individual research-based individual assignment : Impact of COVID-19 on Multinational Companies MNCs (such as BHP, Rio Tinto) businesses around the world. Research-based Individual assignment (20%) ...

Running Head: ADVANCED ACCOUNTING        1
ADVANCED ACCOUNTING         20
ADVANCED ACCOUNTING
INDIVIDUAL RESEARCH-BASED INDIVIDUAL ASSIGNMENT
IMPACT OF COVID-19 ON MULTINATIONAL COMPANIES AROUND THE WORLD
Table of Contents
Introduction    4
Issues Faced by the MNC    4
First Issue: Lesser Production    4
Second Issue: Decline in Profits    5
Third Issue: Lack of Customers    6
Fourth Issue: Export and Import Stopped    6
Fifth Issue: Lack of Labour Power    7
Sixth Power: Internal Conflicts    8
Seventh Issue: Lack of Resources    9
Eighth Issue: Higher Prices    9
Ninth Issue: Lack of Support from Local Communities    10
Recommendations for Solving the Issues    11
Recommendation to the Issue of Less Production:    11
Recommendation to the Issue of Less Profit:    12
Recommendation to the Issue of Lack of Customers:    13
Recommendation to the Issue Regarding Export and Import:    13
Recommendation to the Issue for Lack of Labour:    14
Recommendation to the Issue of Internal Conflicts:    15
Recommendation to the Issue for Lacking Resources:    15
Recommendation to the Issue for Higher Prices:    16
Recommendation to the Issue for Lack of Support:    16
Concluding Remarks    17
References    18
Introduction
This report has been based upon the effects of horrendous impact of COVID-19 on BHP. BHP Billiton or BHP, a multinational company (MNC), is the world-leading resources company. Its main purpose is to extract minerals, oils and gas products and sell them domestically and internationally. The headquarters of BHP has been located in Melbourne, Australia (BHP, 2020). This company progresses with a disciplined approach and strategy. It is considered as the largest mining sector based on market capitalisation.
It is third largest in terms of its revenue from coal, petroleum and natural gas. The products of the company are iron ore, coal, petroleum, copper-nickel, uranium along with natural gas. The company has suddenly received a setback due to COVID-19. The manufacture and production had been hampered (BHP, 2020). This report will analyse the issue, which is faced by BHP during COVID-19. The report will focus on nine issues, respectively. It will be followed with suitable recommendations for mitigation purposes.
Issues Faced by the MNC
First Issue: Lesser Production
The company has secured the largest revenue of $50000 from its main production of petroleum and natural gas. A rate of $20000 revenue has been secured from the distribution of the metal and mining with coal. The products have been sent to England, UK and New Zealand (BHP, 2020). Recently the company has suffered a setback due to Covid-19. The export items to the UK, along with New Zealand, have been temporarily stopped.
The world has been languishing under the threat of Covid-19, therefore the extraction of processes for the manufacture of petroleum and coal is not continuing in BHP. The production, which was soaring high with a rate of 60% in petroleum and 40% in natural gas, has shown a negative mark. During the lockdown session, the vehicles in Australia closed down (Maldonado, Haile, Meegamarachchi & Sasmita, 2020). Therefore, Petroleum and natural gas used for the engines is not being used.
Second Issue: Decline in Profits
The decline in profits of BHP has resulted in a deteriorated growth in the year 2020 in BHP (BHP, 2020). This is because due to the spread of the infectious diseases, production and manufacture of petroleum natural gas, coal and iron ore has been stopped abruptly. In the annual conference of BHP, the CEO has said that due to Covid-19 the overhead expenses of the company have increased. The left available products have needed to be mitigated and progressed with huge costs.
The 50% of the production of the resources such as petroleum and natural gas, which supports the economy of the company, has been stopped. Therefore, BHP has run out of money to provide support to the local communities only (Meney & Pantelic, 2019). The excess of overhead costs has been unable to be controlled by the management of BHP during the pandemic. There has been a similar occurrence of wrong budgetary estimation, which leads to higher overhead costs in BHP due to Covid-19.
Third Issue: Lack of Customers
BHP used to have a large customer base of 2000000 approximately domestically and internationally. Due to the Covid-19, the customers have been lessened by 60%. Most of the time, the customers are not purchasing the products. The petrol pumps of Australia have been running low. The supervisor head of the petrol pumps reported that petrol and natural gas sent by BHP has been of an inferior quality. During the pandemic most of the petrol has been used for lorry and trucks.
They reported a bad smell has been coming from the products. This is equally a reason for a lesser amount of customers in BHP in 2020 (Song, Yun, Noh, Cheong & Kim, 2020). The iron ore and nickel, which is used for the construction of buildings, is not being used and utilised. The construction of houses and buildings has been temporarily stopped in Australia. All the sectors have been closing their schemes; therefore, people engaged with it in BHP are lessening day by day in pandemic.
Fourth Issue: Export and Import Stopped
As the disease has been infectious, therefore an estimate of 0.6 million people affected in Australia. The export relations and business had been done with the countries of the UK and New Zealand. The black mark has stretched there at the limitation of death by 80,000 and 70,000 respectively. Therefore, Australia has totally stopped the export of BHP products from the home country to these countries (Kiseleva, Nekrasova, Mayorova, Rudenko & Kankhva, 2019). The exported supply of items has been totally closed down.
The rate of export failure in BHP is lessened down to 3%, which is a setback for BHP. The import of the product and resources such as machines for manufacture of petroleum, from the suppliers has been equally stopped. Due to the failure of exports, BHP has a decrease in sales structure. The increment of the revenues and investments has been hampered totally (Carrasco & Tovar-Garcia, 2020). Due to lack of export and the import facilities, BHP has been facing severe currency fluctuations.
Fifth Issue: Lack of Labour Power
As the production of BHP has been lessened due to the Covid-19 pandemic, therefore BHP knocked out its employees. BHP has been unable to provide remuneration and incentives to the employee or the labourers. Not only that, BHP cannot provide home securities and travel allowances, which were part of their regulations. Therefore, most of the labours associated with the manufacture of coal, iron ore, minerals have been unable to come to work.
The business, which BHP has planned to settle in the midst of pandemic, cannot be fulfilled properly. Due to the lack of labour-power, the company has offered a degradation in manufacturing. Labours complained about the company's lack of providing them essentialities during the pandemic. This situation served as a threat for BHP. Therefore, labour-power mainly in the handling of petroleum and coal has reduced to 20%. This situation has affected the company.
Sixth Power: Internal Conflicts
Due to the...