Business Strategy: Analysis of British Petroleum (BP) PLC

This report provides an analysis of the business strategy of British Petroleum (BP) PLC, including a company overview, PESTLE analysis, stakeholder analysis, internal environment analysis using the McKinsey 7S model, competitive analysis using Porter's Five Forces model, and strategic planning.

Business strategy

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Company overview......................................................................................................................3
Task 1...............................................................................................................................................3
Pestle analysis..............................................................................................................................3
Stakeholder analysis....................................................................................................................4
TASK 2............................................................................................................................................5
Organization’s internal environment and capacity......................................................................5
McKinsey 7S model....................................................................................................................8
TASK 3............................................................................................................................................9
Competitive Analysis...................................................................................................................9
Task 4.............................................................................................................................................11
Strategic planning......................................................................................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Business strategy have he referring of activities and actions to make respective decision making
in order reach the business goals at the competitive level in the industry. The company have the
deed to make proper level of formulation of business strategy for hiring and resource allocation
process in addition to that’s, it is helpful for the different department to make coordination by
ensuring department decision for supporting all over direction of company. British Petroleum
(BP) PLC is a world’s largest oil and gas company with headquarter in London, UK. BP has
operations in about 80 countries, which produces nearly or equivalent to 3.8 million barrels of oil
per day and runs nearly 22,400 service stations in the world. In this repot there will be
environmental analysis of the company to have the identification of core competencies which is
been evaluated on the basis of their suitability, feasibility and acceptability.
MAIN BODY
Company overview
British petroleum is there global oil company fir which the revenue is been measured as the third
largest company by operating in more than 80 countries. On the other hand, the firm have
reported as the currently facing the big level of challenge with demand of all stakeholders along
with advisability to be part of essential resources. The firm have identified with major level of
challenge which have impacted on there profitability and existence of company. So the company
have been involved in there in strategically analysing the BP company to create the better level
of external environment impact.
Task 1
Pestle analysis
Political factor
The firm face the major issues due to the oil and gas industry is Deepwater Horizon disaster that
is caused by oil spill in the Gulf of Mexico. The firm have felt the level of pressure due to the
profitability and challenging aspect associated with gulf and other industries. On the other hand,
the price of ill have been debatable concept as major changes in price will lack the proper
investments of differentiated projects. This have the major influence on their social and political
factors for the price of crude oil.
Economic factor
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US is having major level of domination to Iraq and their political instability have affected the
price of crude oil. On the other hand, there is increase in demand of crude oil in Indian and
china. So it is important for company to have avoidance of disaster in BP by investing in oil
production company and infrastructure.
Social factor
Change in climate in effecting the business of firm as looking for the right level of supplier o
reduce the negative impact. The income distribution is considered to be important aspect as it is
helpful in improving the demand of oil due to affordability of complementary goods that’s is car
and motor cycle. This is creating the positive impact in company performance.
Technological factor
Due to more level of innovation, the demanded for the substitute service of oil have created hike
in market which is creating negative impact on company. On the other hand, the company is
pressurising to reduce the greenhouse effect and to improve the sub oil sea technology for oil and
gas production method. So, the film is proving efficient training and development to employee in
order to have improvement and adoption of moreen technology
Environmental factor
The more level of climate change which effect the firm profitability. The BP oil is having
pressure to reduce the greenhouse effect and to improve the sub oil sea technology for oil and
gas production method. So, to have avoidance of further damages, the firm is having sustainable
development in infrastructure and cut the greenhouse gas emission by 40% in order to set goals
by promoting the nuclear power usage.
Legal factor
–Taxation and Fuel duty (1993) of government are affecting the price of company. On the other
hand, Renewable Transport Fuel Obligation (2005) have creating the pressure of consumer to
make consumption of bio fuel which is detoxicating demand of oil industry. All the law is
affecting their company operations along with pricing and product.
Stakeholder analysis
As the per the stakeholder mapping, there is acceptability for new level of strategic choices as
the demand in very high in their market se to the consuming power of consumers and risk is
associated is considerably low. In addition to tats BP company so securing more level of
competitive edge in the Asian market which have inclusion of employees, customers,
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shareholders and the government can benefit from the choice as it generates revenue for the
government and quality products for customers. There is more level of opportunity to make the
firm as profit sharing venture.
TASK 2
Organization’s internal environment and capacity
BP is a multinational oil and gas company and it is suffering from many problems like
skilled workforce turnover, failing in satisfying stakeholders needs (Passetti, Cinquini and
Tenucci, 2018). So, it is important for this company to focus on implementing effective business
strategies and make effective decisions. For analysing internal environmental factors it can make
use of some strategies such as:
a) VRIO analysis
Resources Valuable Rare Imitable Organization
Employees Valuable Rare ........... ...........
Financial
resources
Valuable Rare Organization
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Research and
development
skills
valuable Rare Imitable
Marketing slogan Imitable Organization
Valuable
It includes all those elements and resources of this BP oil company which are valuable. One of
the main valuable resources of this company is its skilled workforce. It has skilled workforce but
due to lack of effective working environment it is suffering problem of staff turnover.
