FIVE PORTER ANALYSIS OF THE BHP BILLITON LIMITED

Five Porter analysis of the BHP Billiton Limited

  1. Bargaining Power of Buyers

The bargaining power of the buyers is moderate to low because the company can pass along the increase in price due to the limited supply of the natural resources and strong demand in the market. The bargaining power of the buyers is limited by in-existence of many substitutes in large quantities (Fonseca, 2010). The impact of the price increase by BHP Billiton Limited is diminished by the focus that the company places on retaining long-term customer relationship.

  1. Bargaining Power of Suppliers

BHP Billiton Limited is largely affected by the suppliers bargaining power in energy, labor, materials, energy costs and shipping. As BHP Billiton Limited tries to reduce capacity through the enhanced operations, the aggregate costs have increased as well. There are negligible substitutes that are available which strengthens the suppliers bargaining power.

  1. Threat of New Entrants

There exist a low level of threat of new entrant due to the dearth of the natural resources causing limited capacity and available supply in the global market that restricts new entrants in the market. BHP Billiton Limited is the biggest mining company with enhanced infrastructure, high technology, competent staff, and this coupled with the dropping price of core iron limits the likelihood of any new entrant in the market (Billiton, B.H.P, 2006).

  1. Threat of Substitutes

There is a quite low threat of sub………………………..

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