Business Strategy of BP Oil in the UK: A Case Study

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BUSINESS STRATEGY

Executive Summary
The business strategy regarding the BP oil company of the UK region has been explained in
this case study. The aim of this case study is to analyze the influences and impacts of macro
environment on the business strategy of the organization. The assessment of influences and
impacts of macro environment on the organization has been included to determine the role of
the strategies to achieve the professed goals. The critical analysis of the macro environment
and interpretation of data has been mentioned to determine the effects of the decision-making
process. The Porter's Five Forces model along with the Bowman’s strategy Clock model and
Porters Generic model for the strategic planning has been mentioned to determine the
strategic management plan for the organization in the region of UK.

Table of Contents
Introduction................................................................................................................................4
LO1 Analysis of the effect of the macro environment on the business strategy of BP Oil.......4
P1- Assessment of the effect of the macro business condition on the organization and its
strategy.......................................................................................................................................4
M1- Critical analysis of the external environment of the entity for determining and informing
the strategic management decisions...........................................................................................6
D1- Critical analysis and interpretation of data and information for producing strategic
direction, tactical actions and objectives for BP Oil through application environmental
analysis.......................................................................................................................................8
LO2 Assessment of capabilities of BP Oil...............................................................................10
P2- Explaining the strengths and capacity of BP Oil...............................................................10
M2- critical assessment of strength and weakness of the organization through internal
capabilities and environment....................................................................................................11
LO3 Evaluation of the results of analysis through Porter’s Five Forces model......................12
P3- Porter’s Five Forces...........................................................................................................12
M3- Recommends strategies for improving the position of the company in the market.........13
Lo4 Application of theories, models and concepts for assessment and interpreting strategic
direction of BP.........................................................................................................................14
P4- Application of models and theories for the strategic planning in BP Oil..........................14
a) Bowman’s strategic positioning model.........................................................................14
b) Porters’ Generic model.................................................................................................16
M4- strategic management plan for improving the business of the company.........................17
a) Definition of the strategic management plan (SMP)....................................................17
b) Strategic management plan production........................................................................17
Conclusion................................................................................................................................19
Reference list............................................................................................................................20

Appendix..................................................................................................................................23

Introduction
The present study discusses the current business strategy of BP Oil. In this context, the
impact of the macro environment of the organization upon the business strategy has been
analyzed. BP Oil is an oil refining company that mainly supplies fuel required for
transportation. The company has been founded in the year 1947. In case of, necessary
resources available, the company also has faced several problems. In order to, reduce the
problems better business strategy has to be planned for enhancing the growth of the
organization. This study has described the impact of external environment of the
organization. Different theories and models such as Porter’s Five Forces model, SWOT
analysis, PESTEL analysis, McKinsey’s 7s model has been discussed to analyze the present
business capability. In this respect, strategic directions and actions are recommended such
that the business can improve its position and be at a competitive edge.
LO1 Analysis of the effect of the macro environment on the business
strategy of BP Oil
P1- Assessment of the effect of the macro business condition on the
organization and its strategy
Explanation of business strategy- Business strategy is an action of long term plan that is
designed to reach the aims and objectives in the organization. As stated by Genovese et al.
(2017), a strategy is the plan of the management of the enterprise to support the strengthening
of the performance of the organization. It also assesses the way to achieve the desired plan
for improving the business. The company can implement a better business strategy to gain
their stakeholder's demand that support the increment of the business performance. The
business strategy of BP is to deliver new and improved ways of using low carbon content in
future. The entity aims at implementing improved technologies such that energy can be
produced in an efficient way.
a) Role of strategy to achieve the goals- The purpose of planning the business strategy
in an organization is to reduce the challenges of the company that decreases the
growth of the business. The business strategy supports the better performance of the
organization that leads towards the increment of the business. Implementation of the
strategy can help to achieve the goal of the organization by minimizing the issues
related to the enhancement of the business in the market. Perfect business strategy can
explain the competitive advantages of the company that has to overcome to improve
the business.

The challenges of the company can be decreased by understanding of the value of the
proposed plan is important. Business strategy properly explains the value of the plan
which is crucial to reduce the barriers of the company and without the proper
understanding of the plan, the strategy can fail. However, using new technologies and
strategies to deliver new and improved ways to help to the company to produce low
carbon economy thereby enhance the efficiency of the energy. Manage to the
stakeholders of the company can be achieved by using a new strategy.
b) Different techniques for a strategic plan - There are various techniques that have
used to analyze the present condition of the business environments for
implementation of the strategic plan in the organization. As mentioned by Vecchiato
(2015), some common techniques for analyzing the plan including SWOT analysis,
Porter's Five Forces model, and so on. On the other hand, the creativity of the plan
can enhance the success of the implementation of the plan.
Figure 1: Techniques of effective strategic planning
(Source: Vecchiato 2015)
In spite of that, continual attention is necessary for successful incorporation of
strategic planning. In order to, increase the value of the plan management
commitment is important. The success of the plan depends on the commitment that
has made by the management of the organization. Successful implementation of
strategic planning has best described by these techniques for improving the business
of the BP Oil Company.
M1- Critical analysis of the external environment of the entity for
determining and informing the strategic management decisions

