BP Oil Company Business Strategy: Semester 2 Report

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Business Strategy
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Table of Contents
Introduction...................................................................................................................... 5
LO1 - Analyse the impact and influence which the macro environment has on an
organisation such as BP Oil Company and its business strategy....................................5
P1 - Applying appropriate frameworks analyse the impact and influence of the macro
environment on BP Oil Company as an organization and its strategy..........................5
a) Define and explain the meaning of strategy..........................................................5
b) Explain the role of strategy to achieve business objectives and goals, strategic
intent and different strategic direction.......................................................................6
c) Identify and explain different strategic planning techniques..................................6
M1 - Critically analyse the macro environment to determine and inform strategic
management decisions.................................................................................................6
a) Identify and explain macro environment of an organisation such as BP Oil.........6
b) Do a critical analysis of the macro environment of organisation of BP Oil and
explain how it affects management decision making using SWOT Analysis............7
D1 - Critique and interpret information and data applying environmental and
competitive analysis to produce a set of valid strategic directions, objective and
tactical actions for BP Oil..............................................................................................8
a) Conduct a PESTLE and Stakeholder analysis to critique and interpret
information and based on your data to produce set of valid strategic directions,
objective and tactical actions for BP Oil....................................................................8
LO2 - Assess BP Oils internal environment and capabilities.........................................10
P2 - Analyse the internal environment and capabilities of BP Oil using appropriate
frameworks................................................................................................................. 10
a) Explain what is meant by internal environment and capabilities of an organisation
such as BP Oil........................................................................................................ 10
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b) Examine strategic capabilities and its components of BP Oil using McKinsey’s 7s
Model...................................................................................................................... 11
M2 - Critically evaluate the internal environment to assess strengths and weaknesses
of an organisation’s internal capabilities, structure and skill set using BP Oil company
as an example............................................................................................................ 12
a) Do critical analysis of the outcome of your McKinsey’s 7s Model analysis LO2. 12
b) Use VRIO/VRIN Framework as a tool to analyse the internal
resources/capabilities structure and skill set using an organisation such as BP Oil
as an example.........................................................................................................12
LO3 - Evaluate and apply the outcomes of an analysis using Porter’s Five Forces model
to a given market sector.................................................................................................13
P3 - Applying Porter’s Five Forces Model, evaluate the competitive forces of a given
market sector for an organisation using BP Oil company...........................................13
a) Identify the competitive forces of an organisation such as BP Oil using Porters
Five Forces Model.................................................................................................. 13
M3 - Devise appropriate strategies to improve competitive edge and market position
based on the outcomes.............................................................................................. 15
a) Recommend an appropriate strategy to improve competitive edge and market
position based on the outcomes of your analysis using either Ansoff Matrix or
Market strategy....................................................................................................... 15
LO4 - Apply models, theories and concepts to assist with the understanding and
interpretation of strategic directions available to an organisation...................................16
P4 - Applying a range of theories, concepts and models, interpret and devise strategic
planning for a given organization such as BP Oil Company.......................................16
a) Using a range of theories such as Porters Generic Model, Bowman’s Strategy
Clock Model or any theory of your choice interpret and devise strategic planning for
a given organization such as BP Oil Company.......................................................16
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M4 - Produce a strategic management plan that has tangible and tactical strategic
priorities and objectives for BP Oil Company.............................................................18
a) Explain what is meant by the strategic management plan..................................18
b) Produce a strategic management plan that has tangible and tactical strategic
priorities and objectives for BP Oil Company..........................................................19
Conclusion..................................................................................................................... 21
References.....................................................................................................................22
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Introduction
The assignment mentions about the BP Oil Company, which faces certain challenging
factors. Due to the increasing demand of the stakeholders and the loss of the workers in
the organization, this company is getting affected in the market. Apart from this, certain
negative aspects can also be observed in the last few years. Thus, there was a need for
continuing with some proper business strategy for the betterment of the company. This
organization need to take some of the decisions that are related to strategic
management. For this, the company shall deal with some of the strategic planning
methods. Along with this, the BP Oil Company also need to use the SWOT analysis
method, PESTLE method, the McKinsey’s Model and Porter’s Five Forces. Apart from
this, VRIN or VRIO Framework and some other models such as Porter’s Generic Model
and Bowman’s Strategy Clock Model is used in this process. Another model is also
recommended that can be used is the Baldrige Framework. Thus, in this way, the
company will be able to gain success in this competitive world.
LO1 - Analyse the impact and influence which the macro environment has on an
organisation such as BP Oil Company and its business strategy
P1 - Applying appropriate frameworks analyse the impact and influence of the
macro environment on BP Oil Company as an organization and its strategy.
a) Define and explain the meaning of strategy.
In the context of a business, strategy is a plan, which helps an organization to meet the
desired outcome effectively within a specific timeframe. The managerial head of a
business organization is mainly responsible for making suitable strategies for the
development of the organization. Likewise, by incorporating appropriate strategies, BP
can maximize their profitability and also increase their market share (Erbelding and et
al., 2018).
