Internal Analysis of British Petroleum for Strategic Management

This report provides an internal analysis of British Petroleum (BP) to determine its strategic capabilities. It includes the use of SWOT analysis, VRIO framework, and Porter's value chain model. The analysis reveals BP's strengths, weaknesses, opportunities, and threats, as well as its unique resources and competences. The report concludes with recommendations for BP to sustain its competitive advantage.

STRATEGIC MANAGEMENT

Table of Contents
Table of Contents........................................................................................................................................2
INTRODUCTION.......................................................................................................................................3
MAIN BODY..............................................................................................................................................3
Internal analysis to determine strategic abilities of BP............................................................................3
Threshold resources and competence......................................................................................................8
Unique resource and competences...........................................................................................................8
Evaluation of 3 tools................................................................................................................................8
CONCLUSION.........................................................................................................................................10
REFERENCES..........................................................................................................................................11
Appendix 1 SWOT analysis..................................................................................................................13
Appendix 2 VRIO..................................................................................................................................13
Appendix 3 Core competency................................................................................................................13

INTRODUCTION
Strategic management is the monitoring, ongoing planning, and analysis of all essential
things for companies to meet their objectives and goals. The current report is based on British
Petroleum, is a world’s biggest gas and oil firm with headquarter in UK. It has operations in
about 80 nations, which produces equivalent or closely to 3.8 million barrels of oil every day and
operate nearly 22,400 services stations in across the world. This study explains strategic abilities
of chosen company by conducting internal analysis with the help of using three models.
MAIN BODY
Internal analysis to determine strategic abilities of BP
Here, internal analysis in context of British Petroleum will conducted with the help of
using three effective tools or models, in order to determine the strategic capabilities of company.
Internal analysis is defined as exploration of chosen organization’s competency, competitive
viability and cost position in marketplace. Conducting this process often incorporates measures
that cater useful data about firm, strength, weaknesses, opportunities & threats. There are three
different types of internal analysis models or tools use to analyze capabilities of chosen firm,
following are;
Definition of internal analysis and strategic capabilities-
Strategic abilities refer to a company capability to harness all their skills, resources and
other this in order to achieve business aim and gain competitive advantages within specific sector
(Huikkola and Kohtamäki, 2017). While internal analysis means considering at factors within
internal environment of business such as strengths, weakness, opportunities and other that impact
on decision making.
SWOT analysis-
It is strategic planning technique or method that can used to help a company and
contribute in analyzing their business as well as management capabilities. Here, it is used in
regard to British petroleum (Sevillano and et.al., 2020).

Strengths-
Effective management activities-
BP is multinational gas & oil firm, based in London (Kanso, Nelson and Kitchen, 2019).
It is one of the four largest oil and gas organizations in the world, in terms of revenue with
market cap of 108.50 billion. The strength of this company is its effective management, they has
a number of subsidiaries as well as retail brands that include ARCO, BP connect, Travel centre,
ARCO and British petroleum express, PM Burmah Castrol etc. which cater firm with a
diversified revenue portfolio more than basically relying on their power business.
Strong performance capability-
This organization had strong operational performance that helps to gain competitive
advantages. It is working towards, positioning firm for new oil price scenario. There is direct
focus on costs, discipline and efficiency in capital spending. BP is able to work extensively to
rebuild their brand image in market and wake of current accidents by executives including a full
on focus on CSR and transparency as well as more thoughtful interactions.
Weaknesses-
Dishonesty and lack of management skills-
Oil spills are a concern of BP, as they face same difficult situation like other gas
companies in UK throughout Torrey canyon disaster, which led to significant environmental
change and fatalities around the world. The executives of organization were dishonest and
ineffectively handled these disasters, that further tarnished brand image and led to massive fines,
penalties and costs to assist those field that were destroyed. It defines organization weakness that
directly impact on its productivity and profitability negatively.
Lack of execution-
Company had closed some oil wells, leading to certain layoffs, which have occurred in
bad economic cycles, furthering business position that BP is greedy and uncaring (Tomlinson,
2017).

Opportunities-
Investment in research activities-
By grabbing the opportunities available in marketplace, British Petroleum can increase
their productivity and profit margin as well. Firm has power of becoming a market leader in
many alternatives energy and fuel markets. By investing in research activities and repositioning
their business strategies, BP will get the opportunity to become market leader, these market
changes include solar, hydrogen and wind.
Global expansion-
Along with above thing, business expansion into geographic territories is another
opportunity for company that helps to gain competitive benefits. British Petroleum has chance to
partners with some nations in developing conditions for infrastructure problems in order to take
step towards use of clean energy options, move for positioning their brand around environmental
and innovation accountability (Amernic and Craig, 2017).
Threats-
Intense competitive-
High competitive environment posse’s threat for BP, it affects its business performance
and operational efficiencies (Vassiliou, 2018). It put pressure on company to make changes in
their existing business plans and activities, which require more investment. They face
competition from emergence of particular alternatives energy firms that are providing
affordability and technology to encourage greater relocation away from reliance on fossil fuels,
which will decrease British Petroleum consumer base rather than before.
Porter’s Value chain model-
It is one of the best model can use for BP to identify their internal strength and weakness
(Nagy and et.al., 2018). It includes five primary activities, following are-
A) Primary activities-

