Contemporary Business Environment: Micro and Macroeconomics Components and Theories, Management and Leadership Theories of British Petroleum

This article explores the micro and macroeconomics components and theories, management and leadership theories of British Petroleum in the contemporary business environment. It discusses the company's strategies and policies used to reduce carbon emissions and conserve the environment. The article also covers the impact of external factors such as circular flow of income, fiscal and monetary policies on the company's operations.

Contemporary Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................6
Task 1...............................................................................................................................................6
Micro and Macroeconomics Components and Theories.............................................................6
Task 2...............................................................................................................................................8
Management and Leadership Theories........................................................................................8
Globalized Environment of British Petroleum............................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................13

INTRODUCTION
Contemporary business environment is defined as the current business environment
circumstances and ideas in present time. In the current competitive market contemporary
business environment are increasing. British Petroleum Company plc is the British oil and gas
company, headquarters in London established in 1909. It is the seventh biggest company in the
world which operates its business in all oil and gas industry. On January1, 1995, British
Petroleum became a holding company and later on in 1977 the British government sells the
shares to public and reduced its ownership. In the 1980s the government turned British
Petroleum to private ownership by selling it all remaining shares (Hobbs, 2019). In the process
of its operations and productions company find a developed hydrocarbon resources, refineries,
operate oil, gas production assets and pipelines and terminals across the world. The vision of the
British Petroleum Company is to become a leading hydrocarbon business industry and the engine
room of the integrated energy company.
To solve the biggest issues in the economy company will reduce the carbon emissions,
improves the efficiency, flexibility deploying talent, integrated across value chain. And the
mission of the British Petroleum is to provide the highest quality products, services and solutions
to customers and delivering more values to the customers and earn the loyalty and respect from
them. The aim of the company is to use natural based solutions which delivers the value and
contributes to the society, people, environment and planet through operating its business
activities and using the materials for long period to a good life cycle. The purpose of the British
Petroleum is to reimagine energy for the planet and the people and the aim to become a net zero
company by 2050. Aims and objectives of the British Petroleum is to become net zero operations
and it targets a reduction of 20 percent in operational emission till 2025 and aim of 50 percent
reduction by 2030 (Ceil, 2019).
The second objective is to become net zero production till 2050 in carbon and in
upstream of oil and gas production. British Petroleum targets a reduction of 20 percent carbon till
2025 and 35-40 percent by 2030. The scope of the company is to care for the planet by covering
water management, biodiversity and the nature based solution which includes the reduction or
removal of carbon emissions. The decline in biodiversity and the degradation of the environment
was the serious risk for the planet. Due to the uncertainty of Covid-19 it impacts every business
across the world. British Petroleum support team and leadership teams were addressing and

responding daily to the uncertain changes in the conditions. Company focused on supporting
government to limit the spread of Covid-19 by considering the supplies of fuel and energy.
During pandemic company also provides free foods to people by its UK retail sites.
There is a fall in the commodity and stock price of company due to crisis. The largest
shareholder of the company is State Street Corporation which is a global financial service
company in Boston. It offers institutional investors a range of products and advisory services for
investments (Chofreh and et.al., 2021). State Street Corporation owns about 26.8 million shares
which is 9.5 percent of the company. BlackRock Incorporation holds 16.3 million shares which
represent 5.7 percent of the company. British Petroleum employees over 80.000 people over the
world, the stakeholder affects by the company's performance and also influenced by the
company's performance. The company commits to provide the excellence of health and safety to
customers which helps the company to maintain important position in the sector.
Digitalization in every business helps the business to improve the efficiency of
operations make process easy and increases the speed. David Eyton leads the innovation and
engineering part in British Petroleum. David identifies the threats which it can demonstrate to
play a central and integrating role in providing value creation across British Petroleum. It
mentioned four points which can be followed- Firstly, it understands the licence to innovate
which is based on the operation, safety and security of licence to continue investments.
Secondly, they created a single organization to provide innovation as a service to customers and
British Petroleum, decreasing carbon, providing high returns. Thirdly, it planned to double the
capital investment in digitalization by 2050 of $1.5 billion. Lastly, its aspiration is to create
around 10 new digital business in 2022 focusing on the intelligent commodities and sensing with
a billion dollar potential (AlMulhim, 2021).
British Petroleum has strategies of ICT influence which includes integrating energy
system, driving digital and innovation, partnering with countries, cities and industries. The
company contributes to the creation of value from the source of digital and innovations. The four
sources are- The first and the second sources focuses on the digital investments in the existing
business by transforming core operations and to extend the customer access. Third source
focuses on the reducing carbon emission relation to British Petroleum's operations and products.
And the fourth source is for investing in new digital business which are adjustable to the existing
business of the company.

