PART 3: BHP’s purpose as stated in their mission statement is “prioritising both financial and social value” to “deliver long-term value” to their stakeholders and to “bring people and resources together to build a better world” (BHP Annual Report, 2022, p. 8). They are one of the world’s top producers of resources such as iron, ore and coal, without their existence the modern world would not function as everything from cell phones to heavy machinery rely on mineral products. BHP’s comprehensive value chain starting from the extraction of raw materials to delivering products means that BHP has lots of stakeholders. The stakeholders that are central to their purpose are ……… (Employees, communities including the local communities and indigenous communities, the environment) Authenticity: → ask PART 6: Part 1: propose ONE new initiative that has the potential to create shared value and “grow the pie,” These stakeholder conflicts between BHP and the Indigenous community can be overcome by an initiative that emphasises the creation of long-term shared value. After weighing out BHP’s strengths and core brand identity, namely: 1. Mass production of coal etc We recommend that BHP implement social initiatives to help contribute to improving their relationship with the Indigenous community through voluntary social support and further promote the Indigenous culture through free cultural events that benefit both the indigenous community, through educating them on mining sites, employees on the Indigenous land, and providing free vaccinations, building the indigenous cultural awareness within BHP’s workforce environment. Figure 2: Porter’s Value Chain In accordance with the value chain (Porter, 1985), this initiative stems from its support activities, in particular the Human Resource Management aspect which enhances the mutual relationship between stakeholder and company. Moreover, the costs and long-term mutual benefits of this initiative can be explored through the “Grow the Pie” framework. Multiplication in Social Benefits The cost of initiating free benefits towards the community to an extent could be deemed substantial, including both the funds placed towards providing free vaccinations and organising events for further development and training when learning about the Indigenous culture and aiding Indigenous community into understanding more about mining sites, promoting the further development, and training, resulting in closer long-term relationships, acting to provide support for primary activities to take place and support other support activities. However, despite the small initial cost when organising free initiative, this initiative will be likely be multiplicative, creating social benefits that far outweigh the financial investments. This will involve contribute to an improved quality of life for indigenous people (BHP, 2020), hence, growing the pie. BHP’s aim towards creating longterm relationships with the Indigenous community and bringing people together (BHP, 2022) can be reflected upon this initiative. Additionally, by employing this initiative, both parties are able to learn more about each other, thus, embracing a closer bond and illuminates the importance of the environment. By embracing a closer mutual relationship, BHP will be able to ease down complaints about the business’s destruction towards the environment. However, it could be hard to determine, for example, 2 participants in this free development events and vaccination initiative does not equate to 2 new BHP supporters. Consequently, creating free developmental events for company-stakeholder and vaccines is multiplicative in terms of its low cost and high benefits towards the recipient, but can be hard to determine and identify. Comparative Advantage BHP has a strong comparative advantage in implementing supportive social initiatives such as free services and cultural events for the Indigenous and BHP workers as they are able to leverage their core strengths and develop brand identity. As well as aligning closely with BHP’s aim towards creating long-term relationships with the Indigenous community and bringing people together (BHP, 2022), BHP’s large market capitalisation of $134.69 billion (Global Ranking, 2022) indicates that they have high sale value, hence, ___the direness to promoting good social value with the Indigenous community, increasing the viability of this initiative. With the expansion of the mining industry and marketplace ________, by offering free______ Finally, with consistent sales, BHP maintains their value over time and its products may experience a drop in value especially when the industry is expanding, resulting in increased competition, furthermore, as the supply of products increase and demand decreases, BHP may experience a fall in profits. As such, BHP’s competitive … - Idk but like it’s a big and well-known company with secure market capitalisation so like probs wouldn’t experience much change = create comparative advantage??? - Linking sentence: as such, BHP’s core characteristics complement the levers that drive a successful advantage, creating a comparative advantage. (vice versa) Materiality A specific material group of stakeholders will be impacted by this initiative. The local community, especially the Indigenous community stakeholders are benefited through the access towards free vaccinations and further develop a deeper understanding towards the mining industry, simultaneously creating gains and relieving their pains as investigated earlier. Additionally, it also creates a stronger shared value for BHP, strengthening their brand image, as they are willing to concede short-terms profits into providing free development and services to align with their core values of supporting the Indigenous community by encouraging better relationships between operations and local communities (BHP, 2022). In the long term, for shareholders, sales may increase as consumers may spend more willingly on BHP products as the brand image improves in comparison to other competitive business within the market, as