of business practice from the scholarly journals papers, conferences, books and professional magazines to support their arguments. The strategic analysis will be on a local company. The report consists of two parts and should cover the following requirements
Part 1 (External analysis)
Part 2 (Internal analysis and proposal)
This strategic information system assignment provides a process of research on the company and its provide operating environment to develop a strategy. In this report, BHP an Australian mining company is taken. This strategic information system assignment has to include analysis on external environment of business which affects the strategy of the company. In addition, this assignment has also focused on the company internal resources and elements which affect the strategy of the company. The main purpose of this strategic information system assignment is to formulate and evaluate the strategy of the company after an analysis of the external and internal business factor which provide a competitive advantage in the market.
Business background: BHP formerly known as BHP Billiton Ltd. is an Australian based mining company. The company was founded in 1885, and its headquarter is located in Melbourne, Victoria, Australia. The current revenue is US$ 38.285 Billion in 2017, and the company has an overall 65000 employees working effectively for the profit of the company. In 2017, the company was ranked as world's largest mining company based on capitalisation. It has more than 100 mining sites across 25 countries (BHP, 2018).
BHP is a mining industry which discovers, acquires, develops, and markets natural resources in the worldwide market. The company has segmented its operation in four segments which are Petroleum, Copper, Iron Ore and Coal. The company explores the different natural resources available in the environment (Bloomberg.com, 2018). The company mainly perform exploring and refining the natural resources which is extracted from the different natural resources mines.
General environment analysis
The macro environment analysis is the analysis of the external business factor which affects the operation and strategy of the company. BHP is a mining company and performs mining activities in Austria. In Australian, business environment may affect BHP because the external business environment changes frequently. However, with the proper strategy BHP can easily provide a good strategy according to the business factor.
Political: The Australian government is working under the constitutional monarchy which provides an opportunity for the business. The country has favourable political ambience which will provide fewer issues regarding business activity to BHP. The company is big and having the biggest capitalisation in the mining industry in the world (Zhang et al. 2015). It has very positive support form Australian government.
Economic:Austria has an open market, and the business activity occurs smoothly. As the availability of the capital is high in the country and recently Australia has been facing fast growth in exporting business. The real growth of GDP in 2017 is 2.3%, and purchasing power parity is $1.246 trillion. BHP is a mining company and exports natural resources to other company which provide good revenue (Findlay and Garnaut, 2017).
Social: The country requires a good amount of energy and the population of Australia is 24.39 million. As a BHP is natural resources Extraction Company which is essential for the energy production, the local rapport is very well in Australia. The company has employed many people in Australia; therefore, social support is favourable to BHP.
Technological: In the context of technology, Australia has advanced technology in their country. The availability of the technology provides good R&D to BHP which provide edge of advantage to the company. BHP can utilise technology to perform the mining activity effectively, and the optimal use of resources will be utilised (Zivanovic and Luck, 2016).
Legal: The Australian government follows constitutional monarchy, therefore, the corporate legislation which is essential for the company will be applied. The legislation is equal in the country and provides support for the business if the company did not violate any legislation according to the business (Downes et al. 2014).
Environmental: The environmental condition of Australia is very much suffering as the soil erosion due to overgrazing, deforestation, industrialisation, urbanisation. BHP is listed in one of the 90 fossil fuel extraction and marketing companies which is responsible for the worlds two third greenhouse gas emissions. The company is mainly facing issues regarding environment factor as the mining process affects the environment deploy (Schoenberger, 2016).
Industry environment or Porter’s Five Forces
In the organisation, the analysis of the industry environment is necessary because it provides an idea of the company potential and the threat which may affect the company business operation. BHP is considered as a leading company in the mining industry in the word business market. However, the industry environment is required to evaluate for creating the strategy for the company operates in the future business market our sustainability in the market.
Supplier power: The supplier power to BHP is strong as compared to the other factors. The company largely affected by the power of suppliers in labour, materials, shipping and cost of energy. The company need to perform mining operation in the rich natural resources sites. In regarding that, it requires lots of supply to perform an activity (Eggert, 2017). As regarding that, the company need to make a mutual agreement with the trustworthy suppliers which provide the required resources in effective cost.
Buyer power: The mining industry has very less substitute in the market, and the demand is very high. The demand for the natural resources is very high in the market as it is mainly utilised as the energy. The substitute to the mining industry is comparatively less than the other industry; therefore, the bargaining power of buyer is less. It has provided an advantage to BHP as it can generate a good profit.