 Inbound logistics- British petroleum inbound logistics define its abilities and
capabilities, including storing inputs and components to start manufacture process.
 Operations- Organization always focus on their production activities, which is quite
beneficial in term of increasing profit margin and productivity level.
 Outbound logistics- It includes actions that deliver goods to consumers by passing
through various intermediaries. British Petroleum optimizes and analyzes their outbound
logistics to explore competitive benefit source. Within company, outbound activities are
effectively and timely managed with optimal costs that effect on quality.
 Marketing and sales- Marketing department of BP help to generate brand awareness in
marketplace, they are able to provide many benefits such as aid to increase profit margin
and generate more revenue. Some examples of company marketing as well as sales
activities are sales force, pricing, advertising, building relations with channel members
and promotional activities (Charles, 2019).
 Services- Post and Pre-sales services offered by company will play vital role in
developing consumer loyalty. BP analyze their support activities in order to avoid
damaging brand positioning & reputation, instead utilize it as a tool to spread good word
of mouth due to timely, efficient and quick support services.
B) Secondary activities-
 Firm infrastructure- It denotes several of activities, such as legal matters handling,
planning, quality management and accounting. British Petroleum is capable to optimize
value of whole value chain; the best infrastructure management controls every activity to
strengthen competitive position of firm in market.
 Human resource management- HRM is one of the most important and effective
department in BP, they are able to hire, recruits and trained all workers. Human resource
management helps to strengthen brand image in marketplace and also support to build
strong workforce by applying various techniques & strategies.

 Technology development- British petroleum is capable to invest in technology
development, which increase its operational efficiencies rather than before and in return
increase profitability. Technological integration in distribution, HR activities, production
and marketing requires firm to consider importance of technology development (Yu,
Román and Solvang, 2018).
 Procurement- British Petroleum is able to purchase inputs which may range from
machinery, supplies, equipments and other items essential for offering finished services
or products. Organization considers their procurement activities effectively to optimize
operational, outbound and inbound chain. Firm highlights areas where value will be
added, differentiation basis will be set, cost efficiency can be achieved or procedures will
be optimized. Firm is effectively refining or converting crude oil into finished goods.
VRIO –
It uncovers sustained competitive benefits, it is an acronym for key questions' framework
of value, rarity, Imitability and organization.
Valuable-
In context of British petroleum, company has a strong worldwide presence that is
significantly valuable for them. They attempt to expand their business size, piece and deals of
overall sector. It is a sustainable and competitive method to obtain incomes from new and current
consumers.
Rare-
Growth and performance of company is rare, it is one of the greatest firm all inclusive.
BP made a distinct name for their offers and quality. Other companies also offer various goods
that are provided by British petroleum, which means that it is not rare asset for them. This is
because other firms also have access to similar services or goods as well as portfolio. BP is
contemporary brand name that had a premium touch to it & in modern and upscale. Most other
organizations and competing brands, does not have packaging and quality to urge consumers to
engage in way they do with BP.

Inimitable-
British petroleum continued investment in research and development as it permit them to
generate ideas for new goods and test that new services in limited market setting. It allow firm to
assess viability of new thoughts and generate feedback for betterment where needed. It is an
inimitable asset for BP because it has become essential part of organizational culture and system.
Innovation at firm in an inimitable resource that permits business at stay ahead of high
competition & maintain leadership in their sector by having first mover benefits in its product
portfolio continuously.
Organization-
BP policies and business process organized to help exploitation of their rare, costly and
valuable to imitate assets. The organizational structure and policies are rare as there are other
major players like Dolphin energy that have rare and valuable organizational policies as well as
structure. They are able to use technology to find oil reserves where the amount of oil is more
than the other places. On the other hand, firm is unable to get geographic access to market.
Threshold resources and competence
British Petroleum for increasing their consumer services operation utilized varied types
of techniques and followed tactics. Above utilized tools like SWOT analysis is quite effective in
context of BP because it help organization to get aware about several opportunities and generate
awareness about market threats that put negative impact on business growth.
Unique resource and competences
By using Value chain analysis, it has been identified that effective management and
appropriate styles is one of the most important resource of company as well as strength that help
them to manage business operations and enhance their efficiencies even better. Human resource
management is another resource for company, they take part in exemplified HRM in all their
function, from hiring to training of talent management. It will allow firm to develop an
inimitable asset which is aligned with mission, vision and goals of organization and that is
synonymous to BP itself. With the help of using appropriate and effective management styles
manager can drive workers towards success and by working appropriately employees help to
achieve competitive advantaged for company.