Rare
In this context it can be said that BP oil and Gas Company has an ability of research and
development which makes it unique and able to being in the market. Other main resource which
is rare for this company is its financial resources and effective financial stability. Skilled
workforce can also be considered rare.
Imitable
Financial and ability to research and development cannot be imitable by other companies.
Research and development skill is one of the main strength of this company which has improved
its image. Its effective marketing slogan is other main resource which is imitable (Miethlich and
Oldenburg, 2019).
Organization
In this context, it can be said that its skilled workforce and its marketing slogan which is
Beyond petroleum is the main organization.
SWOT analysis
SWOT analysis is other effective tool by which BP Gas and oil company can analyse or
identify its own strengths and weaknesses by which it can make a strong position in the market.
With the help of SWOT analysis tool, it can identify all internal business environmental
factors which are:
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Strengths
 It has several subsidiaries as well as retail brands which helps it out in increasing
revenue.
 Its news strategies and abilities to regain image is other main strength which allows it to
become sustainable.
 Its Beyond petroleum slogan helped it out to improve its image.
Weaknesses
 Lack of flexibility or adapting situations is weakness as oil spills and disaster created
several problems for it.
 Increased staff turnover is other main weaknesses due to which it has to close many oil
wells which affected its image.
Opportunities
 It has an effective research and development ability which can provide it opportunity to
become market leader in energy and fuel markets (Adem, Çolak and Dağdeviren, 2018).
 It has an opportunity to make an effective partnership with other countries for developing
solutions for all issues which it is facing.
 Expanding on other and new geographic territories is other main opportunity of BP Gas
Company.
Threats
 Environmental issue is one of the main threats for this company as it is continuously
facing problems in providing workplace safety to employees, managing sustainability etc.
 Facing problems of lawsuit and penalties is other main threats as it has become fails in
addressing environmental issues.
 Intense competition in this market due to emergence of specialised alternative energy
companies is main threat for BP Oil Company.
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McKinsey 7S model
It is other main effective strategy which can allow this company to analyse all its internal
factors in a detailed manner. It includes 7 S which plays an important role and can make it able
to take advantages of competitive opportunities such as:
All these S are being sub divided into 2 parts such as: hard S and soft S. hard S of this company
include: strategy, structure and system and soft include: style, staff, shared values and skills.
Strategy: BP oil and Gas Company makes an effective use of several strategies which allow it to
analyse all business environmental factors and taking competitive advantages. Rather, choosing
short term strategy it focuses on long term strategies like differentiation, PESTLE analysis model
etc.
Structure: In this context, it is analysed that BP oil company focuses on hierarchical
organizational structure. Its group is being divided into 4 divisions such as: exploration and
production, chemical and Gas, Oil and power.
System: BP company is vertically integrated which operates in all areas of oil industry. So, it can
be said that it focuses on all aspects and elements of oil industry like refining, distributing and
all.
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Skills: In this context, it is analysed that this company has excellent research and development
skill which allow it to make changes in its strategies and develop its services and products
accordingly.
Staff: BP oil and Gas company has skilled workforce to around 73,000 as it serves worldwide.
The main head of its staff include: Hedge Lund and Bernard Looney who helped this company in
growing and developing (Liu, 2020).
Style: In this context it is stated that company makes an effective use of Laiseez faire style of
leadership in which it makes decision by involving staff members in order to take better
decisions.
Shared Values: It refers norms and values of this company which guide employees’ behaviours
and make them able to perform activities in an effective manner.
TASK 3
Competitive Analysis
This competitive force can be measured and evaluated by Porter’s Five Forces Model.
This model involves five forces which are;
Threat of new entrants
This is the threat which is related to threat that new firm can enter in the market and
increase existing competitors. This requires that entry barriers are high which means capital and
investment required are high (Hagberg, Molin and Vyörykkä, 2017). These are factor which
resist firms to enter in the industry. BP is operating in oil and gas industry and this means that
resources and capital required for entering in the industry is high hence position of the BP in this
force of competition is strong.
Threat of substitute product
Substitute product means those products which can be used at the place of some other
product. Products of BP are petroleum, natural gas, Motor fuels, petrochemicals and aviation
fuels. These products are irreplaceable and only can be used according to their need. Though
these products do not have any substitute but customers can find substitute of the brand and there
are various other companies from which customers can buy the products. Position of BP in this
force is moderate.
Power of Customers
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This means power of customers regarding price and quantity of the product being offered
to them. This power is high when buyers are less in number or sellers are high in number (Kibria,
Al Amin and Rifat, 2017). In context of BP its position is high because sellers are limited and
buyers have less control and power in products which are being offered by BP.
Power of Suppliers
This is the power of suppliers those who supply resources and material to BP. In this
position of BP is strong because of large number of suppliers which exist to supply the material
and resources. This position is defined by number of suppliers, resources being supplied and cost
of switching the supplier. Suppliers are high in number, cost of switching is also not significant
and resources are not rare all these factors make strong position of BP.
