Documentos de Académico
Documentos de Profesional
Documentos de Cultura
SIto Report
SIto Report
The purpose of this report is to address and develop a strategic plan to expand the exportation of
BHP Billitons iron ore business to Japan. BHP Billiton is the leading global mining company
which headquartered in Melbourne, Australia. BHP Billiton is one of the worlds 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 Australias 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 companys 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 companys 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 companys export
to Japan.
1. Firm Analysis
1.1 Range of products and services
BHP Billiton is the worlds 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 Billitons
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
Market Analysis
Market analysis is a critical factor that need to be analysed before BHP Billiton
can develop a strategic plan for expansion of its company that based in Australia by exporting its
product into Japan. By undertaking market analysis, it assists BHP Billiton to understand the
market and identify different aspects that can impact the business.
Export Market
From over the past five years, the total imports for Iron Ore in Japan keep increasing every
year. In the year 2014, Australia was the largest exporter of Iron Ore into Japan and total sales
that have been recorded is 136.44 million tons of Iron Ore being exported to Japan. Thus, it was
an increase of 0.5% from the total sales in 2013 (Market Realist 2015). Moreover, due to positive
demand of Iron Ore, the Iron Ore market is prospective to endure attractive in the next two decades
and predicted the volume of Iron Ore will increase to 30% by 2020 from todays total market
volume (Exxaro n.d). Besides that, the other key factors that push Iron Ore demand in the market
is scrap metal shortage that will keep continue until 2020 which had forced Iron Ore demand to
increase significantly (Exxaro n,d).
Consumer Preferences
Since 1970, Japan has become one of the largest imports of crude steel from Australia and
also have the largest market of steel in the world (Crompton 2013). By that, Japan prefers to get
Iron Ore supply from Australia instead from India and Brazil. Further analyst has found out that
Japanese prefer Australian product than others because of its quality assurance, long-term contract
and bulk shipment as Japan are very attentive when choosing importing products (Singh 2013).
3.2 Political
Japan adopted a democracy political system in 1947 in order to reconstruct the country
after the World War II (Darlington 2014). Reconstruct was needed due to severe nuclear radiation
in Japan specifically in Hiroshima and Nagasaki during the World War II in 1945 (CIA 2015).
Thus, Japan was helped by United States in which peace treaty as a returned. Besides, due to
deflation in Yen currency, Japan government published current policies that will support domestic
as well as International business and trade related to Japan to boost their economic growth which
have been stagnate this current year and slowing down for the overall growth for decades
(Darlington 2014). Japan and Australia has good relationship not only in economic but also for
politic whereby both country perceive as democracy country, human rights and International
Security. Thus, this can be a support BHP Billiton to do export of their product to Japan.
3.3 Legal
As Japan is the world leading innovation country, a lot of overseas companies are actually
seek and compete to expand their company or move it to Japan (Trade and investment 2015).
Overseas companies are attracted because Japan rank the forth as a country that spend on the
Research and Development (R&D) activities (Azuma 2015). Thus, before an overseas company
can actually enter to Japan, they must first understand about Japans laws and regulations. There
are different regulations for every different entry mode and thus overseas company must choose
the entry mode that suite for their business. Besides entry modes, overseas company must also
understand on working rules such as working hours or local content requirement which is a rule
that overseas company must employ the local people to work (IMA 2015). As mention before,
Japan government has just establish policies to encourage foreign business in Japan, however there
is major barrier such as language that overseas company that might take it into consideration.
Nevertheless, the government has promised to educated their people with English and also
provide a technology that can have direct translation from Japan to English and vice versa
(Darlington 2014). Furthermore, government has also promised to increase the selection of
languages such as Indonesian, French, Thai, and Myanmar by 2020 (Azuma 2015). By that, BHP
Billiton may find it easier to do export to Japan, however BHP Billiton must choose entry mode
that suite them.
3.5 Demographic
Japan is having an issue whereby the majority of the population are ages 60 and above
(Index Mundi 2014). Thus, it is very common for people who are ages above 65 that still working
in Japan (BBC News 2015). By that, Japan major issue will be high death rate and low birth rate.