The innovation in Digitalization of British Petroleum means identifying and adapting
ideas from across company global ecosystem innovations. Creation of early stage product which
can be tested or validated. And lastly scaling, from early adapting products to a large and greater
market by both internal and external. In the year 2020 the company plans to spend about 3 billion
gross for the innovation and engineering process, including the half value of the cost of
operations on digital estates. British petroleum and the other oil gas industry were affected a
downturn in the commodity prices by embracing the digitalization from the cost-cutting. The
Digitalization in transforming oil and gas industry creates a upstream for the producers of oil and
gas. Company's performance improved due to technological and digital improvements.
Technological advancements helped in increasing resource recovering over time (Panduru,
Scarlat and Gherman, 2021).
British Petroleum made efforts in using mobility in digitalization for assets in the harsh
operation regions or rural areas whereas doing monitoring and inspection process is very costly
and time consuming. The company is adopting drones for the inspection of pipelines in the
remote area of Alaska, drone sends real time data and relevant digital information. Strategies for
digitalizations are:
 Operational process get fluent:- After digitization it is easy for petroleum
industry to run their operational process. Through digitization to maintain data is
get easier, for petroleum industry to use highly updated technologies are being
normal after digitization. Through adaptation of new technologies helps company
to make effective work procedure. To maintain data of operational processes are
get easier such as distribution channel, export data, cash flows and other factors
are included in this process.
 Productivity get increases:- Through use of highly robotic machinery which are
used in extraction of crude oil are used, so they generate high productivity for the
company. Digital update company use to monitors its human resource and
decreases their burden to make them knowledgable about those technologies
which also increases their productivity, it supports to profit of the company.
 Maintain distribution channel:- It helps for the company to maintain their
distribution channel with use data sheets and technologies, which make easier to
the company again to deal with them. To maintain records after digitization is

very convenient and easier in comparison to paper age. For the petroleum
industry, there produce different products also apart from petrol or crude oil.
Maintaining distribution channel according to product is a big task, but
digitization make easier for the company.
MAIN BODY
Task 1
Micro and Macroeconomics Components and Theories
Macroeconomics is a part of economics that used to determine the overall economy
which includes market or other factors that are responsible for affecting whole economy. There
are two branches to understand economics that is microeconomics and macroeconomics, usually
macroeconomics deals with overall, whole picture of the economy. It focused on the
performance of whole economy and examine functions of the different sectors of the economy
and how they are closely interlinked. Some noted macroeconomic theories that are Classical
economics, Keynesian economics, aggregate market (AS-AD) analysis, IS-LM analysis,
Monetarism and New Classical economics (Capello, 2019).
Macroeconomic factors that influences operations of British Petroleum are state below :- Economic Problem:- Economic problem occurs due to desires or demand of population
are endless but resources that are available to fulfil demand are limited, equilibrium of
supply and demand are not met, so it generates economic problems. British
Petroleum's(British Petroleum) covers huge market share in its domestic market. Demand
of petrol and petroleum products are increases but sources are limited available for the
company, they are not able to fulfil demand, this supply & demand disequilibrium creates
inflation in rates and other economic problems in overall growth of economy. Company
have less resources due to oil & petrol are non-renewable resources, extreme extraction to
fulfil demand is near to impossible. Supply & Demand:- Supply and demand are the basic and most important elements of
the economics. Need or wants of people of different products or services and fulfil those
demand through sell product or services are known as supply & demand. In economy, it
is very essential to maintain supply & demand equilibrium. Generally, as supply
increases it decreases price and vice versa. British Petroleum is petrol based company,

crude oil is the crown jewel of commodity, consumption of petrol are rapidly increases
by companies and thousands of people which is the dominant reason to influence price.
Supply and demand equilibrium supports to company as well whole economy, because
petrol and petroleum product used as raw material for many companies. Market structure:- Market structure describes the way that various industries are
specified and differentiated according to their value and nature of competition for goods
and services. There are four popular types of market structures include that are perfect
competition, oligopoly market, monopoly market and monopolistic competition.
Petroleum companies includes in oligopoly market in market structure. In oligopoly
markets there are limited number of suppliers, some markets are competitive, whereas
others are very less. As company is the Petroleum company so in their market structure
there is fewer competitive by any changes in prices and demand it affects to company's
operation and on its profit as well (González and et.al, 2019). Circular flow of income:- Circular flow refers to the infinite flow of production of
products and services, as parallel to flow of income and expenditure under an economy.
In an economy, money start moving from society and again it comes to society. It is the
one of the important factor which leads to dominates GDP of any economy. Petrol prices
are getting rises and due to inflation occurs so company also rise its employees income
which is very important essential to run this loop fluent. British petroleum get affected by
this external force, in economy it is not controllable after disturbance disequilibrium in
supply and demand process. Inflation disturbs flow of income and it effects to company's
revenue (Cardoso, 2018).
 Fiscal and monetary policy:- Monetary policies used by government and apex institution
of the country to influence the money and credit in an economy, fiscal policy made by
government to made for taxation and spending. Both policies are used to influence
economy. It effects investment of company, whereas petrol industry relates to import and
export part of company as well, when fiscal policies are regulated by government it
directly affects on taxing part which is not beneficial for British petroleum (Chugunov
and et.al, 2021).

