Strategic Management of BP Oil Company

This report discusses the strategic management of BP Oil Company, including the influence of the macro environment, internal environment analysis, Porter's Five Forces analysis, and various models, theories, and concepts used. It also provides insights into the company's strengths, weaknesses, opportunities, and threats. Find study material and solved assignments on Desklib.

Business Strategy

Table of Contents
INTRODUCTION.................................................................................................................................3
Task 1....................................................................................................................................................3
Influence of macro environment........................................................................................................3
Task 2....................................................................................................................................................6
Internal environment analysis............................................................................................................6
Task 3....................................................................................................................................................9
Porter Five Forces analysis................................................................................................................9
Task 4....................................................................................................................................................9
Various model, theories and concept used for strategic management of BP oil company................9
CONCLUSION...................................................................................................................................12
REFERENCE......................................................................................................................................13

INTRODUCTION
Business strategy is defined as a process to form different polices and find out
different approaches that can support company in taking competitive advantages in the
market. This report is based on the case study of the BP Oil Company in respect to its
strategy formation. British Petroleum PLC is the summarised form of BP Oil Company. The
organisation was established in the year 1909. William Knox D’Archy is the founder of the
company. Company is associated with the oil and gas sector to conduct business operations.
Headquarter of the company is located in London, United Kingdom. This report will
summarise the different aspects of the strategy formation of BP Oil Company. Henceforth,
report will emphasis on the impacts macro environment in putting over the business
operations of company. This report will also project about the organisation internal
environment and capabilities. Furthermore, report will also project the Porter Fiver Forces in
respect to the organisation. Strategic direction of company will also discuss in this report.
Task 1
Influence of macro environment
Macro environment is defined as the external business environment that influences
company operations. PESTEL Analysis is the suitable tool to assess the macro environment
influences over the company.
PESTEL Analysis
PESTEL Analysis is a precise technique to assess the impacts of different factors
associated with the macro environment. This model comprises with political, economical,
social, technological, environment and legal factors associated with the macro environment.
Political Factor: Political factors involve different policies and strategies frame by
government related to corporate sector. All such government policies related to oil sector are
directly influence the company’s operations. Government approach towards the growth and
development of corporate sector deeply influence the business environment as all policies
frame by government are a reflection of such government approaches. As the government in
UNIETD Kingdom are very progressive towards the growth and development of peoples and
country which allows governments to frame effective policies for the betterment of the
corporate sector as the sector play a huge role in the growth ad development of the GDP

(Fernandes, 2017). Political stability in country also influences the macro environment in
country. Political stability in UK allows government to frame long term policies and
regulations which further drives companies to form long term strategies related to growth of
business.
Economical Factor: Economic factor put huge impacts over the growth of companies.
Economic factors different elements such as currency flow, value of money, inflation, growth
rate of countries GDP and other economic factors. All policies of company related to
business expansion and products are based on the economic situation of country. Company
also make business expansion decisions based on the economic activity of country. Inflation
in economy also play a huge role for the companies as itv directly restricts the purchasing
capacity of the potential customer of company.
Social Factor: Social factors involve demographics of country, culture, religious values in
country, traditions, education of peoples, choices and other social factors. All the social
factors play huge role in taking buying decisions by customers. Company launch different
campaigns such as marketing campaigns based on the cultural factors so that customers
purchasing decisions can be attracted by companies (Camillus, 2016). Company also launch
new products based on the trend and fashion in country. It can be stated as social factors are
among the key business environment factors associated with the macro environment which
influences all aspects of company’s presence in market.
Technological Factor: Technological factors involve all technological advancement in
country. Technology has been proved as the transformation in the business. This factor in
macro environment drives companies to understand all effective technological factors that
can be channelizes by company in order to achieve growth for te business. Companies utilises
technological factors in all its business operations which includes logistics, operations, supply
chain management and marketing. Technology also drives company to conducts research
related to the business and products development activities.
Environment Factor: Environmental factor can be summarises as the recent development in
macro environment. This factors drives company to launch the eco friendly products to meet
the requirements of the potential customers of company (Liu and et.al., 2017). BP Oil
Company also engaged in various social responsibilities as a part of the corporate social
responsibilities under these factors. This factor drives company to build up loyal customer

