British Petroleum's Global Operations

Company Background

British Petroleum (BP) is the British multinational oil and gas company, headquartered in the United Kingdom. It is a sixth largest oil and Gas Company by market capitalisation and the company turnover. The company is efficient to conduct their operational activities including explorations, product, refining, distribution and marketing, trading, market expansion and power and petrochemicals. The company has 19000 service stations worldwide and the company is serving approximately 70 countries with their quality products and efficient services. The products of the company are such as petroleum, natural gas, motor fuels, petrochemicals and aviation fuels. The company is efficient to enhance their performance Worldwide, where it generates US $ 303.73 billion revenue in the last years as well as the company is successful to expand their service by empowering more than 74000 employees who are efficient in providing service worldwide (British Petroleum, 2019a).

The company is also effective to conduct their operations through upstream and downstream process to make provide positive environmental footprint, so that it is possible for the company to secure future sustainable development and gain market share across the globe. Moreover, the company is effective to develop proper strategies of product and marketing, developing supply chain and branding and public relations, managing organisational culture to establish the brand efficiently (British Petroleum, 2019b).

Section 1: Internal and external analysis of the company BP

Strategic planning is important for the organisation to develop proper tactics to achieve the organisational aims and objectives. The strategies such as product diversification and cost minimisation would be beneficial for BP to achieve success in near future and grab the future market opportunities successfully. Additionally, the company needs to focus on the strategy of sustainability to create values for the social communities as well as protect the environment successfully. In this regard, the internal and external analysis are effective for the organisations where the internal analysis is helpful to identify the own strength and weaknesses of the company as well as predict the market opportunities and future threats. On the other hand, the external analysis is effective for BP to conduct research on market environment through which it is possible to understand the competitive threats in the market, rivalry among the competitors, substitute products and the market demand which are beneficial to develop appropriate strategic planning for the organisation to meet the pre-specified goal of the company.

1.1 External analysis of BP: PESTLE analysis

Through the PESTEL analysis, it is possible to understand the business environment where the political forces, economic stability, social development as well as the legal factors, technological up-gradation and environmental sustainability play a crucial role in shaping the business strategic planning (Lasserre, 2017). The PESTLE analysis of the organisation BP can be explained further,

Political forces

Political factors like government support, subsidy to the businesses for international trade, changed import tax and other monetary and fiscal policies are playing crucial role in business expansion and in this regard, the political economic condition in the UK is stable and the government of the UK is cooperating with the corporate firm to expand their business opportunities in future. On the other hand, the UK government has changed the import tax by 3% which affects and offshore the oil industry in the UK where for example, the North Sea industry is facing major challenges (Meyer, Neck and Meeks, 2017). Moreover, after post-election, the government stated that the oil and gas industry such as petroleum revenue tax at 50% on the top is the company has been established before 1993. However, the stable government in the UK will be helpful for the company to run their business strategically (Meyer, Neck and Meeks, 2017).

Economic stability

Increasing GDP in the UK economy is considered as supporting factor for the company BP where the economic growth and rising income of the customers will raise the demand for motor fuel and services of the organisation (Morden, 2016). The demand for motor vehicles is increasing rapidly in the UK which boosts the requirement of motor fuel and in this regard, it would be beneficial for the company to retain the customers for the motor fuel (Meyer, Neck and Meeks, 2017).

Social development

High education and school enrolment are helpful to ensure social development where the society is developed, and the people are trying to be updated with daily news and information. It is beneficial for the organisation to attract the customers with quality products and efficient services in future where the people are concerned about healthy lifestyle. Social development in the UK further influence the people to raise their utilities of motor fuel which in turn helps the company to strengthen their customers and improve their performance for successful expansion of their services (Morden, 2016).

Technological up-gradation

Technological up-gradation is also playing a crucial role for enhancing the performance of the company. Technology improves the data protection, encourage working in partnership, enhance communication successfully for performing better in the markets. Moreover, the technology of mining and refining are effective to support the operational activities of the company BP. The technological up-gradation of implementing ERP and ICT are also effective to improve supply chain and distribution network through which the company can perform proficiently (Meyer, Neck and Meeks, 2017).