a result, helping BHP boost their market share and profits, growing the pie and facilitating shared value across stakeholders. RANDOM: WHAT I WROTE AT FIRST A business’s purpose centres around the necessity of creating shared value, by expanding the economic and social values. In doing so, with accordance to the concept of growing the pie (Edmans, 2020), rather than focusing on their “piece of the pie”, which highlights around the demand towards profiting and making financial value, businesses are encouraged to incorporate innovation and ____ that can generate societal benefits into the company’s business model. BHP’s continual tension with its Indigenous community’s stakeholder group presents dire consequences towards ‘splitting’ BHP’s pie, conflicting with creating societal value, thus, impacting BHP’s growth in profits. Subsequently, to improve and illuminate these key concerns that surround this stakeholder company relationship, BHP could implement social initiatives to help contribute to improving their relationship with the Indigenous community through voluntary social support and further promoting the Indigenous culture and building the indigenous cultural awareness within BHP’s workforce environment. By introducing initiatives like free cultural knowledge events for both parties to promote further development and training will promote closer long-term relationship, acting to provide support for primary activities to take place and support other support activities value creation will increase through enhanced mutual trust and benefit, thereby, profits will naturally follow. BHP could consider stemming towards initiatives that enriches social value, as such, including supporting local businesses of the Indigenous community, contributing to an enriched support activity of the Human Resource management value chain when retaining a mutually beneficial relationship and further development towards developing mutual respect. This will also additionally contribute to an improved quality of life for indigenous people (BHP, 2020), hence, growing the pie. BHP’s aim towards creating long-term relationships with the Indigenous community and bringing people together (BHP, 2022) can be reflected upon this initiative Sustainability bounds at the forefront of business’s operations when purchasing resources, employing the value chain in its Human Resources Managament aiding value creation between BHP’s alliance with Komatsu we are talking about BHP in this report? perhaps some initiatives such as supporting local indigenous businesses and invite them to be involved in indigenous education for mining sites. BHP’s ambition is to create long-term relationships with Indigenous Peoples, grounded on trust and mutual benefit. Respecting and partnering with Indigenous Peoples aligns with our Company Purpose of bringing people and resources together to build a better world, our focus on delivering long-term social value and our commitment to working with integrity.. commitment to making a social investment of at least 1 per cent pre-tax profit primary purpose of contributing to the resilience of the environment and the communities where we operate, which aligns with our broader business priorities towards initiative that Pieconomics: businesses should aim to create value for society first (grow the pie), then profits will naturally follow we are talking about BHP in this report? perhaps some initiatives such as supporting local indigenous businesses and invite them to be involved in indigenous education for mining sites. illuminates key concerns that surround this stakeholder company relationship and the value creation they form across the value chain framework. Overarchingly, tension between the two stakeholder groups can be deemed a consequence of ‘splitting the pie’ as opposed to ‘growing it’. As Edmans (2019) claims, any business should make a conscious effort to ‘grow the pie’ to ensure value is generated for all stakeholders which naturally leads to a company’s long term success. For BHP, an evident prioritisation of cost effective operative activities to achieve financial success for shareholders has jeopardised Indigenous communities who value their land, demonstrating the removal of value from one stakeholder group to give to another. This creates tension between mainstream shareholders whose main priority is profit maximisation from cost efficient methods, whilst the Kokatha people urge for more sustainable practices to protect their land and resources. Thus, in the case of BHP, it is not that shareholders disagree with more sustainable practices, but more so that it is not a top priority, as their main goal is to make returns on their investments which has so far been achieved with low cost and unsustainable measures. Pieconomics: businesses should aim to create value for society first (grow the pie), then profits will naturally follow o To do so, a company must have a meaningful purpose for operating that is communicated externally and embodied internally Pieconomics is an approach to business that seeks to create profits only through creating value for society (Edmans, 2020) - “an enterprise’s ultimate goal is to create value for society – and by doing so, it will increase profits as a by-product” BHP could take on a modernised multi-stakeholder approach by growing the pie (GTP; Edmans, 2019) Guiding principles: Reconceiving products and markets (is our product good for customers?) Redefining productivity in the value chain Building supportive industry clusters on location: network effects, productivity gains, community roots Growing the pie = instead of solely focusing on the financial value of things, companies should incorporate innovation and societal benefits into their business models company focus on creating more societal value rather than focusing on their “piece of the pie” What resources does my company have and how can my business benefit society? o E.g. restaurant donate to homeless etc Profit-driven firms have the sole purpose of multiplying profits: does $1 spent create >$1 