Business Strategies of British Petroleum Company

Introduction

Business strategies are the plans made by organisation which can help entrepreneur in gaining the competitive advantages along with their goals and objectives. This help an entrepreneur to make organised working between their different elements, so that the aims get achieved in effective manner. BP oils stand for British Petroleum company Ltd, it is an British multinational company of oil and gas.

It was established in 1909, and have head quarter at London, England. In 2010, BP oil faced a disaster of oil leakage in Gulf of Mexico, this lead to reduction in the reputation of BP oils, and also lead them to face lots of loss in profitability. For solving this problem, CEO of BP oil has hired a junior manager for making report , which cover some specific points. These are the impact and influence of macro environment on their strategies. Also the internal environment of BP oils, along with their capabilities ( Brewster, 2017). This report will also cover section on the competitive force of organisation in given market. Along with this, appropriate theories, models, and concepts has have to be discussed, which can help them in making strategies.

The impact and influence of the macro environment on BP Oil Company as an organization and its strategy.

Strategies are referred to the high level plans, which organisations use to design for achieving some specific goals and objectives, with in specific time period. BP oil is huge organisation of Britain, which use to serve peoples in oil and gas sector. It is very important for them to identify the external factors that can influence their strategies. For this, PESTEL analysis has to be done by junior manager of company, which is as follow :-

1. Political: This factor is one of the most important factor for an organisation. BP oil have to make deep study of policies made by government of countries where they use to serve their products. This will help their managers to make strategies which are good for organisation, and this will lead them in attaining their goals and objectives.

2. Economical: Economic condition of a country as well as of that organisation, plays a huge impact on success and failure of that organisation. BP oil has huge source of finance, but in countries where they use to sell their products economic conditions are stable and same. For this, they have to study the economic conditions of country, this will help them in knowing the factors related to economy. Using this study, manager of BP oils can make strategies that will lead them in achieving their goals and objectives.

3. Social: Social factor is very important for an organisation, as this help in improving their profitability and position in market ( Burlton, 2015). BP oil provide their products in different countries, therefore, it is very important for them to study the social factors of that country. Like, if society of a country use to avoid vehicles which run by oils and gas products, then invest in such countries can cause loss to them. Therefore, studying such conditions will help them in making effective strategies which lead them to achieving their objectives.

4. Technological: Change in technology can lead to change in working performance. BP oil use to make regular investments in new technologies ( Chang, 2016). This has become possible because of their regular study on change in technology. This help them in making strategies that help in adopting new technologies, which take then to gain their goals.

5. Environmental: Environment is a factor, which make companies to make changes in their strategies. BP oil also have to study the environmental conditions of places where they their plants. This will help them in modifying their strategies, which are good according to their future perceptions.

6. Legal: Change in legal policies or over lapping these policies can create huge problems for organisations. BP oil have to study all the legal policies and have to make strategies according to these policies and rules. This will help in performing their business without any problem and also help in achievement of their goals and objectives.

Along with this, for making effective strategies, BP oil can use different strategic techniques, which are as follow :-

1. Benchmarking: It is a technique, which is used for studying the comparison between strategies of organisation with their competitors. BP oil can use this, for knowing the strategies used by their competitors, so that they can make changes in their strategies. This will help them in gaining some competitive advantages.

2. Budget planning: Budget planning is very much important for an organisation. BP oil is huge organisation, and making plans for budgets will help them in making strategies according to the budget assigned to specific task.

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The internal environment and capabilities of BP Oil using appropriate frameworks.

The collective form of different elements and operations that decides the performance of an organisation like, management, employees, working culture are known as internal environment of a an organisation (Chen and Jermias, 2014). The direct control of this environment can be done by managers and leaders of organisation, for making the performance good it is very essential to make changes in internal environment. BP oil is one the biggest oil company in UK, but now a days working of them is not going proper. For this they can make some changes in the internal environment of their business, so that they can improve their working and achieve their goals and objective. Before this, junior manager of BP oil have to identify the capabilities of their organisation. For knowing the capabilities, it is required to know the strengths and weaknesses of their organisation. Strengths and weaknesses of BP oil is as follow :-

Strengths

  • BP is one of the biggest organisation of oil and gas sector, they have many ample number subsidiaries like, Amoco, ARCO, BP Express, BP Connect, BP Travel Centre, AM/PM, Burmah Castrol and many other.
  • BP oil is one of the most loyal brand in UK, they have several number of loyal customers, which are keen for their products and services ( Chu, KrishnaKumar and Khosla, 2014).
  • BP oil is one of the biggest oil and gas product seller in United States, they not just only use to sell their products but also plays an important role in the economy of United States.
  • To being one of the biggest oil and gas product seller in UK, BP oil has very large and strong network. Their network is all around Europe, North America, South America, America and the Asia Pacific.

