Individual Project: British Petroleum's Competitive Advantage

This project provides an in-depth analysis of British Petroleum (BP), a major player in the oil and gas industry. It begins with an introduction to BP, its history, and its market position. The project then applies Porter's Five Forces model to assess the competitive landscape, examining the threats of new entrants, the bargaining power of suppliers and buyers, the threat of substitutes, and industry rivalry. The report further explores BP's strategies, including its supply chain management, pricing strategies (economic pricing vs. premium pricing), brand value, marketing approaches (including the PESTAL framework), and human resource management. The project highlights how BP differentiates itself from competitors like ExxonMobil, focusing on its strong supply chain, flexible marketing strategies, and emphasis on safety and risk management. The analysis concludes by summarizing BP's successful business practices and its ability to gain a significant market share through effective strategies and adaptability within a competitive industry.

BP - INDIVIDUAL
PROJECT

Table of Contents
INTRODUCTION...........................................................................................................................3
British Petroleum BP.......................................................................................................................3
Different concepts related to industry.........................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
In the present business world positioning of any organization in the market is of great
importance. It is required that effective strategies are being followed so that more competitive
advantage is achieved. British petroleum is one of the largest oil and gas company which was
founded in 1908. it was the first organization which founded oil in the middle east. Due to
excessive opportunities of growth in this sector distinct companies are entering in the same
industry which has increase total competition (Lees, F012). Therefore it has become necessary
that such strategies are followed which are capable of helping organization in achieving the
competitive advantage. The following report will talk about different concepts like porters five
force model, supply chain management pricing strategies which are adopted by the refereed
organization in order to be different from the other in the same field. Through the given
discussion user will enhance his knowledge about how British petroleum is doing an outstanding
business and has a different image in the oil and gas industry.
British Petroleum BP
BP was founded in May 1908 and established as a subsidiary of Burmah Oil Company
with its headquarters in London, England. It is world's sixth largest oil and gas company and is
world's twelfth largest revenue maker. BP is also world's second biggest oil firm by market
value. This company operates in all areas of oil and gas industry including petrochemicals,
power generation and trading, exploration and production, distribution and marketing. It also
yields a huge amount of turnover for industries and remain attractive due to its market positions
with strong financial and earning growths. Due to this, company has to face tough competition
from its competitors like- Exxon mobile, Royal Dutch Shell, Chevron,Total (France), etc.
Analysis of competition can be done with the help of Porter five force model. Threat of New Entrants- Some factors that affect new companies to enter oil and gas
business are- Huge capital required, increase of the internal competition within industry,
big oil companies can spend in Research and Development to improve their technologies
(Inkpen and Moffett, 2011). British Petroleum is a huge brand which is well established
in the market of oil and gas company. Due to this brand name there is less threat of new
entrants entering this type of market. For new beginners its not easy to enter and compete

with well established and reputed company where they have already captured a large
share of market. For BP, Threat of New Entrants is low. Bargaining Power of Suppliers- BP include suppliers from oil and gas field. BP has a
great name in market so it have and edge over suppliers. In this case they can bargain
with suppliers because suppliers will not be willing to loose business with such a
company (Graham, 2010). Moreover that countries which posses oil fields are also the
suppliers to others so in that case these countries have good bargaining power over
buyers in terms of their policies. For BP, Bargaining Power of Suppliers is low. Bargaining Power of Buyer- Main buyers of oil and gas products are- refineries,
National and International Oil Companies, Distribution Companies, traders, etc. Price of
oil depends upon the global demand for it. Countries which have high power in this field
have high bargaining power over suppliers. Example of countries are- USA, China or
Japan have high power so they can use that to bargain even with big suppliers like British
Petroleum also. When comes to everyday consumption of customers, they can switch to
another oil companies as they have power and switching cost is low depending upon the
requirements of buyers. For BP, Bargaining Power of Buyers is high. Threat of Substitutes- For any company, entrance of new substitute is a great threat. It
affects profitability, market share, turnover of that company. For British Petroleum
substitute can be other oil and gas industry, nuclear energy plants, coal, biofuels and
renewable resources which can pose threat to the company (Szilas, 2010). For BP, it has
less threat form substitutes because this company has big name in market and they are
continuously working on developing the replacement of oil resources. Threat is moderate
in case of this company.
 Industry Rivalry- There are many competitors for British Petroleum which include-
Shell, Gulf coast, Petro China etc. and many more other players which are present in
market. Different industry compete on different matters like product differentiation, fixed
and variable costs, economies of sale. These factors determine profitability ratio of
company. There are very few, strong major companies and more, small scale companies
due to which the competition has become tough. Big companies have high share in
market so competition among them is rising with every passing year. Companies are