Legal rules

As per the legal rules, there are Anti-trust law in the oil and gas industry, Health and safety law, Consumer protection law, Employment rules and Data Protection which reshape the business strategic planning in an ethical manner where the company BP can run their business operational activities in a suitable manner (Meyer, Neck and Meeks, 2017).

Environmental sustainability

Managing environmental sustainability is necessary for the company BP and in the rennet era of globalisation, people and the government is concerned about green footprint and using renewable energy resources for reducing wastage of natural resources of the country. This is effective for the organisation BP to implement proper policy to reshape the business which can secure future sustainable development (Meyer, Neck and Meeks, 2017). For delivering motor fuel, the company needs to maintain environmental sustainability so that the natural resources of the environment cannot be hampered (Morden, 2016).

1.2 Industrial analysis of BP: Porter’s five forces

Threats of new entrants:

The threat of new entrant for the firm is low as the organisation BP is a well-established firm and it is efficient in running their business operational activities strategically. The company is proficient to utilise organisational resources and capabilities to produce motor fuel (Morschett, Schramm-Klein, and Zentes, 2015). It is not possible for the new entrant to invest more and conduct research and development to offset the market position of BP. Hereby, the threats of new entrants are low for the firm BP.

Threats of substitute products:

The threats of substitute products are moderate as there are other substitute products such as nuclear, coal, hydropower, solar energy, and wind and bio fuels for which there are other substitutions available in the market (Modarress, Ansari, and Thies, 2016). The company in this regard needs to raise their product diversification in order to invest more in the renewable resources so that it can strengthen its customer’s base further in upcoming years.

Competitive rivalry:

The competitive rivalry for the firm BP is moderate as there is other competitive firms in the market such as Saudi Arabian Oil, National Iranian oil, Shell, Gazprom which are also efficient to increase their performance and generate moderate revenue (Modarress, Ansari, and Thies, 2016). The company is developing and expanding their business through enhancing production growth and expanding market where the company can increase their revenue after taxation. In addition to these, global presence of the company and continuous improvement can boost the brand to establish as a leader in the oil and gas industry (British Petroleum, 2019b).

As per the figure above, the profit maximisation can be possible for the firm BP where the company aims at maximising their revenue through operating their business internationally so that it can gain highly competitive advantage over other firm operating in the global oil and gas industry (British Petroleum, 2019b).

Bargaining power of the suppliers:

The bargaining power of the suppliers is moderate as the suppliers have the license to explore new opportunities and the government regulations for which the suppliers have the capability to bargain for the best price. However, the company, BP aims to fulfil the needs and preferences of the suppliers as well as create values for them through building strong relationship through which the company focuses at retaining the efficient suppliers and distributors for long run (Morschett, Schramm-Klein, and Zentes, 2015).

Bargaining power of the customers:

The bargaining power of the customers is low, as the company is able to satisfy the customers across the globe by providing petrochemical products, gas utilities, electric utilities, gas refining and mining and successful management of the products and services which can create values for the customers (Morschett, Schramm-Klein, and Zentes, 2015).

Section 2: Evaluating key findings about BP from the above analysis

2.1 Internal analysis of BP: SWOT Analysis

Through SWOT analysis, it is possible to identify the strengths of the company as well as weaknesses. The upcoming market opportunities and threats can also be analysed through the SWOT analysis which can be explored further,

Strengths:

The major strengths of the company are strong financial performance which provides a scope to the organisation to invest more in the research and development as well as exploration and refining of the oil and gas which is the major product of the company. In the last year, the company is successful to generate US $ 303.73 billion revenue and US $ 9.58 billion net income which are effective for the firm to expand their operations and invest more for product mining and refining to serve the customers in better and unique way (British Petroleum, 2019c). Global presence is another strength through which the company can diversity their risk of operating in the international borders as well as the company also has the opportunity to expand their operational activities over the world. In addition to these, use of developed technology is strength where the company is efficient to enhance technological up-gradation as well as improve their operational performance in near future. Wide geographical presence and dominant market position for delivering motor fuel are also other strengths of the company through which it can develop effective strategic planning to grab future market opportunities (British Petroleum, 2019d).

Weaknesses:

The major weaknesses of the company are oil spill in the Gulf of Mexico as well as explosion in the Texas refinery. These are considered as main weakness of the firm where accidental incidents and spill deteriorate and smooth pace of operational activities of the organisation BP. lack of diversification of the product in the organisation is the weakness for which the company could lose their market share in the global oil and gas industry.

