Strategic Management and Change

This report outlines about strategic planning of British petroleum and recommendations for the future direction of the company. From a long time, the company strategy helps them to be competitive with the fast development of new technologies and customer preferences.

Running Head: MANAGEMENT 0
STRATEGIC MANAGEMENT AND CHANGE

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Executive Summary
One of the most vital parts in the markets of energy sources is the natural gas and oil
industry. The demand for oil is continuously increasing in major portions of the world.
British Petroleum is one of the major forerunners when it comes to oil and gas industry. The
company is known for its supply of wide varieties of biofuels in over 80 countries. It is also
one of the company to found oil in the North Sea as this was not done by any other petroleum
company.
This report outlines about strategic planning of British petroleum and recommendations for
the future direction of the company. From a long time, the company strategy helps them to be
competitive with the fast development of new technologies and customer preferences. One of
BP’s key core competencies is its massive logistics network that helps the company in
relation to its distribution and global supply lines. With the help of this report, the
management can also discover company future direction and change management framework
depending upon various hard and soft elements.

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Table of Contents
1 Company Background.............................................................................................................3
2 Strategic Planning for British Petroleum................................................................................3
3 Evaluation and Key findings...................................................................................................9
4 Recommendations for the future direction............................................................................10
5 McKinsey 7S’s Change management framework.................................................................12
6 References.............................................................................................................................14

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1 Company Background
British Petroleum (BP) is a renowned company in UK in the energy industry that provides
fuel for transportation, lubricants for the mechanical engines, energy generating fuels and
many others petrochemical products utilized in daily items as varied as packages, plastics and
paints over 100 years. In 2017, BP has contributed to more than 141,860 jobs in the UK and
added £9.6 billion to the UK’s GDP (bp.com, 2018).
BP mission is developed around long-term integration of petroleum products in relation with
marketing efforts and technology inputs. In addition, the company vision emphasis on
improved performance and sturdy controlled business growth. The revenue for BP in the year
2018 was noted as US$ 299 billion (statista.com, 2018). They also have their operations in
Eurasia and Europe, Africa, Americas and Middle East and Asia Pacific. Other than this, BP
also focused on environmental sustainability by delivering significant lower emission and
avoiding mitigate the environmental impacts over the life of operations.
2 Strategic Planning for British Petroleum
2.1 strategic planning for BP
BP company strategic plan enables it to continue its position in the marketplace with the help
of efficiency exploration and production. It focuses on the effects of BP Company on the
surroundings. The strategic plan for BP UK includes its strategy, vision, mission, goals,
business model and core competencies. It also states the future direction of the company in
relation with its business life cycle.
British Petroleum strategy emphasis on dual challenge as with the help of new technologies,
there will be more efficient production of energy helps in meeting the expected rise of the
demand. The company strategy also helps them to be competitive while the rapid evolvement
of technology, policies, customer preference and prices. Considering some key directions of
the strategy, BP UK includes energy efficiency with BP processes like seeing the price of
carbon in investment assessments and encouraging low cost energy paths with the help of gas
and power generation (Wustenhagen and Menichetti, 2012). BP UK also goes for continuous

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investments in substitute energy with wind, biofuels and investment in research and
technology. Hence, the organisation emphasis on reliable and safe operations with an
enduring journey in personal safety and develops operating management system with
compliance.
The organisation vision is to have a greater competitive operating, corporate and financial
performance while progressing and exclusive to all areas. In relation to their mission
statement, the company seek to display various fundamental qualities in all their activities
including honest dealing, integrity and serving everyone with dignity and respect while
driving for shared benefits and contribute to human development (King, Case and Premo,
2011).
The business model of BP UK includes a varied portfolio across types of resources,
businesses and geographies having downstream, upstream and renewable businesses in align
with well-developed trading abilities. It assist the company to alleviate the influence of
product pricing cycles. The company geographic scope provides them entrance to emerging
marketplaces and new resources and thus create renewed framework for the company to
serve social needs in an efficient way.
British Petroleum (BP) core competency is to provide their services and their oil throughout
markets all over the world. The massive logistics network is considered as primary core
competencies of British Petroleum and it is related with the company ability to effectively
and efficiently carriage its oil in its pre-existing universal supply and delivery lines
(Modarress, Ansari and Thies, 2016). Other core competency of the company is the usage of
low cost fields. It was identified that company completely functions in the biggest and best
productive fields and gains only a part of ownership in the least-productive fields, the
organisation can emphasis on its ability to operate its extraction processes resourcefully.

