Strategic Management and Sustainability: A Case Study of BP Plc

This report provides an analysis of British Petroleum Plc's (BP Plc) strategic management and sustainability initiatives. It begins with an introduction to strategic management and BP Plc, followed by an examination of the company's main strategies over the past five years, utilizing PESTLE analy...Read More

Strategic Management
and Sustainability

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
Main Strategies of the Company.................................................................................................3
Analyse internal business environment.......................................................................................5
Porter's Five Force Analysis........................................................................................................7
CONCLUSION ...............................................................................................................................8
REFERNCES:..................................................................................................................................9
Books and Journals:....................................................................................................................9

INTRODUCTION
Strategic Management involves the management of business resources and materials to
attain the goals and objectives. It encompasses the activities of establishing goals, analysing the
internal business, analysing the competitive environment that management rolls out the plans and
tactics throughout the business (Valeri, 2021). As the business environment is dynamic in
nature, the companies are required to assess the changes happens in that surrounding and analyse
the plans for success and achievements. The following essay is based on the British Petroleum
Plc (BP Plc). It is a multinational oil and gas organization in British administration with
headquarters in London, England. In 1909, the company was established by William Knox
D'Arcy and Charles Greenway. It is found as the top most famous oil and gas “supermajors”. It
has allocated their business operations in all areas of oil and gas sector, consisting exploration
and extraction, power generation, refining, trading, marketing as well as distribution.
Additionally, it also has renewable energy interests in wind power, solar technologies, biofuels
and smart grid. It is also researched that as of 2018, BP Plc had business operations in around 80
nations throughout the world. The current assessment is based on the main strategies that have
been used by the BP Plc over the past 5 years. It is also analysed internal business environment
with the help of SWOT and VRIO frameworks.
TASK
Main Strategies of the Company.
Pestle analysis is an useful management tool that helps to analyse different factors in the
macro business environment. It involves factors such as political, economical, social, legal,
technological and environment factors (Bodrunov and Plotnikov, 2019). This analytical tool
allows BP Plc to makes plans strategically for any changes that need to be happened in its
organizational structure or just to facilitate it with the an overlook about several external
determinants that it has to take into account. Political factors have a great influence in the
determination of progress of the profitable oil company. Since the respective firm operates their
business in a range of locations around the globe, each location has its own political decisions. It
would consist tough employment regulations, enforcement of new tax laws and regulations,
competitive rules in different economies and excalating threats due to terrorism. These variables
either improve or deteriorate the business operations of the firm. It is found that in order to gain

governmental support, the company has been funding different political campaigns. For instance,
in the US, the chosen company has been paying lobby groups to take care of its political
involvements. Due to Brexit impact, it has also influence on the operational decision-making
plans which has made the adoption of various production technologies. Economic factors
determine how the firm can operate and make strategic decisions. For example, the recent
worldwide recession declined the margins in profit, rates of interests also influence the cost of
capital, therefore, the overall expansion and growth as well as exchange rates influences the trade
activities. Because the company deals in oil and gas and involves unsound environmental
policies, the customers' confidence on its goods may be decreases.
It has been found that when social trends are changes, it can affect the demand of
consumer towards firm's products and services. It will also influence the availability and
influence of employees to work. For example, the ageing people in the society of UK has rise the
costs that the firm allocates for pension funds as its employees are likely to live for many years.
As the world population is increasing day by day, it means that demand of oil products will also
rise in the upcominhg days (Zhao, Wang and Yang, 2020). Also, many people are concerned on
issues related with environment, the chosen company will have to make plans to modify the
nature of the products. Technological factor, the chosen firm is faced the issue of developing
existing and global energy innovative goods, The company adopted the exploitation of secure IT
system through which it can overlook and control the oil movement. BP Plc has a website in
order to communicate with buyers on several concerns. The firm is overlooking the suitable
technologies that helps to produce alternate energy sources. Environment is quite considerable
when it comes to companies such as BP Plc. The extraction, refinement and manufacturing of oil
and gas lead to emission of harmful gases that negatively harm the environment. The
Environment Management System in UK has introduce various laws that helps to control oil and
gas activities and also take care of risks associated with it. Legal factors, there are several health
and safety policies are generally regulated by the local government. The Government of UK is
concerned with the health and safety of their individuals associated with the oil sector. It
supports to protect the health of the employees in oil and gas exploration, consumer disposal and
drilling distribution. The oil enactments is also haunted with the raw materials which is acquired
while processing.