Potential entrants: The scarcity of natural resources in the world the entrance of the new potential company is comparatively less in the market. The entry in the mining industry requires huge capital and resources which is difficult for the new company. However, the CITIC Pacific Mining is considered to be a potential entrant in the market which may create a threat to the company. The new entrant company is trying to capture and grow market share in mining (Lodhia and Martin, 2014).
Substitute products: BHP has created a strong base in the business market due to its strong diversification portfolio of natural resources in the different countries. The substitute for the natural resources is not available in the market which provides a company with a competitive advantage. The demand for the product is high which give the good opportunity of generating revenue for the company. The business operation of BHP will not face any issues with any customers regarding substitute of the product (Reddy and Xie, 2017). The supply of the product is unique in the market.
Rivalry among competitors: The rivalry in the mining industry is very tough as the different company are focusing on the capturing of the business in the natural resources. The requirement of the natural resources is very high in the global market which has influenced many companies in the race of the natural resource. The biggest rival to BHP is Rio Tinto Rica etc. in the business of mining. In regard to the business operation of BHP, it has to focus on the effective strategy which will reduce the company excess cost investment (Kamasak, 2017).
The competitive environment is the threat to the company which is available in the business market which may cause issues to the company. BHP is well known for its mining business in Australia, and it has considered as world largest mining company in the world which has provided a competitive advantage to it. However, in the external analysis of the market, Rio Tinto is considered the biggest threat to BHP. Rio Tinto is an Anglo Australian multinational and world largest metal and mining incorporation which have assets in the different company. It was founded in 1873, and it served in the worldwide. The major rivalry which Rio Tinto offer to BHP is that it perform mining activity and it has more assets than BHP. The company revenue is US$ 40.030 billion in 2017 which is more than BHP ((Riotinto.com, 2018). The firm can perform mining activity in the worldwide, and it has covered different natural sites for the mining extraction. The company can perform an activity such as the extraction of the iron ore, Diamond, Uranium Titanium Dioxide etc. (Riotinto.com, 2018). It has a potential capacity of mining in the world business market. The strategy Rio Tinto Group has followed is that they have acquired the more and more natural sites in the world for that they can perform more mining activity. The company has also acquired dual listing in the stock exchange market. The company listed themselves in the world major stock exchange which is London Stock Exchange, Australian Securities Exchange and New York Stock Exchange (Riotinto.com, 2018). The company can offer a threat to BHP in the Petroleum sector as the company has highly sustainable in the metals and mining industry. BHP has an advantage in the Petroleum industry as Rio Tinto group has not entered in that sector. However, Rio Tinto Group has potential to enter in the Petroleum industry which may create first for the company.
Opportunities and threats
The opportunities and threats are available in the business environment which may affect the business operation of the organisation in terms of financial activity, shares and assets. BHP has been operating it is mining operation in the national and international countries for the expansion of the business activity.
Opportunities: The opportunities for BHP are that it can acquire relatively small companies for expanding its market shares. The company can also expand its business operation in the field of Coal and Copper. It has opportunities in performing the operation in the extraction of Diamond because in the Coalmine there is a chance of availability of diamond. In the sustainability of the business operation in the international market, the company has to Tie-Ups and association with other global companies which will provide a chance of increasing the market shares in the global market.
Threats: The threat to the export of the product in the certain countries will be reduced due to the strong emission of the greenhouses emissions. The other threat is that the company is facing a threat from a rival company such as Rio Tinto.
The firm’s resources, tangible and intangible: The company productivity depends upon its resources as the company utilise the resources to perform the various business operation. The company resources may be tangible and intangible which company utilise it as per the requirements. The internal analysis provides company to override it strategy and weakness and the strategy in which company need to focus (Zakery et al. 2017). BHP business operational effectiveness can be evaluated with the help of its resources. BHP tangible resources are employees, mining sites, requirement, transport etc. these are the major resources which company use for the extraction of the natural resources. The tangible assets are present in the physical form which can be utilised in the future uses.
The intangible assets are not present in the physical form however it can be utilised in the business for the future purpose. BHP intangible assets are shares, bonds, patents, copyrights which are acquired in their business for the different mining sites. The common listed in the stock exchanges such as the London Stock Exchange, Australian Securities Exchange and New York Stock Exchange (Fuller et al. 2017). The company has many shares in the market which the company can use in the future business.
The capabilities indicate the company strength which gives the company a competitive advantage in the market. BHP capabilities are discussed below:
The core competence analysis provides an analysis of the significance of the capabilities of the company. BHP has different capabilities, and the major capabilities of the company are petroleum and mining of the metal.
