BHP Billiton Summary
Ker, P. and Manning, P. 2012, ‘Taxes a drag on coal, Kloppers warns investors’, Sydney Morning Herald, 24 August, viewed 1 September 2012,
Summary
Ker and Manning’s (2012) article discusses the implications faced by BHP Billiton, as a result of the Australian carbon and mining taxes which has caused foreign investors to substantially decrease their investment into the Australian coal industry, that has resulted in the delay of the expansion of Olympic Dam mine. This article reflects the political and regulatory influences that occur in the business environment and how companies must respond to changes in rules and regulations enacted by the government even if there are repercussions.
Application of Concepts
This article contains concepts …show more content…
relating to political/regulatory factors. ‘Evaluating a companies exposure to risky political events and assessing their impact should be key components of any company’s strategy’ (PwC 2006). This process is vital because political risk must be avoided as it affects the profitability of a business (Robson 2012a). With BHP Billiton, the federal opposition is blaming the carbon and mining tax for the delay in the expansion which has made Australia less competitive in the international market (Milman 2012). Thermal coal prices have declined due to shareholders demand for higher returns (Ker and Manning 2012), this exemplifies the impact political factors can have on a business, as it has decreased profits for BHP Billiton (Fitzgerald and White 2012). Globalisation has also led to greater political risk exposure (PwC 2006). Exchange rate fluctuations especially for the Australian dollar, South African Rand and US dollar have a significant impact on BHP Billiton (BHP Billiton 2011), which is said to be another cause for the delay in the expansion, as the strong dollar is making Australia less competitive (Kloppers 2012) and combined with the news taxes, ‘turning Australia into a high cost environment’ (Bolt 2012).
CSR is essential for a business to succeed as it improves the image of a brand and ‘it is in the business’s long-term self-interest’ (Carroll and Shabana 2010). BHP Billiton is a pioneer in Corporate Social Responsibility (Hodge 2012). BHP Billiton continuously invests more in CSR compared to other mining companies (Gaete 2009). BHP has community programs across the globe and has also created various foundations helping local communities such as the Montelíbano Educational Foundation in Colombia (Blowfield 2011). For BHP Billiton, CSR is a critical part of maximizing shareholder returns (Goodyear 2006). Therefore it is CSR embedded.
Analysis
BHP Billiton strategy to delay its project was essential since their funds were limited, as taxes constrain the activities of a business (Robson 2012b) through high operating costs associated with the mining tax and also ‘due to the concerns surrounding the stability of the Eurozone and decline in economic activity’ (Coopes 2012).
However, with the introduction of this government tax policy, BHP Billiton action to delay their expansion project has come with much criticism, as it has resulted in a number of job losses (Stewart 2012). It has affected South Australia substantially and is a major disappointment for the nation as a whole, stated by Iggulden (2012). This shows that ‘political developments have significant implications for the real economy’ (Caliskan and Koksal 2011).
Nevertheless, BHP Billiton cannot be blamed in their response since it is not the only mining company to respond to the government tax policy this way. As stated by Stewart (2012), ‘Major mining companies around the world are revisiting their investment plans and refocusing on cutting costs.’ Hence, BHP Billiton responded to the political/ regulatory influences on their businesses in the most effective and efficient manner, as it was necessary and therefore adapting to the changes in the business …show more content…
environment.
Reference List
BHP Billiton, 2011, ‘A disciplined approach A proven strategy’, BHP Billiton Group, viewed 1 September 2012,
Blowfield, M.
2011, ‘Building Better Community Relationships’, Amma, viewed 1 September 2012,
Bolt, A. 2012, ‘Kloppers confirms: government taxes bad for mining investments’, Herald Sun, 24 August, viewed 1 September 2012,
Caliskan, A. and Koksal, C. 2011, ‘Political Business Cycles, Partisan Politics and the Effects of Political Events on the Stock Market: Evidence from a Developing Economy’, SSRN Working Paper Series, viewed on 9 September 2012,
Carroll, A.B. and Shabana, K.M. 2010, ‘The business case for corporate social responsibility: a review of concepts, research and practice’, International Journal of Management Reviews, vol. 12, no. 1 pp. 85- 105.
