Strategic Management of British Petroleum

This report discusses the strategic management of British Petroleum, including industry structure, market position, company background, and relevant sources. It also provides recommendations for the company.

STRATEGIC
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION..........................................................................................................................3
MAIN BODY..................................................................................................................................3
Appropriate theory and review........................................................................................3
Identify, select and utilise relevant sources...............................................................5
Recommendations for company.....................................................................................7
CONCLUSION...............................................................................................................................8
REFERENCES...............................................................................................................................9

INTRODUCTION
Strategic management is all about providing strategic direction to
organisation so that company can achieve all its different objectives behind the
business. This report is based on the case study of British Petroleum in respect to its
strategic direction. Company is a United Kingdom based retail organisation.
Company is based in United Kingdom and associated with oil and gas sector.
Henceforth, report will emphasis on industry structure, market position, market size
and also the brief background about the company. This report would also emphasis
over innovation and strategic innovation in respect to the company. This report
would also emphasis on CSR operations related to the Marks and Spencer Company.
Governance and ethics associated with company would also brief in this report.
MAIN BODY
Appropriate theory and review
Industry Structure
British Petroleum is associated with oil and gas sector. The sector is among
one of the leading market sector associated with the business environment. Over
the period of time total number of retail outlets of oil and gas has been increased
drastically across the globe. The industry has always entertained huge demand
since the time vehicle was invented. Over the period of time developing economies
also witnessed massive economic advancement which has also increased the per
capita income of people based in developing economics which further increased the
buying power of people all across the globe (Parakhina and et.al., 2017). Today due
to massive demand the industry has becomes well structured and expanded
professionally and systematically in the entire world. All across the globe many
companies like British Petroleum, Chervon, Exxon Mobil, Shell and many other
companies are the key competitors associated with the British Petroleum across the
globe.
Market Position
British Petroleum serves the business operations all across the globe.
Company is one of the major companies associated with the oil and gas sector As
the company has expanded its business across the globe the organisation also
serves the strong dominance in the market. As per the previous financial
statements of company it has generated the revenue of US$282.62 billion which
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denote about the strong presence of company all across the globe. Company has
generated the net revenue of approximately US$4.19 billion (Leskaj, 2017). The net
profits and revenue figures denote that company has entertained massive demand
in market even after having the aggressive level of market competition from other
competitors like Chervon, Exxon Mobil, Shell and many other companies all across
the globe. Company is growing at the rate of approximately 2.9% which is
considered as the attractive growth at a global level. Company not just need to
compete with the international brands associated with the oil and gas sector but
along with many regional brands also give aggressive level of competition to Bharat
Petroleum across the globe. Growth rate is the true indicator of company’s presence
in market.
Company’s Background
British Petroleum is a United Kingdom based organisation engaged in the
business operations of oil and gas sector. Company was founded in the year 1909
by the founder William Knox Darcy. Company is engaged in selling petroleum,
natural gas, motor fuels, and aviation fuel and petro chemicals. Company has its
service stations across the globe. Anglo Persion Oil Company, Castrol, Standard Oil
of Ohio, ARCO and Amoco are the predecessor of the British Petroleum.
Headquarter of the company is located in London, England, United Kingdom
(Vishnevskiy, Karasev and Meissner, 2016). It can be stated that company carry
various strengths like huge brand value in oil and gas sector all across the globe,
customer loyalty, huge resources also give huge strength to company, skilled man
power, diversified product range, promotions and marketing strategies of company
are engaging, global presence of company in its business and many other aspects
are the key strengths associated with the company. All these strengths provide
huge support to the company in conducting business operations. Internal capability
of organisation play huge role in achieving the success in market and all the
different strengths of company boost its potential to entertain growth in market.
Along with various strengths company is also associated with weaknesses like
inflation in economy that restricts the buying capacity of customers across the
globe, high pricing practice of company which also restricts the company’s
potentials to achieve growth in market, aggressive level of market competition,
ineffective marketing campaigns and other associated weaknesses restricts the
potential of company to achieve its all different business objectives.