Opportunities:

The major opportunities of the company are such as potential growth in new projects, acquisition of Devon Energy’s assets in Brazil, Azerbaijan, and the US Deepwater, gulf of Mexico, growing demand for energy, Oil and gas exploration projects which provides an opportunity to the company to expand their service across the globe and gain high competitive advantage successfully (Lima, Relvasand Barbosa-Póvoa, 2016). Growing demand for the motor fuel as well as petrochemicals product as well as high consumer trend to utilise these energy sources are influencing the firm to expand their operations across the international borders and strengthen their customer’s base for long run. In addition to these, global presence and high brand value further helps the organisation to grab the future market opportunities and establish the business strategically in the global petrochemical industry.

Threats:

The threats are such as saturation of resources in the North Sea, instability in some oil-producing regions, environmental regulations and responsible for global emission for which it becomes threats for maintaining environmental sustainability in the society. The company has moderate threats of competition and risk in conducting their business operational activities due to lack of management in sustaining the environmental footprint as the operations are related to refining, mining and distributing which explore negative greenhouse gas and affect the natural resources.

2.2 Evaluation the strategic planning of BP

As per the above discussion, it has been seen that, the firm BP is efficient to generate high revenue and maximise profit by retaining more customers for long run through delivering quality products and efficient services to them across the globe. In this regard, the company aims at running safe and reliable operations across all the businesses which are supported by business operations and technology in order to high quality product motor fuel and efficient service to meet the customer’s needs and preferences (British Petroleum, 2019e). In addition to these, the company aims to deliver underlying earnings growth and build competitive advantage to the business for future, where in the recent years the cost profit is growing to $ 7.6 billion in his present year and it is expected to grow faster in the upcoming years. In addition to these, the upstream and downstream strategic planning of the company is another innovative strategy through which the managers and the leader of the organisation try to establish the brand. The upstream strategy of the firm is to improve the activities of the production of motor fuel, field development and other logistics management so that it can utilise global operational functions and latest upgraded technology in order to deliver motor fuel and services to the customers across the international borders (British Petroleum, 2019f). Cost effective quality execution through emission, drilling wells, managing reservoirs, exploration, deploying technology and building projects are effective for the company to be successful in the oil and gas industry. On the other hand, under the downstream technique, the company tries to monitor global marketing and manufacturing process of fuels, lubricants and petrochemicals to maintain product portfolio and gain competitive advantage of refining motor fuel successfully. The company also focuses on managing employees at the workplace in order to create values or them as well as manage all the stakeholders including the government, shareholders suppliers and managers as well as customers by providing high return on investment (British Petroleum, 2019g).

Section 3: Recommendations for future growth of the firm BP

It is necessary for the organisation to improve the strategic planning and develop appropriate strategies for improving their market position and secure future sustainable development by utilising the company’s strength and grabbing the market opportunities. In this regard, the main strategy is to improve product portfolio which can be explained through porter’s generic strategy (Morschett, Schramm-Klein, and Zentes, 2015).

The company should focus on cost effectiveness in order to maintain economic of scale and manage the cost of producing motor fuel so that it can deliver the quality products at affordable price to the customers (Uldam, 2016). It would also be beneficial from the organisation to increase product portfolio by transitioning the product range towards carbon footprints. In this regard, the company should focus on renewable resources, such as solar energy, bio fuels, bio power and bio diesel through which it can maintain environmental footprint. In the recent era of globalisation, people become concerned about utilising renewable resources for mitigating the greenhouse gas emissions and creating positive environmental footprint (Lima, Relvasand Barbosa-Póvoa, 2016). In this regard, increasing products diversification through investing more in the production of motor fuel would be beneficial for the company to establish their brand in the global oil and gas industry in a unique way. The company also needs to focus on safe and reliable operations with zero carbon emissions and increasing utilisation of the renewable energy resources which will be helpful for driving quality and improving efficiency of the organisation (Morschett, Schramm-Klein, and Zentes, 2015).

