In the global marketplace, businesses face many external threats that negatively affect their growth and sustainability due to the growing number of catastrophic crises and disease eruptions all over the world. Therefore, many conceptual models and theories have been developed to build an effective and sustainable model for enterprises to manage their active and effective response to these disasters and crises. COVID-19 which has been proved to be one of the greatest challenges in the 21st century has not only brought infections and deaths but also disturbed economic activities destructively. In this regard, a critical analysis is made to investigate the response of BHP Mining Company towards the pandemic and its influence on the business strategy and operational structure of the company. Moreover, potential key factors that impact the operational sustainability of any industry and its capability to transcend adversity in the time of the COVID-19 crisis are explored and recommendations are made in the light of different commemoratory management theories.
Critical Analysis of Response of BHP towards COVID-19 Crises
COVID-19 and Its Impact on BHP Company
World Health Organization (WHO) declared the COVID-19 virus a pandemic on 1st March which caused the greatest economic disruptions in almost every country by adversely impacting the global supply chain. The global economy, according to International Monetary Fund (IMF), will shrink significantly by 3% in the current year which is the worst decrease since the 1930s’ Great Depression, while the fund’s chief economist reported there will be an accumulative expected GDP loss of about 9 trillion dollars between the year 2020-21 which is more than the combined economies of Japan and Germany (Obrenovic et al. 2020). Although currently, Australia has a lesser number of infected people and deaths per 100,000 people due to quick physical distancing measures, comparatively high national wealth, stable political system, and its isolation geographically, the businesses in the country are still facing the effects of economic shocks due to virus outbreak (Baur & Trench 2020; O’Sullivan, Rahamathulla & Pawar 2020). Its major impact on mining industries has been the continuously decreasing demand which eventually halted industrial production and construction, and drastically reduced the prices of metals and minerals (Laing 2020). BHP which is one of the largest producers of iron, coal, copper, and other minerals (Ahumada, 2020) also faced a huge loss of 45% in its market value when the virus spread on large scale in March (Laing 2020). However, to deal with this unforeseen situation, the company deployed many efforts to ensure safety at the workplace and changed its operational structure to minimize the loss as the leading mining industry in the world as described below.
BHP’s Response to COVID-19
Although it is not possible for companies to avoid crises, they can take measures to eliminate or prevent their effects on business operations. Therefore, in response to COVID-19, the BHP group is taking many actions to protect its employees, their families, and communities based on the conditions of the corresponding mining location. In this regard, it has followed strict guidelines provided by the WHO including social distancing, hygiene, and health screening, and implemented new measures for health and wellbeing in compliance with the government (BHP continues global response to COVID-19 2020). Moreover, it has initiated many assistance programs to facilitate health departments in improving their testing capacities and medical treatment equipment and provided direct donations to different welfare organizations to support communities. So, it shifted its priorities entirely toward the people as a gesture of social corporate responsibility, which further helped it run the business smoothly as indicated by Mike Henry, the current chief executive officer of BHP (Henry and Görner, 2020). He further added that this resilience of the company is based on the strong relations with not only “employees, but also communities, business partners, and traditional owner groups, who have come together to keep the business running.” The Social Exchange Theory also highlights the importance of these social connections to regulate, improve and hand over the resources for mutual benefits (Mora Cortez & Johnston 2020). Moreover, by differentiating coronavirus crises from other financial-based crises, They (Mora Cortez & Johnston 2020) emphasized that such social exchange interactions also contribute to economic outcomes which increase trust and commitment and therefore are equally important as economic dimensions of business growth. However, for complete insight into the crises and consequently to develop an applicable business model based on the particular environment and culture of the BHP company, integration of more Crises Management theories is needed which are discussed in the following section.
Management Theories and Business Challenges
The BHP Company had to face many changes in its business operations as according to Benjamin (2020), it deferred the decision of investment in the Scarborough gas project on the coast of Western Australia. Moreover, it has stopped its operations on different petroleum projects owing to the decreasing prices of petroleum-based products until 2021. Therefore, any early assessment of such external threats and quick response can be very helpful to mitigate their harmful impacts. In this regard, there are many theoretical models available to analyze and cope with the social and economic impacts of natural disasters in the light of different management theories.
In general, management theories perceive crises as organizational and political issues and thereby not only signify the establishment of different steps of crisis management i.e. “detection, prevention/preparation, containment, recovery, and learning but also provide different corresponding crisis-response strategies for sustainable growth” (Obrenovic et al. 2020). For example, the Theory of Crisis Management Teams, which was proposed by Mitroff (1988), focuses on the formation of permanent crises management team, and the Distributed Cognition Theory (Hutchins 1995) emphasizes the integration of different internal and external business units and as well social and environmental units, and the Stakeholder Theory (Clarkson 1995) highlighting the interests of stakeholders in management decisions, provide tools and functions necessary to develop an effective response plan, especially in the time of global crises such as COVID-19. These theories involve all necessary business functions that serve as the fundamental blocks for any response plan to mitigate the adverse impacts of any crisis. However, the implication of these theories is limited based on the business structure and the nature of the disasters. With regards to COVID-19, the theoretical “Enterprise Effectiveness and Sustainability Model during Pandemic” framework was developed by Obrenovic et al. (2020) from the perspective of digital transformation organizational characteristics, operations, and financial management. The model suggests that distributed leadership and employees, more informed and decentralized decision-making, and adaptive culture are the key factors for sustainable operations during a pandemic. Moreover, since scarce resources are the most prominent consequence of any crisis, this integrated model recommends practices to allocate the company’s resources wisely. Therefore, this model can be applied by the BHP group for strategic decision-making to stabilize the growth in the post-COVID-19 era.
Recommendations for Future Crises
After reviewing the preventive actions taken by the BHP Company, it can be observed that although the company implemented a contingency and risk management plan, the current approach towards tackling the immediate crisis issues is not appropriate in terms of practical effects as clear from performance and growth parameters. It is also evident that the entire mining sector was underprepared to manage multidisciplinary crises like COVID-19 of immense magnitude and therefore, it is vital to evaluate business processes and economic actors more carefully. In this regard, their comprehensive understanding in times of severe crises can lead to the development of more effective tactics, and companies like BHP Group which have a strong networked structure, straightforward and flexible guidelines, distributed workforce, and less interdependence are even better at adapting the dynamic situation and respond to the crises effectively.
Moreover, for sustainable growth, the entire mining sector needs to produce new resources and deposits along with being flexible in responding to rapid advancements in technology while observing financial resilience. Apart from this global crisis, climate change is another major challenge that has potential impacts on business in the near future. Therefore, it is recommended to analyze these impacts and design the business models accordingly to effectively combat the disasters, also argued by Laing (2020). Furthermore, by reviewing the response of the BHP group against the pandemic, interdisciplinary scholarship to address the global challenges along with developing partnerships with key stakeholders can be highlighted to deliver impact research required for the pandemic and post-pandemic era (Beech and Anseel, 2020). Meanwhile, the experienced globalization effect due to pandemics must also be incorporated while perceiving the international impacts (Budhwar & Cumming 2020).
To conclude, COVID-19 has affected businesses all over the world, and BHP has also faced the same economic disruptions. Although it has taken very effective measures to cope with the uncertain situation due to pandemics, there is a need to deploy an active response model to mitigate the impacts of such disasters in the future. Moreover, to cope with natural disasters, businesses need to incorporate the globalization effect and technological advancements while developing their business models.
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