Moreover, Japan is the second country in the world that has a low-birth rate whereby the lowest
birth rate is in Germany (BBC News 2015). Low-birth rate occur in Japan is due to high living
cost in Japan and also unintended for young citizen in Japan to get married (Oshio 2015).
According to The Economist (2014), the women in Japan whom are willing to be a full housewife
encounter difficulties to find men to be married. This issue is occurred due to inability of men to
find a stable job to build or support the family traditionally. Thus, this may be the reason for the
declining in the birth rate in Japan. Nevertheless, the government have come out with the solution
to solve the population issue as they are aware that it might have effect on the economic. Japan
government will improve the health of old people, however the government still has no plan for
the youngster regarding to the birth rate. There are number of economic expert that predict that
Japan will actually come out with accepting immigrant that want to live in Japan in which may
help the dropping birth rate occur in Japan (Ezrati 2015).
Strategic Plan:
Production/ Service
As BHP Billiton is considered as one of the largest mining industry in the world, it sales keep on
increasing from time to time due to high demand. From BHP Billiton sales report, it is reported an
increase in output of Iron Ore for a record of 233 million tons. Moreover, BHP Iron Ore
productivity is predicted to increase by seven percent and unit cost expected to fall to $16 per tonne
(Business Insider 2015).From its fast and rapid development on its production, there is a higher
chance for BHP Billiton to exports its Iron Ore product to potential market such as Japan to expand
its companys capacity which makes BHP Billiton not relying on their domestic market. Therefore,
looking at companys performance and productivity, there is a high chance for BHP Billiton to
export its product to Japan market which has high demand for Iron Ore product (ABC News 2015).
BHP Billiton has joint venture with several company in Japan and thus one of the office is
located at Pacific Century Place no. 27F, specifically located in Chiyoda-ku, Japan and it was
founded in 2002 (Bloomberg Business 2015). The office is actually provided by the partner of
joint venture for the purpose of maintaining service line. Furthermore, Japan is one of an important
client of BHP Billiton whom demand and depend on BHP Billiton as their main supplier of natural
resources. The current joint venture of BHP Billiton are ITOCHU and MITSUI. Thus, it was
believed that the joint venture partner will always provide BHP Billiton an office to do monitoring
on the product coming from Australia as maintaining their services
3.8 Labour
BHP Billiton is a leading global resources company with total 47,004 employees registered
in the year end of 2014 around the globe (Statistica 2014). As a big company, BHP Billiton always
prioritize its employee health and safety to build long-term relationship through working together
to deliver positive contribution. Besides that, BHP Billiton employee were educated and trained to
embrace the value of respect, teamwork, openness, trust and diversity as one of the companys
strategy (BHP Billiton 2015). Furthermore, BHP Billiton also attracting and developing people
with exceptional skills and would like to make a difference and stretch people capabilities and
helping us to contribute for long-term future (BHP Billiton 2015).
3.9 Material
Expansion of business to Japan is to enlarge the outreach of BHP Billiton. Moreover, not
only enlarging our outreach, but also maintaining to serve a better services in which related to BHP
Billiton vision. Therefore, resources like physical resources or material and human resources is
needed to enhance the productivity in the office that will be provided by the joint venture partner
in Japan. The material like table, chair, computer, telephone, internet, printer and etc. Moreover,
for the human resources, BHP may choose to employ the local people and also bring in some of
the worker from main branch to work in Japan. According to International HRM Association
(2015), it is very crucial to employ local citizen when you are doing business overseas because
local citizen understand more about their own country market and regulation. Besides, as for main
branch worker, it is also crucial as they are the person who in charge to track and report on how
the business going on overseas.