in future profits? Pieconomics requires 3 principles to be fulfilled: o Multiplication of social benefits: does $1 spent by the firm (private cost) create >$1 in future social benefits? o Comparative advantage: does $1 spent by the firm create more future social benefits than $1 spent by another firm? o Materiality: does the activity benefit a material group of stakeholders? Business framework Advantages SVM Pieconomics - Disadvantages Profit (ICFs): easily quantifiable, single number Easy to understand as a basis for compensation Uses judgement rather than over - exact math a more flexible than SVM Able to judge and decide on many more projects Leads to “errors of omission” a firm doesn;t take action because its effect on profits can;t be quantified Impossible for most projects to even remotely forecast profits “Social value” is hard to objectively quantify as it has many dimensions Pieconomics: businesses should aim to create value for society first (grow the pie), then profits will naturally follow o To do so, a company must have a meaningful purpose for operating that is communicated externally and embodied internally Baccomatto Osteria Evidently, BHP has successfully generated sizable returns to investors simultaneously adhering to their mission of creating long term ‘financial value’ to shareholders. However, the ‘social’ component of their mission has been neglected and as a result has hindered the success of BHP’s mission, tarnished their reputation and created conflict between shareholders and a vulnerable stakeholder group- Indigenous communities. Overarchingly, tension between the two stakeholder groups can be deemed a consequence of ‘splitting the pie’ as opposed to ‘growing it’. As Edmans (2019) claims, any business should make a conscious effort to ‘grow the pie’ to ensure value is generated for all stakeholders which naturally leads to a company’s long term success. This entails the creation of additional value as opposed to withdrawing value from one stakeholder group to appease another. For BHP, an evident prioritisation of cost effective operative activities to achieve financial success for shareholders has jeopardised Indigenous communities who value their land, demonstrating the removal of value from one stakeholder group to give to another. BHP’s cost efficient approach to retrieving raw materials has resulted in dire consequences due to radioactive tailings being left behind at mining sites once ores have been mined. For the Kokatha people, an Indigenous community near the Olympic Dam region, the perpetual use of unsustainable practices resulting in radioactive tailing has damaged their land and will continue to do so if no alternative sustainable methods are adopted (reference). According to Green and Noonan (2020), it is estimated that tailing waste continues to increase eight to ten million tonnes a year at the Olympic Dam. This creates tension between mainstream shareholders whose main priority is profit maximisation from cost efficient methods, whilst the Kokatha people urge for more sustainable practices to protect their land and resources. Shareholders have not explicitly and collectively argued against the protection of land rights for the Kokatha people. If anything, there was a recent protest where 100 shareholders joined in to argue for BHP to do better (reference). However, 100 shareholders out of the multitude that currently own BHP shares is indicative that most mainstream investors prioritise short term monetary gains over anything else. Historically, the concept of shareholder value maximisation has been expressed by Milton Friedman’s assertion that the ‘social responsibility of business is to increase its profits’ (Wiggins, 2020). As Wiggins (2020) continues to assert, it is hard to dispute the notion that this long held ‘philosophy’ has all of a sudden been abandoned. The reality is, it still continues to ‘define the motivations and actions of most companies and shareholders’ (Wiggins, 2020). Thus, in the case of BHP, it is not that shareholders disagree with more sustainable practices, but more so that it is not a top priority, as their main goal is to make returns on their investments which has so far been achieved with low cost and unsustainable measures. INTRO: These stakeholder conflicts between BHP and the Indigenous community can be overcome by an initiative that emphasises the creation of long-term shared value. After weighing out BHP’s strengths and core brand identity we recommend that BHP proposes an internal mutually beneficial training program with the local indigenous advisory council on a continuous collaboration basis for the objective of overseeing BHP's operation at minimum cost. This new training program will oversee the overarching operational process and ensure the rightful usage of Indigenous land in attempt to reduce BHP’s radioactive tailing of its sourcing process. Figure 2: Porter’s Value Chain In accordance with the Value Chain (Porter, 1985), this initiative redefines the productivity of its Operations and Human Resource body by initiating the collaboration between the training program and the Indigenous Advisory Council, enhancing the mutual relationship between stakeholder and company. Moreover, the costs and long-term mutual benefits of this initiative can be explored through the “Grow the Pie” framework. Multiplication in Social Benefits The cost of initiating a new traineeship program can be deemed minimal to an extent, rather it aids the expansion towards the total pool of economic and social value (Porter and Kramer, 2011) and adds shared value for society, multiplying future benefits. In collaboration between the traineeship body and the Advisory Council, which is previously employed in BHP’s South Flank project, BHP can expand the pool of economic and social values by outsourcing cultural heritage management strategies and resources from the Council. These resources will then be employed by the training program group into BHP’s operational primary activities to better ensure sustainable management when sourcing