Impact of Macro Environment on BP Oil Company

Business
strategy
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Contents
INTRODUCTION...........................................................................................................................4
MAINBODY....................................................................................................................................4
TASK 1............................................................................................................................................4
P1Applying appropriate frame works analyse the impact and influence of the macro
environment on a given organization and its strategies..............................................................4
M1 Critically analyse the macro environment to determine and inform strategic management
decisions......................................................................................................................................7
TASK 2............................................................................................................................................7
P2 Internal environment and capabilities of BP oil company.....................................................7
M2 Evaluation of the internal environment to assess strengths and weaknesses of an
organization’s internal capabilities, structure and skill set.........................................................9
TASK 3..........................................................................................................................................10
P3 Apply Porter’s Five Forces model evaluate the competitive forces of a given market sector
for an organization....................................................................................................................10
M3 Devise appropriate strategies to improve competitive edge and market position based on
the outcomes.............................................................................................................................13
TASK 4..........................................................................................................................................13
P4 Application of various theories and models to formulate strategic planning for BP Oil.....13
M4 Strategic management plan for BP Oil with tangible goals................................................15
D1 Critical analysis of theories and approaches to leadership..................................................15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17
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INTRODUCTION
Business strategy is defined as a set of plans, action and goals which help the firm
compete in a particular market. Business strategy assists business firms expand on a global scare
and overcome obstacles conducting commercial activities across borders. Corporations are able
to enhance their business operations with the help of an effective business strategy. Business
strategy provides a vision about the future direction of the organisation. BP Oil is the business
firm selected for this report. BP oil is British multinational oil and gas company headquartered in
London and operates service stations all over the globe. The present report analyses influence of
macro environment on BP and identifies internal capabilities of the company. In addition to this
Porter’s five forces model is applied to BP in this report. Strategic directions of BP are analysed
in this report with the help of suitable models.
MAINBODY
TASK 1
P1Applying appropriate frame works analyse the impact and influence of the macro environment
on a given organization and its strategies.
Pestle analysis of BP Oil Company
PESTLE analysis is an important framework which helps the companies to analyse the external
macro environment to identify and mitigate the impact of several factors such as political,
economic, social, technological, environmental and legal over business and improve its overall
performance and profitability. This framework enable BP Oil Company to prepare for the
unprecedented changes in advance and make necessary changes into the business strategies to
improve the competitiveness of the company (Xie, Zhu and Wang, 2019). PESTLE is an
acronym for Political, economic, social, technology, legal and environment which are as follows:
Political factors: Political factors constitute a political stability and instability in foreign market,
foreign trade policy, tax policy, labour law, trade restriction, government policies etc. BP Oil
Company have its operations in more than six continents which make it more vulnerable to the
influence of political factors. Any changes in the political factors can bring up or down
profitability of a company. Taxes on the import of the crude oil imposed by government of
different nation will result in getting an oil of high cost which in turn affect the profitability of
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BP Oil Company. On the other hand, different policies of government on development of the
nation needs good transportation facility and fuel is required to operate these vehicles which
increases the sales revenue of company. On other hand, monopoly of few oil companies can
impede BP Oil Company to run its operation in the nation thus affecting their competitiveness.
Economic factors: Economic growth, exchange rates, inflation rates, disposable income of the
consumer and business also impact the business activities of BP Oil Company in long run and
affect their strategic decision. High inflation rate in few nations have forced the employees to ask
for a high remuneration and other benefits which have increased the operation cost and people’s
spending have been reduced significantly due to which company is unable to cover its cost.
Having operations in multiple country BP Oil Company face several economic problems as
when there is a change in exchanges rate importin of crude oil becomes expensive and impacts
the profitability of a company (Ren and et. al., 2019). However the risk have been diversified as
BP operates in several nations.
Social factors: These factors are also known as socio-cultural factors that consist of shared
beliefs and attitude. These factors include population growth rate, age, income distribution,
career attitude, income level of buyers etc. BP Oil Company have been influencing by the
changing trends in the buying habits of the customer. As the people are becoming more
concerned about the environment, there is decline in the sales revenue of a BP Oil Company.
People are heading towards the electrical vehicles or making use of public transport to cause less
impact on environment. Rise in carbon footprints, sudden climate change, CO2 emission are the
factors that is affecting business activities of BP Oil Company.
Technological factors: With the rapid changes in the technology the way business firm conduct
its business operations is changing significantly (Bailey, Pitelis and Tomlinson, 2020). New
ways of producing goods and services, new way of distribution, and innovating way of
communicating with the target audience are the several technological factors. With the
automation and artificial intelligence, automobile companies are making eco-friendly engines
that run on electric power rather combustible that have impact on the BP Oil Company. BP
already have underground pipelines for the supply of oil and gas that keeps them competitive and
relevant in market.
Environmental factors: Growing concern among the people with regards to the several pollutant
factors that have deteriorating impact over environment have reduced the demand of the product
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