Strategic Analysis of British Petroleum: PESTLE, Industry Life Cycle and Value Chain Analysis

This essay provides a strategic analysis of British Petroleum using PESTLE, Industry Life Cycle and Value Chain Analysis. It evaluates the global haulage industry and competitive environment of BP. The PESTLE analysis highlights opportunities and threats of external factors. The Industry Life Cycle analysis shows the growth, maturity and decline stages of the industry. The Value Chain Analysis model by Porter evaluates the primary and support activities of BP.

Analysis of British Petroleum
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Table of content
Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Evaluation of Global Haulage Industry with the help of related frameworks in order to
critically analyse the industry......................................................................................................3
Evaluation of competitive environment of British Petroleum. ..................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
Strategic analysis is basically a process wherein an organisation conducts research of the
business environment of an organisation. It tends to facilitate the strategic planning in order to
facilitate decision making for smooth operations of the organisation. The essay revolves around
the strategic analysis of British Petroleum. British Petroleum is an organisation of the Haulage
industry of the UK. The organisation has been facing several issues in context of supply at
several retail sites and hence few sites have temporarily closed. The reason behind the shut down
was unavailability of unleaded and diesel grades. In order to study the impact of several external
factors, several strategic analysis have been done in context of the organisation (Clarkson, 2019).
The essay will focus upon several strategic analysis approaches like PESTLE analysis, Industry
Life cycle analysis along with the Value Chain Analysis model that has been proposed by Porter.
MAIN BODY
Evaluation of Global Haulage Industry with the help of related frameworks in order to critically
analyse the industry.
PESTLE and SWOT analysis
The PESTLE analysis of Global Haulage industry in context of British Petroleum has
been performed below. The section has further highlighted the opportunities and threats of the
several external factors within the industry that have an impact over the organisation.
OPPORTUNITIES THREAT
POLITICAL  Political opportunity that
British Petroleum has grasp
recently is by its expansion
in post Soviet Union regions
for its future reserves. Also,
in North Sea region it has
made its presence by
increase in its important oil
and gas acquisitions.
 For its benefit, in UK it has
 Political instability posses
great threat to the business
of British Petroleum. Due
to BREXIT there is lot of
instability in movement of
workers and supply chain
involved in it (Anthony,
2019).
 Disruption in global oil
prices can happen any time
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start paying lobby fees so
that they can take care of its
political interest in the
country. Also, it has start
funding political campaigns
of the government in order
to get the political
advantages (Anokhina,
Maksimov and Seredina,
2019).
if there are tensions
between Iran and US. This
can lead to reduce in the
supply of oil and demand
of oil will increase which
will lead to increase in the
prices of oil.
ECONOMIC  Another opportunity that is
available with British
Petroleum is that is has
come out with flexible price
policy system and this
system is not being followed
by its rivals.
 The opportunity that British
Petroleum has grasp is
getting listed on London
Stock Exchange which has
helped in developing the
consumer loyalty towards it
in oil sector.
 Collaboration is an
opportunity to meet out the
demand and supply of
British Petroleum products
in UK. As, supply chain is
getting more options outside
 The threat that British
Petroleum possess is that
due to recession the profit
margins decreased which
resulted in its overall
growth and expansion
strategy.
 When the inflation is high
it results in workers
demanding more wages
and leads to higher
operational cost.
 The loss of revenue has
been felt in both supply
chain and oil industry. This
is due to increase in the
wages of the employees
working in this sector.
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UK.
 Infrastructure quality can be
further developed to
enhance the production in
oil sector and supply chain
infrastructure can also be
improved.
SOCIAL  Their is an opportunity for
BP as the population is
increasing at enormous rate.
So the demand for its oil
products will also increase
in near future (Danish, Blais
and Champagne, 2019).
 Since in oil sector majority
of the workforce that is
working are ageing towards
retirement. So British
Petroleum can take the
advantage of recruiting
young workforce and train
them. So that they get ready
for future operations.
 Due to increase in ageing
population of UK the
demand for pension funds
has also increased because
the workers who worked
with BP are entitled for it.
 Their is threat for BP as
more people have become
environment friendly so the
demand for the
environment friendly
products have increased. So
they have to change the
nature of its products to
meet this threat.
TECHNOLOGICAL  In technological
environment BP has many
opportunities like they can
create current and
worldwide energy
innovative goods.
