International Business and Enterprise BHP Billiton

Question: Discuss about the International Business and Enterprise for BHP Billiton. Answer: Introduction: BHP Billiton is one of the leading companies as per market capitalization in Australia. BHP Billiton is Anglo-Australian Mining, metal and petroleum organisation based out of Melbourne Australia. The company is assessed as worlds largest mining companies which has already bitten companies like British Petroleum and Exxon Mobil in market shares. The company has been able to put Australia in the international mining map. The company was formed due to the result of the merging of two Australian companies which are Australian Broken Hill Proprietary Company Limited and (BHP) and Anglo Dutch Billiton in the year 2001. Since the company has created history by becoming the largest company in Australia and also have a huge financial share in the Australian market but have a primary listing in the Australian Stock Exchange (Cavusgil et al., 2014). The global mining and petroleum industry is a highly competitive industry in the world and hence it is extremely important that the company strategises its business movements effectively in order to capture market share in the global market. The company has its headquarters based in Melbourne Australia and its global headquarter is based out of London United Kingdom. The company has got a total strength of around 30,000 employees which has been effective in meeting the objectives of the company. In Australia the company has around 7000 employees working in its mining zones and offices and the rest in other plants and global headquarter in UK. It is important to mention that the company has been able to gain competitive advantage in the market with the help of efficient employees and effective business strategy. The company operates in coal, copper, iron ore, petroleum and potash mining and has been able to provide their services in all across the Australia through its effective minin g services (Rugman Collinson, 2009). Even though the company has its global headquarters in Melbourne and London but the company also have offices in places like Houston (US), Santiago, Perth, Brisbane (Australia), Kuala Lumpur (Malaysia), Singapore and Shanghai (China). It is important to mention that the companies have been able to attract a huge number of shareholders due to its extensive operation in all major countries of the world. The company has also shown great interest in gas extraction and has become one of the leading companies in Australia to provide oil and gas services (Buckley Casson, 2010). In the recent past the company has faced few controversies but the company has been very particular about its corporate governance and corporate social responsibility. In the last financial year the company has donated around US$ 100 million for charitable funds and has also taken environmental initiatives in different parts of the world where it operates. The company is also v ery particular about its workforce and tries to recognise the contribution made by its employees that helps the company to have an effective rapport with the employees which has helped the company to improve its business procedure and operations to a large extent, and this has made BHP arguably the leading company in Australia (Schaffer et al., 2011). It is quite natural when a company works in a particular state the regulatory frameworks will tend to affect the company either in a negative way or in a positive way or in both ways. It is extremely important for a company to conform to the regulatory frameworks laid down by the local governmental bodies or the central government in order to have a peaceful relationship between the entities. In this case BHP has to abide by different regulatory frameworks that affect the operations of the organisation to a large extent. The economic regulatory frameworks laid down by the Australian government are the one that affects the company directly. Even though the company takes pleasure in supporting the government for the visible economic growth and development of the country but it directly affects the revenue generation and overall profit making (Penrose, 2013). It is important to mention that the Australian tax legislation has been an old one but it has been constantly modified for the pe rsonal taxes and property tax but the corporate tax is a tax system which has not seen changes for a long time. As per the Taxation Administration Act 1953 as well as the Australian Tax Law 2016 the corporate tax is around 30% for bigger multinational companies which are mostly paid by the company based on their profit before it is distributed to these shareholders. This clearly affects the profit of the company as in the last year the company has paid around 72% of its total tax to Australian government which comes up to around US$ 5,245 million (Wild et al., 2014). Fig 1: Tax Payment Australia Fig 2: Pie Chart Tax payment Australia Source: https://www.bhpbilliton.com/~/media/12d7d9572f1042a4b6cdb0bd7abe5c09.ashx On the other hand the company also has to pay Capital gains Tax which is around 33 and half percent on usable assets which the company has to pay as well. It is important to mention this economic regulatory framework overall affects the net profit and gross revenue generation of the company since huge amount of tax is given to the government. In the recent past there has been a Joint Government Environmental Impact statement enforcement which shows the effect of BHPs expanded mining operation in Northern Territory of the Australia and there have been contradictions with it. The company has opposed that it is not using any extended land for mining operations and will ensure the stability of the environment in the area but reportedly nullified by the joint government in Australia. Even though the mining operation in question produces around 1Mtpa of Copper but it is also in talks with the government in order to start another open Pit Mine which has not been agreed upon so far due to en vironmental impacts (Dunning, 2012). It could be said