Strategic Management: PESTEL Analysis of BP and Five Forces Analysis of the World Steel Industry

This document explores the strategic landscape of two industries: the oil and gas sector, focusing on BP, and the world steel industry. Using PESTEL analysis, we identify key opportunities and threats facing BP in the wake of the Deepwater Horizon disaster and changing global energy dynamics. We then apply Porter's Five Forces framework to assess the attractiveness of the world steel industry, considering factors like the threat of new entrants, bargaining power of buyers and suppliers, and the presence of substitutes. The analysis provides insights into the competitive dynamics and strategic challenges faced by companies operating in these industries.

Strategic Management

Table of Contents
Question 1........................................................................................................................................3
Task: Using PESTEL, analyse the case study on factors that offer the most important
opportunities to BP, and the most important threats?......................................................................3
Question 2:.......................................................................................................................................6
Task: Analyze using Five Forces analysis on how attractive is the world steel industry? What
accounts for this?.............................................................................................................................6
Question 3:.......................................................................................................................................8
A. Select product or services of a business organization and analyze growth/market share using
BCG market.....................................................................................................................................8
b) Critically analyze the potential problems with the BCG matrix...............................................10
Reference list.................................................................................................................................12

Question 1
Task: Using PESTEL, analyse the case study on factors that offer the most important
opportunities to BP, and the most important threats?
Political (P) The Gulf of Mexico had to face a major problem in
oil and gas industry where deepwater horizon
disaster caused oil spill. Solution to this was not
found (Sammarco et al., 2016). As Gulf is one of
the profitable industries BP had to face a lot of
problems and they were under pressure. There was
a debate in between two communities due to oil
prices one community was saying it happened due
to disaster and other said because of the price
change and that is may be because of lack of
investments. Also the crude oil was influenced by
political and social factors.
Economic (E) Other than India and china there was a rise in oil
prices in Iraq and US also. For the company
stability and capacity so that further disaster
happening in BP can be avoided, more investment
on oil and gas company and in their infrastructures
too. BP should keep a watch on exchange rates,
inflation rates and investments also (Ritchie et al.,
2014).
Social (S) Right kind of suppliers is required for the rise in
domestic oil and gas prices, which may be BP’s
marketing strategy. Social factor is one of the
important factors (Vaast et al., 2017). It is a great
opportunity for middle class people to buy cars if
money distribution can be done for the demand of

oil increases. But if there is an increase in demand
of population, the demand for oil will still be there
even if there is no improvement in terms of income
distribution.
Technology (T) BP had to do a lot for the reduction of greenhouse
emissions. A lot has been done as per the
technological needs alternative energy sources
other methods were used (Fingas et al., 2016). Like
for the improvement of sub-sea oil technology BP
had to invest a lot for this. For the modern
technology, training is provided to develop the
skills of employs.
Environmental (E) Fracking can pollute local water supplies and can
also lead to earthquakes. Climate change will affect
the oil industries in some way eventually. Efforts
can be made to reduce greenhouse emission. BP
took a step to reduce the nuclear emissions; they
had to take a major step regarding greenhouse
effect.
Legal (L) Pressure on consumers were made to use bio-fuels
by the renewable transport fuel obligation, the bio-
fuels destroy the sales in oil industry. Government
has also imposed taxation and duel duty rules that
affect the prices of oil.
The opportunities and threats to BP are:
OPPORTUNITIES THREATS
 BP has been active in bio-fuels and
wind power, as a small alternating
business set up, and it’s been since
2005.
 There was a partnership between
 The major threat to BP is that it is one
of the world’s largest oil and gas
companies.
 Oil Company peaked at about $120 a
barrel in 2008 but after that recession

controversial alliance and a leading
Russian businessman as the BP’s oil
business was transferred to the alliance
in which BP’s share was 17 percent
(Susskind et al., 2016).
 There was a hike between 2012 and
2020 of about percent per annum in
china.
took place in 2009.
 Driving tests have failed in United
Kingdom by about 17 percent.

Question 2:
Task: Analyze using Five Forces analysis on how attractive is the world steel industry?
What accounts for this?
On using five forces analysis, how attractive can be the world steel industry
Threat of new entrance (H): The threat of new entrance to the still existing producers in steel
industry is high. At first, producers were nation based, state based but there was no profit, but
after Mittal and Tata bought European steel they made world’s largest steel industry (Chand et
al., 2016). But in the last two decades, china took over the world steel industry and there was a
increase of capacity of about seven times, it reached about 45% in 2011. This led the Chinese
companies on number two position and there was a decrease in the domestic demand which
slowly surged into the international markets.
Bargaining power of customers (L): The bargaining power of customers is low as usually most
of the buyers are from the car manufacturers so there is no such competition in the domestic
market. And most of the car manufacturers work with technological developments in materials.
A lot of car manufacturing companies has new domestic buyers like ford, general motors,
Chrysler have linked up with Toyota, BMW, Honda. Even in metal packaging industry, leading
producers like Crown Holdings, makes food cans of about one third of which is produced in
North America, and they buy this in huge numbers, where purchases are coordinated around the
world.
Bargaining power of suppliers (H): The bargaining power of suppliers is high in steel
industry, as key material in this industry is iron ore and there are three big ore producers- vale,
Rio Tinto and BHP Billiton (Mahapatra et al., 2016). These producers take over the market
around 70 percent for internationally traded ore. And the prices of these ore have risen four times
in between 2005 and 2008. Iron ore has seen a loss but recovered back twice in 2012 as in 2005.
So, this makes up for the bargaining of power suppliers high in steel industry market.
Threat of substitute (H): There’s been a high threat of substitutes in world steel industry, in the
nineteenth century, steel was substituted by other materials, like in cars steel was substituted with

aluminum, then plastics and aluminum in packaging and ceramics in many high-tech
applications. Sometimes it’s just steel own advancements which reduced the need of steel and so
steel cans have now become the one third in last few decades.
Competitive rivalry (H): The risk of competitive rivalry is high, as world steel industry was
high by about 50 percent in-between 2000and 2008, which dropped after some point of time.
Despite of Mittal and Tata who made the steel industry, which grossed for some time, the
European steel company, made up 25% in 2012, hearing this Mittal tried to close down the
floorage plant, which the French government tried to nationalize it by threatening them.