Weaknesses

  • BP oil has faced many issues related to their ethics, as they have caught in many scandals of dishonest transactions with their customers.
  • Controversies are most common for them, as they have faced many scandals related to oil spills at different locations of the world.
  • BP oil has tried their interest in many different areas of market, like non energy, but they do not get success in that, which cause them huge loss in their economic conditions and in goodwill also ( Eaton and Kilby, 2015).

From the above, it is clear that BP oil is big and powerful organisation of energy sector, but not of non energy sector. Therefore, they are needed to make changes in their environment so that they can achieve goals and objectives related to energy sector. BP oil have to examine their strategic capabilities, for this McKinsey’s 7s model of BP oil is as follow :-

1. Structure: Intricate project management structure was very much responsible in the poor decision making during deep water horizon accident. Along with this, they use vertically integrated structure while they make decisions for their teams.

2. System: The system of BP oils is followed by many safety measure, but their staff and contractors do not use to follow that. Along with this, leadership styles used by them also not able to understand their employees about the importance of safety measure.

3. Style: In the year of deep water horizon accident, leadership style used by them was not able to make their employees and contractors to understand the importance of safety measure ( Jocovic and et. al, 2014). Their corporate culture has stubborn nature, which is very much known as culture of arrogance.

4. Staff: The staff of BP oil do not understand the importance of safety, as they do not think that safety as a core element for their organisation. This is all because of lack in communication of importance of safety among employees.

5. Skills: The staff of BP oil has lack of skills that are required while dealing with an accident or preventing it in line with values shared by BP oil safety and environment. This is because, leadership is not able to communicate with their staff about the importance of these skills in safety and growth of them.

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6. Strategies: They have adopted a strategy, which make a condition for them of no profit and no gain, which was named as “federation of assets”. This help them in gaining some incentives in sharing best practice in risk management and safety.

7. Shared vision: BP oil has several rules and regulations in their organisation related to safety and other operations of organisation. But due to lack in leadership style, their employees are not able to follow them. This leads to delay in achieving organisational goals and obejctive, and also can cause loss to organisation.

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P3 Evaluate the competitive forces of a given market sector for an organisation.

BP oil is a huge organisation of Europe, for evaluating their competitive force it is required for the junior manager make Porter's five force model ( Klettner, Clarke and Boersma, 2014). It is model which is used for analysing the force of different factors that can affect the working of organisation and their profitability. Following is the Porter's five force model :-

1. Threat of substitutes: Substitutes are the products which are use for replacing one when it is not available or on permanent basis. The best example of substitutes are tea and coffee, a person who use to drink coffee, some time drink tea when it is not available. BP oil is a big organisation of UK in oil and sector, and substitutes in this sector are narrow. As a vehicle can run only on one either it can be liquid or can be gas, therefore, substituting their product is not possible till now. And the force of substitutes are negligible for them. assignment help in australia

2. Bargaining power of buyer: This factor is considered with the powers related to organisation's customers. As customer are the biggest factors that can lead a business to meet success and also have power to fail a successful business. BP oil has ample number of loyal customers, this is all because they provide products at lower price and at best quality. The bargaining power of buyer in oil sector is also negligible, as the rates of products are decided by government, and the difference between rates goes down to narrow ( Lawton, 2017). High number of loyal customers and decrease in difference between rate reduces the force of buyer on their bargaining power.

3. Bargaining power of supplier: Suppliers in oil and gas sectors are limited and generally are government agencies of supplier countries. BP oil has all these suppliers in their contact, as it is huge organisation of oil and gas sector of Europe. Suppliers in oil sector have their own terms and conditions, but in the case of BP oil suppliers use to get agree at their terms condition. This is all because no want to lose such a big importer of product. This influence of BP oil reduces the force of their supplier's bargaining power.

4. Threat of new entrance: Rules and regulations of Europe legislations (EU) are very tough and handy to handle. It is not easy in UK to start a small business, lengthy paper work and highly time consuming process make it very irritating for any one to get permission for a small business even. Rules and regulations for oil industry are tough, and it is not easier for any one to get permission for this sector. Along with this, the investment rate for a new entrance in this sector is very high, and cunt goes in trillions of dollar. Therefore, these factor together make it just like impossible for any one to come and launch their venture in this sector. This all make the threat of new entrance as Zero for BP oils.

5. Industry rivalry: BP is a government organisation of Europe, which deals in oil and gas sector. When it come to competitors, BP oil has about 10 competitors which are affecting their profit share in market. As they also have ample number of loyal customers which do not get disturbed by their competitors strategies. As the fossil are going towards drying, therefore, it is very important for every organisation of this sector to gain fair part of customers ( Peng, 2017). For this, BP oil has started merging with small organisation of this industries, which help them in gaining some competitive advantages.