 Also, they can do research
 The threat that technology
posses is that hackers can
hack the technology of BP
and leak out the important
information which can
result in loss for BP.
 Also, another threat is that
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on required technology so
that they can adopt in
manufacturing of alternative
energy sources.
 Secure information
technology system has been
adopted by the company to
watch the flow of oil and
control the movement of it.
 The company is using
technology to communicate
with its customers using its
website. This opportunity
can be used by the company
to have contact with all its
stakeholders using this
website (Kreutzer, 2019).
 Another thing they can do is
to be the first one to try new
technology because if it
works they will get first
mover advantage. Also,
their supply chain will get
benefit from it.
confidential information
related to stakeholders can
also be hacked which can
result in stakeholders
breaking the relationship
with British Petroleum
(Kalinin and Vershinin,
2020).
ENVIRONMNETAL  British Petroleum can take
the opportunity of becoming
sustainable energy company
rather than being a simply
oil based company.
 Also they should focus upon
providing products that
 Since consumers are
becoming aware of
environment, many groups
related to environment are
voicing the concerns of the
degradation of the
environment that the
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should not harm the
environment and they can
be safeguarded against
global disasters that happens
(Lessard, 2021).
company is causing. So it is
a environmental threat for
the company as it could
impact the overall
performance of the
company.
 Also, due to not engaging
in the effort to protect the
environment company
recently got the award
named as Green wash
award. This award was
given to the company for
not making attempt
towards climate change.
This is a threat for the
company as stakeholders
want to work with those
companies who are now
taking efforts to protect the
environment.
LEGAL  Legal environment is
beneficial for British
petroleum as they can know
in what things they need to
invest and what are the
rights of the customer. For it
OGA was formed by the
government of UK which
overlooks at various things.
These things are oil and gas
 Since the government of
UK is concerned towards
the health and safety of
people working in oil
sector. So they have passed
the law of health and safety
policies so that they can
safeguard the rights of the
workers working in this
industry (Moskalenko,
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licensing, oil and gas fields
and wells, oil and gas
infrastructure, oil and gas
fields and wells and carbon
storage licensing.
 Access to finance is also
limited as the bond needs to
be signed so that if low
quality of product is extract
than the loss can be shared
by both companies and
supply chain.
2018).
 Another act that is passed
by the government of UK
is age discrimination and
disability discrimination
law. So now they need to
employ the employees of
all age types and disability
workers also.
Industry Life cycle
The industry life cycle is nearly similar to the several other industries. The industry life
cycle comprises of four stages that are used in order to determine the extent to which the industry
produces the several ranges of products. The stages comprises of the introduction stage, growth
stage, maturity stage as well as the decline stage. There are several factors that determine the life
cycle of the industry. The several factors are demand growth as well as the production. The
growth rate of the industry determines the changes that are required to take place in the industry.
It is basically the production factor that determines whether the products of the organisation are
likely to improve the life cycle of the organisation through several sales and promotional
techniques (Novikov, 2018).
The first stage of industrial life cycle process of British Petroleum is the Introduction
stage wherein the sales of the product along with the rate of market penetration tends to be quite
low. The reason is that the products are recently introduced in the market.
The second phase of the industry life cycle process is basically the growth phase wherein
the organisation tends to launch into the full scale marketing activities as well as the promotional
activities in order to take advantage of the emerging industry as well as the market. The value of
the industry in the growth stage tends to increase as the customers are likely to take notice of the
several products and services of the British Petroleum. During this phase, the industry
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experiences an upwards growth during the growth stage as the sales continuously rise during the
phase (Paul and Ni, 2019).
The maturity stage is the third stage of the industry life cycle process of British
Petroleum. This phase tends to mark a flat growth curve that states that the growth the of the
organisation has become stagnant. This phase states that the growth has reduced at the specific
point. The maturity stage tends to comprise of the several aggressive competition that tends to
comprise of aggressive competition from the new entrants within the organisation. It is very
essential for the marketing effort during the stage to be very strong so that the organisation can
offer some unique product or the differentiated services to their customers. In the maturity stage,
there are quite less firms within the market and the weak firms are eliminated from the market
where as the dominating firms further become more dominant in the market.