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Identify, select and utilise relevant sources
As per the views of Bondarenko and et.al., (2017) British Petroleum is one of
the leading brand associated with oil and gas sector at a global level. Company is
conducting its business operation since 1909 that has allowed company to utilise its
established presence in market to achieve its all different objectives behind the
business functions. Company carry a strong supply chain at a global level which has
supported company to expand its business at a global level. All this supply chain
system of company has always supported company to meet all different needs and
requirements of its potential customers all across the globe. Supply chain of
company has supported the organisation in serving all latest and trendy products in
oil and gas sector on the basis of the changing needs and demands of market.
As illustrated by Dyer and et.al., (2017) management of British Petroleum
have always supported company to channelizes precise market and product
research with the support of experienced professionals. This research of company
has supported company to involve innovation in product development activity.
Research always a positive strategic choice company can involve in achieving its
product development objective on a continuous basis. This strategy company have
guided the organisation to continuously improve its potential to entertain profits
and also to boost its sales potential at a global level. The research has also
supported company to take competitive advantages in the market at a global level.
British petroleum carry a huge brand value which always utilised by the marketing
team in all its branding and marketing campaigns. Brand value has supported
company in meeting all its different business objectives like profits, customer value
and many other.
Although there have been a lot of positive aspects that have been discussed
about the company British Petroleum i.e. BP but there have been numerous
controversies as well in the company identified itself and had to face severe
controversies due to this (Alm and Brown, 2020). Since BP is basically an oil and gas
company, it has been involved in a number of controversies over the years.
Authors, Chaplinsky, Lynch and Doherty (2017), state that the overall
environmental record of the company is not very good despite it being heavily
regulated and monitored. One of the major blow n the basis of CSR grounds and
ranking was in the case of illegal dumping of hazardous substances in the Alaska
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North Slope. BP pleaded guilty in this case and the question here does not belong to
the compensation amount that was paid by the company but it rather arises in the
context that why would a company that has developed such strong propaganda on
the carbon footprints; gas emissions etc. would knowingly cause damage to the
nature. This incident caused a major puncture in the reputation and respect that BP
had built up.
Another major scandal in which the company got involved at a large scale was the
series of explosions and leaks which happened at the Texas City refinery. This
series of blasts and the harm that it caused to the natural environment created a
very revolting public attitude where the accusations and claims that were being led
on the company increased to multiple folds (Levy, 2019). The series of court trials
and the strong resistance that the company received from the local people of Texas
as well as the local government of the Texas ultimately led to selling off of that
particular refinery to another company Marathon Petroleum. This was an extremely
vivid show of the incompetence of the company where the governance, ethics and
CSR compliance of the company was questioned ultimately.
It was not just the environmental aspect in which the company engaged in
controversies and scandals but the political connections and the link up of the
company was also questioned when it was found to be lobbying for a prisoner
(Amernic, J. and Craig, 2017). It was clearly identified that the company had
pressured the government to release a prisoner that was responsible for the killings
of 270 people and all this was done in order to save the 900 million deal that BP had
entered into and also in order to protect the commercial interests of the company
so that they could avoid unnecessary losses for the company and its profit
generation. This was badly received by the public when they realised that BP had
been playing a profit oriented strategy rather than welfare oriented which the
company had always purported earlier (Daintith and Hancher, 2019).
The company has also been found to be involved in the market manipulation
practices where it was alleged that a variety of traders of BP tended to increase the
prices of propane by cornering the propane market and one of the BP traders
pleaded guilty to it (Khan, 2016). Further, after continuous denials and ultimate
dismissal of the matter officially, an internal email was leaked which clearly stated
that the prices were to be raised in certain parts of the sites and hence the further
distrust on the dealings of the company that ensued could not be curbed easily.