Explanation macro environment- Macro environments of the business relates to the
external factors of the organization which are mainly uncontrollable for the organization
(Valente, 2018). The factors related to the macro environments of the business including
socio-cultural, ethical issues, political influence, economic forces, legal condition,
technological forces that have mainly affect the performance of the business. It has found out
that the factors related to the macro environments have a direct effect on the decision-making
process of the organization. Sustaining of the business also depends on the effect of these
factors.
Figure 2: Factors related to the macro environments
(Source: Kennedy, 2016)
The enterprise has faced a problem to extract the oil in the Gulf of Mexico. This has been
considered as political issues that have to decrease by the company. This political issue
affects the reputation of the venture. The enterprise has found enhancement of the oil price
which is stated as a social factor that has found to take the decision for the management of the
company. This also affects the economics of the company (Kowo et al. 2018). Apart from
this, the company requires to incorporate new and advanced technologies which lead towards
the low carbon economy. The management requires to take the decision to achieve the goals
which cause improvement in the business.
b) Critical analysis of the macro environment and its impact on the process of decision
making through SWOT analysis- The factors of the macro environments on the

organization has an influence on the decision making the process. The explosion caused by
the deep-water drilling has raised legal as well as environmental issues for the company.
However, the company is strong in terms of technology usage as it updates its technology to
produce energy in more efficient ways. However, the improvement in the business requires to
imply the strategic plan. There is a high demand for oil due to the increase in population.
However, the rise in prices of oil and gas affects the strategies of BP Oil as they look for the
right suppliers to sell their product. Again, due to political instability, BP needs to watch out
the inflation and exchange rates.
As opined by Kwak et al. (2019), successful implementation of the business plan is related to
the decision making the process of the management. However, the decision-making process
has found the benefits by using the analysis. It has also influenced the management to take
the decision for reducing their challenges for improving their business. The company
operates worldwide through a large network. In spite of that, strong management is
mentioned as the strength of the company that is effective for taking the decision. Good
management can help the company to take proper decision for good execution of the strategic
plan (Isaboke, 2015). The weaknesses of the company have evaluated when compared to
other factors. The company has faced challenges in case of oil spillage in the Deepwater
Horizon disaster. The oil extraction process has also increased the lifetime risk of the aquatic
animal. However, the company has to take proper decision for improving its process of oil
extraction.
Moreover, many opportunities are available for the company as they have earned respect in
the past years. The brand loyalty for the company can also increase the opportunities for
taking the better decision that is beneficial for the company to achieve the goals. As per the
view of Littlewood and Holt (2018), opportunities enhance the performance of the business
when they are properly explored. In spite of that, the Deepwater Horizon disaster is an
important threat for the company that requires to reduce for improvement in the business of
the company. It has found that many companies have closed due to this problem. Apart from
this, the competitors of the company have also increased the threat of the business. The main
competitors of the company are Shell and Chevron. In order to, reduce the threats the
management has to take a necessary decision which is beneficial for improving the business
of the company.

D1- Critical analysis and interpretation of data and information for
producing strategic direction, tactical actions and objectives for BP Oil
through application environmental analysis
PESTEL analysis- As stated by Preece et al. (2015), factors of the PESTEL analysis
influences the performance of the business.
Political factor: The Company has faced a problem with the Deepwater Horizon disaster
which is mainly caused by the oil spill in the Gulf of Mexico. This disaster has been
considered as political for the company that has to reduce for improving the business. The
company requires finding the solution for this disaster. Apart from this, the company has
under pressure due to other enterprises. The gulf is considered to be the most profitable
property for the other company. Due to this reason, many of the companies have to take
advantages of the place.
Figure 3: Pestel analysis
(Source: Preece et al. 2015)
Economic condition: Oil prices have risen in the recent time at globally which creates a
problem in case of performing the task of the company. However, the company has to invest
more in oil production for ensuring the stability which is also helpful to increase the capacity
for avoiding the disaster.
Social condition: Marketing strategies of the BP Oil has also affected by the increment of the
price of the oil and they require finding out the right suppliers for increasing their business. In

