Assignment On British Petroleum Company

Discuss the Microenvironment within the British Petroleum operates and also identify the key stakeholder within the industry. Analysis of internal environment of British Petroleum. Describe the commentary of macro, micro, and internal environment that can identify strength, weakness, and threat, opportunities which useful for decision making. Benefits and impacts of Porter's 5 forces. PESTLE analysis of the British Petroleum Company. This report also elaborates the VRIO analysis for the internal environment of the company and in the last SWOT Analysis is being done to take the strategic decision regarding the company.

Individual Report and
Reflective Report: Case Study
Analysis
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Table of Contents
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................3
1). PESTLE analysis of the British Petroleum Company............................................................3
2). Discuss about the Micro environment within the British Petroleum operates and also
identify the key stakeholder within industry................................................................................6
3). Analysis of internal environment of British Petroleum..........................................................9
4). Describe the commentary of macro, micro and internal environment that can identify
strength, weakness and threat, opportunities which useful for decision making. .....................10
PART 2..........................................................................................................................................12
Benefits and impacts of Porter's 5 forces...................................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15
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INTRODUCTION
This report is the individual report and reflective report on British Petroleum as it
summarised the critical reflection on the subject and also it is considered as collective work of
each student. BP plc is formerly known as the British Petroleum Company plc it is a British
Multinational oil as well as gas company that is head quartered at London it comes in the worlds
six largest oil and gas company by having the market capitalisation and the company is in the
worlds 12th largest in the revenue turnover and their products are petroleum, motor fuels, natural
gas, aviation fuels and the Petro chemicals having the 73000 employees. This report contains the
analysis of the macro environment of the company and its impact on the performance. PESTLE
analysis is being done for the macro environment and the Porter's Five Forces is explained to
assess the attractiveness of company. This report also elaborate the VRIO analysis for the
internal environment of the company and in the last SWOT Analysis is being done to take the
strategic decision regarding the company.
PART 1
1). PESTLE analysis of the British Petroleum Company
PESTLE ANALYSIS
PESTLE analysis is a part of the Situation Analysis (Scanning the Environment: PESTEL
Analysis, 2016). Pestle analysis refers to the process of identification and investigation of the
factors which can impact the organisation. Organization has some external environment in which
various factors plays an important role in creation of opportunities and threats for the
organisation. Through the pestle analysis, company is able to scan their external environment
and analysis its impact on the business activities. “Pestle” word is an acronym of Political,
Economic, Socio-Cultural, Technological, Legal and Environmental (SHTAL and et.al., 2018).
PESTLE ANALYSIS OF THE COMPANY
Pestle analysis of the British Petroleum Company is as follows -
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POLITICAL FACTORS – Political factors are those elements which tell the extent to which
government and its related intervenes affect the industry which in turn affect the companies'
activities. Example of political factors are political stability, tax policies, government policy &
regulations, government stability, government perception towards industry, export & import
regulations, and trade control etc. (Phillips and Moutinho, 2018).
For the country development, transportation facilities must be strong. Thus, for making
strong transportation in the country, Government imposed low taxation policy to this industry
which lead to high profitability of the company. Due to lack of petroleum resources for the
future, Government are supporting non – petroleum resources which lead companies to face so
many issues such as lack of governmental support and tough trading policies.
ECONOMIC FACTORS – Economic factors are those factors which cause due to economic
performance of the country and affect the performance of industry and companies as well.
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(Illustration 1: Factors in Pestle Analysis
Source: Scanning the Environment: PESTEL Analysis, 2016)

Example of economic factors are such as – economic growth rate, employment & unemployment
rate, foreign exchange rate, interest rate, inflation rate and purchasing power of the customers
etc.
Due to open trade country, Many countries are importing petroleum oil and related
materials from the industry which lead company to earn profitability. Due to high prices of petrol
and its related items, Consumers are not able to consume it and they are diverting towards
electronic vehicles or sharing vehicles. This impacts the company's revenue generation.
SOCIO-CULTURAL FACTORS – These factors are those which origin due to demographic
structure and culture aspects of the country. It also affects the country's industrial trends which
impact the companies' working activities. Instance of socio-cultural factors are population size,
life expectancy rates, religion beliefs, family structure, education level, average income
distribution and lifestyle of the people etc. (Anton, 2015).
Due to change in lifestyle and education level, people are becoming more conscious
towards environment which lead them to divert towards electronic vehicles which doesn't
required petrol. This changing behaviour will affect the company's profitability. Due to
increasing population, the rate of transportation consumed increasing which lead to high
consumption of petrol which is beneficial for the company.
