BP's Business and Environmental Impacts

This assignment delves into British Petroleum's (BP) multifaceted operations and their implications. It examines BP's strategic decisions in the upstream sector, its economic contributions to the UK, and the environmental consequences of its activities, including the Deepwater Horizon disaster. Furthermore, the analysis explores BP's response to Brexit and its investments in renewable energy sources.

Report And Reflective Report: Case
Study Analysis

Table of Contents
INTRODUCTION...........................................................................................................................3
SECTION 1......................................................................................................................................3
SECTION 2......................................................................................................................................5
SECTION 3......................................................................................................................................6
SECTION 4....................................................................................................................................10
RECOMMENDATION.................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment is a combination of internal and external environment in which
company operates their business. All the aspects of environment are directly linked with the
performance of an organisation that's why they have to make their strategies accordingly. For
this report, British Petroleum PLC is taken for discussion which is multinational oil and gas
company in the world and deals in natural gas, petroleum, aviation fuels etc. (Our History,
2019). Macro environment would be analysed with the help of Pestle framework so that driving
factors or which influences performance would be identified. Moreover, to scan internal
environment, SWOT analysis would be done on pan organisations and how it will affect their
decision making. Petroleum industry would be analysis by using porters give forces model and to
identify current status of company, VRIO will be done. At last, reflective report will be produced
for the whole report.
SECTION 1
British Petroleum formerly owned by the government only but after after privatised the
company in 1987 due to which they merged with the Amoco in 1998 and become of the largest
exporter of oil and gas in the world.
All the business operation in an organisation is conducted under the environment which
is divided into two aspects i.e., internal and external environment. External factors can not be
modified or controlled by the single organisation as it is uncontrollable in nature. So it must be
essential for them to analyse and monitor it regularly and then make the marketing activities and
strategies accordingly. To conduct external analysis of British Petroleum, Pestle analysis will be
used which is explained below with functional example of it,
 Political environment: Policies of the UK government has a direct effect on the growth
and development of the oil and gas industry due to the sensitiveness of demand and
supply relationship. Before the news of Brexit, BP has the potential and power of
conducting their business in various countries of European union like Denmark, Austria,
France etc. But after that, rules and regulation regarding supply of oil and gas would be
changed due to which negative impact would be generated on BP. Besides this electricity
and gas bills will be increased due to which BP profitability would be affected negatively
(Brexit and the UK oil and gas industry, 2019) On the other hand, due to closeness

between the UK government, BP has been able to grab 10 billion dollars deal with the
Russian government due to which shares and trust of the investors are increasing
significantly (BP's close ties with the UK government, 2019).
 Economical environment: Economic condition of the UK is been hampered due to
fluctuation in the GBP due to which companies like BP has been suffering negatively
from past many years (How does Brexit affect the pound?, 2019). But oppositely,
increase in inflation rate of UK to its highest, crude oil price is also increasing which is
positive sign for companies profitability in the future (UK inflation hits six-month high of
2.7%, 2019).
 Sociological environment: BP has been able to enhance the living standard of the people
and employees associated with them. For instance, BP has paid 1.7 billion dollars of
dividend to their employees due to which company image in the mind of the customers
are getting stronger (BP's impact on the UK economy in 2017, 2019). On the other side,
rise in global warming and depletion of natural resources has affect their goodwill
negatively as spill in gulf of Mexico has killed thousands of Kemp Ridley sea turtles
which comes under the most endangers species in the world (BP spill damaged the
environment, 2019).
 Technological environment: It has positive impact on the BP working operations as
with advanced technology like Big data and latest technology, BP would be able explore
more than 120,000 barrels of oil on regular basis. Moreover, it also works in the climate
like storm which has 40 meters wave. Along with this, BP has saved 7 billion dollar by
predicting the future climate (BP looks to big data to help weather weak oil price, 2019)
 Legal environment: It is essential for company to comply with rules and regulations as
various legal issues could be faced by them then. For instance, due to oil and pollution
act, British Petroleum has paid 12.6 billion dollar to countries and companies due to
which their balance sheet has affected negatively (Deepwater Horizon costs total $62B,
2019). But on the other side, BP has been able to cope up with all the rules and regulation
of employees due to which their retention rate are higher as compare to other companies.
For instance, they spend 3300 dollar per employees in a year to make the environment
healthy and friendly (BP at a glance, 2018).

