British Petroleum Strategic Management and Sustainability Assessment 2

This report explores the sustainable business practices of British Petroleum through the implementation of strategic management and sustainability science. It analyzes the key business strategies, resources, and capabilities of the company and its commitment to sustainability. The report also evaluates the implementation of the environment sustainability science by BP.

Strategic Management
and Sustainability-
Assessment 2

Table of Contents
INTRODUCTION ........................................................................................................................ 3
MAIN BODY................................................................................................................................. 3
Key business strategies of British Petroleum......................................................................3
Resources and capabilities of British Petroleum.................................................................7
Implementation of environment sustainability science: BP................................................10
CONCLUSION........................................................................................................................... 12
REFERENCES.......................................................................................................................... 13

INTRODUCTION
Sustainable strategic management is an inclusive of formulating, analysing and
implementing business strategies that are socially responsible, competitive and takes care of
economic growth as a whole. With impact of Brexit there was a significant impact caused to
economy of UK in which various small as well as large business enterprise were being
impacted. Furthermore, upcoming of COVID-19 pandemic, economy of several regions of the
world showed a drastic changes in terms of operations (Leins, 2020). The given report
document will explore sustainable business practices through implementation of strategic
management considering pressure changes dealt within UK Haulage industry. In the said
document implication of strategic models, theories and concepts will be evaluated within case
study organisation i.e. British Petroleum. Said company is a British multinational oil and gas
company which is being headquartered in London, England. The given company operates
under oil and gas industry which was founded by William Knox D'Arcy and Charles Greenway in
1909 (Rivera-González, Bolonio and Valencia-Chapi, 2019).
MAIN BODY
Key business strategies of British Petroleum
Every business has some strategies in order to achieve its goals. These strategies are
both qualitative and quantitative. These strategies are designed keeping in mind consumer
behaviour and the changing patterns of industries. As mentioned in BP P.L.C. website, (2021),
company managers are building on purpose with believes of future of energy system and
changing consumer needs or demands. The strategy of said firm focuses on three sources to
amplify value that includes; mobility and convenience, resilient and focused hydrocarbons and
low carbon electricity and energy. For the basis of strategy; innovation and digital, integrating
energy system and partnering with industries, countries and cities (BP PLC., 2021).

The below tables shows the ratios that have been calculated of last four years in order to
know the impact of the financials on the investors(Boan, et. al., 2018).
Profitability Ratios
2020 2019 2018 2017
Return on capital
employed
0 0.07 0.08 0.04
Return on equity -0.31 0.12 0.19 0.09
Gross profit
margin
0.06 0.1 0.1 0.08
Net profit margin -0.12 0.04 0.06 0.04
Activity Ratios
2020 2019 2018 2017
Net asset
turnover
0.67 0.94 1.06 0.87
Debtors collection
period
19.27 26.55 32.02 31.19
Creditors
payment period
0.18 0.15 0.18 0.17
Current Ratios

2020 2019 2018 2017
Current ratio 1.22 1.12 1.05 1.16
Quick asset ratio 0.94 0.83 0.78 0.8
2020 2019 2018 2017
Capital gearing
ratio
1.13 1.72 1.78 1.79
Debt to equity 1.15 0.79 0.66 0.64
Interest coverage
ratio
-6.99 3.34 7.62 4.46
Investor's ratios
2020 2019 2018 2017
Earning per share -1.07 0.57 0.96 0.47
Managers of respective company i.e. BP plc. takes considerations of Ansoff matrix to
evaluate on any changes required in respect to market changes. The stated framework
develops better standards for working in corporate firm and evaluates on effective usage of
resources being invested in the business firm (Eftekhari, 2019); Market Penetration: For the given element emphasis on business working are being
established in respect to increase the current sales of existing products in an existing
market. In context of BP plc., managers of business firm apply mature market
restructuring through application of aggressive campaigns for promoting their existing
products or services in existing markets.

 Product Development: In the stated segment focus on business working are being
established in respect to introducing new products in an existing market. For this
element managers of the business firm takes this aspect of model through vision of
growth strategy for the company. Said company undergo various research programs that
coincides with production segment. In its inclusion, underdeveloped reservoirs of oil as
well as gas developing these reservoirs coupled with the productions as well as
transportation of natural gas together with oil from wells that are developed(Mujkic and
Klingner, 2019). Market Development: For the given element emphasis on business working are being
established in respect to entering a new market using an existing product of a company.
In inclusive of provided element, managers of said company develops operational
standards in respect to exploration of timely new geographic markets that includes,
exporting of products of company to new countries. Furthermore, in said approach
various attempts are being made in respect to establishment of new distribution
channel(Dahou, Hacini and Burgoyne, 2018).
 Diversification: In inclusive of this element managers of respective company focuses
on entering any new market with introducing a new product or service. Under the given
element of model, managers of the corporate firm are facing issues or difficulties due to
lack of experience in this dimension of working(Mahoney, 2018). However, some
initiatives are being taken in respect to formation of join ventures with relative industry
business and undergoing intensive market researches are formed as a base to fasten
growth of the company irrespective of its specified field of working.
As mentioned by Jorn Madslien, (2010), BP has outlined effective strategy in terms of
reviving the public believes in respect to its ability to operate in a responsible manner. Being
stated by Mr. Dubley who was CEO of the company at that time, it was being clearly mentioned
that firstly, company had stopped the leak and have made a huge progress in cleaning up the

