BHP Billiton was founded in 1885, and it is one of the largest corporations operating in Australia in terms of market capitalisation. It is an Anglo Australian based enterprise which offers services in metals, mining, and petroleum industry (BHP, 2018a). The company has put Australia in the map of international mining sector by providing tough competition to leading enterprises such as Exxon Mobil and British Petroleum. The enterprise has formed with the collaboration between Anglo-Dutch Billiton and Australian Broken Hill Proprietary Company Limited. The headquarters of the company is situated in Melbourne, Australia, and its global headquarters is situated in London, United Kingdom. The corporation has hired more than 60 thousand employees globally to perform its operations (Forbes, 2018). In Australia, the company has hired more than 26 thousand employees to manage its operation (IBIS World, 2017). The enterprise has gained a competitive advantage in its industry due to its effective and efficient workforce.
When a corporation manages its operations in international markets, it is usual for the enterprise to face both positive and negative consequences due to the regulatory framework of the country. It is important for a corporation to effectively comply with its regulatory framework which is provided by the central and local governmental bodies. The main objective of these legislative frameworks is to create peaceful relationship between the company and the government. In the case of BHP Billiton, the enterprise has to comply with an extensive legal framework which provides a wide range of regulatory policies which the corporation has to comply with. The economic framework which is established by the Australian government has a significant impact on the operations of BHP Billiton. The company is a key contributor the economy of the country, and it also reinforces its economic growth, still, the enterprise has to ensure that it complies with the legal framework established by the Australian government (BHP, 2018b). A good example is the Australian tax regulation which continuously modified by the government which includes personal as well as corporate tax rates.
As per the Australian Tax Law 2016 and Taxation Administration Act 1953, the current tax rates implemented by the government on companies are 30 percent. The tax slab is similar for the multinational enterprises as well which is paid by the corporation on the profits generated by them while managing their operations in Australia (Phua, 2015). The dividend distributed by the corporation to its shareholders is reduced based on the tax paid by the enterprise. In the case of an international enterprise, the tax paid by the company to the government is substantially high. For example, in 2017, BHP Billiton has paid US$4.7 billion in taxes globally from which 81 percent of tax was paid in Australia which is contributed by the government to the economy of the nation (BHP, 2017). Furthermore, the enterprise also pays Goods and Services Tax to the Australian government at a rate of 10 percent (ATO, 2017). This tax is given by the government on the services offered by it to its competitors. The economic regulatory provisions established by the government significant affect the net profits and gross revenue which is generated by the organisation.
Since the company has to pay a significant amount of its profits as tax, it resulted in affecting its overall profitability. Another key legislative framework which affects the operations of BHP Billiton is Joint Government Environmental Impact Statement enforcement. The enterprise operations in metals, mining and petroleum industry based on which it is a key contributor to pollution. The new statement enforces BHP Billiton to show the impact of its operations on the Northern Territory of Australia. The corporation has opposed the claims made by the government regarding its use of extended land for its mining operations. The corporation provided that it focuses on maintaining stability in the environment while operating in the area. However, these arguments are nullified by the Australian government. The metal related operations of the company produce over 1Mtpa of Copper which is a key contributor in the metal sector (BHP, 2015). The enterprise wanted to open a new Pit Mine in the country; however, the government is not providing its acceptance due to the negative environmental impact of this decision.
Based on this decision, it can be stated that the Environmental Impact Statement which has made mandatory by the government is affecting the business of the enterprise because it is not able to establish a new mine in the country. Due to this decision, the corporation is facing adverse financial consequences as it is losing over $100 million from its current mine (EHP, 2011). Furthermore, the corporation has to comply with the Fair Work Act 2009 while managing its operations in the country. Since the procedure of mining is dangerous, the company has to ensure that it maintains a high standard of safety for its workers as per the guidelines issued under the Fair Work Act. The objective of this act is to ensure that a high standard of care is maintained by the corporations while managing their operation in Australia (Fonseca, 2010). Based on these regulations, the enterprise has to ensure that it did not mistreat its workers and provide them appropriate safety measures to ensure that they are not affected by the operations of the company.