Question 3:
A. Select product or services of a business organization and analyze growth/market share
using BCG market.
Using BCG matrix, here a product is used of a business organization and growth of the product is
measured (Whitehead et al., 2015).
A basic BCG matrix is there, where its business growth rate versus relative position that is
market share, where high-high results in star category, where the market share is high and so the
growth rate is high. Again, high-low results in question mark, where the consumption of money
is huge but market share is low. Then comes, low-high results in cash cows, where the company
gets more than the market growth rate and generates more cash than they consume. Then, low-
low which results in low market share and lower growth rate and also does not consume money.

Samsung product is used to analyze the growth rate in terms of BCG matrix.
(Source: Statista, 2018)
As seen in the statistic graph, the growth rate for the Samsung product is seen in range of 2009 -
2017.
From the quarter 2 quarter 2019 year 2009 has been stagnant, and there has been a slight growth
since then quarter 2, year 2011 and there’s been a slight fall. Then the market share rose 2012 by
more than 30% again with a slight fall in quarter 2 to quarter 4 in year 2012 and raising it in
quarter 2 to quarter 4 in year 2013 maintained its market share. Then with a fall from 2013 to
2014 and rise in market share from quarter 4 2014 to quarter 2 2015 maintaining it by more than
30% this continues. And then there was a fall between 2013 to 2016, which was not stable at all,
by that time other products were launched, like apple product and they had a huge market share
over Samsung products, apple launched several new products which made an impact in stock

market, which actually made Samsung’s growth rate low. And till now 2017, Samsung is still
showing its progress in the market share with the other products market share.
Samsung Smartphone sales has reached its peak value over the years, from 2009 to 2017 with its
android feature, Samsung Smartphone ruled over the years but then apple products came into the
market and sales of apple products rose higher over the years and Samsung company and apple
company ruled over the years and had huge growth rate. Samsung shipped its products by 2.4
millions and apple shipped its products by 54 million per quarter (Biswas et al., 2016).
b) Critically analyze the potential problems with the BCG matrix.
The problems which can arise from the BCG matrix can be:
 BCG matrix can only be classified in high or low businesses, but not in terms of medium
it cannot be classified. But business can be in medium category also. So BCG matrix
does not show the true nature of business.
 High share markets, includes both high profits and costs of business. The matrix does not
take into account mediocre profits or sales. Hence the matrix does not take into account
or consideration the performance of the new entrants.
 The indication of profitability not only shows the growth rate and relative market it
overlooks other indicators of the model. The model ignores important factors such as the
quality of the people working for the organization or its brand value and only considers
the profit/revenue.
 It would be wrong to say, that dogs not only in business gaining competitive but also earn
by cash cows also.
 This four quadrant structure is considered to be the simplistic one.
 In this BCG matrix, market is not clearly defined. The geographical extent or the various
segments within the market are not clearly distinguished and hence decision making
based on this model can be risky. The term ‘market’ has no clear meaning in BCG
matrix.
 In BCG matrix, that specific high growth or low growth cannot be misjudged for a small
time span, but if we see for a larger time span there is a growth rate growing consistently.
 Data cannot be interpreted from market share and market rate.

 Low share in business can be profitable.
 BCG matrix compares to only one competitor that is the market leader. But it misses out
small growing companies in the industries. Since the model does not consider various
competitors, again decision making is not perfect.
 The BCG matrix has only two dimensions that is market share and growth rate. This may
lead to management to a particular product.
 Incomplete vertical axis and sales growth rate (Shanbhag et al., 2016).
 There are flaws in mathematical calculation in vertical business growth rate and
horizontal market share.
 Market share should have an arithmetic average.
 In terms of market share, the requirement of sales economy is required. In other words to
compute the market share associated data is also required related to the national GDP,
growth rate etc.
 Each and every industry should be taken into consideration, in terms of market share.
 Characteristics of any industry must be taken into consideration in terms of market share.
The model as has been previously mentioned does not define the market clearly and
hence the various qualitative factors or the characteristics of the market are not
considered by the same.

Reference list
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atmosphere experimental studies on Iron Ore Group (IOG) basalts from Dangoaposi-Noamundi-
Koira areas of Singhbhum Craton, Eastern India: Phase equilibrium studies to constrain parent
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Statista. (2018). Samsung smartphone market share worldwide 2009-2017 | Statistic. [online]
Available at: https://www.statista.com/statistics/276477/global-market-share-held-by-samsung-
smartphones/ [Accessed 20 Mar. 2018]
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FOR CONNECTIVE ACTION: AN EXAMINATION OF MICROBLOGGING USE DURING
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Biswas, I., Avittathur, B. and Chatterjee, A.K., 2016. Impact of structure, market share and
information asymmetry on supply contracts for a single supplier multiple buyer
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