TECHNOLOGICAL FACTORS – Illustration of these factors are automation, research &
development activities, technological innovation & invention, technological changes, ICT
technologies and approaches to new technologies etc. are the technological factors. These factors
are those factors which cause due to technologies being used by the companies working under
the industry.
There are a lot of changes in process of refining, exploring and distributing the petroleum
items due to technological innovation which lead company's to have a lot of petrols. This lead to
profits for the company. But due to change in technologies, Company's are storing petrols which
lead organization to bear a lot of operating and storage costs. This impacts the company's
revenue and profits.
LEGAL FACTORS – It is an extension version of political factors. Legal factors refers to all
those factors which arise due to change in legislations, regulations, laws and guidelines impose
by the government and its authorities on the particular industry and companies. Employment
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law, company law, labour law, contract law, consumer law, data protection law, equality law and
intellectual property law etc. are the examples of legal factors.
UK Government is concerned about the employees, staffs and workers of the oil and gas
industry which involves the personal health of the people who are working in oil and petrol
refining, exploration, distribution, and disposal. This lead government to change health & safety
law as well as employment laws. This lead company to take care of the employees. Due to a lot
of amendment in environmental and employment legislation by the government, industry has to
change their policies which impacts the working style of the company.
ENVIRONMENTAL FACTORS – Environmental factors are those components which causes
due to change in environment and its related aspects. These changes affect the companies and
industry both. Examples of environmental factors are as follows – climate, weather, wastage of
resources, pollution level, environmental policies and regulations, awareness towards eco &
green products, usage of renewable sources and recycling standards etc (Perera, 2017).
Due to lack of oil and petroleum resources for future, consumers and government are
becoming aware about it. This lead to reduction in pollution level and increase in electronic
vehicles. This impacts the industry which in turn impact the company's profitability.
2). Discuss about the Micro environment within the British Petroleum operates and also identify
the key stakeholder within industry.
British petroleum is a type of oil and gas industry that was found in 1900 and largest energy form
in the world. It is situated across the different countries such as United states and England. This
organization works in the global enterprise provide the power and fuel along with producing the
oil. It must be used the Porter’ forces model that will help for company to analyse their recent
position and also identify their competitiveness in business world (Carpenter and Wagner, 2019).
Threat of New Entrants
Oil and gas industry is very popular and attractive in global market because of their major
production and profits in the enterprises. There are lots of reasons, it can be analysed that there
are limited threat of new entrants into the industry because it has a higher barrier to enter in the
market. It has been included that higher fixed price for the establishment of source and energy. In
this way, it is very difficult for organizations to enter in the market and selling their products in
marketplace.
Threat of Substitutes
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The threat of substitutes may affect the productivity and profitability of organization
because there are other types of renewable resources which easily substitutes in the Oil industry.
In this way, it can be determined that there are limited threat from because firms are already
working on the development and also takes more time to replace it (Carpenter and Wagner,
2019). Threat of substitutes become moderate in the British petroleum.
Bargaining power of Supplier
In British Petroleum, the supplier must perform the specific task in the oil fields where
many engineers work on it. The organization have an edge over the supplier if they will do
bargaining with the supplier because they wanted to maintain their position and they don’t lose
the business. In UK, they must possess the oil and fuel industry connect with the supplier and
also nation have the bargaining power over the potential buyer by using policies and procedures.
Bargaining power of Buyer
In British petroleum, the cost of fuel must be depended on the demand in global world. In
UK, there have high bargaining power and also developed their bargaining power through
supplier. For Example- there are such countries like Japan, USA and China whereas they can use
their own bargaining power with the help for supplier such as British petroleum (Larkin, Gracie
and Krewski, 2018). In this way, bargaining power of buyer is high and they can easily move
from one supplier to another. it always depending on their own needs and requirements.
Rivalry
There are large number of competitors of British Petroleum such as Gulf, Shell, OMP,
Texaco and so on. These are competitors and player in global world. In oil and fuel industry, it
has required to analyse the different factors that help for organization to differentiate the product
on the behalf of quality, cost etc. It also determines the profitable of British petroleum company
in the industry (Carpenter and Wagner, 2019). British petroleum has largest share and
competition level among the different organisation but the demand has been changed according
to the situations. In this way, BP has moving towards the other small enterprise and mergers. In
this way, it will build the strong position in terms of renewable resources.