The guidelines of this act also cover various aspects of the employees such as overwork payment, work timings, minimum wage and others. Effective compliance with these regulations is important for the company to ensure that it is able to peacefully manage its operations without conflicts with labour unions or government authorities (McKenney and Kiesecker, 2010). The role of these standards has increased substantially with the awareness between employees based on which the company has to ensure that it did not violate the guidelines issued by the government. The company has to comply with the Disability Discrimination Act 1992 in Australia which provides a range of guidelines in order to stop discrimination in organisations with employees based on their disabilities (Legislation, 2018). The senior level executives of the company have to ensure that they provide equal growth opportunities to all employees and avoid discriminating between them based on their disabilities. Effective compliance with these regulatory frameworks is important for BHP Billiton since it assists the enterprise in creating a positive image in the market and manage its operations effective which is crucial for maintaining strong profitability in its field.
BHP Billiton has been involved in a number of controversies due to its operations which adversely affect the business of the enterprise; however, the government favours its operations which result in providing the company much needed support. For example, the red mud tragedy in the Bento Rodrigues Dam disaster which happened in Brazil resulted in adversely affecting the operations of the enterprise and its brand image (Phillips, 2018). The treaties, conventions or agreements form between Australia, and other nations in which BHP Billiton operates have both positive and negative impact on its business. The Australian government entered into a number of treaties and agreements in order to support the economy of the country and its overall growth. These treaties create new business opportunities for BHP Billiton; however, many times they bring new challenges for the multinational organisations as well because the government prefers to support small and medium enterprises. The main objective of the Australian government is to ensure that it maintains a clear and fruitful relationship with countries such as the United Kingdom, China, Japan, the United States and others. The country enters into treaties with these nations in order to support their economy and creates new trading relationships with them by entering into free trade agreements.
However, many times these agreements resulted in negatively affecting the operations of the company. For example, BHP Billiton has its operations situated in the United States, and both governments have entered into a trading agreement to support both nations. The Australia-United States Free Trade Agreement (AUSFTA) creates new challenges for BHP Billiton because the corporation has a substantial interest in the United States and due to this agreement the company has to offers its suppliers at relatively lower prices (Faunce, Bai, and Nguyen, 2010). Similarly, the treaty formed between China and Australia titled China-Australian Free Trade Agreement (ChAFTA) resulted in creating challenges for BHP Billiton as well. The company has a key interest in the Chinese market due to which it has to suffer substantial loss because it has to offer its services at lower prices (Chen et al., 2016). The diplomatic relationship between these nations resulted in creating new challenges for BHP Billiton and affects the products and services offered by the company. Since the profitability of the enterprise has increased due to offering its suppliers at lower prices, the company has to increase the price of its products in the Australian markets such as petroleum and gas. Due to an increase in the rate of such products, the organisation has faced criticism in Australia which reduces its reputation in the market.
Furthermore, these agreements make it easier for the competitors of the company such as Exxon, Chevron, and Royal Dutch Shell to enter into new markets in which BHP Billiton operates which increases the competition for the company. Furthermore, recently, the corporation was involved in a bribery case in which it was found guilty, and it was charged and punished for bribery due to which the company has to pay fine. Australia and New Zealand have entered into a number of treaties in order to create new trading routes for operations operating in both nations and supporting the economy of both countries. The countries have entered into a Free Trade Agreement which provides benefits to corporations which operates their operations in both nations since it has to pay relatively low charges (Kelsey, 2012). BHP Billiton offers its products in both Australia and New Zealand relating to petroleum and gases. Due to such treaty, the corporation is able to offer low priced products in both countries which enable it to generate a competitive advantage over its competitors. These treaties directly influence the products and services offered by the company to its customers since the corporation is able to export more effectively which resulted in benefiting the organisation in the long run. One of the key assets of the company is its workforce which is crucial for the company to maintain its competitive advantage in the country.
The treaties enable the corporation to hire talented employees from both nations which resulted in finding innovative solutions for the company. The Australia New Zealand Closer Economic Relations Trade Agreement or ANZCERTA is a treaty which is formed between both nations. The objective of this treaty is to promote the trade practices between both nations by reducing initial charges along with legislative framework which applies on the corporations while establishing and operating their business in both nations (Bergami, 2017). Based on this treaty, BHP Billiton is able to offer high-quality products and services to its customers that are situated in both Australia and New Zealand. The purpose of this treaty is to support the economy of both nations which assist the nations in providing better services to its citizens. BHP Billiton has become one of the largest organisations operating in Australia in terms of market capitalisation and profitability, and these treaties play a crucial role in it (Lopert and Gleeson, 2013). Based on these treaties, the corporation has been able to expand its operation in both Australia and New Zealand which resulted in expanding its customer base. The enterprise is able to offer competitive pricing to its customers on its products and services due to which the company has generated a competitive advantage in the industry which assists in sustaining its future growth
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