base for effective growth of the company. Social responsibilities also allow company to
promote its products and brand value in front of the target customers in market.
Legal Factor: Legal factor can be defined as laws and regulations issued by government.
Legal factor are among the key factor associated with the macro environment. All policies
and strategies form by company are based on the legal structure of country. This factor
precisely guides company about all legal aspects associated with the company’s business.
The above factors are precisely defines about different factors associated with the
macro environment.
Stakeholder Analysis
Stakeholder analysis is the analytical too use to address the impacts of different
stakeholders associated with the company.
Customers: Customers are among the key stakeholder associated with the BP oil company.
This stakeholder influences sustainability as well as growth potentials of company in target
market. All strategies frame by company are based on the potential customers of company.
Suppliers: Suppliers are also a key stakeholder associated with the company. In order to
ensure availability of company’s products company needs to carry an effective suppliers
group.
Employees: Employees are among the primary stakeholder associated with the company.
Employee play an important role for meeting up all objectives of company (Ulubeyli and
et.al., 2019). They control the internal structure of the BP Oil Company.
Investors: Investors are the entities who invest in the company. They are the peoples who
allocate financial resources to the organisation. In order to sustain the growth potential of the
organisation investors play an effective role for the company.
Government: Government is also the key external stakeholder of the company. All
operations frame by company are based on the policies of government.
The above mentioned stakeholders are among the key stakeholder associated with the
BP Oil Company. All stakeholders carry the different significance in the company’s business.

Task 2
Internal environment analysis
Internal analysis is defined as addressing the internal capabilities and strengths of the
company.
SWOT Analysis
SWOT Analysis is among the key tool utilises to assess the company’s potentials.
This is a diversified model focuses on strengths, weakness, opportunities and threats of the
respective organisation.
Strength of BP Oil Company
Company is associated with the following strengths.
Brand value: BP Oil Company comprises with an effective brand value. High brand value is
among the major strength associated with the company (Ramírez and et.al., 2019). Company
has witnessed effective growth in the market due to its brand value. BP Oil is among the top
brand in oil sector all across the globe.
Low cost products: Company is well known for offering affordable products in the market.
Due to its affordability in process company has achieved an effective success in all across the
globe (Quiceno and et.al., 2019). Low cost is among the key factor that attracts potential
customers all across the globe towards buying company’s products.
Effective supply chain: Supply chain of the company has also played a significant role in
improving the products presence in market. Supply chain ensures p[roper availability of
company’s products in market.
Weakness of BP Oil Company
Key weaknesses associated with the BP Oil Company can be summarises in following
points.
Ineffective financial planning: Company’s financial planning looks ineffective. Financial
resources are among the limited resources company carry so it is important for the company
to utilise its financial resources in the optimum manner (Rakovska and Stratieva, 2018). Due

to inappropriate financial planning company could not uplift its growth potential in the best
of its capacity.
Outdated marketing techniques: Company’s marketing and promotional techniques can
also be considered as outdated in nature. This has also affected the company’s sales in
market. Due to the inefficiencies company could not entertain sales in the best of its
capacities.
Opportunities of BP Oil Company
Opportunities available for the company can be summarises in following points.
Business expansion opportunity: Company carries the huge opportunity to expand the
business operations. This can be stated as the key opportunity company consist up with. This
will also improve the profitability of the company.
Business advancement opportunity: Company has the opportunity to upgrade the
infrastructure of the company. This will involve latest information technology equipment in
the company. This will support company in improving its operation efficiencies.
Threats of BP Oil Company
Threats associated with the BP Oil Company can be summarises in following points.
Competition: Competition is among the key threat associated with the BP Oil Company. The
sector is among the dominating sector in the entire business environment which also make the
sector as one of the most competitive market sector in business environment (Kadhem and
Jawad, 2019). Due to heavy competition it directly reduces the sales potential of company.
Inflation: Inflation has been one of the major threat of the companies. As the inflation
directly restricts the sales potential of company in market.
McKinney 7 S model
This model is a well diversified model that influences company’s internal structure.
Strategy: BP Oil Company channelizes diversified strategies for operating functional
activities of company. Company channelizes all modern mediums to control and monitor of
its strategies.

