Strategic Management: Opportunities and Threats to BP

STRATEGIC
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
PESTLE Analysis to offer important opportunities and threats to BP.......................................1
TASK 2............................................................................................................................................3
Five Forces analysis that make steel industry attractive.............................................................3
TASK 3............................................................................................................................................4
a) Analyse growth/market share using BCG matrix ..................................................................4
B) Potential problems with the BCG matrix...............................................................................4
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................4

INTRODUCTION
Strategic management is the important process adopted by business organisation in which
they frame important plans and steps that has to be followed effectively. This assignment involve
case of BP, which is one of the world's largest oil and gas company. Other case highlights the
importance of steel industry and roles played by it in number of places over nation. The report
focuses upon PESTEL analysis that underlines the opportunity and threats that is offered to BP.
Apart from it, it also highlight the five force analysis that make steel industry attractive.
TASK 1
PESTLE Analysis to offer important opportunities and threats to BP
BP utilises PESTLE analysis which is consider one of the tool to analyse the impact of
elements that are present in external environment and consider it while taking decisions. Thus, in
order to examine various factors that may effect their functioning to find out several
opportunities and threats are discussed below:
Opportunities: There are several opportunities that are experienced by Oil business in
Russia was aligned with in partnership with Rosneft, in which BP contains 18% of the shares.
According to the prediction of Forbes magazine, it was presented that economic growth of BP
will be 7% per annum for china, 2% for united States and 1% for Europe. This shows sustainable
increase in growth at market place. Another favourable condition of this company is that oil
prices is at peak in 2008, that is about $120. Apart from it, BP have to introduce new laws and
regulations related to workers safety, who are working in industry.
There are several technological opportunities that include 'Fire ice' and 'Fracking'.
Adopting 'Fracking' technology will lead to increase in supply of natural gas worldwide by 2020.
New and innovative technology results into fall of natural gas price to 30% between 2011 and
2013. Moreover company have to follow all the rules and regulations that are framed by UK
government so that all transactions that are related to oil and gas could be carried out in effective
manner. It is essential for them to Comply all rules and regulations that are formulated will allow
them to work smoothly without any problem.
Threats: There are several external and internal threats that are faced by this company
one involve the tragedy that took place in 2010, BP's deep water Horizon oil rig explosion that
lead to occurrence of 11 deaths, and for this US government charged $4bn for their disaster.
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There are number of court cases that is still pending. The major threat also involve recession that
took place in 2009 and thus oil prices drop down to $30 from $120. Another factor involve
exchange rates that have to be consider by the company of different nations. Use of cars has been
declined in European countries and have shifted to motor vehicles, train. Technological aspects
of the company include 'Fracking' technology system results into pollution of local water bodies
and also lead to generation of small earthquakes. It also contributes in global warming as gas
which is produced in fracking process is directly released into the atmosphere. Major
threat faced this company was the oil rig explosion that took place in 2010, that results in 11
deaths. Apart from it, introduction of new technology that involve 'fracking' in which extraction
of gas took place from underground rock resulting in polluting water bodies and small
earthquakes. It also causes global warming that lead to pollution of environment. Different
nation have distinct legal rules and regulations, thus BP have to follow it in correct manner.
Major challenges faced by this company is to formulate policies related to health and safety of
workers that are working in that industry which should be in accordance to guidelines framed by
the government body. Company should frame tax rate related to their products that they sell to
various places. The deep water horizon disaster that took place in creation of safety rules that has
to be imposed into the system.
Conclusion: From the above discussion about PESTLE analysis that affect the BP
company in several ways. Each factors of PESTLE analysis offer some opportunities and threats
that may hinder and foster the performance of BP.
TASK 2
Five Forces analysis that make steel industry attractive
Porter's five forces model is an essential technique that help every business to evaluate
competition that is present in outside environment. The steel industry is a important component
and is static for longer period of time. Thus, it have to be analysed using porter's five forces
model which is described below:
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