Case Study Of Managerial Decision Making

781 Words4 Pages
Managerial Decision Making “A man who does not plan long ahead will find trouble at his door.” Confucius said. Being one of the biggest mining companies, BHP Billiton’s managers at all levels have to make a ton of decisions every day to remain the company’s stability and growth. Frontline level’s decisions are usually about well-structured and repeated problems, which could be made by using the company’s procedures, rules and policies. However, the senior managers have to deal with non-programmed decisions, which are related to long-term strategies of the company, and required ability of judgment and creativity to make. There are six current issues drawing the most concern of BHP Billiton’s top managers, in order of urgency and importance 1. Protection of margin and Improving Productivity: A decade of good business due to high commodity prices has concealed the impact of huge operating cost and falling productivity in mining sector. However, the decrease of commodity prices in 2012 has revealed the huge impact of the high operating cost, and low productivity on the company’s margins, which resulted in significant drop of the stock prices. Over the past decade, mining sector has been suffered a lot from the shortage of most inputs such as skilled employees, sulphuric acid, and port access. In order to secure adequacy of inputs, mining companies have to pay extra for “scarcity premium”, which lead to a huge increase in cost of inputs. According to Guy Elliott, CFO of Rio Tinto, the average annual increasing base cost of mining sector has risen to US$2 billion since 2009. In order to strive against the inflation in cost, a number of big companies, such as Rio Tinto and BHP Billiton, decided to renegotiate new long-term contracts i... ... middle of paper ... ...ning and metals sector due to promising pay rate of mining sector and falling of their business fields. According to Minerals Council of Australia, over the same period, there was an increasing of 85% in long-distance workers joining mining and metals sector in Australia. This could suggest a threat that when other industries recover from the effects of Global Financial Crisis and the pay rate of mining sectors is not as promising as it is before, these long-distance workers will return to their previous industries. Since 2008, many mining and metals corporations, such as Rio Tinto and BHP Billiton, have realised the importance of having a long-term strategy to strive against the skill shortage. They decided to work with government and universities to 4. Price and Currency Volatility 5. Capital Project Execution 6. Cost of Infrastructure 7. Threat of Substitutes

More about Case Study Of Managerial Decision Making

Open Document