BHP Billiton Ltd: Maximizing Shareholders’ Wealth

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Introduction

Maximization of the stakeholders’ value/wealth is the mandate of every organization. Leaders usually employ various strategic leadership mechanisms to ensure that the business remains competitive, efficient, and buoyant in the market realms. Contextually, the management at BHP Billiton Limited also strategizes to ensure that the business continues to grow and remains relevant in the business realms. This paper discusses whether BHP Billiton Limited’s move to issue US$195.5 million as community contributions was consistent with the company’s mandates to maximize its shareholder’s wealth.

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Charity contributions are ways through which an organization can give back to the community, enhance its publicity, create strong humanitarian attachments, and accomplish its corporate social responsibility (Mallin 2009). It is from this argument that the move which was taken by the company remains appropriate. It is imperative to agree that the cash that BHP Billiton Limited contributed to the community as of 30th June 2011 were high; nonetheless, the movie remains consistent with the maximization of the shareholder’s wealth following its long term and indirect contributions to the business.

Major Arguments

There are numerous ways through which the company can increase its shareholder wealth minus considering its extravagancy in contributing to the community. From the company’s financial statement, BHP Billiton Limited has shown massive progress and lucrative business returns. This indicates that the company is progressive and focused in the realms of business. It would not lose its market value having indulged in the community contributions as alleged before. The company can increase its shareholder’s wealth by enhancing the value of the company’s ordinary shares (Ross et al. 2011).

This is possible through massive publication, strategic management, considerable returns, and proactive action to mitigate business risks. These strategies will render the company quite competitive in the industry hence will outdo other contenders, capture more shareholders, and consequently increase the value of shares. From this move, it is obvious that the company will augment its shareholders’ wealth (Ellsworth 2002).

Contextually, shareholders’ wealth is the value of the company’s assets as at any review. Since the purchase of shares grants shareholders an opportunity to own the company, the increase in the value of the company’s assets globally will consequently increase the shareholders’ wealth. Hence, the move by the company to support the community is still in line with the maximization of the shareholders’ wealth as indicated previously.

Additionally, when the company goes public through its participation in community contributions, it promotes its brand name, public presence, and other associated features. According to the studied sources, the public will trust the company more hence be willing to associate with it. In return, it will enhance its business endeavors, increase sales, capture a considerable market share, and remain competitive in the market realms (Moles, Parrino & Kidwell 2011).

Consequently, the company will experience increased revenues, the hiked value of shares, and enhanced dividends to its shareholders. From this argument, it is evident that BHP Billiton Limited will increase its shareholders’ wealth as demanded in the business strategies. Hence, indulging in the community contribution is just another indirect way of increasing the company’s value despite the looming allegations of extravagance. This is an evident phenomenon in the realm of business.

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BHP Billiton Limited has numerous branches globally dealing in the mining business. Since it has a centralized management, its efforts to integrate and enhance its business endeavors must involve the entire stakeholders. This incorporates shareholders, management, employees, clients, and the community at large. Evidently, the management is mandated to make a rational solution and strategic business administration that will favour the entire stakeholders. Contextually, if the organization fails to provide the community with considerable contributions, it will not attain its targeted corporate social responsibility, a move that might disfavour the company massively.

Another way through which the organization might increase its shareholders’ wealth is through the increase of the company’s stock price. In this context, the stock is the exact value used by the investors to erect the investment. The management can increase this value. Consequently, the value of the company will increase tremendously. The stakeholders’ wealth will eventually amplify since the value of shares on the company will increase (Brigham et al. 2010).

This is a lucrative way of increasing the value of shares. The company must increase the value of its shares through creative means than complaining about the funds used to support the community. Although the profits used to fund the community contributions, when divided, could have increased the value of dividends, this could have been temporal. It is crucial to invest in people as the company did such that it is guaranteed the future business prospects and ability to capture and retain numerous clients. This is a crucial idea concerning business prospects and strategies.

Improving the company stock globally, involving the community, and operating strategically while considering its customers’ demands and prospects is important in this context. BHP Billiton Limited can only attain its business ambitions when it sets clear business objectives and manages to uphold the quality of its services and deliverance of commodities (Plunkett 2008). This contributes to the basics of the company and indicates how prospective the company is in the context of improving its shareholder’s wealth. Additionally, the company can indulge in Initial Public Offerings (IPOs) to promote the sale of its stocks in the market and augment its shareholding capacity.

Precisely, contributing to the community is not destructive to the growth of the company shareholder’s wealth but navigates for its future success as indicated before (Ross et al. 2011). From the case study and other sources, the messages from the CEOs of the various mineral company within the same holding declare their commitments in attaining the company’s visions and achieving a competitive shareholders wealth on periodic evaluations. Importantly, it is crucial to admit that numerous business prospects have no strategic planning, enthusiasm, and business mighty enjoyed by that BHP Billiton Limited globally. This relates to the security exchange rankings mentioned before.

Conclusion

It is notable that the company embraces diversity and has employed from various races, sexes, and cultures intending to integrate its shareholders, clients, and workforce to enhance its market value with novelties. The company endeavours to create a long-term shareholder’s value through commitment, expansion, acquisition, development, and marketing of its mineral products the aspects of marketing have provided room for interacting directly with the community, giving back to them, and strategizing lucratively to ensure that the business remains relevant in its endeavours.

There are so many opportunities through which the company can increase its market share, shareholder’s value, and other provisions as prospected in most of its endeavours. Conclusively, there are some business strategies or undertakings that might not concur with the company’s mandates of increasing the value of its shareholder’s wealth. Nevertheless, the move to contribute to the community is negligible in this list. The profits that the company makes should be shared with the community as claimed before.

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Reference List

Brigham, E. et al. 2010, Intermediate financial management, South-Western, Ohio.

Ellsworth, R 2002, Leading with purpose the new corporate realities, Stanford Business Books, Stanford.

Mallin, C 2009, Corporate social responsibility, Edward Elgar, Cheltenham.

Moles, P., Parrino, R & Kidwell, D 2011, Fundamentals of corporate finance, Wiley, New Jersey.

Plunkett, J 2008, Plunkett’s energy industry almanac 2009 the only comprehensive guide to the energy & utilities industry, Plunkett Research, Texas.

Ross, M et al. 2011, Fundamentals of corporate finance, 5th ed. McGraw-hill, New York.

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BusinessEssay. (2022, June 11). BHP Billiton Ltd: Maximizing Shareholders' Wealth. Retrieved from https://business-essay.com/bhp-billiton-ltd-maximizing-shareholders-wealth/

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BusinessEssay. (2022) 'BHP Billiton Ltd: Maximizing Shareholders' Wealth'. 11 June.

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BusinessEssay. 2022. "BHP Billiton Ltd: Maximizing Shareholders' Wealth." June 11, 2022. https://business-essay.com/bhp-billiton-ltd-maximizing-shareholders-wealth/.

1. BusinessEssay. "BHP Billiton Ltd: Maximizing Shareholders' Wealth." June 11, 2022. https://business-essay.com/bhp-billiton-ltd-maximizing-shareholders-wealth/.


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BusinessEssay. "BHP Billiton Ltd: Maximizing Shareholders' Wealth." June 11, 2022. https://business-essay.com/bhp-billiton-ltd-maximizing-shareholders-wealth/.