Structure: The organisation structure of the company is decentralised divided in multiple
departments based on the functional operations.
System: Company channelizes an effective system to take all decisions. Information
technology systems are installed in the company to take effective decisions.
Shared value: Company has a shared value to achieve the best customer’s experiences in
respect to company’s products. Values of company are shared in all employees and
stakeholders associated with the company.
Skills: Employees of the company are well skilled and able to face any circumstances. Skill
plays an important role for channelizing effective operation practices in company.
Style: Company business style is progressive which allows management to take all important
decisions based on the needs and requirements of business (Hine and et.al., 2018). It is stated
that the organisation follow the approach which delivers high growth potential in favour of
the company.
Staff: Company approaches are to have an effective staff that can deliver all services
effectively.
VRIN Analysis
Valuable: Company’s products ensures the best quality that is a valuable aspects of the BP
Oil Company. The management of company give priority to ensure the best customer
satisfaction from the services.
Rare: BP Oil Company is associated with the effective supply chain management system
well established in all across the globe which can be stated as rate in nature. This is an
important feature associated with company.
Imitate: The products of company can’t be imitated in nature. It can’t be replaced with any
other products.
Organise to capture value: Company aims to improve its value addition with its services.

Task 3
Porter Five Forces analysis
This is a well diversified model which analysis the competitiveness of the company.
Competition in industry (High): Oil sector is among the highly profitable sector in business
environment. Due to effective demands and attractive profitability the competition in the
sector is very aggressive in nature.
Potential of new entrant in industry (High): As it is stated that the growth potential of
sector is high which attracts to new entrants to conducts business operations (Guggenheim,
2016)? Due to effective outcomes and demands this force is high.
Power of suppliers (Medium): This forces medium in nature as the BP Oil Company is
among one of the dominating company all across the globe in the industry (Jevtic, Demirovic
and Marinkovic, 2016). This force work medium in nature for well established companies
due to high dependency of the suppliers over big companies for generating profits.
Power of customers (High): This force is relatively high as compare to all other forces. As
customers play a huge role in sustainability and growth of the company. Due to huge
involvement of customers in all aspect of business this force is high.
Threat of substitute products (Medium): This force is medium in present case. As the
sector comprises with huge demands. This force is medium in nature for the company.
Task 4
Various model, theories and concept used for strategic management of BP oil company
Company need to effective plan various strategies in advance in order to gain
competitive advantages and earn maximum amount of profitability. Bowman clock model
can be used for strategic management of BP Oil Company so that it can achieve its
predetermined objectives. Such as:
Low price, low value: Bp oil does not deals in products that have low quality in order to
provide qualitative experience to maximum number of customers (Andersen and Andersson,
2017). Thus, it also not charge low prices from customers in order to gain competitive
advantages and expand its market share.