that this EIS framework has affected the business as it has not been able to open the mine and this has financial impact on the company as the company might be losing on to around 100millions from this mine itself. Overall it could be said that the regulatory framework has mostly affected the company in terms of finance and hence it could be said that it has a negative effect on the business. It is important to mention that this framework has been formed in order to ensure that there is no further environmental impact especially regarding the constant degradation of soil and erosion. This has clearly affected their business in Australia (Tricker, 2015). In the recent past there has been number of controversies that BHP has got involved into. It could be said that the company has somehow not been able to work effectively with the governments favoring the work process of the company. With the debacles happening in mines in Brazil socially in Samarco and the red mud tragedy in the Bento Rodrigues Dam disaster in Brazil have landed the company in trouble and since then the company had to face treaties in order to work effectively even in Australia. With the number of international agreements that Australia is getting into it is quite clear that the country wants to have a clear and a transparent diplomatic relationship with countries like USA, China, Japan et cetera. Since these countries have supported Australia in different situation the country has promised to support these countries with the free trade agreement. With the free trade agreement happening right away it has been seen that a lot of companies have started suffering troubl es due to it (Prado Lorenzo et al., 2009). BHP for instance has had its market in US and China but with the Australia getting involved in the free trade agreements the company has had to reduce its prices of resources and supplies in these countries which has affected their business profit and this has backfired in their own country. In Australia the company had to increase the price of petroleum and gas for the consumers and have faced criticism due to this. With the different competitors coming into play in the market in the form of Royal Dutch Shell, Exxon, Chevron the position of the company has been strongly challenged. Hence it could be said that the Free Trade Treaty has acted in opposite for the country company (Woellner et al., 2016). In a recent Case against BHP was bribery case through which the company was liable to be punished and charged with a felony for bribery and the company could have been sued with financial punishment. Australia and New Zealand are involved i n number of treaties together and it helps the companies to work within the two countries. Both the countries have a Free Trade Agreement and this has helped the companies working both Australia and New Zealand to work effectively with very less charge. BHP is able to work on mining and other operations and provide services to the Australian consumers with any charges paid to the Kiwi counterpart. It has helped the country to provide services cheap and affordable which has helped to gain competitive advantage in the Australian market. It is important to mention that these treaties have affected the business of BHP Billiton directly. Australia have signed up number of treaties which is likely to develop the business of certain types of exporter and it is important to mention that BHP Billiton has to work with different suppliers and one of the most important supply that the company wants is resources and manpower is extremely important and this is what the company is able to bring fr om the foreign countries in order to work in the mines and other extraction sites which helps the company to provide the best possible service to the consumers in Australia (Coulton Ruddock, 2011). Australia and Germany has signed a new tax treaty which will help to augment the bilateral trades of the countries and is also likely to develop the trade within the countries effectively. BHP has mines in different areas of the world and hence it is important that the company is able to handle them. It is important that the company is able to get all the available resources at an affordable cost and hence working in Australian mines with the exported supplies at less cost from Germany due to the tax treaty. Hence it will help the company to provide services at an affordable cost (Schaffer et al., 2011). BHP Billiton has captured a huge market in the Oil and Gas market in Australia but with the constant pressure coming in the market the company has to strategise its business movement and get competitive advantage in the Australian market. It could be said that BHP Billiton has consistently performed well in the global market as well but in the recent past the cases in Brazil have stirred huge controversy which might move towards getting another treaty between Brazil and Australia which would restrict the company from going into rigorous expansion plans in the South America which is likely to impact the Australian market as well (Breen, 2010). Overall it could be said that the treaties made by the Australian government it could said that recent cases in foreign sites of the BHP Billiton would affect the market directly. On the other hand conventions or agreements that Australia gets into with other countries have a pretty even impact with a mix of positives and negatives for the company. Overall it could be said that the present study has been able to discuss the key aspects of corporate and enterprise law with reference to BHP Billiton one of the leading companies in Australia (Silva da Rosa et al., 2012). References Breen, M., 2010. Digital determinism: culture industries in the USA-Australia Free Trade Agreement.New Media Society. Buckley, P.J. and Casson, M., 2010. A theory of cooperation in international business. InThe Multinational Enterprise Revisited(pp. 41-67). Palgrave Macmillan UK. Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L., 2014.International business. Pearson Australia. 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