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b) Explain the role of strategy to achieve business objectives and goals, strategic
intent and different strategic direction.
After analyzing the past and current scenario, the managing directors of BP has taken
certain rational strategies to improve their overall performance. The key personnel of BP
has accumulated information from macro and microenvironment, which help them to
make rational decisions for accomplishing the objectives of the organization. With the
help of marketing strategy, BP can promote its products easily towards their target
market. Moreover, appropriate marketing, as well as pricing strategy, help this company
to acquire their customer’s interest (Silva and et al., 2019). It will help BP to improve its
sales volume. From this description, it can be stated that strategies play an important
role for BP to overcome their barriers and also attain their goals easily.
c) Identify and explain different strategic planning techniques.
To execute the strategic plan, BP also takes certain techniques. The management of
BP has utilized SWOT techniques to identify their internal strengths, weaknesses,
opportunities, and threats. Through this analysis, the managers of BP can understand
their internal market environment, which will help them to take appropriate strategic
measures to strengthen their strong points (Silva and et al., 2019). PESTLE analysis is
a tool, which helps an organization to identify their macro environment. Likewise, the
managers of BP also use PESTLE tool to determine their extremal environment, which
also helps the management of BP to take appropriate strategic decisions for the growth
of the organization (Erbelding and et al., 2018).
M1 - Critically analyse the macro environment to determine and inform strategic
management decisions
a) Identify and explain macro environment of an organisation such as BP Oil
According to sources, BP is one of the renowned company in the oil industry. Political
influences have adversely affected the business operation of BP. Economic instability in
the oil industry is considered as the biggest threat for BP to successfully carry out their
operation. Global climate change negatively influenced the overall performance of BP.
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Moreover, due to the environmental act, consumers are preferred to use biofuel for their
cars, which imposes threats for BP (WidyaYudha, Tjahjono and Kolios, 2018). Rules,
legislations also created a positive impact on the business. However, intense market
competition is considered as the threat for this oil company. It can also be identified that
this company has invested money for improving the overall infrastructure of the
company to overcome the barriers effectively. Moreover, due to improve infrastructure,
the company can maintain its product quality, which helps this company to attract
customers towards their products. It also influences the sales of the company (Gheibi
and et al., 2018).
b) Do a critical analysis of the macro environment of organisation of BP Oil and
explain how it affects management decision making using SWOT Analysis
Strengths
 Good brand image. By reducing
the product cost, the company can
improve its brand image.
 Maintain their product quality by
implementing modern
technologies.
 The company manages its
business operation vertically.
Hence, it can be said that the
company has a vertically
integrated operation.
 The global presence also
considered as the strength of this
company. BP is one of the
renowned company in the energy
industry (Bull and et al., 2016).
Weaknesses
 Deepwater Horizon disaster in the
Gulf of Mexico (Gheibi and et al.,
2018).
 The price of petrol is increased day
by day.
 The oil wells of Alaska was in
danger, due to this reason, the
company has not got permission to
extract oil from Alaskan oil wells.
 Market competition is also a
weakness for this company.
Opportunities Threats
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 Invest financial resources to
improve the infrastructure of the
company.
 Expansion of the natural gas
market.
 Implementation of a low pricing
policy to sustain in the competitive
world (Silva and et al.,2019).
 Discovering new oil well.
 The rapid change in government
regulation
 Due to the Deepwater Horizon
disaster, the company has
bankrupted.
 Environmental issues.
 Political pressure.
 Corrosions of oil pipelines
(WidyaYudha, Tjahjono and
Kolios, 2018).
D1 - Critique and interpret information and data applying environmental and
competitive analysis to produce a set of valid strategic directions, objective and
tactical actions for BP Oil
a) Conduct a PESTLE and Stakeholder analysis to critique and interpret
information and based on your data to produce set of valid strategic directions,
objective and tactical actions for BP Oil
Factors Impacts
Political Deepwater Horizon disaster adversely
affected the performance of BP. Domestic
and international political events also
influence the price of oil. Apart from this,
different countries have different legislations,
which negatively influenced the overall
operation of BP (WidyaYudha, Tjahjono and
Kolios, 2018).
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Economic The demand from China and India is
considered as the main reason for rising the
oil prices. Exchange rate, inflation rate also
affected the operation of this company (Islam
and Mamun, 2017).
Social Climate change affects the company’s
operation. Moreover, the income level of
customers also influences the productivity of
the company. Currently, consumers are
utilizing biofuels to protect their environment,
which creates a negative impact on the
growth of BP (Sridhar and et al.,2016).
Technological Technology is the factor, which helps a
business organization to diminish the market
competition. Currently, BP has allocated a
huge amount of financial resources to reduce
greenhouse emission. In addition, this
company also invested money on the oil has
gas production procedure. Whereas, by
applying modern machinery, the company
can also improve their employees’ knowledge
(Gheibi and et al., 2018).
