Business Environment Analysis of British Petroleum

This report analyzes the business environment of British Petroleum, including PESTLE analysis, Five Force Framework, internal environment analysis, and application of SWOT analysis. It discusses the impact of political, economic, social, technological, environmental, and legal factors on the company's operations. The report also examines the company's resources, skills, capabilities, and core competencies, and provides insights into decision-making using SWOT analysis.

Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
1 PESTLE Analysis ( Marco environmental analysis)...............................................................1
2 Five Force Framework ( Micro environmental analysis).........................................................3
3 Internal Environment ( Resources, skills, capabilities and core competencies)......................4
4 Application of SWOT analysis and decision-making..............................................................5
Individual reflective report..........................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................7

INTRODUCTION
Business environment is term as collection of people and entities as well as other
elements that may or may not be control of a business which may effect business operation. It is
a mixture of all internal and external factors such as employees, customer's needs and
expectation, supply and demand, social trends, market trends and economic changes etc
(Brewster, 2017). Each and every business organisation operates in a distinctive environment as
business operation and function cannot exist in isolation. In this report organisation chosen is
British Petroleum Ltd, a British multinational oil and gas organisation headquartered in London.
It is one of the leading industry in oil and gas at world wide. This report is going to analysis
macro United Kingdom environment within which British petroleum operates that impact on
performance by adopting PESTLE analysis. Moreover, identifying industry environment by
applying Porters Five forces framework. Along with this analysing resources, skills, capabilities
and core competencies of a respective organisation. Furthermore, applying SWOT analysis that
will help in taking effective decision along with appropriate findings and conclusion.
1 PESTLE Analysis ( Marco environmental analysis)
PESTLE analysis is acquire by business to access competitive position of their product
and services within a stipulated time period. A respective organisation is adopting this tool in
order to know what are the key drivers of change that are extracting a stronger influences over
the other factors of a company while operating their day to day business activity.
Political Factor: Political factors play's a essential role in examining those elements that impact
an organisation by economic factors or government interference that affect business
operation(Burlton, 2015). For such instance mangers of British Petroleum need to analysis
drivers of change that create strong influences over business. Such as organisation are dealing
with various rules and regulation such as interferences of government legal framework that are
dine by a government. It is necessary for BP oil to maintain their energy forms to maintain
weather condition and different forms of carbon dioxide.
Positive impact: Different nation of government are providing various and various
opportunities such as eco friendly energy that ultimately benefit both organisation and economy.
In this manner a business can maintain sustainability for longer duration of time.
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Negative impact: There are some drivers have have negative impact to such as they need
to take care of safety measure so their their employees and customer feel comfortable. It occurs
higher cost with proper abidance that consist of employees safety so that an organisation have
good name in competitive marketplace.
Economic factors: Economic factors are those factors that usually impact on inflation rate,
foreign exchange rate, interest rate and other factors that determine aggregate demands and
investment within an economy. For such purpose many countries are depended on British
Petroleum as they are supporting out with high energy supply.
Positive impact: Many countries are reducing tax and inflation rate so that they can
develop their economic value which is beneficial for both organisation as well as nation.
Negative impact: Here are some drivers that are faced by a respective organisation is
that they need to follow different norms and regulation. Moreover, they need to reduce carbon
trading emission which are usually affected by high tax rate or inflation rate.
Social Factor: Social factor usually impact on culture of an organisation within an environment
as it consist of share beliefs and attitudes that play a major role in operating business(Chang,
2016). For this purpose they need to understand the marketplace social attitudes and cultural
issues and demand of population that may affect an organisation respectively.
Positive impact: British Petroleum are producing their product in such a manner that help
them to reduce carbon emission which leads to create positive impact on business environment
as well as society.
Negative impact: In many countries BP oil have faced may social issues as they fails up
to meet up the buying and consumption pattern of customer's as it differ from nation to nation.
Thus, this drive change may impact while operating business function effectively.