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The analysis therefore shows that despite the variety of vastness of the good
actions and practices that have been implemented by the British Petroleum during
the years through which they have operated, there have been some serious
allegations and issues that have been faced by the company strategically
(Modarress, Ansari and Thies, 2016). Although it is natural for the company that is
dealing in oil and petroleum industry to face these issues but yet, it can be
questioned that why British Petroleum is not exactly implementing the care and
precautions that are expected and the deliberate actions that ultimately harm the
nature does not show a good strategic positioning of the company.
Recommendations for company
Based on the analysis of the above findings, it can be clearly observed that
company lacks to strategically excel in various aspects and hence is facing backlash
and issues. In order to minimise the overall failures and increase the chances of
success for the company, there are certain recommendations that can be made for
BP:
 Rather than relying on penalties and fine amounts to restore the lost prestige,
company should extensively develop projects and ideologies that can be used
to clearly work on the improvement of the CSR practices (Boivin, 2017). It is
necessary that there should be increased transparency where the company’s
practices can be evaluated by the public.
 The company should also create a strong grievance panel for its employees
where the complaints of the employees regarding any carelessness or
intentional wrongdoings must be addressed seriously rather than curbing them
altogether.
 Another major recommendation that can be made for BP is that the system
should be modified right from the top where the ultimate aim should not be to
earn profits out of the human lives loss and strong strategic positioning of the
company should be a key aspect of focus.
If BP implements these recommendations than the chances of increasing or
regaining the lost importance can be increased for the company.
CONCLUSION
The research conducted in the report above clearly indicates that the strategic management
of the company is not very comprehensive or extensive and it largely affects the overall
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functioning of the British Petroleum. The market structure and positioning of the company was
clearly identified and analysed accordingly where the extent to which the company’s operation
are expanded was discussed. Further the report also clearly identified that what are the issues that
were faced by the company and what were the success points in a critical manner. Lastly, based
on this critically analysis, certain key recommendations were also made for the company.
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REFERENCES
Books and Journals
Alm, K. and Brown, M., 2020. John Rawls’ Concept of the Reasonable: A Study of
Stakeholder Action and Reaction Between British Petroleum and the Victims
of the Oil Spill in the Gulf of Mexico. Journal of Business Ethics, pp.1-17.
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.
Boivin, H., 2017. British Petroleum–using rhetoric to avoid the sustainability
challenge in its global 2015 Sustainability Report (Doctoral dissertation,
Auckland University of Technology).
Bondarenko, T. G. and et.al., 2017. Optimization of the company strategic
management system in the context of economic instability.
Chaplinsky, S., Lynch, L.J. and Doherty, P., 2017. British Petroleum, Ltd. Darden
Business Publishing Cases.
Daintith, T. and Hancher, L., 2019. Energy strategy in Europe: the legal
framework (Vol. 4). Walter de Gruyter GmbH & Co KG.
Dyer, J. H. and et.al., 2017. Strategic management: Concepts and cases. John Wiley
& Sons.
Khan, A., 2016. Communication strategies used by'British Petroleum (BP)'to deal
with legitimacy before and after the Deepwater Horizon Accident.
Leskaj, E., 2017. The challenges faced by the strategic management of public
organizations. Revista» Administratie si Management Public «(RAMP). (29).
pp.151-161.
Levy, W.J., 2019. Oil strategy and politics, 1941-1981. Routledge.
Modarress, B., Ansari, A. and Thies, E., 2016. Outsourcing in the Persian Gulf
petroleum supply chain. Strategic Outsourcing: An International Journal.
Parakhina, V. and et.al., 2017. Strategic management in universities as a factor of
their global competitiveness. International Journal of Educational
Management.
Vishnevskiy, K., Karasev, O. and Meissner, D., 2016. Integrated roadmaps for
strategic management and planning. Technological Forecasting and Social
Change. 110. pp.153-166.
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