COMPETITIVE STRATEGY.

COMPETITIVE STRATEGY

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Executive Summary
Russia has huge potential of growth in the oil and gas industry. BP made many policies that
can help them in enhancing the resources they have and in the process they extended their
reach in Russian market. This was done by the company with the help of strategic
partnerships such as merger and acquisitions as well as Joint ventures. Joint ventures allowed
the company to have better strategic position in the market and helped them in gaining many
assets. However the company failed in maintaining the partnership. Due to this it was seen
that companies had to face severe loss as there were many strategic loopholes in the
collaboration. The report suggests the application of the internationalisation strategy
especially in terms of use of strategic partnerships like merger and acquisition and Joint
Ventures. It was found that Joint Ventures allows the company to enhance their resources and
allows each other in improving on their weaknesses.
Content

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s
Introduction............................................................................................................... 2
Case summary............................................................................................................ 2
Strategic issues faced by BP in Russia..............................................................................3
Theoretical concept..................................................................................................... 4
Application of the strategy model.................................................................................... 6
Conclusion................................................................................................................ 7
References................................................................................................................ 9
Appendix................................................................................................................ 10

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Introduction
Russia has one of the biggest oil and gas reserve and hence it attracts different companies
from different parts of the world. British Petroleum being one of the biggest companies that
produces oil in the European region. There are various challenges that are faced by the firms
that aim to expand its business in Russia. The partnership model of business within Russia
has been successful but it has also faced many kinds of challenges due to political and
economic situation within Russia. Since oil and gas industry is a capital intensive market
hence companies had to ensure that they have larger numbers of resources that can improve
their financial position within the industry (Fischer, 2016). It also helps companies in
extending into new projects especially the ones that are related to exploration of oil and gas
reserves. It is seen that firms that are not able to manage their relationship with their partners
have often failed. In this report the strategic issues faced by BP in Russia has been
highlighted with the help of appropriate theoretical model. It also explains the application of
the partnership model done by the company.
Case summary
BP entered into the Russia in the year 1997 as the country has large potential to enhance its
oil and gas industry (Ross, 2013). In managing the business partnership, this firm had to face
challenges related to the management of operations and also in managing the control over
their operations. The company faced issues in terms of the fact that government changed their
policies related to the management of human resource management as the government made
the policy to recruit more Russian people within the country. Due to this many of the higher
officials of the BP had to face the issue of Visa renewal. It was seen that companies had to
face challenges in the areas like control over the business due to the partnership model
selected by the company. Case study illustrates the fact that many of the partnerships of the
BP failed due to improper management of long term challenges faced by the company. For
example it failed in its joint ventures with the Uneximbank group. Still its partnership with
Tyumen Oil Company in a Joint venture of 50-50 allowed them to gain control in the Russian
market. However the partnerships faced expansion disputes which were one of the major
reasons why companies separated. The problem also become bigger in terms of the fact that
BP had to do share swap with its partners in Russia. For instance due to BP’s existing
partnership with AAR in TNK-BP at the time of proposed BP-Rosneft alliance, the Russia