Stakeholders of British Petroleum’s
External Stakeholders Internal Stakeholders
 Employees
 Suppliers
 Competitors
 Local communities
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 consumers
Table: 1
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3). Analysis of internal environment of British Petroleum
Internal environment analysis is being done through the analytical technique as it is
brilliant way of doing analysis for the evaluation of the company resources and its competitive
advantage. VRIO analysis compare the resource and the capabilities of British petroleum to
determine that one is having the competitive advantage over the other (Abdelrehim, Maltby and
Toms, 2015). This goal is to realize the sustainable competitive advantage that maximise the
potential over these. VRIO analysis is perfectly suited for the evaluation of the resources of the
company as it is the technical analysis that the company is able to get into the better position
that itself relate to the better position from its competitors. VRIO stands for the
Value of the resources
It is the resources that is valuable to the firm as these are financial resources, human resources,
marketing expertise and the operation management. It analyses that the resources of the firm and
the capabilities of the company is being enable to respond in the environmental threats and
opportunities. Company can improve their performance as if their strategies are being able to
exploit the opportunities as well as neutralise the threats. As Business petroleum is having the
flexible supply chain network that make the resources valuable and firm can be able to do the
competition that is being based on the differentiation in the industry (Anderson Jr, 2015). British
petroleum is having the proper product portfolio that is being valuable for the segmentation and
the consumer preference. A company must possess the valuable resources so that they can able to
create the economic value as well as they can increase the willingness of the customer to pay,
decrease the cost and the both (McKain and et.al., 2015).
Rareness of the resource
It is the resource that is rare and uncommon or it is not being possessed by most of the
organisations and considered as rare. When the resource is both rare and valuable than it is
usually having the short lived. In this the competitors can quickly realise and can also intimate
about the resources without having too much trouble. It is only the competitive advantage that is
temporary in nature (Cheon, Lackner and Urpelainen, 2015). In this respect the competitors also
having the decent marketing know how and now most of the competitors among this industry
wants to enter into the lucrative segments. It is having the rare global and local presence at the
same the firm has invested in building the strong customer loyalty. It is that part of the
organisation in which no other companies are using the data based employee from the
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management. As the company is having very scary and the rare resources so that they gain the
greater competitive advantage. The company can also able to use the absolutely unique product
that keep the competition at bay (Cheon, Lackner and Urpelainen, 2015) .
Imitation Risk
Resources that are considered as hard to imitate as they are also considered as the
extremely expensive for the other organisation to acquire them. It is those resources that are
considered as the hard for the company and also imitate as it is protected by the legal means that
is patent, trademark. These are considered as the competitive advantage if they are valuable, rare
and hard to imitate. British Petroleum is having the price strategies that is often matched by the
competitors. Presently most of the industries are facing the increasing threats of disruption
(Lange and Kinyondo, 2016). As per the data of British Petroleum it is being seems that the core
differentiation of the imd521 imd519 is very difficult to imitate. On the broader scale, imitation
of the products can be happen in two ways that is the duplication of products in the organisation
and from its competitors is being coming up with the substitute products that can disrupt the
present structure of the company (Comyns and Figge, 2015).
Organisation Competence
It measures that how much to make most of the resources. It measures how much the company is
being able to harness the valuable rare and as well as difficult to imitate the resources in the
market place. The analysis of the exploitation level can be done through two prospectives that is
as the British petroleum is able to exploit the full potential of their resources and still they are
having lot of upside (Abdelrehim, Maltby and Toms, 2015). Mostly the exploitation level is
highly depended on the team execution as well as on the execution strategy of the firm.
Exploitation level is considered as the good barometer to assess the quality of human resources
in the organisation. Their capabilities is also tended to arise and expand on over the time as the
firm can take actions that is build on their strategic resources (Cheon, Lackner and Urpelainen,
2015).
4). Describe the commentary of macro, micro and internal environment that can identify
strength, weakness and threat, opportunities which useful for decision making.
SWOT analysis is the most useful tool for British Petroleum that can understand the
market trends and competitors in proper manner. This will help for organization to identify their
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strength and weakness for decision making. It will help for identifying the competitors and other
type of threats generated during the business operations and functions.
Strength
British Petroleum is third largest organization in terms of energy resources that provide the oil or
fuel in the different countries. It is one of the common strength of British petroleum is good
performance in terms of energy industry (Whittington, 2019). BP has strongest brand
management procedure that easily maintain their overall operations in effective manner. It also
increased the rate of profit of 80% due to the price of fuel.