Technological factor: Technological factor is one to affective and disrupting factor in growth
of an organisation. With the adoption of proper technologies BP oil need to refine, explore and
distribute in marketplace so that they can increase their product offerings as well as create value
chain in oil and gas sector.
Positive impact: British Petroleum are creating positive impact in a marketplace as they
are acquiring advance tools and techniques that will help them to provide better quality of goods
and services.
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Negative impact: Though they are acquiring advance tool and techniques but they are
lacking behind in competitive marketplace due to high number of competition and rivalry among
existing marketplace.
Environmental Factors: Environmental factors are those factors that consist of harmful gasses
that are emitted due to refining, extracting and producing petroleum that may effect negatively.
In this manner this factor is creating drivers of change into both positive and negative manner.
Positive impact: Government are supporting a respective organisation to develop their
business with certain rules that may help in reducing carbon emission while operating in an
effective manner. Moreover, they are maintaining proper recycling process so that they can
utilise their waste product in an effective manner.
Negative impact: Apart from this, it do have negative impact while operating business
activities such as they need to maintain certain laws and regulation that are abided by
government pollution. Along with this they need to maintain proper waste management in oil
and gas industry.
Legal factors: Legal factors refers to those factors that consist of legal framework and institution
that are effective to protect intellectual property rights of an organisation.
Positive impact: Legal factors are essential for an organisation as it is an intellectual
property that cannot the copied by any other easily. Herein, legal factor that are followed by a
respective company are they are following discrimination law, consumer protection and e
commerce.
Negative impact: If an organisation fails to meet up certain rules and regulation they are
abided with legal punishment that are being imposed by government. They need to ensure that
they are maintaining proper health and safety measure in order to have sustainability for longer
period of time.
2 Five Force Framework ( Micro environmental analysis)
Porter's five force is a model that identifies and analyses five competitive position in
order to shape industry which usually determines strength and weakness or help in identifying an
industry structure to determine corporate strategy. This model is adopted by the mangers of
British Petroleum in order to know its competitive position in competitive marketplace.
Threats of substitute: Substitute are refer to those product which are use for replacing
product when one product is not available on permanent basis. For example tea and coffee,
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coffee is substitute of tea as some people do not drink tea(Chen and Jermias,2014.). Herein,
British Petroleum is a big and leading oil industry and its substitute are very less in nature. Its
creates a biggest advantage for a respective company to have a good command over its
competitive position in emerging marketplace.
Bargaining power of buyer: The British Petroleum is are having loyal customer's in
competitive marketplace of same industry line. For such purpose they are offering their best
quality of product and services to its potential customer's with affordable price and premium
quality in their offerings. Thus, with the increase in number of loyal customer's a respective
organisation is able to have high competitive advancement that ultimately reduces the bargaining
power of buyer.
Bargaining power of suppliers: British Petroleum have limited suppliers as they do not
want to compromise with their product quality and services. With limited number of supplier its
competitors can gain various advantage over it by having large number of suppliers. Hence, it
main influence British Petroleum to increase their force of suppliers in competitive marketplace.
Threat of new entrance: In emerging competitive an organisation need to maintain such
rules and regulation. British Petroleum is one of the leading oil and gas industry from it it has a
biggest advantage as it is not easier for other competitor to enter into same industry product line
in an effective manner. Hence indicates that it is impossible for common or local business to
invest a and launch their product and services in this sector.
Industry rivalry: In emerging business environment British Petroleum has number of
competitors which are affecting a respective company competitive position in marketplace. This
lead mangers of respective organisation to emerge with small level of same industry line which
will help them to acquire large number of market share in competitive position of same industry
line.
Thus, from the above its been concluded that British Petroleum has good command over its
competitive position in the industry of same product line. Along with this they are one of leading
oil and gas industry as they are offering their product and services at affordable price.