 Environmental environment: Oil and gas companies have to take extra care in
protecting the environment as they are extracting natural resources from the sea. This
factor has affected the BP negatively as company has paid more than 18.7 billion dollar
to four states due to spill of oil in the shore which leads to killing of thousands of flaura
and fauna. Besides this, half of the dolphin in the sea has sickened by lung disease which
is a negative sign for future generations (largest environmental fine in US history for Gulf
oil spill, 2019) To compensate this, BP has been active towards the goal of enhancement
of the society as they have avoided 2.9 million tonnes of CO2 in 2017. Besides this, BP
has generated electricity through their wind plant to power more than 400,000 homes
(Renewable energy, 2019).
SECTION 2
It is essential for every company to assess the power of the stakeholders as strategies of
an organisation is made accordingly (Aithal, 2016). Porters five forces model is used to analyse
the industry trends and situations which is explained below by taking gas and oil industry.
 Bargaining power of supplier: All the raw materials which is required by BP to operate
their business is numerous in number. So companies like BP has specific number of
suppliers due to which power divided equally. Apart from this, BP plc is vertically
integrated business which means that raw materials are also done by them only.
Bargaining power of supplier is moderate in nature.
 Bargaining power of consumers: Price of the oil is directly proportionate to the demand
of it. So in this industry, consumers are the country who import oil to satisfy their needs
and demands. Big countries like USA, UK, India, China, Africa etc has more bargaining
power as they are price sensitive in nature. So they can switch their vendors according to
their price and demand. So higher power is in the hands of consumers only (Prajogo,
2016).
 Threat of substitute: There are wide varieties of product which could be substitute with
the oil like biofuel, biodegradable materials, wind and solar energy, electricity etc. So it
can be said that threat of substitute is high in power as people are now start using cleaner
energy which will have a negative impact on BP business.
 Competitive rivalry: There are large number of competitors in the oil and gas industry
like Anglo Persian oil company, gulf oil, chevron, Esso, Exxonmobil etc. Competition is

based on the cost of the product as customers are highly price sensitive in nature.
Competitive rivalry is high in power as all the companies are investing in enhancing their
technology capabilities with the aim of decreasing production cost (Hillary, 2017).
 Threat of new entrants: Oil and gas industry is the most attractive industry in the
market as there are high profit margin which makes it competitive also. But due to high
number of barriers like government permission, compliance with legislation, cost of
investment etc threat of entrants become low in power. So it can be said that threat of
substitute is lower in oil industry.
SECTION 3
Organisation strategy is linked with the strategies they are planning to introduce in to
their working operations. So it is essential for company to know about their resources and
capabilities which is elaborated below with the help of Vrio analysis,
Factors Valuable Rare Imitable Organisation Benefits
Resource Company has
more than
70000
employees
working in
more than 70
countries.
British
Petroleum
employees are
highly
dedicated
towards their
work as
company is
spending more
than 3300
It is not rare in
nature as other
companies can
also copy their
strategies to
motivate their
employees to
work harder.
- - Competitive
equality

dollar on
single
employee
every year so
that proper
skills and
knowledge
would be
inculcate in
them. So It
can be said
that employees
are valuable
for BP (Bah,
and Fang,
2015).
Skills BP has
incorporated
big data in to
their business
operations
which is
valuable in
nature as they
have saved
more than 7
billion dollar
till now.
It is rare in
nature as no
other
companies are
using big data
to predict the
climatic
conditions and
then run their
operations
accordingly.
It is not
imitable in
nature as after
sometime
other
companies can
also copy the
technology to
predict the
climate.
- Temporary
competitive
advantage
Capabilities BP has the
capability of
It is rare in
nature as no
It is not
imitable in a
BP has not
been able to
Unused
competitive