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2.2 Environment analysis
2.2.1 Pestle analysis
PESTLE framework will help BP petroleum to identify and evaluate various external factors
offering both threats and opportunities in the competitive market place. In addition, some of
these factors are beyond the control of management or organisation and bring out various
sustainable challenges to the company.
The major factors that influence on organisation strategy considering this analysis includes
political, economic, socio-cultural, technological, legal and environmental factors.
 Political Factors – BP was approved by The British government that it would
oppose any possible seizure of the organisation, which was extremely deteriorated by
the massive bill sustained after the Gulf of Mexico Deepwater Horizon disaster. The
company is now also calculating the cost of disaster and it has so far stated $43.5
billion over the leak (Calkins and Fisk, 2015).
PESTLE
Economic
SocialPolitical
Technological
Environmental
Legal

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However, UK government support the company in many ways. For instance, the
government of UK has interfered in provision of BP over a US ban on the oil main
pursuing federal contracts.
 Economic Factors – In mid of 2017, $6 billion worth of mergers and acquisitions
happened in the UK Continental Shelf (oilandgasuk.co.uk, 2017). Hence, the Oil &
Gas UK is supposing to gain a boost in investment. However, in the capital and
operational efficiency of the section, there is need for further improvement. In the
present market conditions, there will be several new opportunities due to the renewed
interest.
From the North Sea, BP is focusing to mine more and more and there was dip in
profits in the early months of 2017 (Boehmer-Christiansen, 2017). The new North Sea
volumes of the company will come from an part that is west of Shetland Islands.
 Social Factors – The Company is trying to do probing drilling on the coast of South
Australia. Though, various natives of the areas are bringing conflicts as they thinking
that these operations can bring negative outcome to the ocean and also threats to their
lives. It is the same area where 11 people died in 2010 due to some explosion and
these people are concerned about the BP ideas in relation with that specific area.
However, in relation to its business activity, the company is making various
contributions to society through social investment. In 2016, $61.1 million was
contributed by BP in towards social investment that helps in improving standard of
living of various communities. This benefit the company in building positive brand
image in the marketplace.
 Technological Factors – In April 2017, BP proclaimed a key discovery in seismic
imaging that has recognized more than 200 million barrels of further resources at
BP’s Atlantis field in the deep-water Gulf of Mexico (offshoreenergytoday.com,
2017). This technological innovation helps the company to enhance the image clarity
that is being collected during seismic surveys and thus allow BP to drill new
development wells in deep-water reservoirs with greater precision.
However, the company was found guilty in 2010 while reporting on Deep-water
Horizon rig explosion, as their systems were not able to detect early warning signs in
the hours before the explosion aboard the oilrig.
 Environment factors – The Company have a BP Target Neutral (BPTN) carbon-
offsetting programme that develops carbon neutral products and services for partners
and customers. With the help of BPTN, the company has come up with 20 carbon

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neutral offers into the market. It is also helping consumers to follow global best
practice to ‘reduce, replace and neutralize’ their greenhouse gas emissions.
However, there are some of the company negative practices too that caused
environmental catastrophes and been complicit in human rights abuses in various
countries where it operates. For instance, 95 tonnes of oil was leaked by the company
into the North Sea and decided not to clear it up (Vaughan, 2016).
 Legal Factors – In 2010, the company already faced various legal challenges against
four BP subsidiaries. This requires BP to accept its responsibility, as they have to pay
huge amount for a final settlement of $20.8bn with US authorities.
In relation with benefits, the company have an effective greenhouse gases policy and
regulation that helps the company to run with necessary compliance.
2.2.2 Microanalysis
The microenvironment of British Petroleum UK is being analyzed with the help of five forces
model while evaluating company competitiveness. The gas and oil industry in which the
company drives conventionally needed financial investments due to costly infrastructure.
High capital investment is important to fill up expenditures like drilling wells, construction of
pipelines, acquisition of land and building access roads. In 2018, nearly 282 billion U.S.
dollars of total assests were reported by the BP (statista.com, 2018). The risk of new entrant
is low considering economies of scale in the sector and cost of market entry.
There is also various substitute products available like hydroelectricity, nuclear energy, coal,
wind energy and solar power. Though, many are currently in development stage. In addition,
the production cost of auxiliary products is also very high. The significance of oil in
generating electricity, powering cars, and operating industries make it's essential and
beneficial for various areas of the economy. As alternate products are less competitive,
threats of substitutes are also low. The oil and gas sector include various suppliers in extent
with private enterprises to governments (Yusuf et al, 2013). In addition, there are also several
potential buyers identical to BP. Moreover, the vertical integration of BP in its processes is
alike to that of main rivals. The suppliers bargaining power is therefore assessed as moderate.
At last, the gas and oil industry is controlled by vast businesses that create various low
differentiated products. BP key rivals include Total, Chevron and Royal Dutch Shell also
have substantial customer base. This shows that BP and its rivals have altogether adjusted
with vertical integration of alike variety of products.