Metal extraction and refining of metal from the natural sites
Significant value: The metal is the one the major natural resources in the world. BHP extract iron ore, copper, coal, nickel, uranium mainly. It has significance as it has the highest demand in the international market. As the natural resources are used for the energy production and uranium, coal is one of the best energy extraction elements (BHP, 2018).
Allow to increase or dominant market share: The product which BHP produce has dominant value in the market as its demand is high and it may dominate the market shares.
Imitate possibility: The product is difficult to imitate as the mining industry requires a huge amount of investment. The only established company can imitate the product.
Competitive advantage: BHP is considered as world largest mining company in terms of capitalisation because of its offer valuable product in the market.
Petroleum extraction and refining
Significant value: The petroleum is used all over the world as fuel, therefore; it has significant value in the market.
Allow to increase or dominant market share: It provides good dominance in the market shares as the demand for petrol is high.
Imitate possibility: It may produce difficulties in imitation of the product.
Competitive advantage: The petrol refining of BHP has provided the competitive advantage in the market. Rio Tinto Group major rival of BHP does not have petroleum extraction business (BHP, 2018).
Propose a suitable information system solution that meets the chosen company needs
The company is well established in the market. It only requires some strategy to perform the business operation in the business market. The company only requires an effective information system in which the data of the natural resources may be included. The company need to find the potential natural resource sites in the market for extraction purpose. BHP need to manage the overall information in its database and try to set a benchmark to achieve. Rio Tinto has expanded its business to different sites which provide the company competitive advantage; BHP needs to find the suitable country which is rich in natural resources and expand the business in that market.
Evaluate the proposed system and provide your recommendations
The information system provides information about the company resources and its utilisation. The recommendation which can be made regarding imaging of the company resources are:
This strategic information system assignment is based on the strategic information in which the company external and internal analysis is performed. In regard to topic, BHP is taken into consideration. The various external business environment factors which affect the company is analysed in this report. The company internal strength and capabilities are also analysed in this report. The conclusion which can draw from this strategic information system assignment is that the company strategy depends on the external and internal business environment factors. It will provide an overview based on that company strategy for operating a business is created. In this sample solution of strategic information system assignment a detailed analysis is done by referring to the academic theories which helped us to arrive at an accurate inference.
BHP. (2018). BHP | A leading global resources company. [online] Available at: https://www.bhp.com/ [Accessed 24 Aug. 2018].
Bloomberg.com. (2018). Terms of Service Violation. [online] Available at: https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=256654 [Accessed 24 Aug. 2018].
Downes, P.M., Hanslow, K. and Tulip, P., 2014. The effect of the mining boom on the Australian economy.
Eggert, R.G., 2017. Market Analysis for Mineral Property Feasibility Studies. Mineral Property Evaluation: Handbook for Feasibility Studies and Due Diligence, p.209.
Findlay, C. and Garnaut, R., 2017. The political economy of manufacturing protection: Experiences of ASEAN and Australia. Routledge.
Fuller, M.A., Valacich, J.S., George, J.F. and Schneider, C., 2017. Information Systems Project Management: A Process and Team Approach, Edition 1.1. Prospect Press.
Kamasak, R., 2017. The contribution of tangible and intangible resources, and capabilities to a firm’s profitability and market performance. European Journal of Management and Business Economics, 26(2), pp.252-275.
Lodhia, S. and Martin, N., 2014. Corporate sustainability indicators: an Australian mining case study. Journal of cleaner production, 84, pp.107-115.
Lodhia, S. and Martin, N., 2014. Corporate sustainability indicators: an Australian mining case study. Journal of cleaner production, 84, pp.107-115.
Riotinto.com. (2018). Global home. [online] Available at: https://www.riotinto.com/ [Accessed 24 Aug. 2018].
Schoenberger, E., 2016. Environmentally sustainable mining: The case of tailings storage facilities. Resources Policy, 49, pp.119-128.
Zakery, A., Afrazeh, A. and Dumay, J., 2017. Analysing and improving the strategic alignment of firms’ resource dynamics. Journal of Intellectual Capital, 18(1), pp.217-240.
Zhang, A., Moffat, K., Lacey, J., Wang, J., González, R., Uribe, K., Cui, L. and Dai, Y., 2015. Understanding the social licence to operate of mining at the national scale: a comparative study of Australia, China and Chile. Journal of Cleaner Production, 108, pp.1063-1072.
Zivanovic, A.J. and Luck, G.W., 2016. Social and environmental factors drive variation in plant and bird communities across urban greenspace in Sydney, Australia. Journal of environmental management, 169, pp.210-222.