3 Internal Environment ( Resources, skills, capabilities and core competencies)
British Petroleum oil and gas is one of the leading oil and gas industry of United kingdom
and worldwide. For operating a business function an organisation have many different elements
and operation that usually decided the overall performance of an organisation. It consist of
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management, employees, staff members and and other working culture that defines internal
environment. Apart from this, it consist of resources, skills, capabilities and core competencies
which may control over organisation rules and regulation such as business plan and procedures
so that they can perform accordingly in order to have strong capabilities over time period.
. For such purpose an organisation need to bring out changes so that they can improve their
working criteria over resources, skills, capabilities and its core competencies in competitive
marketplace. Herein, a respective company have diversified its product and services with ample
number of subsidiaries with its loyal customers that help them to increase customer's(Chu,
KrishnaKumar, Khosla2014). Apart from this they have highest contribution towards economic
welfare as well as highest network of business at worldwide. Moreover, it have also faced many
ethical and social issues in performing their business operation and function in competitive
marketplace. They were caught in many scandals such they were not treating their employees
and customer's in an effective manner. It leads spoil reputation of an industry at same product
line. Moreover, they have advantages too they have good utilisation of resources over their waste
product and services. In this manner they are utilising their best resources will skilled employees
and staff members so that they can achieve their targets within stipulated period of time. For
such instance they need to put highest number of efforts in their business operation in order to
maintain its core competencies among its competitors. For such instance they need to properly
analysis the marketplace in order to achieve success as well as help in economic growth and
development along with high productivity and profitability as well as attain good will in
competitive marketplace.
4 Application of SWOT analysis and decision-making
With context to business SWOT analysis have an specific role as it help an organisation
to know its competitive position by identifying strengthen, weakness, opportunities and threats
in order to have an appropriate planning for their business operation. For such manger need to
identrigy an organisation threats and opportunities along with its threats and weakness so that
they cam maintain their stability for longer duration of time. Generally, it is a framework that is
used by many organisation to know the exact position of their organisation in competitive
business environment of same industry line.
Strength: In a business this element is defined as different feature that a company have
which usually separate its from its competitor.
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Herein, British Petroleum have diversified themselves have entered into different areas such as
in aviation in fuel and lubricants energy in competitive marketplace. Moreover, it have loyal
number of customer's that is helping an organisation to attain global leadership that is important
to balance in context to economy. Moreover, it also help to take effective decision that are
needed to take more efforts in order to survive into competitive position, thus, in this manner an
organisation will able to attain sustainability for longer duration of time by providing better
quality of goods and services.
Weakness: Within an organisation weaknesses refers those area where an organisation
need to do improvements. For such instance British petroleum have faced controversies such as
they have undergone many scandals which have effected sustainability rating that affected
goodwill. Apart from this have undergone with various ethical and social issues which lead to
create negative impact within an organisation as well as outside business. Additionally, mangers
of PB oil was not able to penetrate successful in non energy markets due to low energy related
domains. Thus, mangers of a respective company need to focus on making different and useful
strategic planning so that they can overcome with their weakness in an appropriate manner. This
will be helpful if they will keenly an effectively monitor the marketplace so that they can acquire
success in an effective manner.
Opportunities: With business context opportunities are refers to those advancement that
create opportunities within marketplace. For such purpose British Petroleum are expanding their
business operation in many business countries and nation. This will lead to create opportunities
with huge amount of resources and demand. It will also help to increase production of motor
vehicle in different parts which will ultimately help in increase need of goods and services. It
will also raise different and attractive opportunities that are need to adopted within proper period
of time.
Threats: It consist of those factors that will have usually harm an organisation to design
eco friendly product and services that will help them to lower down the cost of profit margin.
Additionally, emergence of new marketplace and number of competitors among the profit
margins as well as fluctuate high amount of investment. Apart from this mangers of a respective
need to have strong plans and policies so that they can overcome with such threats in competitive
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marketplace. Additionally, it is need so that they respective company be harmed in different
manner.