3.10 Warehousing
As Iron Ore in Japan is one of the biggest market and highly demanded for BHP Billiton,
it is very important and recommended for BHP Billiton to set up warehousing facilities to store
its product in Japan to ensure there is sufficient stock for distribution. According to Belcher
(2014), by implementing storage of inventory in warehouse it allows BHP Billiton to track
inventory and customers able to receive iron ore product delivery time can be cut rather than
waiting the product delivery to arrive from exporting country. Therefore, warehousing
implementation can help BHP Billiton to improve on its exporting sector to become more effective
and efficient.
BHP Billiton locations spread through continents in Asia, Europe, America, Oceania and
Africa. However, each different locations has a different roles and associates such as production
unit of oil and gas, coal and iron ore, head offices and corporate offices. However, there are only
two location for iron ore production unit which is in Australia and Brazil whereas geographically
Australia is much closer to Japan to export iron ore goods as it can reduce exporting operation cost
(BHP Billiton 2015).
Furthermore, in response in overcoming customer demand and providing better service for
customers, it is fully recommended that BHP Billiton to set up warehousing facilities and corporate
office in Japan as it can improve customer service and on time delivery service performance. With
that, it allows BHP Billiton to manage its stock level in Japan to ensure adequate supply for
customer ordering.
3.12 Marketing
BHP Billiton always promote their product in which emphasizing on high quality product.
Besides, BHP Billiton has also highlighted on their quality of the human resources, and the
unchanged strategy of the operations which are large and low-cost (BHP Billiton 2015).
Furthermore, safety of environment and workforce is another factor that have been marked as an
crucial factor for the company strategy. According to Linkedin (2015), BHP Billiton have top 24
marketing managers in which each manager handle the marketing in their own country. Thus, each
of every marketing manager market the consistent message to their customers whereby consistency
has an important role in doing the global business (Kotler & Keller 2012). Although BHP Billiton
marketing managers has emphasized on the same message, however there must be a tailor of
marketing strategy regarding to match with the country that they expand their business to.
Therefore, BHP Billiton have just to keep their consistency of promoting their product which is
consistent with the vision unchanged strategy and have tailor their marketing strategy
accordingly toward the country.
3.13 Joint-venture
Previously, BHP Billiton already had joint venture experiences with several companies all over
the world such as 50:50 owned company with Rio Tinto in year 2009 for covering the entirety of
both companies Western Australian iron ore assets (BHP Billiton 2009). Besides, BHP Billiton
also have 50:50 joint venture partner with Vale at the Samarco operations in Brazil (BHP Billiton
2011). Moreover, the recently extended of BHP Billiton are Western Australia Iron Ore joint
venture relationship with Mitsui & Co. Ltd (MITSUI) and ITOCHU Corporation (ITOCHU) who
combine invested around $1.5billion into Jimblebar mine expansion project (BHP Billiton
2013). Therefore, based on the successful joint venture, BHP Billiton will still using joint venture
as their strategy for expansion and hence it is also to increase the market share of Iron Ore as well
as natural mineral in Japan.
Recommendation
It is highly recommended for BHP Billiton keep expanding their business to Japan in term
of capturing more market share. The entry mode that suit and recommended for BHP Billiton will
be joint venture as it is less costly and their partner of local company will help BHP Billiton in
term of regulations or others that related to government. Furthermore, it is also a win-win situation
between Australia and Japan in which may boost their countries GDP as well as relationship not
only in business but also political. Therefore,
Conclusion
Hire staff F E 15
This project management is trying to illustrate time taken to build warehouse facility in Japan as
one of their exporting expansion strategic plan. In this project, the critical path is the longest
activity in terms of time for the project which is A-B-C-E-F-G. There is a slack for the critical
path on project management is 50 days difference on building the facility and preparing legal
requirement documents.if there is any activity longer than 160 days will affect whole project to
be delayed.
2. Inventory Control
Qopt =
Reorder point, R =
= 2,0504,795 / 25 (days)
Inventory control will be used as one of the quantitative methods because of BHP Billiton act as
a supplier of the Iron Ore to the local company. Thus, BHP Billiton must make sure that their
warehouse that they are going to build in Japan must not run out of inventory needed. From the
calculation above, it is estimated that BHP Billiton must restock their inventory in their
warehouse when they only have 820,192 tonnes of Iron Ore left. Moreover, they must restock
back 14,143,136 tonnes of Iron Ore in which will have a leap time of 25 days. Therefore, BHP
Billiton must have always keep track and record on their inventory in their warehouse in Japan.