Coopes, A. 2012, ‘BHP delays Olympic Dam project as profits dive’, Yahoo News, 22 August, viewed 1 September 2012,
DiPiazza, A. S. and Brenner, I. 2010, ‘Integrating Political Risk Into Enterprise Risk Management’, PriceWaterhouseCoopers, viewed 31 August 2012,
Fitzgerald, B. and White, A. 2012, ‘Rio shrugs off BHP’s problems’, The Australian, viewed 1 September 2012,
Gaete, P. 2012, ‘Expert: BHP Billiton spends more on CSR than rest of mining council, 8 June 2009, viewed 1 September
2012,
Goodyear, W. C. 2006, ‘Social responsibility has a dollar value’, The Age, 27 July 2006, viewed 6 September 2012,
Hodge, K. 2012, ‘CSR review ranks Arup in Arup in Australia’s top 15’, 25 February 2012, viewed 1 September 2012,
Igguilden, T. 2012, ‘Opposition blames Government for BHP plans’, Australian Broadcasting Corporation, 22 August, viewed 1 September 2012,
Ker, P. and Manning, P. 2012, ‘Taxes a drag on coal, Kloppers warns investors’, Sydney Morning Herald, 24 August, viewed 1 September 2012,
Kloppers, M. 2012, ‘Coalition blames carbon tax for delay but BHP points to Aussie dollar’, Startupsmart, 23 August, viewed 31 August,
Milman, O. 2012, ‘Coalition blames carbon tax for delay but BHP points to Aussie dollar’, Startupsmart, 23 August, viewed 31 August,
Robson, H. 2012a, Week 5: The Political Environment (BUSS1002), at the University of Sydney, Sydney, 27 August 2012.
Robson, H. 2012b, Week 6: The Regulatory Environment (BUSS1002), at the University of Sydney, Sydney, 3 September 2012.
Steward, M. R. 2012, ‘BHP Billiton cuts jobs as $28bn Olympic Dam plan unravels’, The Australian, 29 August, viewed 1 September 2012,
Summary
Ker and Manning’s (2012) article discusses the implications faced by BHP Billiton, as a result of the Australian carbon and mining taxes which has caused foreign investors to substantially decrease their investment into the Australian coal industry, that has resulted in the delay of the expansion of Olympic Dam mine. This article reflects the political and regulatory influences that occur in the business environment and how companies must respond to changes in rules and regulations enacted by the government even if there are repercussions.
Application of Concepts
This article contains concepts …show more content…
relating to political/regulatory factors. ‘Evaluating a companies exposure to risky political events and assessing their impact should be key components of any company’s strategy’ (PwC 2006). This process is vital because political risk must be avoided as it affects the profitability of a business (Robson 2012a). With BHP Billiton, the federal opposition is blaming the carbon and mining tax for the delay in the expansion which has made Australia less competitive in the international market (Milman 2012). Thermal coal prices have declined due to shareholders demand for higher returns (Ker and Manning 2012), this exemplifies the impact political factors can have on a business, as it has decreased profits for BHP Billiton (Fitzgerald and White 2012). Globalisation has also led to greater political risk exposure (PwC 2006). Exchange rate fluctuations especially for the Australian dollar, South African Rand and US dollar have a significant impact on BHP Billiton (BHP Billiton 2011), which is said to be another cause for the delay in the expansion, as the strong dollar is making Australia less competitive (Kloppers 2012) and combined with the news taxes, ‘turning Australia into a high cost environment’ (Bolt 2012).
CSR is essential for a business to succeed as it improves the image of a brand and ‘it is in the business’s long-term self-interest’ (Carroll and Shabana 2010). BHP Billiton is a pioneer in Corporate Social Responsibility (Hodge 2012). BHP Billiton continuously invests more in CSR compared to other mining companies (Gaete 2009). BHP has community programs across the globe and has also created various foundations helping local communities such as the Montelíbano Educational Foundation in Colombia (Blowfield 2011). For BHP Billiton, CSR is a critical part of maximizing shareholder returns (Goodyear 2006). Therefore it is CSR embedded.
