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Competitive Strategy Assignment : BP Plc

   

Added on  2021-02-19

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COMPETITIVE STRATEGY

Table of ContentsINTRODUCTION...........................................................................................................................3MAIN BODY...................................................................................................................................3History of BP and previous Blasts and Oil Spill Cases..............................................................3Effectiveness of the competitive follow-up strategies adopted by the company in the past.......4Oil Spill in Deepwater Horizon, 2010.........................................................................................5Impact on Competitors and Competitive Strategies Adopted.....................................................6Porter's Five Force Analysis of BP for analysing competitive dynamics...................................7CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10

INTRODUCTIONBP Plc is a British multinational oil and gas company founded in the year 1909 byWilliam Knox D'Arcy. It is having its headquarter in London, UK. It is the world's seven oil andgas super majors. Report will include the case of 2010 related to Deep water Horizon oil spillthat brought huge loss for the company and nation as it damaged the marine life and wildlifehabitat. Further report will include Competitive Dynamic strategy using porters 5 force analysisthat tells about the Threat of new entrants, Threat of substitute products, Bargaining Power ofBuyers, bargaining power of suppliers and at last about Competitive rivalry(Mathooko andOgutu, 2015). Previously such attack were seen in Alaska and Taxes due to their poor strategies,but BP improved its competitive strategies that helped out the company in long run. MAIN BODYHistory of BP and previous Blasts and Oil Spill Cases.Despite BP being fifth largest oil and petroleum company in Deepwater Horizon has notbeen the only case. In 2005, a BP owned refinery in Texas has a blast which led to death of 15workers and left around 180 workers severely injured. The second largest refinery which wasacquired by BP when it merged with Amoco was facing a lot of safety issues like thinned andleaking pipes, broken alarms, defective machinery etc. The workers and supervisors responsiblefor daily security checks were found to be extremely careless breaking the protocols and ignoringthe importance of follow up activities (Nyankson, Rodene and Gupta, , 2016). It was found thatdue to cost-cutting the necessary improvements and modifications were not made in thecompany and this failure of making adequate investment in the company led to this explosion.Another similar incident occurred in Alaska in 2006 at Prudhoe Bay where the largestever oil spill in North Slope region of Alaska was recorded due to spill of 267,000 gallons ofcrude oil. This spill occurred due to hole in the corroded pipeline which was used fortransporting oil from the Prudhoe oil field to a pumping station (Prudhoe Bay 2006 Oil Spill,2015). This spill was accredited to poor corrosion monitoring system and weak detection systemsdespite regular warning from inside as well as outside of the organization. The management ofBP promised to replace miles of pipeline and finished it in 2008 replacing 16 miles of transitpipelines in Prudhoe Bay. But in 2009, a subsequent spill occurred form the similar transitpipelines in greater Prudhoe Bay area which led to a lawsuit being filed of BP claiming that theywere still negligent.3

Therefore, it can be concluded that there is a history of oil spill and explosion cases withBP but still the company has managed to remain in the top sphere of oil and natural gascompanies due to the extremely efficient competitive strategies that have been adopted by thecomp[any overtime and a strong PR game.Effectiveness of the competitive follow-up strategies adopted by the company in the past.After the Texas Blast in 2005, the very first thing that the CEO did was to submit to theevaluation of the incident and subsequent report preparation by Occupational safety and HealthAdministration (OSHA) which ultimately fined them with $21 million. The Baker Panel Reportwhich proved to be the most prominent one stated that the incident could have been avoided andlives saved if BP had upgraded the refinery and its processes and installed a flare (BP to pay$50m fine for safety violations after Texas City explosion, 2017). It would have led to zero deathsand nobody would have even found out that there was a blast if it had been installed. In a followup speech by BP's CEO, it was claimed by him that this blast would act as a watershed for thecompany and help in avoiding any future accidents. It was promised that the company wouldspend $1.7 billion every year on safety. A memorial service was help for the 15 workers whodied at the factory and BP gained a sympathy spot in the residents of Texas despite such a majorblast by emphasizing the fact that if BP was not there, survival of Texas would be extremelydifficult. It was also emphasized that it is crucial for America to have their own refineries andproduction units reducing their dependency on outside of America.Similarly, after the oil spill in Alaska in 2006, BP was fined with $25 million which thecompany implied with without any qualms. Further, the company spent billions in building upthe pipeline which was the reason behind spill (BP: The inside story, 2016). The CEO of thecompany, Tony Hayward agreed to implement a system wide integrity management programwhich would ensure that spill could happen to any other company operating in the industry aswell. The officials of BP further countered that since the incident in Alaska, they have vastly improvedtheir safety protocols as opposed to their competitors i.e. Exxon Mobil, Valero etc. They statethat approximately in USA, 58 refinery workers have died and not a single one of them havebeen employed under BP or its subsidiaries. They further state that there have been at-least 350fires in refineries located at USA and none of them has been under USA including sites ofValero as well. The oil spill of Chevron in Californian Canyon of 800,000 gallons in 2019 which4

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