Task 2
Management and Leadership Theories
British petroleum faced many crises in its operations and leadership. In 2010, company
was involved in the worst ecological disaster in its operations. The explosion of deep water
Horizon oil rig in USA which causes 11 deaths, the accident leads to the spillage of 4.9 million
oil drums in Gulf of Mexico. The problems which are faced by British Petroleum in leadership
problems and how the leader's outcome these crises by using its talent. Company's current
business and corporate level strategies includes the different kinds of investments in which it
should access in the need to focus and invest in low carbon emission and oil gas production
(Vasilescu, 2019). The major aim of the company is to reduce the emission in the air and to
conserve environment. The management practice of British Petroleum can change by adapting
right leadership theories.
Leadership Management Theory was called transactional leadership, focuses on
supervision, group performance and organizations. Transactional leadership is the system of
rewarding and punishing which was used in the business. In the operations of British Petroleum
when the employee's success in its work it should be appraised by the leader. And when the
people fail in the operations it should be punished so it will majorly focus to success and
provides its best output. The management leadership is very effective theory. Example, if the
employee of the British Petroleum success in the increasing the sales of the business it should be
appraised by the company which impact other employees to success (Mango, 2018).
Participative Theory, in the common world participative theory is not common, in this
leadership theory describes that employees should directly involved in making decisions for
organization. The advantages of the theory is employees feel more engaged in working with the
organization and performs better in operation of business. Example, Bill Gates follows the
participative theory to engage employees and to get better ideas and suggestions from employees
which increase in the performance of business.
System Management Theory, this theory offers an alternative approach to organization
for planning and management. Theory states that the organization success depends on the several
elements such as the interdependence, interrelation between subsystems, work groups, business
units. Example, The manager of the British Petroleum should design patterns in the company for
determining best management approach.

The challenges faced in leadership theory are that inspiring others by motivating
employees to satisfy them in their work and the job, developing the employee skills by coaching
and mentoring effectively. The key challenge faced is the team building, team management and
development, leading team to effectively engage and supporting employee in the work. Leaders
of British Petroleum was not performing effectively at time of crisis (Zhou and et.al., 2019).
Government policies can negatively affect the strategy for establishment renewable energy,
company should more focus on the advertising and marketing of energy and it should firstly
educate the peoples the advantages of using renewable energy. To influence the customer
company should also work with other domestic companies.
Globalized Environment of British Petroleum
Most of the peoples believed that the globalization will tremendously for turn and benefit
to them, but relying on globalization it causes a lot of problems. Globalization effect in the
markedly increasing not only to the international trade but also to the cultural exchange. The
worldwide movement towards the trade, financial, economic culture and integration of
communication. The global framework of US and UK provides a guide to improve diversity,
inclusion and equity of British Petroleum. The guide includes how we govern DE&I and to focus
on the transparency of the policies and data, employees of the company, including the leadership
of the business accountable for their support and behaviour of DE&I activities by the
development and the attraction of the diverse talent. Framework of the organizations were
informed by the employees, research efforts from the other companies, other stakeholders. The
three frameworks are Transparency, Accountability and Talent (Ngai, 2022).
Transparency
In globalized environment it enables and encourage the people to share their diversity
data with British Petroleum. It reports diversity of progress and data internally and externally. It
also provides a forum to facilitate honest dialogue that educates and builds understandings of
diverse experiences and create a inclusive environment. Example, In June 2021 it published a
comprehensive DE&I report internally and externally that will support the approach of data
driven to progress and increase the visibility and accountability.
Accountability
Company entities are accountable for implementing of process and policies which drive inclusive
supply chain (Markey and et.al., 2021). Every employee of UK and US should have DE&I