spill. Furthermore, company is engaging its operation in respect to commitment that was passed
by respective company as they were the responsible party for the accident (BP sets out to
rebuild reputation, 2010). In light to the discussion, several new operational standards were
being introduced by given company and usage of enhanced technology was being taken into
consideration to govern organisational operations(Bardos, Ertugrul and Gao, 2020).
Resources and capabilities of British Petroleum
According to Priyanshu Dixit, (2019), British Petroleum as one of the world's top five gas
and oil company. Additionally, it is being stated that highlighted success of the business firm is
not to be considered as overnight success, but a result of steady and slow development
attaining principles of sustainable value chain in gas and oil industry. Over the period of time
managers of respective company have followed basis for achieving excellence in its value
chain. With presence of high complexities high investment of time and associated resources are
being concentrated for the purpose being (British Petroleum: Value Chain Excellence, 2019).
BP resource and capabilities

(Source: British Petroleum: Value Chain Excellence, 2019)
Managers at BP plc. incorporates strong basis for integrated value chain through
developing alternative standards for establishment of reflective organisational structure for the
business firm. Following are some key consideration which are being taken into consideration
while implementation of sustainable value chain analysis to respective company; Integration: Managers at BP approached to upward and downward vertical integration i
n respect to the strategy for diversifying its operational working in O&G industry. The
approach helped corporate firm to diversify its activities while engaging in energy sector
and adopted economies of scale, thus gained control over supply sources as well as
front end retail stores(Jayanti, 2018). Collaborative partnerships: The said company excelled in terms of strategic
partnerships with firms within the industry. This enabled operational working of company
to diversify its business market and gain advantage of better market knowledge over its
competitors. Organisational structure: In respect to the rise in complexities in operational working
environment of the operational firm. Managers at chosen firm directs their efforts to
formulate effective plans as well as strategies that aid towards better organisational
structuring.
 Modernisation of the whole group: With the fact that BP have invested over $429
Million in respect to perform research and development to modernize the whole group
(British Petroleum: Value Chain Excellence, 2019). This was an inclusive for taking use
of cloud-based technologies, APEX technology, Robotic inspection and digital vest in
Oman etc(Joshua and Alola, 2020).
The resources and capabilities of British petroleum has been identified through VRIO
framework. The key business strategies of British Petroleum is analysed using VRIO framework
which is explained below:

VRIO framework:
Valuable:
British Petroleum financial performances is valuable as these helps in knowing that what
amount of resources are invested by the company and also are there enough funds available to
invest in external opportunities when they arise. This also helps the company to provide
protection from the threats that arise externally. Due to high brand name the products of the
company are considered of high value by the customers. The company also considers its
employees as one of the valuable resource because most of its workforce are highly trained
which results in better productivity for the company. Also, the employee retention is high in the
organisation and employees are loyal towards the organisation(Hauser, 2020).
Firm also considers its patent as one of the valuable resource because it allows the firm
to sell its products without any interference by the competitors. Distributors are also considered
one of the valuable resource because they help the company distribute its products to the end
users. Company considers all these things valuable because it helps the company in generating
higher revenue. Company does not consider its cost structure valuable because the production
cost is high which affects the overall profit of the company. Also, the company does not consider
research and development as a valuable resource because the cost is high and the success
rate of innovation is not so high.
Rare:
The financial resources of the company are rare because strong financial resources are
possessed by few companies in same line of industry. The products that the company is offering
are not rare because these same products are being offered by other companies in the same
industry. Hence, there is no competitive advantage. The employees of the organisation are
considered rare because they are highly skilled and trained and company offers them better
compensation so that they can stay in the organisation.

The patents are also considered rare because the patents are not easily available and
are not with the competitors. The distribution network is also considered rare because they have
large distribution network as compared to the competitors. If the competitors want to match with
their distribution network than that it would require a lot of investment.
Imitable:
The financial resources that the company possess is highly imitable since these
resources have been acquired by the company through prolonged income that it earned over
the years. For its competitors to acquire these resources they need to have enough profits and
have to wait for long period of time. The patents of British Petroleum is highly imitable since
competitors cannot acquire the same patent because it is not allowed legally.
The distribution network can also be not imitate by the competitors because it has been
developed by the company over the years. If the competitors want to have same type of
distribution system than they need to invest lot of amount. The employees of the company are
not imitable since the competitors can train their employees to be highly skilled and productive.
Also, competitors can offer employees of British petroleum higher compensation and better
growth opportunities so that they can join their competitor company.
Organisation:
The financial resources of the British Petroleum are organised so much so that value
can be captured out of them. These resources are used by the company to use at right place at
right time so that they can be better used when the opportunity arises and threats can be
reduced. Hence, these resources provides the company competitive sustained advantage. The
patents are not so organised because the company is not using them at their full potential. This
can be used by the company to rent its patented products so that they can generate more profit
before it expires. The distribution network of British petroleum is highly organised since the
products are available to the customers through its outlet which is being only possible through
its highly distribution network.