Evaluation of 3 tools
As discussed above, SWOT, VRIO and porter’s value chain analysis has been used in context of
BP.
Tools Benefits Limitations
SWOT analysis It help to determine weakness
of company and allow
management to make further
plan to overcome it in effective
manner (Phadermrod,
Crowder and Wills, 2019).
This model is limited as it does
not priorities problems and
would not cater any solutions
(Gürel and Tat, 2017).
Porter value chain model It aid break down all
management practice or
business actions that go into
manufacturing of services and
products and comprehending
areas of cost savings (Ruan,
2020).
The format of this tool is
heavily oriented to
manufacturing companies and
tone can be off-putting for
other kind of firms (Rosa,
Sassanelli and Terzi, 2019).
VRIO The best thing about this
model is that it is easy to use
and help to determine unused
competitive benefits that
company can further transform
into sustained advantages
(Indartono and Wibowo,
2017).
On the other hand, it is quite
complex to apply to smaller
companies.
Analysis interpretation-
From above analysis it has been identified that British Petroleum by focusing on their
management activities and business functions working in effective manner. But due to intense

competition level they face specific strategic issue and face problem to keep at top. After using
internal analysis models such as SWOT analysis, VRIO and value chain model in context of BP,
it has been determined that company is capable to manage their business operations effectively.
The high competitive environment threaten firm, but they can manage each and every activity
with strong workforce.
CONCLUSION
From above analysis, it has been concluded that BP is capable to sustain within
marketplace for longer, as they can satisfy consumer’s needs and manage value chain activities
in effective manner. Furthermore, it has been analyzed that British petroleum has to be more
innovative to bring out technology; they seek to invest for installation and implementation of
new systems that is beneficial for business growth. Organization is slowly becoming to be a CSR
firm because they have reached set aim very before and had gained a good benefit from doing so.

REFERENCES
Book and Journals
Amernic, J. and Craig, R., 2017. CEO speeches and safety culture: British Petroleum before the
Deepwater Horizon disaster. Critical perspectives on accounting. 47. pp.61-80.
Chaplinsky, S., Lynch, L.J. and Doherty, P., 2017. British Petroleum, Ltd. Darden Business
Publishing Cases.
Charles, D., 2019. Enhancing and Capturing More Value from the Caribbean Community’s
Value Chains. Cambridge Scholars Publishing.
Gürel, E. and Tat, M., 2017. SWOT analysis: a theoretical review. Journal of International
Social Research. 10(51).
Huikkola, T. and Kohtamäki, M., 2017. Solution providers’ strategic capabilities. Journal of
Business & Industrial Marketing.
Indartono, S. and Wibowo, F.W., 2017. VRIO and THES based development of university
competitive advantage model in formulating university strategic plan. International
Information Institute (Tokyo). Information, 20(10A), pp.7275-7283.
Kanso, A.M., Nelson, R.A. and Kitchen, P.J., 2019. BP and the Deepwater Horizon oil spill: A
case study of how company management employed public relations to restore a damaged
brand. Journal of Marketing Communications. pp.1-29.
Nagy, J and et.al., 2018. The role and impact of Industry 4.0 and the internet of things on the
business strategy of the value chain—the case of Hungary. Sustainability. 10(10).
p.3491.
Phadermrod, B., Crowder, R.M. and Wills, G.B., 2019. Importance-performance analysis based
SWOT analysis. International Journal of Information Management. 44. pp.194-203.
Rosa, P., Sassanelli, C. and Terzi, S., 2019. Circular Business Models versus circular benefits:
An assessment in the waste from Electrical and Electronic Equipments sector. Journal of
cleaner production. 231. pp.940-952.
Ruan, S., 2020, April. Research on Strategic Cost Management of Enterprises Based on Porter’s
Value Chain Model. In Journal of Physics: Conference Series (Vol. 1533, No. 2, p.
022056). IOP Publishing.
Sevillano, D and et.al., 2020. Definition of internal target volumes based on planar X‐ray
fluoroscopic images for lung and hepatic stereotactic body radiation therapy.
Comparison to inhale/exhale CT technique. Journal of Applied Clinical Medical
Physics.
Tomlinson, K., 2017. Oil and gas companies and the management of social and environmental
impacts and issues. Extractive Industries. p.422.

Vassiliou, M.S., 2018. Historical dictionary of the petroleum industry. Rowman & Littlefield.
Yu, H., Román, E. and Solvang, W.D., 2018. A value chain analysis for bioenergy production
from biomass and biodegradable waste: a case study in Northern Norway. Energy
Systems and Environment. p.183.

Appendix 1 SWOT analysis
Strengths Weaknesses
 Effective management activities
 Strong performance capability
 Dishonesty
 Lack of execution
Opportunities Threat
 Investment in research activities
 Global expansion
 Competitive environment
Appendix 2 VRIO

Appendix 3 Core competency