Analysis
BHP Billiton strategy to delay its project was essential since their funds were limited, as taxes constrain the activities of a business (Robson 2012b) through high operating costs associated with the mining tax and also ‘due to the concerns surrounding the stability of the Eurozone and decline in economic activity’ (Coopes 2012).
However, with the introduction of this government tax policy, BHP Billiton action to delay their expansion project has come with much criticism, as it has resulted in a number of job losses (Stewart 2012). It has affected South Australia substantially and is a major disappointment for the nation as a whole, stated by Iggulden (2012). This shows that ‘political developments have significant implications for the real economy’ (Caliskan and Koksal 2011).
Nevertheless, BHP Billiton cannot be blamed in their response since it is not the only mining company to respond to the government tax policy this way. As stated by Stewart (2012), ‘Major mining companies around the world are revisiting their investment plans and refocusing on cutting costs.’ Hence, BHP Billiton responded to the political/ regulatory influences on their businesses in the most effective and efficient manner, as it was necessary and therefore adapting to the changes in the business …show more content…
environment.
Reference List
BHP Billiton, 2011, ‘A disciplined approach A proven strategy’, BHP Billiton Group, viewed 1 September 2012,
Blowfield, M.
2011, ‘Building Better Community Relationships’, Amma, viewed 1 September 2012,
Bolt, A. 2012, ‘Kloppers confirms: government taxes bad for mining investments’, Herald Sun, 24 August, viewed 1 September 2012,
Caliskan, A. and Koksal, C. 2011, ‘Political Business Cycles, Partisan Politics and the Effects of Political Events on the Stock Market: Evidence from a Developing Economy’, SSRN Working Paper Series, viewed on 9 September 2012,
Carroll, A.B. and Shabana, K.M. 2010, ‘The business case for corporate social responsibility: a review of concepts, research and practice’, International Journal of Management Reviews, vol. 12, no. 1 pp. 85- 105.
Coopes, A. 2012, ‘BHP delays Olympic Dam project as profits dive’, Yahoo News, 22 August, viewed 1 September 2012,
DiPiazza, A. S. and Brenner, I. 2010, ‘Integrating Political Risk Into Enterprise Risk Management’, PriceWaterhouseCoopers, viewed 31 August 2012,
Fitzgerald, B. and White, A. 2012, ‘Rio shrugs off BHP’s problems’, The Australian, viewed 1 September 2012,
Gaete, P. 2012, ‘Expert: BHP Billiton spends more on CSR than rest of mining council, 8 June 2009, viewed 1 September
2012,
Goodyear, W. C. 2006, ‘Social responsibility has a dollar value’, The Age, 27 July 2006, viewed 6 September 2012,
Hodge, K. 2012, ‘CSR review ranks Arup in Arup in Australia’s top 15’, 25 February 2012, viewed 1 September 2012,
Igguilden, T. 2012, ‘Opposition blames Government for BHP plans’, Australian Broadcasting Corporation, 22 August, viewed 1 September 2012,
Ker, P. and Manning, P. 2012, ‘Taxes a drag on coal, Kloppers warns investors’, Sydney Morning Herald, 24 August, viewed 1 September 2012,
Kloppers, M. 2012, ‘Coalition blames carbon tax for delay but BHP points to Aussie dollar’, Startupsmart, 23 August, viewed 31 August,
Milman, O. 2012, ‘Coalition blames carbon tax for delay but BHP points to Aussie dollar’, Startupsmart, 23 August, viewed 31 August,
Robson, H. 2012a, Week 5: The Political Environment (BUSS1002), at the University of Sydney, Sydney, 27 August 2012.
Robson, H. 2012b, Week 6: The Regulatory Environment (BUSS1002), at the University of Sydney, Sydney, 3 September 2012.
Steward, M. R. 2012, ‘BHP Billiton cuts jobs as $28bn Olympic Dam plan unravels’, The Australian, 29 August, viewed 1 September 2012,