extracting
120,000
barrels of oil
per day due to
their latest
technology
they use to run
their
operations.
Besides this,
cost of the
production is
less as
compare to
other
companies in
the same
industry
(Saleem,
2015).
other company
is extracting
the oil in such
low
production
cost.
shorter period
of time as high
amount of
investment is
required to
bring
advanced
technology
into the
operations.
use this
capabilities as
high losses
due to spill of
oil is
compensating
the benefits of
it.
advantage
Core
competencies
BP is one of
the largest
producer of oil
and gas in the
world.
Moreover they
are also
investing in
cleaner energy
so that
institutional
It is rare in
nature as no
other country
has the same
goodwill as
British
Petroleum.
It is imitable
in nature as
goodwill is
made in the
mind of
customer
which can not
changed
easily.
BP is capable
of handling
their brand
image as that's
why they have
been able to
run their
business for so
long.
Long term
competitive
advantage

risk would be
reduced. So it
can be said
that company
brand image is
valuable in
nature.

SECTION 4
By using SWOT framework, internal environment of the company is analysed and
monitor as it assist them to make their strategies accordingly. SWOT analysis on British
Petroleum is explained below,
STRENGTHS
 British petroleum has various
subsidiaries like Amoco, BP express,
ARCO etc all over world which assist
them to maintain their brand awareness
in the market.
 BP is now entering in to green energy
field as they have start their production
in wind energy, solar energy, biofuels
etc which reduce their organisational
risk in the market (Alternative energy,
2019).
WEAKNESS
 BP has negative image in the market as
they are affecting environment in a
negative way by spilling oil in the gulf.
So company have to make their
decision of drilling according to their
own capabilities (Erasmus, Strydom
and Rudansky-Kloppers, 2016).
 Due to weak economic conditions, BP
has announced 3% job cuts in upstream
department which is attracting lots of
criticism from government and
employees (BP to cut 3 percent of its
upstream workforce, 2019). So BP role
is to now hire employees according to
the demand and supply as lay-off
affects company image in a negative
way.
OPPORTUNITY
 BP has the alternative of making their
position in the cleaner energy as after
Europe largest solar panels plant,
company is now planning to enter into
Brazil region which is a positive sign
for their balance sheet (Lightsource BP,
2019).
THREAT
 Due to depletion of natural resources,
company are now changing their
business in to green energy. Due to this,
company revenue might get hampered
in the future. BP main focus should be
to enter into renewal energy because at
some point of time, natural resources

 BP has enter in to battery industry as
they largest public charging facilities
have been open in Milton Keynes.
From this, company can expand their
business in the field of battery so that
more market share would be attracted
thus getting revenue from different
sources also (largest public rapid
charging hub, 2019).
would get ended (Kolk, 2016).
Reflective Report
As per my point of view, Business environment encompasses the internal and external
factors and it is dynamic in nature. It enable the company to identify business opportunities in
order to expand the business operation and can overcome the threat or challenges effectively.
From the company context, I think that business environment help them to implement effective
decision for attainment of high profitability and productivity. Along with this it help company to
control over economic, political , social factors which impact positively or negatively on
company's image ((Hair Jr and et. al., 2015). In order to analyse or evaluate business factors, I
think that company can apply SWOT and PESTLE analysis, VRIO and Porter's five force model
. SWOT analysis helps the company to understand the internal factors which impact the overall
performance of company. From the context of company, I believes that SWOT analysis is an
important part which identify the potentiality of employees as well as firm so that they can work
together in the same areas. Furthermore, SWOT analysis can eliminate internal weakness by
assigning company resources to fix the problems in order to attain high level of profit
maximisation. In this competitive world, company should have effective strategies or tactics to
overcome or tackle the business issues and can capture the market effectively and efficiently. Its
a big failure if company avoids or ignore the internal factors then it lead to poor business
decisions. During the case study I realised that SWOT analysis helps the company to take
effective and productive decision which enable them to make grater profit. From the company
context, I think it is important to evaluate external environment for that applied PESTLE analysis