As per the Ansoff matrix, there are four parts which are market development and penetration with existing products as well as diversification and product development with new products. In this regard, BP needs to concentrate both product development and market penetration to grab new market opportunities. In order to grab the opportunity of high demand of the customers for their products, it is necessary for the firm to invest on marketing so that the customers can access their products of motor fuel and services as well as the company also can improve their brand visibility in the market (Modarress, Ansari, and Thies, 2016). For market penetration, it is hereby important for the organisation BP to promote motor fuel and services through social media marketing as well as television marketing so that it can provide proper information to the customers about their innovation and creativity to serve the customers in a better and unique way with quality products and efficient services (Alizadeh et al., 2016). Another important innovation needs to be implemented in the organisation where the company should focus on the transition of low carbon products in order to ensure digitally enable future where the company needs to offer diversified products, maintain product portfolio as well as invest a secure percentage of profit in the new filed for creating renewable resources (Morschett, Schramm-Klein, and Zentes, 2015).

Section 4: Discuss Mckinsey’s 7S’s as a change management for strategic change

In order to implement the strategic changes as per the above recommendations, it is necessary for the company to develop proper strategic of change management in the workplace so that the leader and managers can lead the employees towards achieving success (Lima, Relvasand Barbosa-Póvoa, 2016).

As per the Mckinsey’s 7S’s as a change management model, the factors are structure, systems, style, staff, skills and strategy which can reshape the change strategic planning on the organisation (Modarress, Ansari, and Thies, 2016). In this regard, the company BP needs to provide proper training and development program to the staff members as well as invest more in the research and development in order to enhance technical skill and capabilities of the employees (Morschett, Schramm-Klein, and Zentes, 2015). On the other hand, it is necessary to create suitable organisational culture by managing health and Safety of the staff and creating values for them through providing monetary and non-monetary rewards so that they can be satisfied and contribute for achieving future success through change management (Alizadeh et al., 2016). The organisational system in BP needs to be updated with latest technology, expanding their field of work and investing in solar energy, bio fuel and bio diesel in order to ensure transition of the business towards low carbon footprint. The corporate strategy of BP also needs to be improved where the leader and managers develop partnership working for sharing experience and work as a group in order to achieve success and satisfy the customers in near future.

Conclusion

It can be concluded that, the company BP is efficient to generate profitability and review year by year whereas per the external analysis, political and economic stability, social development, technological up-gradation and legal rules are contributing factors to reshape the strategic planning of the BP. Moreover, as per the internal analysis, the company is proficient to invest more in production of motor fuel, bio diesel and others ensuring transition towards low carbon footprint by providing high product diversification through delivering bio fuel, bio diesel and bio power which is the main recommended suggestion for the company BP. Moreover, the company needs to invest in marketing strategy and field in order to enhance the production of renewable resources and strengthen their customer base across the globe which in turn helps the firm to gain high market share in the global oil and gas industry.

Reference List

Alizadeh, R., Lund, P.D., Beynaghi, A., Abolghasemi, M. and Maknoon, R., 2016. An integrated scenario-based robust planning approach for foresight and strategic management with application to energy industry. Technological Forecasting and Social Change, 104, pp.162-171.

Ansoff, H.I., Kipley, D., Lewis, A.O., Helm-Stevens, R. and Ansoff, R., 2018. Implanting strategic management. Springer. Hill, T., 2017. Manufacturing strategy: the strategic management of the manufacturing function. London: Macmillan International Higher Education.

Lasserre, P., 2017. Global strategic management. London: Macmillan International Higher Education.

Lima, C., Relvas, S. and Barbosa-Póvoa, A.P.F., 2016. Downstream oil supply chain management: A critical review and future directions. Computers & Chemical Engineering, 92, pp.78-92.

Meyer, G.D., Neck, H.M. and Meeks, M.D., 2017. The entrepreneurship‐strategic management interface. Strategic entrepreneurship: Creating a new mindset, pp.17-44.

Modarress, B., Ansari, A. and Thies, E., 2016. Outsourcing in the Persian Gulf petroleum supply chain. Strategic Outsourcing: An International Journal, 9(1), pp.2-21.

Morden, T., 2016. Principles of strategic management. London: Routledge.

Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. Strategic international management (pp. 978-3658078836). Berlin: Springer.

Uldam, J., 2016. Corporate management of visibility and the fantasy of the post-political: Social media and surveillance. New Media & Society, 18(2), pp.201-219.