From the above discussion, it is stated that, step taken by BP oil of merging with small industries will help them in gaining the most competitive advantages and also help in gaining some long term advancements.

P4 Applying a range of theories, concepts and models, interpret and devise strategic planning for a given organization

For making effective strategies, it is very much essential for organisations to use some basic theories and models, which can help them in designing workable strategies. Some of these are as follow :-

1. Porters Generic Model: Porters Generic Model is use for describing how an organisation will pursues competitive advantages in selected market scope. This was developed by Michael Porter in 1980 ( Rosemann and vom Brocke, 2015). BP oil can use this model in order to make strategies which can help them in gaining some competitive advantages. Under this, they can adopt any of three strategies for their products, which are as follow :-

  • Cost Leadership: It is a strategy which BP can use in their products for gaining some competitive advantages. According to this, they have to produce some products which are lower in cost, and are able to attract customers. This will help them in gaining some competitive advantages, along with increase in their profitability.
  • Differentiation: It is a type of making different strategy. This can help BP oil in looking their organisation different from other organisations of their industry. For this they have to make some different and unique products, which can fulfil the demands of their customers and also give some competitive advantages. This also help them in gaining some extra profitability from market.
  • Focus: Focus is basically divided in two parts, first on cost focus and second on differentiation focus. In cost focus, organisation use to make strategies which can make their focus only on the cost of product in selected market. This can help BP oils in making proper strategies that can help in increasing their profitability. Where as, differentiation focus can help BP oil in making strategies which has main focus on making a product which can make their organisation different in market.

2. Bowman's Strategy Clock Model: It is type of model which is used by organisations for making strategies, that can help in positioning their products, so that it can give most competitive position in market ( Scholes, 2015). BP oil can use any of 8 positions made in Bowman's Strategy Clock Model, which are as follow :-

  • Low price and low value-added (position 1): This is considered as no competitive positioning. In this, products or BP oil are perceives very little value by customers rather then low price.
  • Low price (position 2): This position help a business in keeping them self at low cost leader. BP oil can gain advantage by this, as low in cost but high in revenue can help in maximising their profits ( Spender, 2014).
  • Hybrid (position 3): This is according to the name, it help in designing strategies for making the price of product low along with some differentiated products. BP oil can use this to lower the price of their unique products.
  • Differentiation (position 4): This main aim of this strategy is to make and provide product which are very different in market. This will help BP oil in making a different image in market.
  • Focused differentiation (position 5): This is a strategy which is used for making high 14priced different products. This can help BP oil in making luxury products, customers who use to buy product by it's cost can get affected.
  • Risky high margin (position 6): This strategy can cause a two way for organisation, this can lead an organisation to failure ( Veit and et. al, 2014). BP oil can make high pricing of their products but without offering much extra in that product can lead them to meet failure.
  • Monopoly pricing (position 7): Monopoly refers to offering of specific product or service by only one organisation. This lead to higher the cost of product or service. BP oil make a product which is unique in market and no other is offering that product can lead them in pricing the product very high.
  • Loss of market share (position 8): This is known as higher the value and lower the price ( Wheelen and et. al, 2017). This can help BP oil in gaining competitive advantage at the most from their competitors.

Conclusion

Form the above report it has been concluded that, business strategies are the plans that entrepreneur use to attain their future goals and objectives. BP oil is huge organisation of world, which use to provide products in oil and gas sector. Macro environment have factors which can affect the strategies of an organisation, for BP oil can use different strategic techniques for making different strategies according to the factors. For identifying their capabilities they have to identify their strengths and weaknesses, along with that McKinsey’s 7s model can also help in this. For identifying the affect or macro factors on competency of BP oils, junior manager of them can use Porter's Five force model. At last, Porters Generic Model and Bowman's Strategy Clock Model can be used for making the strategies of BP oil.

References

  • Brewster, C., 2017. The integration of human resource management and corporate strategy. In Policy and practice in European human resource management
  • Burlton, R. T., 2015. Delivering business strategy through process management. In Handbook on Business Process Management 2 (pp. 45-78). Springer, Berlin, Heidelberg.
  • Chang, J. F., 2016. Business process management systems: strategy and implementation. Auerbach Publications.
  • Chen, Y. and Jermias, J., 2014. Business strategy, executive compensation and firm performance. Accounting & Finance.
  • Chu, M. T., KrishnaKumar, P. and Khosla, R., 2014. Mapping knowledge sharing traits to business strategy in knowledge based organisation. Journal of Intelligent Manufacturing.
  • Eaton, D. and Kilby, G., 2015. Does Your Organizational Culture Support Your Business Strategy?. The Journal for Quality and Participation.
  • Jocovic, M. and et. al., 2014. Modern business strategy Customer Relationship Management in the area of civil engineering. Applied Mechanics & Materials
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