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Summary of the article by David Forman “BHP REVITALISES ITS GLOBAL MANAGEMENT,” Business Review Weekly, April 17 1995, page 24-26.
BHP is setting up the required management to handle a rapid global expansion. They have done this by appointing a network of regional corporate representatives and a corporate general manager, international.
Representing BHP across the world, these managers will facilitate new developments, and assist global expansion. This overseas focus of expansion requires new systems and processes, to take on projects in different countries around the world.
BHP has taken advice from other companies, that have expanded outside their home countries, also background advice from consulting firms. BHP have taken this advice, and created a management model to suit their operations.
By providing regional representatives to deal with governments, bureaucracies and coordinators of cross divisional activities, this model expects BHP to be able to find expansion opportunities. Particularly where opportunities exist that involve more than one divisional group.
An example of this is BHP Power, which develops power stations using the most appropriate energy source for the circumstances. Power is an independent group, drawing on the skills of the Mining and Petroleum divisions where necessary.
The company is looking at other possible new businesses, that are natural developments of the company’s existing businesses, in the same way Power has evolved from Petroleum and Mining. One of these is Manufacturing, using the skills developed in the Steel division.
In 15 years BHP has gone from being a domestic steel producer with small petroleum and mining operations, to having a significant international presence in the steel, oil and mining industries. (Forman, D. 1995, pp. 24-26)
After a six month review of their business position into the next century BHP has developed a strategic plan.(Forman, D. 1995)
The strategic management process uses nine steps to create a strategic plan.
1: Identify the organisations current mission, objectives and strategies.
BHP operates steel, mining and petroleum businesses.
2: Analyse the environment.
They have recognised that many areas that they operate in are suitable for expanding existing operations.
3: Identify opportunities and threats.
The opportunities are to develop businesses that are not yet operating in a particular area. The threats are competitors who move in quicker, and a lack of understanding of the specific environment.
4: Analyse the organisation's resources.
BHP have recognised that they have many skilled people within the steel, mining and petroleum operating divisions.
5: Identifying strengths and weaknesses.
The strength of BHP is in its traditional steel, mining and petroleum operations. The weaknesses are the lack of a co-operative link between the divisions.
6: Reassessing the organisation's mission and objectives.
Merging the organisations' resources with the opportunities in the environment shows the organisation’s opportunities.
OPPORTUNITIES (Robbins,S & Murkeji, D.1994 page 142)
The opportunities are to develop new businesses using the skills of the steel, mining and petroleum people.
The organisation's objectives were to operate these divisions as separate businesses. New objectives will be needed to direct the organisation into these opportunities.
7: Formulating strategies.
Using the eight step decision making process, a strategic plan was formulated. The objective of this plan is worldwide growth, through diversification and direct expansion.
8: Implementing strategies.
Once the strategic plan was decided, the process was implemented to develop an operational plan to achieve the objectives.
9: Evaluating results.
The performance results of this plan, measured by the international growth of the organisation, will show whether the plan requires adjustments or not.
(Robbins,S & Murkeji, D.1994. pp 141-143)
BHP has then used the eight steps of decision making to develop the operational plan.
1: Formulating a problem.
The problem was to find a management model that will help achieve the goal of global expansion and diversification.
2: Identifying decision criteria.
BHP wanted a stronger presence overseas, to be able to recognise and develop opportunities for new projects, with greater co-operation between the steel, petroleum and mining divisions.
3: Allocating weights to the criteria.
Weighting these criteria, divisional co-operation would have scored highest, then the need to have people that can develop new opportunities, followed by the need for regional representatives. All of these criteria would have scored highly.
4: Developing alternatives.
BHP studied other successful global companies, as well as seeking
advice from consulting firms, looking for alternative management systems.
5: Analysing alternatives.
Studying the management systems of other international companies, BHP
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Mining, Occupational safety and health, Dual-listed companies, BHP Billiton
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