Analyse internal business environment
SWOT analysis is used by the company to overlook and review the internal business
environment, including strengths, weaknesses, threats and opportunities. All such factors can
influence the company's strategic decisions. BP Plc has number of strengths. The company
operates their business in number of locations of the world. It has operations in North America,
South America, UK, Africa and many more. It has strong network of the retail brands and
subsidiaries situated in different locations throughout the globe. Some of these are BP connect,
BP express and Burma Castrol (Solangi and et.al., 2019). In UK, the oil industry shows about the
13% of FTSE 100 index. It is also mentioned in the London Stock Exchange which is one of the
main strengths of the business. Moreover, it has strong symbol of the goods that helped in
building customer's loyalty for oil. Based on the last few years, the financial performance is also
improved and experienced a significant amount of revenue due to record rise in oil and gas
consumption.
Despite of its strong areas, the company has also weaknesses. The chosen organization
came into number of controversies and scandals from oil spills in different sections of world. It
affects the sustainability and goodwill with various stakeholders. It also caused loss of lives to
marine life. BP Plc also faced the ethical issues in order to commit dishonest transactions from
workers and they tackled the controversies linked to the oil spillage. BP Plc has diverse interests
in number of areas and mostly in energy related areas. Somehow, poorly performed in non-
energy areas severely affect the company in long run.
There are number of opportunities that can be exploited by the BP Plc. The company can
try to engage with developing countries to make solutions for infrastructure challenges which
enables to use alternative options of energy. It also helps to enhance the goodwill and image in
the market as it can look environmentally savvy. BP Plc has a outstanding presence in the energy
industry and the brand can look at the alternate options of energy such as wind or tider energy.
As the sustainability is the global focus can create lot of opportunities in the energy options.
Hence, it can be appropriate track to grow the business.
The company is in constant threat due to range of factors. It can involve unfriendly
environmental policies that most of time result in toxic spillage of oil. It is not cost effective to
clean, isolated explosions of the refineries can result in the destruction and enactments are

constantly being introduced it concerning its unsound ecological operations. Additionally, the
company is not free from competition such as Chevron and Shell.
VRIO is a resource oriented analysis. This is based on the assumption that strategic
resources can create opportunities to the BP Plc and gain competitive advantages in the industry.
The sustainable competitive benefits can help the brand to leverage the additional profits in the
sector and scotch competitive stress (Lopes, Oliveira and Silveira, 2020). It has been found that
financial resources of the BP Plc are valuable to the company as it makes company to invest into
external growth opportunities and to combat threats. Employees and workers are also valuable to
the company as they are highly differentiated. A huge portion of the workers are highly trained
and leads productivity in the business. The employees are also loyal to the business as well as
the retention level is also high in the BP Plc.
The VRIO analysis of the BP Plc found the financial resources rare as there are only few
company which possesses strong financial resources in the oil and gas sector. It is also analysed
that employees are rare to the firm. The company tends to give better work surroundings and
compensations which ensures to retain employees in the business. The patents are also rare for
the company as these patents are not available and cannot possessed by the rivalries. The
financial resources are costly to imitate as found in the VRIO analysis. These sort of resources
have been obtained through prolonged profits over the years. New entrants and other companies
would need similar profits for long time period to pile up these amounts of financial resources.
The employees are inexpensive to imitate as many companies provide training and developing
equipments to improve the knowledge of their employees. Other companies also facilitate better
compensation packages, working environment, development opportunities and many more.
Through VRIO analysis, it can be said that financial resources of the BP Plc are well organised
and used strategically in the business. These resources prove to be source of competitive benefits
for the BP Plc. Then patents are not well organised in the business as these patents are not used
by the company to its full potential. An unused competitive benefits present in the environment
that can helps to gain competitive benefits.
Hence, with the help of VRIO analysis, it can be said that financial resources give a
sustained competitive benefits. The patents are the great source of unused competitive benefits.