Weakness
The organization fall in terms of gas and crude oil production because of increasing the
demand. in this way, it has been increased the prices. Sometimes, it occurs the hazards condition
due to waste of dumping, leakage of raw materials. It also increases threats to the demand from
the public. There are different types of tragedies which occur to the British Petroleum such as
Explosion in the Gulf that will create negative image in the market.
Opportunities
The price of fuel must be changes at quickly and also increase the production of different
vehicles in the world and definitely raise the demand and supply. It directly impacts on the
British petroleum to develop opportunities for increasing the production and sales in global
marketplace (Selvaseelan, 2018). The organization should find more and more resources so that
they can reserves. It will gran the opportunity to expand their export due to increase the rate of
population in different countries such as China and so on.
Threat
It is one of the most common threat to increase the regulation on environmental which
will impose the pressure on the industry. In this way, they can design the eco-friendly which
increase the cost of production and reduce the profit rate (Whittington, 2019). On the other hand,
Natural disaster is also another important threat in oil and fuel industry that can destroy the entire
production. For Example- Hurricane Katrina is a type of disaster that increase the cost of oil due
to the lack of demands. The Sudden change in policy may decrease the profitability and
productivity of Oil industry.
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PART 2
REFLECTIVE REPORT
Benefits and impacts of Porter's 5 forces
British petroleum is a multinational oil and gas company so it serves its services
worldwide. It is important for this company to analyze all its external factors or competition
factors and stakeholder analysis that can have impacts on its performance and competition
situation. There are mainly 5 forces that will show the way that how external competitive forces
are acting on British petroleum company in order to affect its operations in the market.
Bargaining power of suppliers: In the context of suppliers it is identified that it includes
various suppliers from oil field, the engineers and other technicians that all work on it and its
project. I can say that suppliers have more power of bargaining and decrease the profit margin
that the company can earn from customers. They have more power to raise input prices & the
overall cost of the industry. As per my view, it is important for the company to make an effective
relationship and treat suppliers as a business partner to take competitive advantages.
Bargaining power of buyers: Consumers and buyers have more ability to decrease and
increase the prices of products and services. I have found out that the prices of oil in this industry
are all depends upon the global demand. Countries as customers like China, Japan and USA can
decrease the profit margin and bargain with British Petroleum Company. I have also analysed
that consumers can switch to another oil supplier according to their requirements and prices of
the products. SO it can be said that the company requires developing a good brand relationship
with customers.
Threats of substitutes: Substitute means the product and services that have the same
characteristics and features and have the ability to satisfy customer’s needs. I have analysed that
there are some products like bio fuels and other renewable resources that can be substitutes in
this oil industry. This threat is moderate because British petroleum company is a brand and
focusing on development. On the other hand government policies that can decrease & oppose the
use of fossil fuel is also a threat for this company. So as per my view, this company requires
focusing on satisfying environmental needs.
Threat of new entrants: I have analysed from research that this industry is attractive and
can earn more profits but on the other hand this is complex to enter in this industry. It has to face
several barriers as it is a wide range of industry so there is a less threat of new entrants. New
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entrants need to invest more so if they have strong financial stability that time only they can
think to enter. So there is no issue and no need to think about this factor.
Industry rivalry: From marketing I analysed that there are several competitors of British
Petroleum like Petro China, OMP, Shel, etc. All these companies have different features like
some has product differentiation, some have effective pricing and also have big share in the
market. This threat is high for British Petroleum Company so I can suggest that it should more
focus on pricing strategy, differentiation strategy and other strategies that can make it able to
take competitive advantages.
After completion of report I evaluated my performance and analysed that how resource
audit is used and what it reflects in context of company. It is tool which enables in analysing the
overall firm competency which include resources, skills, capabilities and core competency. Also,
with help of this I will be able to determine any firm or organisation internal analysis. It
benefited me in getting an overview about British Petroleum. So, it was easy for me to use this
model and segregate firm competency.
Stakeholder mapping was used by me to find out the core stakeholders of firm. I used this
tool because it was difficult for me to analyse stakeholders of firm. As British Petroleum is large
company so there are many stakeholders engaged with them. I categorised them into four to get
in depth knowledge on their interest and influence on organisation.