Implementation of environment sustainability science: BP
The term environment sustainability refers to conservation of natural resources which
directs its efforts towards protecting global ecosystem and promoting health and well-being in
once economy. According to information and data extracted through BP plc. website, (2021),
respective company is engaging its operations more towards sustainability. In the process being
ambition for net zero by 2050, fundamentally changing organisation deliver is being highlighted.
In inclusive of this ambition there would be established aims that supports operational direction
of the business firm. Installation of methane measurement at all BP's major gas and oil
processing sites by 2023 and reduced methane intensity of operations by 50%. Furthermore,
more investments to non-oil and gas businesses will be concentrated over period of time (BP
PLC., 2021).

Sustainability frame
(Source: BP plc., 2021: Home/ Sustainability)
The above discussion purely dedicates to practices which is adopted by respective
company towards sustainability principles and also highlights inherit capabilities of the firm.
From the analysis of discussion, it can be stated that managers of respective firm are framing
sustainability as a bridge to achieve competitive advantages in their relative business market. In
the process being stakeholder engagements is being considered as the most important value
for chosen company to attain goals as per desired standards. Following are some elements
which are deemed to be embedded in company's DNA for achieving sustainable growth (Brkić
and Praks, 2020);

 Get to net zero
 Improve people's lives
 Care for our planet
CONCLUSION
From the analysis of above report document, it can be concluded that, strategic
management and sustainability plays a vital role in governing operations of a business firm. In
the process being managers of the corporate firm develops appropriate standards on the basis
of which effective regulation of business activities can be monitored. For the provided
discussion, it can be said that, in respect to changes caused by COVID-19 and Brexit
businesses of UK undergo several changes, however, rebuilding organisational structure using
sustainable businesses practices.

REFERENCES
Books and Journals
Bardos, K.S., Ertugrul, M. and Gao, L.S., 2020. Corporate social responsibility, product market
perception, and firm value. Journal of Corporate Finance, 62, p.101588.
Boan, J.J., Malcolm, J.R., Vanier, M.D., Euler, D.L. and Moola, F.M., 2018. From climate to
caribou: How manufactured uncertainty is affecting wildlife management. Wildlife
Society Bulletin, 42(2), pp.366-381.
Brkić, D. and Praks, P., 2020. Proper use of technical standards in offshore petroleum industry.
Journal of Marine Science and Engineering, 8(8), p.555.
Dahou, K., Hacini, I. and Burgoyne, J., 2018. Knowledge management as a critical success
factor in developing international companies’ organizational learning capability. Journal
of Workplace Learning.
Eftekhari, A., 2019. Lithium batteries for electric vehicles: from economy to research strategy.
Hauser, S.J., 2020. Long Live the Heritage of Petroleum—Discoveries of Former Oil Sites in the
Port City of Dunkirk. Urban Science, 4(2), p.22.
Jayanti, R.K., 2018. Sustainability based corporate identity: A study of corporate websites.
Academy of Marketing Studies Journal, 22(3), pp.1-16.
Joshua, U. and Alola, A.A., 2020. Accounting for environmental sustainability from coal-led
growth in South Africa: the role of employment and FDI.
Leins, S., 2020. ‘Responsible investment’: ESG and the post-crisis ethical order. Economy and
Society, 49(1), pp.71-91.
Mahoney, M., 2018. The latest fashion trend: water sustainability and social ethics (Doctoral
dissertation).
Mujkic, E. and Klingner, D., 2019. Dieselgate: How hubris and bad leadership caused the
biggest scandal in automotive history. Public Integrity, 21(4), pp.365-377.
Rivera-González, L., Bolonio, D., Mazadiego, L.F. and Valencia-Chapi, R., 2019. Long-term
electricity supply and demand forecast (2018–2040): a LEAP model application
towards a sustainable power generation system in Ecuador. Sustainability, 11(19),
p.5316.
Online
BP PLC., 2021. [Online]. Available at: <https://www.bp.com/en/global/corporate/what-we-do/our-
strategy.html> and <https://www.bp.com/en/global/corporate/news-and-insights/press-
releases/bernard-looney-announces-new-ambition-for-bp.html>
BP sets out to rebuild reputation, 2010. [Online]. Available at:
<https://www.bbc.com/news/business-11620902>
British Petroleum: Value Chain Excellence, 2019. [Online]. Available at:
<https://medium.com/excellence-in-operations-supply-chain-management/british-
petroleum-value-chain-excellence-1e79559147f5>