i.e. it is a strategic planning method to reduce business threat and provide deeper understanding
of business business opportunities. As it benefits the company in many ways such as reduce cost,
deeper understanding of business environment, create awareness of potential threat in order to
stand firmly among competitors. From the company context, I think it build an opportunity to
build market campaign among competitor and gives the opportunity to expand the business
across the globe. While, doing an analysis, I realised that it is proactive steps to considered five
forces of porter model, which is used to ascertain internal capabilities or competitive advantages
for British petroleum in order to ascertain a kind of forced act to build business continuity for a
longer period of time. I personally gone through analysis or ascertaining supplier's for this
leading along with the their impacts on business performance. I realised that the supplier's has
lack of interest, while dealing with the British petroleum, this is because of fluctuation in prices
and cost components. Supplier's have lack of confidence while dealing with British petroleum
for a future period of time. I also realised that, due to rise in prices of a crude oil, peoples ability
to consume oil has been decreased along with decreasing growth to the business operations. In
this context, I also noticed that, increasing competitor's or rivalries will be major threat for BPO
to tackle and also overcome with a long usage of strategic planning or control measure to gather
a good and proper results in a given period of time. I put down in information that use of CNG is
a replacements of the petroleum products and of which usage are also increasing on which
control measures are most necessary to build outcomes in an accordance to it. I also have
undergone resources audit to know what sort of the resources such as man, manpower, material
etc., can be utilises to led an effective production process in a given productive level or stage of
operating business regulation, I also realised that resources like manpower needs skills and
competencies to undergone production of an final output to built an effective products for a
longer period of time.
Also, I realised that, it is necessary to led an effective regulation of resources capabilities
and also building core competencies to establishes production outcomes to accomplish strength
for a market position. Also, I gone through shareholder's mapping to identify what all sort of the
stakeholders are their in business functioning of the BP and how can it be accomplished to build
growth to business process or functioning for a future time period. Also, stakeholder mapping
has made me to gather about an information on how stakeholders and behaviour acts in a certain
ways. Lastly, I also gone through complete analysis of major theories which are highly necessary

business from front position or line of an operations. This will benefits me to gather a wide of an
information which is required to gather outcomes for business in given period of time.
RECOMMENDATION
 British petroleum should try to invest more in the wind energy as it is more cheaper as
compare to other source of power.
 Proper training should be provided to the employees so that no other incidence of spill oil
would be highlight in the future.
 BP should try to clean the water they have deteriorated as it will enhance their brand
image in the market which will leads to better profitability in future.

CONCLUSION
From the above mentioned information, it can be summarised that an organisation should
regularly assessing and analysing their internal and external environment as business operations
of the company is directly linked with it. Apart from this, proper analysis of internal capabilities
should be done by companies as it would help to make the strategies according to their strengths
and weakness.

REFERENCES
Books and Journals
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Africa. Journal of Development Economics. 114. pp.159-171.
Erasmus, B., Strydom, J.W. and Rudansky-Kloppers, S. eds., 2016. Introduction to business
management. Oxford University Press Southern Africa.
Hair Jr and et. al., 2015. Essentials of business research methods. Routledge.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
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Prajogo, D. I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics. 171.
pp.241-249.
Saleem, S., 2015. BUSINESS ENVIRONMENT, 3/e. Pearson Education India.
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largest environmental fine in US history for Gulf oil spill. 2019. [Online]. Available Through:
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environmental-fine-in-us-history-for-gulf-oil-spill> (Hair Jr and et. al., 2015)
largest public rapid charging hub. 2019. [Online]. Available Through:
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Lightsource BP. 2019. [Online]. Available Through:
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Our History. 2019. [Online]. Available Through:
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Renewable energy. 2019. [Online]. Available Through:
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UK inflation hits six-month high of 2.7%. 2019. [Online]. Available Through:
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(Hair Jr and et. al., 2015)