BHP Billiton Limited SWOT Analysis / Matrix

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SWOT analysis is a strategic planning tool that can be used by BHP Billiton Limited managers to do a situational analysis of the organization . It is a handy technique to map out the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) BHP Billiton Limited is facing in its current business environment.

The BHP Billiton Limited is one of the leading companies in its industry. BHP Billiton Limited maintains its dominant position in market by carefully analyzing and reviewing the SWOT analysis. SWOT analysis a highly interactive process and requires effective coordination among various departments within the company such as – marketing, finance, operations, management information systems and strategic planning.

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The SWOT Analysis framework enables an organization to identify the internal strategic factors such as -strengths and weaknesses, & external strategic factors such as - opportunities and threats. It leads to a 2X2 matrix – also called SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix enables the managers of the BHP Billiton Limited to develop four types of strategies:

SO (strengths-opportunities) Strategies
WO (weaknesses-opportunities) Strategies
ST (strengths-threats) Strategies
WT (weaknesses-threats) Strategies

BHP Billiton Limited swot analysis / matrix

SWOT Matrix Strategies Objective

The central purpose of SWOT matrix is to identify the strategies that a company can utilize to exploit external opportunities, counter threats, and build on & protect BHP Billiton Limited strengths, and eradicate its weaknesses.

Step by Step Guide to BHP Billiton Limited SWOT Analysis

Strengths of BHP Billiton Limited – Internal Strategic Factors

As one of the leading firms in its industry, BHP Billiton Limited has numerous strengths that enable it to thrive in the market place. These strengths not only help it to protect the market share in existing markets but also help in penetrating new markets. Based on Fern Fort University extensive research – some of the strengths of BHP Billiton Limited are –

Read - BHP Billiton Limited Porter 5 Forces Analysis & Industry Analysis
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Automation of activities brought consistency of quality to BHP Billiton Limited products and has enabled the company to scale up and scale down based on the demand conditions in the market.
High level of customer satisfaction – the company with its dedicated customer relationship management department has able to achieve a high level of customer satisfaction among present customers and good brand equity among the potential customers.
Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
Good Returns on Capital Expenditure – BHP Billiton Limited is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
Successful track record of integrating complimentary firms through mergers & acquisition. It has successfully integrated number of technology companies in the past few years to streamline its operations and to build a reliable supply chain.
Strong Free Cash Flow – BHP Billiton Limited has strong free cash flows that provide resources in the hand of the company to expand into new projects.
Highly skilled workforce through successful training and learning programs. BHP Billiton Limited is investing huge resources in training and development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more.
Highly successful at Go To Market strategies for its products.

Weakness of BHP Billiton Limited – Internal Strategic Factors

Weakness are the areas where BHP Billiton Limited can improve upon. Strategy is about making choices and weakness are the areas where an organization can improve using SWOT analysis and build on its competitive advantage and strategic positioning.

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The marketing of the products left a lot to be desired. Even though the product is a success in terms of sale but its positioning and unique selling proposition is not clearly defined which can lead to the attacks in this segment from the competitors.
The profitability ratio and Net Contribution % of BHP Billiton Limited are below the industry average.
Not very good at product demand forecasting leading to higher rate of missed opportunities compare to its competitors. One of the reason why the days inventory is high compare to its competitors is that BHP Billiton Limited is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
Investment in Research and Development is below the fastest growing players in the industry. Even though BHP Billiton Limited is spending above the industry average on Research and Development, it has not been able to compete with the leading players in the industry in terms of innovation. It has come across as a mature firm looking forward to bring out products based on tested features in the market.
Limited success outside core business – Even though BHP Billiton Limited is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
Days inventory is high compare to the competitors – making the company raise more capital to invest in the channel. This can impact the long term growth of BHP Billiton Limited
Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.

