Boston matrix analysis for BHP Billiton Group The WritePass Journal

Boston matrix analysis for BHP Billiton Group Abstract Boston matrix analysis for BHP Billiton Group . This aspect prompted the company to follow a question mark strategy because despite its low market share, the provision of various natural resources took place in a high growing market (Schemerhorn, 2013). However, at the end of 2012, the corporation gradually started expanding its share prices by representing an adequate price-to-earnings (P/E) ratio. This means that the group has focused on following a star strategy in its main segments. Yet, it is challenging to estimate the market price for each product due to the extensive diversity of the company’s products (Grant, 2013). Another challenge associated with the quantification of returns is the categorisation of returns in different currencies. As previously indicated, BHP Billiton Group placed importance on location when it comes to making investments. In the United States, the corporation has been extensively concerned to adhere to a star strategy on the Boston matrix by distributing crude petroleum (BHP Billiton Ltd., 2013). It is essential to note that the company relies on its current strength of occupying a leading position in global commodities prices that are related to the health of the international economy. This suggests the potential of the corporation to predominantly follow a star strategy, which would guarantee it a better position compared to other organisations operating in the same industry sector (Grant, 2013). Nonetheless, the company is unable to predict currency assessments, which may lead to the adoption of a cash cow or a question mark strategy according to the Boston matrix. It has been indicated that certain flaws in the global economy negatively affect the performance of the corporation in the sen se of decreasing its market share in certain segments. For instance, such flaws may lead to a reduced demand for commodities, which may directly reflect in lower prices and reduced profitability of the company. The diverse portfolio of assets provided by BHP Billiton Group has assumed a solid market position of the company in its major segments. It is important to note that the corporation occupies a leading position in the trade of uranium in Australia after Olympic Dam Mine as well as of other natural assets, such as silver and copper (BHP Billiton Ltd., 2013). This places the company at a quite favourable position regarding its trade activities and thus it is more likely to adopt a star strategy in its home country. The fact that the corporation is a leading producer of nickel globally is indicative of the high market share it has in different segments and in different locations across the world (Stern and Deimler, 2006). As a result of the application of the Boston matrix analysis to the performance of BHP Billiton Group, it can be suggested that the company has the potential to make a substantial impact on the global delivery of natural assets. Its position as a star in most of its seg ments and in most locations shows solid management and leadership practices present at the organisation. It is important to note that the major purpose of the Boston matrix analysis is to help BHP Billiton Group decide which of its business units should be kept as well as in which areas it can invest further (Grant, 2013). There are different strategies to be applied considering that the organisation is in the position of a cash cow on the Boston matrix. One of these strategies is to hold in order to maintain its sales or market share (Schermerhorn, 2013). Another strategy that can be utilised is to defend its position regardless of the challenges the company faces with regards to its market share and projected market growth (Kotler, 2006). BHP Billiton Group can also implement a strategy, which is identified as ‘milk’, implying that the company is expected to use the cash it generated in the fiscal year to return to its position as a star on the matrix from the period of 2011 to 2012 (BHP Billiton Ltd., 2013). The fact that the company is at the position of a cash cow means that its profitability ratios have significantly declined. For instance, the organisation’s net profit margin, operating profit margin, ROE and ROA deteriorated in the period from 2011 to 2012 and from 2012 to 2013. It can be suggested that the company should seriously rethink its position in the market so as to try its best to restore its star position from the past (Schermerhorn, 2013). The application of the Boston matrix analysis to BHP Billiton Group’s performance yields significant conclusions about the company’s challenges and opportunities that can be addressed. Conclusion This paper has provided an analysis of BHP Billiton Group’s financial performance based on the Boston matrix. It has been indicated that the organisation is currently at the position of a cash cow on the matrix considering its high market share and low growing market (Kotler, 2006). Certain strategies have been provided so that the organisation can implement them in order to improve its position and return to the status of a star, which represents an ideal combination of a high market share and fast growing market (Grant, 2013). References BHP Billiton Ltd. (2013). Stock Analysis on Net [online]. Available at: stock-analysis-on.net/NYSE/Company/BHP-Billiton-Ltd/Financial-Statement/Income-Statement [Accessed: 14 August 2014]. Grant, R. M. (2013). Contemporary Strategy Analysis. New York: Wiley. Kotler, P. (2006). Marketing Management. New York: Pearson Education. Schermerhorn, J. R. (2013). Exploring Management. New York: Wiley. Stern, C. W. and Deimler, M. S. (2006). The Boston Consulting Group on Strategy: Classic Concepts and New Perspectives. New York: Wiley.