the words of Song et al. (2017), the supply management chain is necessary to manage for
improving the business in the market. In spite of that, income distribution is also important
for assessing the social factors. The demand for oil enhances when the improvement in the
income distribution increase.
Technological factor: In order to, increase the demand for energy the integration of the new
technology is important. It has found out that the technology is the valuable factor to sustain
in the competitive level of the alternative market of energy. Apart from this, to meet the low
carbon strategy the company requires to invest in the technology that supports the reduction
of the greenhouse emission.
Environmental forces: It has assessed that the climatic changes have affected the oil
industries. In order to, decrease the greenhouse gases the company has to make efficient
strategies which also support the climate. Apart from this, the company requires more
investment to maintain its infrastructure.
Legal: As per the view of Tsangas et al. (2019), taxation and Fuel duty acts of the
governments affects the oil price in the country. In spite of that, the enhancement of the uses
of biofuels has also reduced the sales of the oil industry. Maintenance of sustainable business
the company has to follow the legal terms of the governments.
b) Stakeholder analysis- Stakeholder analysis of the company has identified the valuable
entities which mainly influence the strategies and objectives of the company (Fombrun et al.
2015). There are internal and external stakeholders have identified for BP Oil. Internal
stakeholders for the company including employees, suppliers and shareholders. On the other
hand, customers, competitors, governments, local communities have mentioned as external
stakeholders.
Keep satisfied- Improvement in the business has to maintain the satisfaction of some
stakeholders. As per the view of Thomas et al. (2017), stakeholders such as governments,
shareholders require to be satisfied by the organization. The satisfaction of these stakeholders
is important to improve the business. In the case of, BP Oil satisfaction of the shareholders
can increase the funding of the business which is necessary for sustainable business
maintenance.
Manage closely- Stakeholders like customers, communities require managing properly for
successful implementation of the objectives of the venture. In order to, enhance the business
of the company, they require to manage these stakeholders which is beneficial for enhancing
their business in the market.

Figure 4: Stakeholder analysis
(Source: Fombrun et al. 2015)
Monitor- Stakeholder such as competitors has to monitor for following the improvement of
the business. Monitoring of competitors is beneficial to understand the further improvements
that are necessary for the company to increase the business (Chandler et al. 2017). As per the
case study, the company requires to enhance their business and this can possible by using this
strategy.
Keep informed- Keeping the employees is important for maintaining the performance in the
organization. In this context, staff management is a big issue that has faced by the company.
In this respect, BP oil needs to manage each of its stakeholders well. The entity needs to
adopt strategies and follow the environmental legislation in order to reduce the environment
related issues.
LO2 Assessment of capabilities of BP Oil
P2- Explaining the strengths and capacity of BP Oil
SWOT analysis: It has found out that the company has generated its energy by using the low
carbon strategy which is considered as the strength for the business. In spite of that, the uses
of new and advanced technology have improved the business of the company. BP Oil has
also the market worldwide and brand loyalty is valuable for enhancing their business. In the
case of, extracting oil in the Gulf of Mexico the company has increased the risk of the aquatic
animals. On the other hand, the company was involved in the disaster of the deepwater
exclusion. However, they require maintaining proper techniques to improve the business.
As per the case study, they require to manage the employees in the organization. As
mentioned by Fombrun et al. (2015), the employees are mainly influenced by the

performance of the business. Managing the performance requires managing the workers in
the organization. In spite of that, the company has further opportunities to enhance their
business in the market by managing their technologies and to enact the strategic plan.
Competition is an important threat for the company to increase the business. Improvement in
the performance can achieve by minimizing the threats of the company.
b) McKinsey’s 7s model- This model explains the structure, system, strategy, style, staffs
and skills which is essential for maintaining the business (Shiri et al. 2015). Implementation
of this model increases the effectiveness of the business. It has found out that the proper
maintenance of the capabilities in the organization has to follow the purposeful assessment of
the structure of the company. This is beneficial for enhancing the business. In the case of, BP
Oil they have to maintain the multi-domestic structure that is also beneficial for reducing
their problems. According to the model, staff management is necessary for improving the
business.
The company has affected by climate change. However, using the advanced technology and
reduction in the greenhouse gas emission supports the strategy of low carbon economy of the
company. As stated by Jalagat (2016), this model explains the style and improvement of the
skills of the employees. In the case of, managing the performance of the company skills
development of the employees is essential and it leads to the success of the business. Based
on the case study, the company has to follow this model in order to develop better capabilities
and the environments of the company which is beneficial for enhancing the business.
M2- critical assessment of strength and weakness of the organization
through internal capabilities and environment
Outcomes of McKinsey’s model: It has found that the company has to manage its
employees and develop the skills of the employees for increasing the performance of the
enterprise. In order to, manage new and advanced technology skill development is necessary
(Shiri et al. 2015). It has also found that the company requires maintaining the structure of
the entities for managing the business. On the other hand, the company requires following the
structure of its infrastructure for maintaining the capabilities.
a) VRIO or VRIN framework:
Resource Value Rare Imitation Organization
Raw materials Yes Yes, as the
other
Costly, so can
imitate by the
Yes