List of References:
International HRM Association 2015, Managing Human Resources in an International Business,
viewed 20 September 2015,
<http://wps.prenhall.com/wps/media/objects/728/745520/chapter13.pdf >
Bloomberg Business 2015, BHP Billiton Japan Ltd, viewed 20 September 2015,
<http://www.bloomberg.com/profiles/companies/BHPZBZ:JP-bhp-billiton-japan-ltd >
Mitsui 2015, Iron Ore: a proud past, a promising future, viewed 20 September 2015,
<https://www.mitsui.com/jp/en/business/challenge/1203364_1856.html >
Kotler, P & Keller, KL 2012, Marketimg Management, 14th edn., Pearson Education, Edinburgh
Gate.
Market Realist 2015, BHP's Fiscal 2015 Results: Is Everything Going According to Plan?,
viewed 16 September 2015, < http://marketrealist.com/2015/09/everything-going-according-plan-
bhp-billiton/>
Glynn, J 2015, Japan Set to Overtake China for Australias Biggest Trade Surplus, viewed 8th
August 2015, < http://www.wsj.com/articles/ironoreplungereshapesaustraliastradebalance-
1434357342>
Market Realist 2015, Japan Iron Ore Imports and Crude Steel Production, Iron Ore Price, viewed
15 September 2015, <http://marketrealist.com/2015/06/iron-ore-prices-stage-comeback-june-16-
will-last/>.
Exxaro n,d 2013, Iron Ore Market Analysis in Japan and China, Iron Ore Demand Analysis,
viewed 15 September 2015,
<http://www.exxaro.com/pdf/icpr/ef/me/iron_analysis.htm>.
Crompton, P 2013, Future Trends in Japanese Steel Consumption, Department of Economics, The
University of Western Australia, Nedlands, viewed 15 September 2015,
<https://ecompapers.biz.uwa.edu.au/paper/PDF%20of%20Discussion%20Papers/1999/99-
10.pdf>.
Ezrati, M 2015, The Demographic Timebomb Crippling Japans Economy, viewed 18 September
2015, < http://www.nationalinterest.org/feature/the-demographic-timebomb-crippling-japans-
economy-12479 >
Singh, R 2013, Japan may prefer Australia to India for Iron Ore Supply, LiveMint, viewed 15
September 2015, <http://www.livemint.com/Politics/aaubru4ixbSKeTfAfGzMQK/Japan-may-
prefer-Australia-to-India-for-iron-ore-supply.html>.
Nohara, Y 2015, In Japan, the rise of the machines solves a labor problem, viewed 15 September
2015, < http://www.japantimes.co.jp/news/2015/09/15/business/economy-business/japan-rise-
machines-solves-labor-problem/#.VffJBBGqqko >
Krugman, P 2015, Japans Economy, Crippled by Caution, viewed 15 September 2015, <
http://www.nytimes.com/2015/09/11/opinion/paul-krugman-japans-economy-crippled-by-
caution.html?_r=0>
FOO 2015, Research and Analysis Overseas Business risk Japan , viewed 17 September 2015,
<https://www.gov.uk/government/publications/overseas-business-risk-japan/overseas-business-
risk-japan>
Validakis, V 2014, BHP Billiton celebrate the export of one billion tonne of Iron Ore to Japan,
viewed 17 September 2015, < http://www.australianmining.com.au/news/bhp-billiton-celebrates-
the-export-of-one-billiont >
CIA 2015, The World Fact Book, viewed 17 September 2015,
<https://www.cia.gov/library/publications/the-world-factbook/geos/ja.html>
Darlington, R 2014, A Short Guide to the Japanese Political System, viewed 16 September 2015,
<http://www.rogerdarlington.me.uk/Japanesepoliticalsystem.html >
Crewsent, JM 2015, Japan Country Brief, viewed 16 September 2015, <
http://dfat.gov.au/geo/japan/pages/japan-country-brief.aspx >
OOCE n.d, Trade in Australia, viewed 16 September 2015, <
https://atlas.media.mit.edu/en/profile/country/aus/ >
Bank of Japan 2015, Outlook for Economic Activity and Prices, viewed 17 September 2015,
<https://www.boj.or.jp/en/mopo/outlook/gor1504b.pdf >
Chan, SP 2014, Godfather of Abenomics: Japans sales tax hike must be delayed, viewed 17
September 2015 <http://www.telegraph.co.uk/finance/economics/11232512/Godfather-of-
Abenomics-Japans-sales-tax-hike-must-be-delayed.html >
Nechako, S 2014, Business Expansion: Why Expand?, Community Futures, viewed 17 September
2015, <http://www.cf-sn.ca/business/business_expansion/intro.php>.