Thus from the above discussion it has been identified that amangers of a respective
organisation need to identify its organisation strength, weakness, threat and opportunities so that
they can take out appropriate measure so that they can have good and effective decision for their
businesses operation. This process is necessary in order to have proper rule over marketplace by
acquiring market share as well as attain sustainability for longer duration of time. Moreover,
strength will help an organisation top know its unique capabilities that differentiate from its
competitors in marketplace. Where as from the analysis of weakness an manger can come up
with different strategic planning where they can improve those areas where they are lacking
behind. Apart from this, respective organisation can keenly observe the marketplace so that they
are able acquire opportunities from which they can achieve their gaols and target in an
effectively manner. From which they can capitalize their income as well as their productivity,
profitability and sustainability for longer duration of time. Moreover, from this a manger can
analysis what are the threats that may harm business operation and function that are affection the
production. Thus, SWOT analysis help a business to have effective decision in order to have
competitive position in marketplace.
Individual reflective report
Business environment is an important factor which plays major role to understand the dynamics
organisation have to evaluate various factors such as SWOT, PESTEL and internal
environmental capabilities, skills of employees and core competencies of an organisation that
helps to reach out desirable goals and objectives. In BP oil to expand and prosper they have to
evaluate each and every attribute with help of their own strength, weaknesses and opportunities
with threats to compete in business environment. In that case with the helps of SWOT analysis
organisation can be able to evaluate their inner strength which also helps to me to take important
decision in taking major decision. With help of PESTEL analysis organisation can easily
evaluate the major competitors and their strategies to remain competitive in marketplace. It also
helps to me to understand various competitors and their major plans for future that enables in
major decision making to reach at desirable goals and objectives. In order to organisation have
to be access their own skills, capabilities and competencies that helps to remain always
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competitive in market place. It also helps to me in knowing strength of BP oil and how it can be
use as an marketing tool to so that organisation can seem different from their fierce competitors.
Majorly skills sets of employees are very much important for organisational growth and
enhancement and it is very much rare also so that it helps in gaining competitive advantage in
positive manner. It also helps to me to select best skills and talented people to recruit
competitive staff members so that it also helps in my career enhancement also to reach at
competitive personnel. for an organisation accessing their own capabilities and strength are very
much important to remain always competitive into marketplace by giving best attributes to
general public by identify their needs and wants in proper way so that important results should
be accomplished. By using that tools and techniques helps in grab attention of large no. of
consumer base and give competitive advantage to remain always up to date so that maximum
benefits should be reap out. As an student it proved beneficial for me to understand the
importance of these tools for an organisation and enhancing knowledge. There are some issues
also that faced by an student while evaluating these tools and techniques in reaching at desirable
goals and objectives. These tools and techniques sometimes mislead in taking important
decisions when BP oil have to take important steps to reach at desirable position to reap
important benefits. So by using tools and techniques that helps in understand the dynamics of
organisational environment and give knowledge and information to an student to enhance their
level so that they can grow in their career in proper way. So there are various ways and methods
that helps in reach at common goals and objectives for both an organisation as well as an
individual to enhance their knowledge level.
CONCLUSION
From the above discussion it has been concluded that businesses environment plays an
effective role. It is a mixture of all internal and external factors such as employees, customer's
needs and expectation, supply and demand, social trends, market trends and economic changes
etc. herein, business environment help a respective organisation to know their capabilities in
competitive marketplace by providing out premium quality of goods and services. Moreover,
Macro factors are affecting business environment and strategies of an organisation that can be
adopted with different business techniques foe coming up different analysing in an effectively
manner. Furthermore, by identifying the affect of macro factors are affecting the factors of
competencies that are creating difficulties for operating business activities and function. Thus,
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with the adoption of SWOT analysis an organisation is able to know what are the strengthen and
weakness so that they can overcome it accordingly. Thus, business environment play's an
important role so that a respective organisation can attain success in an effective manner.
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