Bhp Billiton

Executive Summary

The purpose of this report is to address and develop a strategic plan to expand the exportation of BHP Billiton’s iron ore business to Japan.  BHP Billiton is the leading global mining company which headquartered in Melbourne, Australia.  BHP Billiton is one of the world’s largest producers of natural resources that offer a large range of its natural mineral products such as iron ore, metallurgical coal, copper and uranium and have significant interests in conventional and unconventional oil and gas and energy coal.

In current trend, Japan government estimates that Australia’s iron ore surplus to Japan will reach estimated US$18.6 billion overtaking China for biggest trade surplus. This research shows that there is huge market potential in Japan for iron ore hence this report recommends BHP Billiton to expand and grow their export business to Japan in term to capture and increase market share in Japan. A new strategically and well-developed strategy plan is critical for BHP Billiton to be success and achievable in a foreign country.

This report include will also provide a details analysis of the firm, target market, target country and strategic plan. Moreover, this report also comprises two quantitative techniques to improve the strategic plan for BHP Billiton. The two quantitative techniques are project management and inventory control. Project management technique allows BHP Billiton to address the sequence of activities and the time frame of each stage. Furthermore, it also allows the company to determine which activities can be overlapped thus it can save time and cost. Besides, as inventory control, it keeps track and record on their inventory of their warehouse in Japan when should they restock and the leap time of restocking.

Last but not least, this report provides a recommendation for BHP Billiton of the expansion method in order for them to run their operations in a more efficient and effective way in a new country and market.

Introduction
        The purpose of writing this report is to address the export and develop a strategic plan to expand BHP Billiton to Japan. In this report, it will emphasise on exporting issues and recommending strategic plan that should be undertaken by BHP Billiton in order to maximise its export and company’s performance and operation. After conducting further analysis, iron ore product is highly demanded in Japanese market and selected to be the main focus for exporting including developing strategic operation solution to improve company’s performance.

BHP Billiton was established in Melbourne, Australia since 1885. BHP Billiton are operating based on metal and mining such as iron ore, coal, aluminium, nickel and silver assets. Moreover, BHP Billiton operation are spread through six continent around the globe consisting corporate office, production unit, processing center and marketing office. By that, BHP Billiton has been considered as one of the biggest metal and mining company in the world that able to serve quality product to its customers.

Hence, BHP Billiton will keep innovating, expanding its operations and improve its performance to deliver the best product and service for customers. Further analysis regarding to BHP Billiton exporting will be discussed to support the strategic plan to expand company’s export to Japan.

1. Firm Analysis

1.1 Range of products and services

BHP Billiton is the world’s largest producers of major commodities on its current trading operations including coal, copper, iron ore, nickel and uranium furthermore a significant interests in oil and gas (BHP Billiton 2015). The diversification of BHP Billiton portfolio  has sets them apart from their competitors and considered to be one of the biggest metal and mining company in the world. Therefore, it can be a strength of the BHP Billiton.

1.2 Current trading operations

The high demand of Iron Ore in the market urge BHP Billiton to expand its joint venture relationship with ITOCHU Corporation and MITSUI Co. Ltd for extension of Western Australia Iron Ore in 2013. ITOCHU and Mitsui individually invested approximately of US$0.8 million and US$0.7 million hence both companies collectively hold a 15 per cent interest in BHP Billiton’s Western Australia Iron Ore current mine, rail and port infrastructure (BHP Billiton 2015). In year 2014, BHP Billiton already ships one billion tonne of iron ore to japan starting since year 1966 (BHP Billiton 2014).

1.3 Export capacities

[pic 1]Sources: Market Realist 2015

Iron Ore is selected mineral to be exported due to high demand in Japanese market (Glynn 2015). According to Market Realist (2015), BHP are committed to increase its production from 250 million tonnes to 290 million tonnes of Iron ore by the end of 2018 financial year and go beyond 370 million tonnes if a range of longer-term expansion opportunities in the future.

1.4 Market strength and financial performances

Furthermore, BHP Billiton operated in more than 100 locations in 25 countries across the world including in United States, Canada, South America, Australia, and Asia countries such as Thailand, Pakistan (BHP Billiton 2015). BHP Billiton's commodity and geographic diversification enable them to lower its risk profile and strengthen their income stream.

[pic 2][pic 3]

Sources: Annual Report 2014

The Financial statement of BHP Billiton for the year ended 30 June 2014 below shows that they are capable to generate profit after taxation of 15,244 million USD which is a very positive and healthy financial condition.  The unique attribute of quality of the employees, asset base and their strategy of owning and operating large, long life, low-cost, expandable, upstream assets diversified by product, geographically and market. Furthermore, from all range of product of BHP Billiton, iron ore accounted for thirty percent of the total revenue in year 2014 and resulted iron ore as the biggest profitable asset of the BHP Billiton compare to other minerals.Besides, BHP Billiton is a company that have committed to health and safety of their employees,  environment and  communities in which they operate. The long-term actions will enable BHP Billiton to build their own community and work together to make the people who live close to our business have a better social life and make a positive contribution to long-lasting relationships.

1.5 Operations relevant to this export expansion

The unit cash cost for iron ore fell 31% to less than US$ 19 per tonne for the year and further decreases to US$17 per tonne in the second half (Market Realist 2015). Despite the global price for iron ore is decreasing, BHP Billiton is focusing to low cost its productivity and  resulted in volume growth above the original capital investment (BHP Billiton 2015). Therefore, it will not affect the production of Iron Ore on BHP Billiton.

1.6 Export performance and strategies