Low price strategy: In such types of strategy firms planned to manufacture products in large
quantities and maintain quality of products by bringing economic of scale. Therefore, BP oil
can also use such strategy to attract maximum number of customers through using innovative
technologies and training employees to effectively work so that maximum output can be
gained and it can offer qualitative products at reasonable rates to customers.
Hybrid strategy: The Company focus on both product differentiation and lower price of
products in order to satisfy needs of wide range of customers. Thus, it helps Bp oil to
effective convince and attract customer to prefer products and services of firm as compared to
other competitors (Slack and Brandon-Jones, 2018). Hybrid strategy can helps in increasing
sales volume and profitability of organisation by fulfilling needs of people that are living in
the society.
Differentiate strategy: BP oil in order to get profitability for long term period has to focus
to increasing its brand image through maintaining quality of products and services and
continuous innovation so that desired of people can be fulfilled within limited time, efforts
and cost. Therefore differentiate strategy is one of the best method to get competitive
advantages and enhance sales volume of firm.
Focused differentiation: It is another strategy that can be used by Bp oil to earn high
profitability by manufacturing differentiate and qualitative products for target customers
(Wang, and et.al., 2016). Therefore, focused differentiation can be used to product luxury
brand products to high class people so that maximum profit can be earned.
Risky high margin: Manager of BP oil tries to avoid high risk profit margin for long term
growth and retention of large number of customers within company. Therefore avoidance of
risky high profit margin promotes growth and expansion of firm for long term.
Monopoly pricing: There are large number of competitors in which BP oil company operates
so firm cannot plan to charge monopoly prices to customers as it will result in dissatisfaction
among customers needs (Zhang and Li, 2016). Therefore, manager has planned to charged
appropriate prices of its products and services to retain customers and earn profit.
Loss of market share: BP oil manager need to effective evaluates various threats and
appropriate of particular strategies in order to retain market share in particular industry. At
the same time need to innovates its products and services so that preference, requirements of
wide range of customers can be fulfilled and firm can enhance its market share.
Team development theory

Manager of BP oil company has effectively use Tuckman team development theory
to manage different people within organisation so that firm can achieve its desired goals.
There are five stages that are used by manager of firm to effective motivate and coordinate
different individual to work together as team so that company objectives can be meet.
Various stages of Tuckman development theory are as follows:
Forming Stage: Member of team are polite and pleasant since they have given simple
introduction about each other and work that need to be performed by each team member so
that task can be completed (Andersen and Andersson, 2017). Therefore at this stage manager
of BP oil clearly assigned, distribute roles and responsibilities that need to be performed by
particular individual so that company can expand its market share.
Storming Stage: It is stage where some amount of conflict exists between team member
regarding task, activities that need to be performed by each individual. So, manager of BP oil
tries to reduce conflict between team member by building strong relationship and motivating
employees to work hard so that the desired goals can be achieved.
Norming Stage: Team members able to recognise each other strength and weakness at the
same time able to understand each other point of view thus effectively coordinate with each
others. Team member of BP Oil are strong committed to face different challenges together
and effectively utilise available opportunities so that sales volume and profitability can be
enhanced.
Performing Stage: Manager of BP oil has clearly defined process, system and standard that
need to be performed by each individual. Leaders of BP oil delegate authority and
responsibilities to people so that they can be stay motivated and influenced to work hard for
completion of particular task (Choudhry, 2018). It motivated and create a sense of
belongingness among team member to work together as team for completion of task and
satisfaction of customers needs beyond their expectancy.
Adjourning Stage: Every teams exist for particular period of time so at this stage team
disband and member began to perform various functions separately. It is hard for team
members of BP Oil Company to quite relation and work separate for different task and
activities. Therefore manager continuous motivate and inspire team member to perform best
so that maximum output can be gained.

CONCLUSION
From the above report it can be concluded that Pestle analysis model helps in
indentifying various internal and external factors that impact on BP oil companies’ strategy.
It can also be analysed that company strength helps in effective utilisation of opportunities
and satisfaction of customers needs beyond their expectancy. From the above analysis it can
also be illustrated that Tuckman theory of team development helps in effective coordination
and cooperation of individual goals toward common objectives of firm. On the other hand
porter five forces helps in identifying competitive positioning of firm in the industry so that
company can expand its market share.

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