Opportunities for BHP Billiton Limited – External Strategic Factors

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Government green drive also opens an opportunity for procurement of BHP Billiton Limited products by the state as well as federal government contractors.
New environmental policies – The new opportunities will create a level playing field for all the players in the industry. It represent a great opportunity for BHP Billiton Limited to drive home its advantage in new technology and gain market share in the new product category.
Stable free cash flow provides opportunities to invest in adjacent product segments. With more cash in bank the company can invest in new technologies as well as in new products segments. This should open a window of opportunity for BHP Billiton Limited in other product categories.
New customers from online channel – Over the past few years the company has invested vast sum of money into the online platform. This investment has opened new sales channel for BHP Billiton Limited. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
The new technology provides an opportunity to BHP Billiton Limited to practices differentiated pricing strategy in the new market. It will enable the firm to maintain its loyal customers with great service and lure new customers through other value oriented propositions.
The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as BHP Billiton Limited to increase its profitability.
Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of BHP Billiton Limited.
The market development will lead to dilution of competitor’s advantage and enable BHP Billiton Limited to increase its competitiveness compare to the other competitors.

Threats BHP Billiton Limited Facing - External Strategic Factors

Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
Intense competition – Stable profitability has increased the number of players in the industry over last two years which has put downward pressure on not only profitability but also on overall sales.
As the company is operating in numerous countries it is exposed to currency fluctuations especially given the volatile political climate in number of markets across the world.
Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for BHP Billiton Limited in those markets.
Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
Rising raw material can pose a threat to the BHP Billiton Limited profitability.

Limitations of SWOT Analysis for BHP Billiton Limited

Although the SWOT analysis is widely used as a strategic planning tool, the analysis does have its share of limitations.

Certain capabilities or factors of an organization can be both a strength and weakness at the same time. This is one of the major limitations of SWOT analysis . For example changing environmental regulations can be both a threat to company it can also be an opportunity in a sense that it will enable the company to be on a level playing field or at advantage to competitors if it able to develop the products faster than the competitors.
SWOT does not show how to achieve a competitive advantage, so it must not be an end in itself.
The matrix is only a starting point for a discussion on how proposed strategies could be implemented. It provided an evaluation window but not an implementation plan based on strategic competitiveness of BHP Billiton Limited
SWOT is a static assessment - analysis of status quo with few prospective changes. As circumstances, capabilities, threats, and strategies change, the dynamics of a competitive environment may not be revealed in a single matrix.
SWOT analysis may lead the firm to overemphasize a single internal or external factor in formulating strategies. There are interrelationships among the key internal and external factors that SWOT does not reveal that may be important in devising strategies.

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Weighted SWOT Analysis of BHP Billiton Limited

In light of the above mentioned limitations of the SWOT analysis / matrix, corporate managers decided to provide weightage to each internal strength and weakness of the firm. Organizations also assess the likelihood of events taking place in the coming future and how strong their impact could be on company's performance.

This method is called Weighted SWOT analysis. It is better than doing simplistic SWOT analysis because with Weighted SWOT Analysis BHP Billiton Limited managers can focus on the most critical factors and discount the non-important one. It also solves the long list problem where organizations ends up making a long list but none of the factors deemed too critical.

Limitation of Weighted SWOT analysis of BHP Billiton Limited

This approach also suffers from one major drawback - it focus on individual importance of factor rather than how they are collectively important and impact the business holistically.

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Example of Weighted SWOT Analysis

You can email us to get an example document of Weighted SWOT analysis.

SWOT Worksheet & Template

If you like to do your own SWOT analysis or want to make your own Weighted SWOT SWOT matrix then feel free to download Fern Fort University SWOT Analysis Template.

References / Citations & Bibliography

M. E. Porter, Competitive Strategy(New York: Free Press, 1980)
A. D. Chandler, Strategy and Structure (Cambridge, Mass.: MIT Press, 1962)
O. E. Williamson, Markets and Hierarchies(New York: Free Press, 1975);
L. Wrigley, Divisional Autonomy and Diversification (PhD, Harvard Business School, 1970)
R. E. White, Generic Business Strategies, Organizational Context and Performance: An Empirical Investigation, Strategic Management Journal7 (1986)