Environmental Change in the global climate also affected the
overall function of this industry. BP has
implemented certain measures to reduce
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greenhouse emission, which helps to protect
their brand image (Sridhar and et al.,2016).
Moreover, BP also invested money in their oil
wells and pipelines to improve the overall
infrastructure.
Legal Rules and regulations of government
influenced the oil price of BP. The renewable
transport fuel obligation act increases the
utilization of biofuels, which is the main
reason for deteriorating the sales in BP.
Taxation policies, environmental policies also
affected the operation of the company
(Gheibi and et al., 2018).
Stakeholder Analysis
Stakeholder Analysis is an important technique, which helps BP to identify its
stakeholder appropriately and also understand their needs. The key stakeholders of this
organization are directors, managers, staff members, suppliers, governments and
others. BP should develop a friendly relationship with their stakeholders to carry out its
business performance. On the other hand, HR manager of BP should organize training
programmes for their employees to enhance their skills that help BP to improve their
overall organizational performance (Omeje, 2017). Moreover, the company invests
money to improve the quality of the products. Product quality positively influences the
buying behaviour of customers. Moreover, the marketing managers of BP also gather
information from the market to design their organizational structure that will help to gain
stakeholder’s trust and loyalty (Dhir, 2007). These aforesaid strategies have been
implemented by BP to attain the trust of its stakeholders.
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LO2 - Assess BP Oils internal environment and capabilities
P2 - Analyse the internal environment and capabilities of BP Oil using appropriate
frameworks
a) Explain what is meant by internal environment and capabilities of an
organisation such as BP Oil.
The working condition of the organization is based on the abilities and capabilities of the
internal environment in BP Oil. With the help of the employees and the management,
the BP Oil Company has gained a competitive position in the UK market. The effective
capability of the internal environment will drive the company towards success. The
working of the management helps in recognizing the growth of the organization like BP
Oil. This company can gain success if its management structure is quite effective. The
employees need to work in an ordered manner. Internal environment mainly states the
factors, members, culture and events that usually influence the organizational decisions.
Corporate culture, organizational structure, value system, physical resources, human
resources, technological capabilities and the mission, objectives and vision falls under
the internal environment of BP Oil (Simon and et al., 2015). The capabilities and abilities
of these factors create an impact on the organization.
b) Examine strategic capabilities and its components of BP Oil using McKinsey’s
7s Model
McKinsey 7s Model is used as a tool for focusing on the organization through its seven
elements such as Structure, Strategy, Systems, Style, Skills, Staff and Shared Values.
This model is beneficial for achieving the objectives of the company. Along with this, it is
also used for identifying the effectual skills and the strategy that is used in the
organizational context. This model helps in recognizing the system and style of the
organization. On the other hand, it is also used for understanding the skills of the staff
members. The shared values are also acknowledged through this model. BP Oil
company uses the Mc Kinsey’s 7s Model for continuing with the organizational change.
Apart from this, it has been observed that this model also assists the company by
applying a new strategy for the purpose of betterment. The future possible changes are
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also identified through this procedure. The better way of merging with the other
organizations are also done through McKinsey’s Model.
The Strategy in the McKinsey Model helps in identifying and achieving the competitive
advantages and the issues related to the values and mission of the company, BP Oil.
The structure basically defines the organizational working process and the way the
process is continued. Skills of the employees and the other staff members can also be
understood through this. The organization will try to motivate the workforce and along
with this, they sh-ould be trained and rewarded accordingly (Mitchell and et al., 2015).
The manager or the other top-level members manage the style. However, it has been
observed that shared values play a significant role in the company as it helps in guiding
the employees and the overall management to work in an efficacious way. Thus, in this
way, the BP Oil Company will be able to use the McKinsey 7s Model for gaining
strategic capabilities out of it.
M2 - Critically evaluate the internal environment to assess strengths and
weaknesses of an organisation’s internal capabilities, structure and skill set
using BP Oil company as an example
a) Do critical analysis of the outcome of your McKinsey’s 7s Model analysis LO2
After applying the McKinsey’s 7s Model, BP Oil company has gained many benefits. It
has used different innovative and useful strategies that are useful in the context of the
organization. The strategies are implemented for the sake of bringing a positive result.
On the other hand, it is also used for strengthening the organizational structure and
values. Teamwork structure is maintained in the BP Oil Company. With the help of this
factor, the organization will be able to work with the help of the team members.
Similarly, the company also maintains the system. Training and development processes
are carried on for the purpose of enriching the company (Alam, 2017). In this way, the
shared values are also focused by the company for improving the behaviour of the
employees and working according to the direction of the company. Therefore, it can be
stated that BP Oil has to gain advantageous outcomes from McKinsey’s Model. This
has increased the scopes and opportunities of the organization.
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