Now, I know about how to conduct audit of firm and what model is to be used. So, in
future I can easily find out a company stakeholder interest and their influence by using
stakeholder mapping. This will help in conducting research and getting in depth knowledge
about any business. Apart from it, I can use this framework in doing my personal audit as well. It
will help in my personal growth and development. Moreover, I concluded that the main benefit
of resource is it helps in identifying firm core resources through which they have gained
competitive advantage. Also, what capabilities they possess and what type of skilled workforce
is used by them is overviewed. The benefit of stakeholder mapping is it helps in finding out who
are the groups that impact on organisation. Furthermore, it analyse how groups influence on
decision making. Thus, it is easy to identify those groups with it. In modern world it is essential
to identify stakeholder so that their impact can be analyzed. Alongside it, I realised that with
such as complex business environment firm there is a high impact on firm growth. Hence,
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stakeholder takes decision regarding it. So, it can be simply evaluated which group influence is
high and low.
I learned in this course that British Petroleum main stakeholders are government, people,
employees, etc. In this government plays a crucial role. They take major decisions. I also got to
know that company main resources are infrastructure. They are having highly skilled work force.
Moreover, people interest is highly taken into consideration. This is because it is public limited
company. Along with it, I learned a lot of more things related to business environment like how
external and internal factors are related to each other. Other than this, how British Petroleum is
controlled and regulated by government policies. Therefore, it gave me insight about role of
stakeholder in decision making.
CONCLUSION
From the above study, it has been summarized that Business environment is an important
part of the organisation and its success. Business environment consists of various factors which
are divided into 2 parts – internal factors and external factors. Analysis of these factors are very
important for the company as it helps organisation to get to know about the positive and negative
impact of the factors on their activities. Environmental analysis are done by various tools which
are as follows – SWOT analysis, Pestle analysis, Porter's 5 forces model, resources audit and
stakeholder mapping etc. These all analysis tools helps company to know about the
environmental factors, their strengths, weaknesses, opportunities, threats, their resources,
capabilities & core competencies and their stakeholders & impact of their perceptions on
business. If any of these are affecting the business in negative ways, they will immediately take
actions to reduce it. And if any of the factor affects the organisation in positive way, company
will try to take actions accordingly in order to increase their impact on the business.
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REFERENCES
Book and Journals
Abdelrehim, N., Maltby, J. and Toms, S., 2015. Narrative reporting and crises: British Petroleum
and Shell, 1950–1958. Accounting History. 20(2). pp.138-157.
Anderson Jr, I.H., 2015. The Standard-Vacuum Oil Company and United States East Asian
Policy, 1933-1941 (Vol. 1315). Princeton University Press.
Anton, R., 2015. An Integrated Strategy Framework (ISF) for Combining Porter's 5-Forces,
Diamond, PESTEL, and SWOT Analysis.
Carpenter, A. and Wagner, M., 2019. Environmental justice in the oil refinery industry: A panel
analysis across United States counties. Ecological economics. 159. pp.101-109.
Cheon, A., Lackner, M. and Urpelainen, J., 2015. Instruments of political control: National oil
companies, oil prices, and petroleum subsidies. Comparative Political Studies. 48(3).
pp.370-402.
Comyns, B. and Figge, F., 2015. Greenhouse gas reporting quality in the oil and gas industry: A
longitudinal study using the typology of “search”,“experience” and “credence”
information. Accounting, Auditing & Accountability Journal. 28(3). pp.403-433.
Lange, S. and Kinyondo, A., 2016. Resource nationalism and local content in Tanzania:
experiences from mining and consequences for the petroleum sector. The Extractive
Industries and Society. 3(4). pp.1095-1104.
Larkin, P., Gracie, R. and Krewski, D., 2018. Ensuring health and environmental protection in
hydraulic fracturing: A focus on British Columbia and Alberta, Canada. The Extractive
Industries and Society. 5(4). pp.581-595.
McKain, K., and et.al., 2015. Methane emissions from natural gas infrastructure and use in the
urban region of Boston, Massachusetts. Proceedings of the National Academy of
Sciences. 112(7). pp.1941-1946.
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Phillips, P. and Moutinho, L., 2018. Strategic analysis. In Contemporary Issues in Strategic
Management. (pp. 46-79). Routledge.
Selvaseelan, J., 2018. Development and Introduction of the Risk-Sentience Auxiliary Framework
(RSAF) as an Enabler to the ISO 31000 and ISO 31010 for High-Risk
Environments. Administrative Sciences. 8(2). p.22.
SHTAL, T.V., and et.al., 2018. Methods of analysis of the external environment of business
activities. Revista ESPACIOS. 39(12).
Whittington, R., 2019. Opening Strategy: Professional Strategists and Practice Change, 1960 to
Today. Oxford University Press.
Online
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<https://www.business-to-you.com/scanning-the-environment-pestel-analysis/>
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