objective by compiling with the objectives with the performance with direct link to
compensation. Example, In January 2021, it completed for the first time, all the US and UK
employees is required to include a DE&I priority in appraisal and development process of 'My
Plan'. In 2 quarter of 2021 it launched compulsory racial equality and inclusion programme for
all the employees of US which complements the existing unconscious bias training.
Talent
It seeks to attract and hire talent from ethically diverse and other under the represented
communities. It also offers opportunities to employees to develop their skills with high potential
from ethnically diverse and other represented communities. Invests in and partner with people
outside the organization to grow the talent in global diversification from school age groups
(Duttagupta, Hosseinabad and Zaman, 2021). Example, Increased in the community and
education funding for the specific external organization for working to strength the STEM
education pipelines for under the represented minorities and African Americans in January 2021.
Global gas industry is facing major challenges and opportunities. In the past 30 years the
global population will increase from the 5 billion to 7 billion. The consumption of global energy
was increased by 80 percent, in the last few years gas accounted for the largest source in the
energy consumption growth with growing production by almost twice in the average rate of 10
year. In the 1990s it was seen that in the US it has switched from coal to gas and reduced the
emission levels. The advantages of globalization are impact in providing cheap products to
consumers, integrates the markets, provides employment in less developed countries. Some
disadvantages to the company in globalization is the intensive competition, increase in the
widening gap between rich and the poor countries, harder for the smaller enterprise to establish
(Ngai, 2022). British Petroleum sets the standards for the global performance on the
environmental and financial dimensions by growth, safety and the satisfaction of employee and
customer. To prevent spilling and leakages British Petroleum is now storing its gasoline in
double skinned tanks.
CONCLUSION
Thus, the report has been concluded that the British Petroleum is majorly focusing on
reducing emission and the impact of digitalization increase in the performance of the company.
The macro-economics factors economic problem, market structure, etc. influence the British

Petroleum. Moreover, at the time of crisis company suffers as there was lack of leadership. In the
response of Global citizen the company focuses on the Transparency, Accountability and the
Talent. By introducing renewable energy in market company can increase in the rate of carbon
emission which helped in solving global economic issues.

REFERENCES
Books and Journals
AlMulhim, A.F., 2021. Smart supply chain and firm performance: The role of digital
technologies. Business Process Management Journal.
Capello, R., 2019. Regional development theories and formalised economic approaches: An
evolving relationship. Italian Economic Journal. 5(1). pp.1-16.
Cardoso, J.L., 2018. The circular economy: historical grounds. Changing Societies: Legacies and
Challenges. Vol. III. The Diverse Worlds of Sustainability. pp.115-127.
Ceil, C., 2019. Strategic Report on British Petroleum. Available at SSRN 3521088.
Chofreh, A.G., and et.al., 2021. Covid-19 shock: Development of strategic management
framework for global energy. Renewable and Sustainable Energy Reviews. 139.
p.110643.
Chugunov, I., and et.al, 2021. Fiscal and monetary policy of economic development. European
Journal of Sustainable Development. 10(1). pp.42-42.
Duttagupta, A., Hosseinabad, E.R. and Zaman, M.A.U., 2021. Corporate social responsibility
and sustainability: a perspective from the oil and gas industry. Journal of Nature. 2.
pp.22-29.
González, L.O., and et.al, 2019. Market structure, performance, and efficiency: Evidence from
the MENA banking sector. International Review of Economics & Finance. 64. pp.84-
101.
Hobbs, G., 2019. British Imperialism and Oil: A History of British Petroleum. 1901-
2016 (Doctoral dissertation, SOAS University of London).
Mango, E., 2018. Rethinking leadership theories. Open Journal of Leadership. 7(01). p.57.
Markey, K., and et.al., 2021. Fostering an ethos of cultural humility development in nurturing
inclusiveness and effective intercultural team working. Journal of Nursing
Management. 29(8). pp.2724-2728.
Ngai, G., 2022. Nurturing Socially Responsible Global Citizens Through Blended Learning: A
Journey Through Technology-Enhanced Service-Learning. In International Conference
on Blended Learning (pp. 3-13). Springer, Cham.

Panduru, D.A., Scarlat, C. and Gherman, M.L., 2021. The ICT Influence on Strategic Thinking.
Particularities in the Oil and Gas Industry. Issues in Information Systems. 22(1).
Vasilescu, M., 2019. Leadership styles and theories in an effective management activity. Annals-
Economy Series. 4. pp.47-52.
Zhou, X., and et.al., 2019, January. Fake news: Fundamental theories, detection strategies and
challenges. In Proceedings of the twelfth ACM international conference on web search
and data mining (pp. 836-837).

15