Porter's Five Force Analysis
BP Plc is using this model to analyse the current position in the marketplace in terms of
competitiveness in the related sector or industry. This model will help the company to know how
different forces affect the business operations and activities in the market.
Industry Rivalry, there are various big competitors for BP Plc exists in the industry.
These include, Gulf Coast, Shell, OMP, Total, Petro China, Texaco and many more (Porter,
2019). These competition tends to compete with each other in the oil industry, based on the
various factors such as economies of scale, product differentiation, fixed and variable costs for
such organizations. The oil and energy industry involves a very few strong competition. For
genuine reasons, the big organizations have huge amount of share in the market and competition
among these firms is becoming more strong with each passing year. The world is shifting to
capture the fair amount of market share (Dursa and et.al., 2019). Resulting, BP Plc have started
to take initiatives into merger with small firms to gain competitive benefits over the big rivalries.
Threat of new entrants, though the energy sector is very attractive as it generates more profits for
the business. This sector is having less threat of new entrants because there are high barriers to
entry. It involves high fixed costs consist in the investment of setting up business like that. Also,
it is tough to compete in the market as established companies already gains customer loyalty and
gains bigger market share.
Threat of substitutes, it affects the business profitability. Biofuels and renewable
resources can be the alternative options in the energy sector. Still, there is a less threat of
substitution as the organizations are still working for their development and will take sufficient
time to replace the oil products. Hence, for BP Plc, the threat of substitute products is moderate.
Bargaining power of suppliers, it includes the suppliers from oil sectors, technicians,
management and engineers that work on it. Big names such as BP Plc has a strong influence
over the suppliers as they can bargain with the vendors. Suppliers do not want to lose the
company which makes profits to them. Hence, the bargaining power of suppliers is low to
moderate in the energy sector. Bargaining power of buyers, in the oil and energy sector, the
prices of the oil is highly dependent upon on the global demand for such products. The countries
which have high influence and generated a power to bargain over the supplier. Economies such
as Japan, China, USA can use the bargaining power with suppliers such as BP Plc. In case of
everyday customers, they also have power to switch the brand to other which is depending on

the requirements (Shehata and Montash, 2019). Hence, the bargaining power of buyers is high to
moderate as customers can switch to other brands as well.
CONCLUSION
On the basis of above discussion, it has been concluded that strategic management
involves the planning and direction that helps businesses to obtain the desired results and targets.
It will also help organization to gain long term success that reflects in the productivity and profit
of the business. The case study is based upon the British Petroleum Plc which is the top most
service provider in UK. The company has been affected by several internal and external factors
that needed to be analysed. Pestle analysis is used to analyse different macro environment factors
such as political, social or legal. Covid-19 and Brexit has delivered the huge impact on the oil
and energy industry. Government of UK also imposes many guidelines to protect the health of
people due to which it also affects the business operations of BP Plc. It is found that the
company has many strong points over weaknesses, which results in BP Plc turned out as the top
most company for oil and energy consumption. The competitive environment is analysed with
the help of Porter' five forces.

REFERNCES:
Books and Journals:
Bodrunov, S. and Plotnikov, V.A., 2019. Strategic aspects of national socio-economic
development. In International Business Information Management Association
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Dursa, E.K. And et.al., 2019. Health Status of Female and Male Gulf War and Gulf Era
Veterans: A Population-Based Study. Women's Health Issues, 29, pp.S39-S46.
Lopes, J., Oliveira, J. and Silveira, P., 2020. Applying Regional VRIO Model to Island Regions:
An Evaluation of RIS3. In Regional Helix Ecosystems and Sustainable Growth (pp. 67-
84). Springer, Cham.
Porter, G., 2019. Vietnamese policy and the Indochina crisis. In The third Indochina conflict (pp.
69-137). Routledge.
Shehata, G.M. and Montash, M.A., 2019. Driving the internet and e-business technologies to
generate a competitive advantage in emerging markets: Evidence from
Egypt. Information Technology & People.
Solangi, Y.A. and et.al.,2019. Evaluating the strategies for sustainable energy planning in
Pakistan: An integrated SWOT-AHP and Fuzzy-TOPSIS approach. Journal of Cleaner
Production, 236, p.117655.
Valeri, M., 2021. Organizational Studies: Implications for the Strategic Management. Springer
Nature.
Zhao, H., Wang, F. and Yang, Q., 2020. Origin traceability of peanut kernels based on multi‐
element fingerprinting combined with multivariate data analysis. Journal of the Science
of Food and Agriculture, 100(10), pp.4040-4048.