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2.3.3 Internal analysis
A SWOT analysis is a compilation of the organisation strengths, weakness, opportunities and
threats. Strengths and weakness are internal to the organisation (example, patents, intellectual
property) whereas opportunities and threats are external (such as competitors, customer
trends and cost of raw materials). This framework also help the company in evaluating its
competitive position and then help it to develop a strategic plan.
Strengths
 Well performance in operations
 Adoption of advanced technology
Weakness
 Oil Spills
 Near-miss accidents
Opportunities
 Likely growth through new projects
 Growing demand for energy
Threats
 Responsible for worldwide
emission
 Cybersecurity a concern
a) Strengths – British Petroleum UK is developing and positioning itself for the new oil
price setting. The company ensure discipline on costs, efficiency and capital spending.
In the 2017-second quarter, BP had come up with strong operational performance
with operating cash flow of $4.8 billion (bp.com, 2017). In addition, the company is
also developing its own technology with continuous involvement in research and
development. The company and its subsidiaries have more than 3,800 allotted patents
across the globe. British Petroleum also invested $400 million in the year 2016
towards research and development.
b) Weakness – For any oil and gas enterprise, oil spill is one of the major concern areas.
British petroleum also faced same issue in the UK in the course of Torrey Canyon
disaster. Currently, the preventive mechanisms are also not so strong enough which
builds out such situations at some or any time. In addition, there are two near-miss

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coincidences, which can be proved a deadly and huge loss to the company. The first
was related to BP oil refinery in Indiana in 2014 and the second one was at Hull
chemical plant of the company (Wlasiuk, 2014). To such a big company, these
failures can be curial to company reputation and profitability.
c) Opportunities – A diversified portfolio of projects brings out potential growth for the
company. For instance, by 2021, 900mboed of new production from the major
projects are expected (bp.com, 2018). In 2018, the company also initiated up to six
upstream big projects in Eurasia and Europe, North Africa and North America with
following on from seven successful start-ups in 2017 (bp.com, 2018). In addition, the
company also have huge opportunities due to growing demand for energy and the
global market for liquid fuels is set to continue to increase for a period, with growing
demand from emerging economies met by increased supplies mainly from the OPEC
and US
d) Threats – Increased environmental regulations will levy pressure on BP to plan eco-
friendly products, which increase the cost of production and lower the profit margin
too. In addition, competitors such as Shell and Chevron will also decrease BP
customer base.
3 Evaluation and Key findings
British Petroleum (BP) can develop the competitive advantage of its strengths, which has
already established in the oil sector. One of the key success elements of BP is having
recognized diverse brands and a vast distribution network. It helps in building greater level
loyalty by BP AMOCO as a solid oil brand and also developing an effective marketing
performance in higher than 78 nations like the US, Europe, Middle East and China. This
significant geographic marketing activity of BP results in an increase in notable profits with
oil and gas energy prices. Other than this, investment in latest technology and patents will
give competitive advantage to the company over other competitors such as Chevron and
Shell.
One of the threats of BP is less consideration to the surroundings and it can be recommended
to the company to try to adopt green products and energy. In addition, BP now effectively
controlled the oil spill and thus it can be taken as strength of BP and the company have new
departments for the protection of environment. In addition, cybersecurity also becomes a
concern and in June 2017, the company already noted a loss of US$300M (Bergman, 2017).