Patra, P & Bartaki, S 2009, Productivity Improvement Using Ten Process Commandments,
Project Management Institute, India, viewed 23 September 2013,
<http://www.pmi.org/en/Knowledge-Center/Knowledge-Shelf/~/media/PDF/Knowledge-
Shelf/Patra_Bartaki_2009.ashx>.
Worstall, T 2014, Japans GDP Fall by 6.8% in the Second Quarter on the Sales Tax Rise, viewed
17 September 2015, < http://www.forbes.com/sites/timworstall/2014/08/13/japans-gdp-falls-by-
6-8-in-the-second-quarter-on-sales-tax-rise/ >
BBC News 2015, Germany passes Japan to have the worlds lowest birth rate, viewed 18
September 2015, <http://www.bbc.com/news/world-europe-32929962 >
Business Insider 2015, Mining Giants BHP Billitons iron ore production rises but gas slips,
Markets, viewed 18 september 2015, <http://www.businessinsider.my/afp-bhp-billitons-iron-ore-
production-rises-but-gas-slips-2015-7/#0buQ75k72pOq1jKq.97>.
ABC News 2015, BHP Billiton says increased productivity will boost iron output, Business,
viewed 18 September 2015, <http://www.abc.net.au/news/2015-07-22/bhp-billiton-says-
increased-productivity-will-boost-iron-output/6639094>.
Statistica 2014, BHP Billiton total number of employee, Mining, Metals, Minerals, viewed 18
September 2015, <http://www.statista.com/statistics/274234/number-of-employees-at-bhp-
billiton-by-region/>
BHP Billiton 2015, Our Company, Australia , viewed 8 August 2015, <
http://www.bhpbilliton.com/aboutus/ourcompany >.
Belcher, LM 2014, How to organize storage inventory in a warehouse, Business Chron, viewed
19 September 2015, <http://smallbusiness.chron.com/organize-storage-inventory-warehouse-
13246.html>.
BHP Billiton 2009, Rio Tinto and BHP Billiton announce Western
Australian Iron Ore Production Joint Venture, Australia , viewed 8 August 2015, <
http://www.bhpbilliton.com/investors/news/rio-tinto-and-bhp-billiton-announce-western-
australian-iron-ore-production-joint-venture>.
BHP Billiton 2011, BHP Billiton Approves Samarco Expansion, Australia, viewed 8 August 2015,
< http://www.bhpbilliton.com/investors/news/bhp-billiton-approves-samarco-expansion>
BHP Billiton 2013, BHP Billiton Extends Western Australia Iron Ore Joint Venture Relationship,
Australia, viewed 8 August 2015, <http://www.bhpbilliton.com/investors/news/bhp-billiton-
extends-western-australia-iron-ore-joint-venture-relationship>
BHP Billiton 2003, Posmac Joint Venture Finalised, Australia, viewed 8 August 2015 <
http://www.bhpbilliton.com/investors/news/posmac-joint-venture-finalised>