The declining stage is basically the last stage of the industry life cycle which is
considered as inevitable in any sort of industry wherein the organisation fails to maintain the
level of profits until and unless the sales of the product becomes obsolete. The phase of declining
stage is denoted by the downward curve as the industry tends to experience the shake out from
the competitors who have not left the industry in the declining stage (Sales 2019).
Evaluation of competitive environment of British Petroleum.
The evaluation of the competitive environment of British Petroleum has been performed
with the help of value chain model determined by Porter. The value chain model comprises of
analysis of the activities that lead to increase in the production and manufacturing process of oil
as well as the oil based products of the organisation while adding value to the organisation as
well. Several activities are performed by British Petroleum that tend to add value to the
organisation which includes primary as well as the support activities. The primary activities are
basically the core activities wherein the organisation tends to indulge in. The primary activities
of British Petroleum include exploring oil along with the production that further involves
extraction of the natural gas as well as the crude oil from the several oil field in the neighbouring
areas.
The inbound logistics tend to include the shipping process of the crude oil through
several modes like pipelines and transit lines. There are several transportation modes also that
can be used such as road transportation, rail transports as well through water ways. The
operational process is also a part of primary activities that further focus upon the concept of
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refining of the crude oil in form of refined oil which is further transported. The goods that are
transported are further distributed through the utilisation of the several processes of outbound
logistics. The several outbound logistics include pipeline networks along with the transportation
networks as well (Segura, Morales and Somolinos, 2018).
The support activities are basically the activities that help in supporting the primary
activities and the process of carrying out. The support activities of British Petroleum basically
tends to involve its several employees that are inexperienced who work in several divisions of
the organisation. The infrastructure tends to involves the several distributional as well as the
logistical networks. These networks further facilitate the utilisation of the networks in order to
transport or ship the crude oil products as well as the refined oil products. These are transported
with the help of oil pipelines along with the shipping division of the British Petroleum. The
technology that tends to get used the most by the organisation in the research and development
division of the organisation is purified Terephthalic Acid technology, Carbon capture and storage
technology (CSS), British Petroleum Solar as well as Bright Water Technology (Muflikh, Smith
and Aziz, 2021).
The financial resources of the organisation are of huge importance for the organisation.
Further, the Value Chain Analysis holds abundant significance in the value chain of British
Petroleum as well. The financial resources act as a huge support for the primary activity along
with providing support to the technology as well that are of significance in the oil and natural gas
exploration as well as production. Technology plays an important role in the refining as well as
the marketing of the products and corresponding services of the organisation or the brand.
Further, the strategic fit in the organisation deals with the way in which the organisation
accomplished its resources along with the aim of smooth operations in order complement the
several aims, objectives as well as the strategies of the organisation. It is assumed that the
organisation that has a good strategic fit is likely to succeed in the course of operation as well
while using the resource of the organisation in an optimal manner. It has been analysed that the
British Petroleum has been successful in achieving the strategic fit that has further witnessed that
most of the organisational strategies have been successful in the accomplishment of the
objectives as well as goals of the organisation. British petroleum has accomplished its goals and
objectives by minimising the several costs of production as well as manufacturing cost while
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utilising the thin film photovoltaic sells while providing enhanced operational safety as well
Zahari and Romli, 2019).
British Petroleum has been able to accomplish the strategic fit while minimising the
corporate overheads along with declining the investment of the funds of the organisation in the
alternative energy research and development activities at the organisation. The activities have
been further helping the organisation to attain the competitive advantages in aspect of the several
other oil organisations within the haulage industry of the United Kingdom.
CONCLUSION
It can be concluded from the essay that strategic analysis plays a crucial role in the
organisation. Strategic analysis comprises of internal as well as external analysis of the
organisation which tends to describe the several elements that have an impact upon the business
performance of he organisation. Strategic analysis is basically a process wherein an organisation
conducts research of the business environment of an organisation. It tends to facilitate the
strategic planning in order to facilitate decision making for smooth operations of the
organisation. It can be concluded from the essay that there are several external factors in the
environment of the business that might act as opportunities as well as threats. The organisation
must work upon grabbing the opportunities and formulate strategies in order to avoid threats.
Further, It can be concluded that the each organisation of each industry tends to go through the
industry life cycle and hence the strategies must be formulated in accordance with the phase that
the organisation is going through.
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REFERENCES
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