Industrial Rivalry
This is related to rivalry among existing firms in the industry. There are several firms
operating in this industry. This is the reason that rivalry among existing firms is high. But
position of BP is still strong because of its size and level of operation.
Above analysis of competitive factors of BP suggests that even after challenges which are
being faced by BP its position in competitive force is strong. Regarding its challenge in terms of
resource availability BP can change its suppliers and start dealing with new suppliers. BP is a big
firm in the industry hence it is not difficult for BP to find other supplier (Moreno-Izquierdo,
Ramón-Rodríguez and Perles-Ribes, 2016). Current position of BP is overall good hence it
requires that competitive position is maintained by dealing with challenges so that it does not
become negative for the BP. In terms of BP losing its employees to its competitors this is
challenge because they are resources and this may affect the competitive position of BP. This
requires BP to reduce its employee turnover applying appropriate strategy which can deal with
reasons because of which employees are leaving the firm.
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Task 4
Strategic planning
Vision Vision
The company want to be best level of corporative fir operating
with efficient financial performance introduce the accessible and
inclusive product to customer.
Mission Mission
To seek the unchanging m fundamental qualities by treating
everyone with respect and dignity by meeting the demand of
customers.
Objectives To provide high quality products to customer.
To maximize the financial return towards the stakeholders.
To have effective developments of the customer expectation
Strategies
(Based on Suitability,
Acceptability and
Feasibility)
Suitability
Tows Matrix
As per the TOWS matrix, there have been analysing their
suitability that the oil industry has the major level of
opportunities in the Asian markets and internals alliance in
perfect manner. there is tough level of competition in Singapore
and Hong Kong so the BP company can make the strategic use
of brand name in order to gains completive advantage. The
company have tool proper level of attention over the aspect of
centralized vs decentralized, formal vs informal culture, there
are some common cultural values which benefit the
organization.
Acceptability
Stakeholder mapping
As the per the stakeholder mapping, there is acceptability for
new level of strategic choices as the demand in very high in their
market se to the consuming power of consumers and risk is
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associated is considerably low. In addition to tats BP company
so securing more level of competitive edge in the Asian market
which have inclusion of employees, customers, shareholders and
the government can benefit from the choice as it generates
revenue for the government and quality products for customers.
There is more level of opportunity to make the firm as profit
sharing venture.
Feasibility:
As per the aspect of feasibility, it have the inclusion of the
resources deployment and financial feasibility as it included
brand image and strength to increase the fund stock in perfect
manner. the firm need to make employee more expertise and
increase the firm reputation in order to have operating all over
the world with diverse level of workforce. For the firm, it is
understand to meet the local demands and trusted relationship
with customers as it requires the time period of 5 years in having
implementation of securing funds.
Tactics
(Ansoff matrix)
Ansoff matrix
This is used to have analysing the various level of corporate
choices to enable of deciding the products and market strategy
for business growth which is been referred as the product
market extension grid.
Market Penetration-
This is about developing their business with level of existing
products into existing consumers. as per the BP company have
the good market penetration by earing the brand loyalty. this is
potentials and value company which is considered to be very
expensive in upcoming strategy development. So the firm should
try to penetrate in market with is segment product to need up the
demand of consumer in perfect manner.
Product Development
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As product development aspect. the firm is coming up with
there many new level of products to the customer with tasking
proper consideration of the competitive advantages in order to
have strengthening of business market in perfect manner.
Market Development
It is the situation when, the firm have the want to sell the
existing product into ne market as the BP firm is trying to have
the expansion of business in Asian markets as Indian and
Bangladesh in more level of interested in car segment. Hence
this have been h good opportunity for company to get in market
with existing customer.
Diversification
This the strategy in which the firm have the new level of
product for new market associated with level of risk and
potentially for the bid corporation to achieve the success. As
there is less level of demand for the solar power, but the
company is performing well in both the sector as the switching
cost is low and gains more level of potentiality in market.
CONCLUSION
From the above study, it has been summarized that business strategies including SWOT
analysis model, Porters’ 5 forces and others played a vital role. Business strategies allow
company to take competitive advantages and accomplishing all goals if they are being used in an
effective manner by analysing them in both positive and in a negative manner. This study has
shown 2 types of business strategies which help company in analysing internal and external
business environmental factors. For analysing external factors, Porters’ five forces, PESTLE
analysis tools play a vital role. For analysing internal factors, VRIO analysis, SWOT and
McKinsey 7 s model which consists of main 7 elements such as: strategy, skills, structure, staff,
style and others which all can allow company to being the market leader if they are being
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organized in an effective manner. It has also shown importance of knowing intensity of
competition in the market in order to make changes in internal strategies accordingly.
Stakeholder analysis also played a vital role as it allows company to identify direct and indirect
stakeholders along with their needs in order to choose the best strategy of satisfying their needs.
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