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This has raised major concern for various stakeholders of the company and therefore, this is a
critical area, the company needs to emphasis upon.
4 Recommendations for the future direction
In the limelight of above discussion, British Petroleum has a bright future in the gas and oil
industry as the organisation has taken various innovative initiatives to help the community
and customers with various practices and strategies. However, some incidents such as Oil
Spill in the Mexican Gulf have negatively influenced the brand reputation of the organisation.
In relation with future direction of the firm, the focus of the company should be on
systematic, disciplined and process-driven operations including both upstream and
downstream business. From a long time, the British Petroleum has been outstanding in
framing its plans and strategies while ensuring effectiveness of the firm. However, the
company needs to develop clear and better standards for company performance so that to
achieve its predetermined objectives and goals until 2021 as it agrees. These procedures must
have a clear consideration and include all actions extending from Deep Sea drilling, testing
for greater performance and competence to cope up with risks excellently. These set targets
would help the enterprise to play effective in oil sector and attain a greater share in the
marketplace. Other than this, British Petroleum must have well established standards of
safety and health of the individuals and most significantly must confirm its implementation.
It is also necessary for the organisation to collaborate intensively with eternal stakeholders so
that to minimize likelihood of ecological disasters. To achieve this, it is important for the
organisation to consult various officials of local government so that to eliminate the
environment disaster possibility. Another significant recommendation for the organisation is
to involve themselves in future knowledge sharing programs that simplify the way of
recognizing technological processes that can be used in moderating the risk in environment
and employee associated risk factors as well. For example, less risk is present in better
drilling process can enhance company efficiency at various levels.
British Petroleum also has the prospect to collaborate with specific nations in formulating
keys for infrastructure concerns so that to move into use of clean energy selections, placing
the BP brand around revolution and environmental sustainability. In the same way, the
enterprise can emphasis on further building various divisions that are outside of its

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petrochemical focus to improve income streams in respective extents. However, the company
also have to work extensively to reconstruct its image in respect with recent accidents and
ensure greater transparency and more thoughtful communication within the company.
Strategic direction – Ansoff matrix
Product Development
Bio-fuels that are produced in a sustainable way and
solar energy, wind energy, etc. These include the
human resource and information technology.
Market Penetration
It involves BP encompassing its direct distribution,
geographical frontiers, higher retail outlets, etc. In
order to expand to untapped market, the company
can use aggressive marketing techniques including
advertising and promotional tools.
Market Development
The company must enter into to others countries
market and can also acquire person owned retail
outlets in prime locations. The company can adopt
new pricing policies for attracting divergent
consumers in order to create new market segment.
Diversification
The company can introduce clean and renewable
solar energy for roads, homes, and businesses. With
increase in demand, the company also needed to
identify alternate source so that it can make it core
competency in future.
Products
Existing New
INCREASING RISK
INCREASING RISK
Existing
Market
New

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5 McKinsey 7S’s Change management framework
McKinsey 7S framework depends on various factors mainly soft and hard elements. The hard
category elements include strategy, systems and structures where elements in soft category
refer to skills, staff, style and shared values. On the hard elements, management has a direct
influence and it is easy for them to define those whereas the soft elements are challenging to
describe as they are less tangible and also influenced by culture.
Source: (Alshaher, 2013)
In relation with strategy, it represents the organisation plan where it allows its scarce
resources while developing an advantage over its rivals. The organisation must follow its
goals and emphasis on specific policies of those objectives. The strategy of BP has a huge
impact before the oil spill and the company gained a significant advantage over its rivals.
This has been achievable with maintaining and focusing on long-term objectives and
confirming that they must align with other elements to attain respective goals. Considering
structure, it represents the way BP division units co-relate with each other. It also looks at the
subdivision and hierarchy of various departments within the organisation. At BP, various
units and divisions are organized and data is readily available with extent to responsibility.
The BP structure is simply visible and flexible to changes in the context. The next element is
systems, which includes routines and procedures defining major work to be carried out within
the enterprise. The systems used at BP comprises performance, recruitment, financial and
information systems work in respective coordination so that to ensure that daily operations

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and functions of business are carried out in an effective way. The management has to
determine any changes in the enterprise utilizing the systems.
Considering soft elements, the first element is the shared value comprises of beliefs and
attitudes that the organisation stands for (Alshaher, 2013). BP core values are fundamental
and strong in determining its corporate culture. Necessary standards have been put by BP that
direct behaviour and actions of the organisation. In extent with skills, it is the capabilities
controlled by the employees. At BP, the assigned task done with high excellence in context of
harbor and competent capabilities. In addition, BP also ensures necessary adjustments must
be developed in accordance with varied employee skills in case of any organisational change
in structure and strategy.
The next significant soft element is staff, which focuses on the type and number of employees
that an enterprise will be needed and the way they need to be trained so as to offer good
service. At BP, the HRM division continuously ensure that vacant positions filled with the
right individuals possessing adequate skills. The company leader also confirms that its
employees get motivate according to their performance with including bonuses and
appraisals. The last soft element includes style which states the way of leadership style
contributes to gaining the organisation objectives and evaluate whether it is effective or not.
Considering, British Petroleum UK, the organisation has adopted a structural leadership style
comprising of top managers and its subordinates emphasizing on a stable communication
across different levels. The management style of BP UK ensures symbolic value to the
complete organisation. Hence, these are the significant recommendations elaborated above
help the firm in achieving its vision and mission in the long run.

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6 References
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