from Indigenous land and minimising BHP’s radioactive footprint. Ultimately, this initiative of a voluntary free training program is multiplicative in terms of its low cost and high mutual benefits. BHP gains expanded economic and social value when providing an opportunity for Indigenous individuals to partake in this internal program, while collaborating with the Advisory Council to ensure the sustainable processes. Comparative Advantage: BHP has a strong comparative advantage in implementing this training program and collaborating with the Advisory Council, as it helps further leverage their core strengths as a market dominant company and develop improved brand identity. As well as aligning closely with BHP’s values in creating long-term relationships with the Indigenous community and bringing people together (BHP, 2022), BHP’s large market capitalisation of $134.69 billion (Global Ranking, 2022) indicates that they have a competitive advantage within the mining industry. Moreover, being able to reduce operational costs through this voluntary internal traineeship program and acquiring the opportunity to collaborate with a known governance Advisory Council will substantially aid increased future remunerations, in comparison to a smaller domestic mining company who may not have such programs and connections. This internal traineeship body that represents the Indigenous community plays a prominent role to ensuring the effective and sustainable governance of its operations, thus, enlightening BHP’s brand identity. As such, BHP’s market dominance and collaboration with the Advisory Council complements the levers that creates BHP’s comparative advantage. Materiality: A specific material group of stakeholders will be impacted by this initiative. The local Indigenous community stakeholders are benefited through a stronger enforcement for BHP to abide by the Indigenous communities’ cultural well-being and heritage guidelines, including mining at acceptable locations. Additionally, BHP also establishes a community root with the indigenous Advisory Council as well as the local indigenous community as they operate under continual indigenous heritage management practices which adds further social value for BHP. It also creates shared value for BHP, strengthening their brand image being one that values the cultural heritage and spiritual connection the Indigenous community have with their land, as BHP is willing to concede a voluntary (free) traineeship program for the Indigenous community with zero labour costs, in return individuals further gain in depth experience when overseeing BHP’s operational activities. The Indigenous community is also indirectly benefited, as the Advisory Council provides resources on how to better manage BHP’s extracting process sustainably, generating cultural Indigenous knowledge for the company. As a result, BHP is able to better preserve the environment and reduce radioactive footprints, enabling the environment to gain spiritual connection and historical value within the Indigenous community. In the long term, for shareholders, sales may increase as consumers may spend more willingly knowing BHP’s redefined sustainable productivity in the operations and human resource value chain, growing the pie and facilitating shared values across stakeholders. Eventhough the indigenous community is benefited the environment is also benefited as it hold historical/ spiritual and cultural value towards indigenous comm → our initiative will help improve and better the mining process → indigneous community indirectly benefited as their land is better maintained → ad body provide advise on how to better mining process and them BHP can better manage the neg impacts it have on the environment → e.g. is mining site being damaged on long/short term It also creates shared value for Kathmandu, strengthening their brand image of sustainability and status as a B Corporation as they are willing to concede short-term profits to align with their core values. In the long term, for shareholders, sales may increase as consumers may spend more willingly on Kathmandu products as the potential to be able to resell on the marketplace may 8 make purchases feel less financially significant. In particular, BHP internalises indigenous communities' cultural well-being and heritage significance in their operations. , simultaneously creating gains and relieving their pains as investigated earlier. ___the direness to promoting good social value with the Indigenous community, increasing the viability of this initiative will ensure low labour costs and provides a more enforceable bridge towards ensuring that BHP operates through effective governance. In the long term, through improved cultural heritage management in an ethnically sensitive method towards the Indigenous community the will act as a body of BHP to oversee BHP’s operations In the case of the South Flank project, BHP and the Banjima people established a Heritage Advisory Council. Since then, the Heritage Advisory Council has met periodically to discuss appropriate heritage management practices in the Central Pilbara. , including both the funds placed towards providing organising cultural forums for further development and training when learning about the Indigenous culture and aiding Indigenous community into understanding more about mining sites, promoting the further development, and training, resulting in closer long-term relationships, acting to provide support for primary activities to take place and support other support activities. Shared value: multiplicative or materiality Productivity in the operations and human resource value chain is redefined by the initiative of collaborating with the indigenous advisory council. In particular, BHP internalises indigenous communities' cultural well-being and heritage significance in their operations. Meanwhile, BHP also establishes a community root with the indigenous Advisory Council as well as the local indigenous community as they operate under continual indigenous heritage management practices.