trying very hard to make them stable in competitive market. For that they are formulating
different alternatives and substitutes like renewable resources, biofuels etc. to make them
strong. Industry rivalry for BP is very high.
Different concepts related to industry
As we know BP is sixth largest company in world it gets a stiff competition from Exxon
Mobil Corporation which is multinational oil and gas corporation of the world and 10th largest
revenue maker in the world. So by virtue of competition these two oil firm are on same scale so
Exxon Mobil is regarded as major competitor of BP in the world (Skogdalen and
Vinnem,2012. So gaining competitive advantages they have to be on on their mark to compete
in business world. There are certain factors based on which company have competitive
advantage in their oil business \
Supply chain management - Though both the organisation have a large geographical
practices supply chain management of BP is much better than Exxon Mobil as BP's supply
chain management is is operated by 48,000 people which help them to cover a large amount area
e.g. They have a reach up-to Gulf of Mexico. By a report in 2011 their offshore management
helps in cleaning up of sorbet and dispersant material in heir wastage removal plan where as
wastage program is restricted to a smaller place near Beaumont and Baton Rogue though they
have effectively planned to manage that area but not effective as BP which is only possible with
a good quality of supply chain management. BP focus on increasing safety measures on
operations and risk as well as maintaining quality of product in competitively lower prices than
Exxon Mobil (Reboredo and Rivera-Castro, 2014). Through conference in Institute for Supply
Management 97th conference Client clears on focussing focussing frequent practice drills which
help in increasing their efficacies in increasing supply and reducing risks. But there are no such
drills and practices are found in Exxon Mobil.
Pricing strategy – There are different types of pricing strategies which are present in
market . Both the company use different types of pricing strategies to flourish in market. It is not
possible to use same pricing strategies in different global market so both the organisation are
easier to use different pricing strategies according to market while concentrate on selling their
product at lower price. Bot the organisation use different pricing strategies like BP uses
Economic pricing where they give discounts on barrels hence can expand their business in South

Asian market on the other hand to Exxon Mobil use pricing at a premium where they set higher
prices than their competitor , this strategy is helpful for them in American market as they have
their dominance there but cannot help them in expansion (Alkhudhiri, Darwish and Hilal, 2013).
In dominating their market BP is focus on investing in gas and advantaged oil and focus on
investing 75% of revenue to their new start-up by 2021, it will allow them to sell their product in
cheaper rate and penetrate deep in market whereas Exxon Mobil do not have innovative
planning.
Brand value- it means creation of alignment of company's business progress in corporate
structure. Chief Executive BP Tony Hayward have highlighted exposure of risk an challenges
of an oil form. In 2000 they have changed their poster to 'Beyond Petroleum ' from 'British
Petroleum ' and invested million of dollars in their promotion activities. Both the company have
over come fro accidents and losses to competence in market ,in 2010 in Deep water Horizon BP
faces a industrial disaster where 4.9 barrels of oil split which accuses a major loss to company
like wise Exxon Mobil have also faced that kind of tragedy back in 2000 in Alaska which have
drastically affected ecosystem for a very long time. Both the factor have seen decline in their
business as well as brand value. But BP have smartly covered up with better business ability
form capturing market. BP have recovered from that by promotions as well as increasing safety
and risk management factors in market place . And hence in future they are focussing on
investing in gas which have further enhance their brand value.
Marketing - Marketing strategy of BP is quite different form that of Exxon Mobil as
BP concentrate on diverse, economic political and social environment. So they have to
frequently change strategies in flexible trading environment. As BP is a multinational company
having more than 80,000 workers. They operate in a wide range operation like refinery ,
exploration, trading , production. It has increased their grass roots in more than 80 countries
(Chin, Cheong and Ismail, 2010). For analysing the market they use PESTAL framework
which analyse different political, economical, social,technological, economical and legal factors
which help in identification of different criteria for promotional activities. They have a good
relation with Arabian countries which help them to have easy trade by getting raw material at
cheaper rates. By analysis strategy of BP it has been found that they have a good amount of
stakeholders in market and have plans to do business on long term market . On the other hand
Exxon Mobil they have adopted 7ps method which helps them to segment and analysis different

factors in an organisation (Mazloumi and et. al, 2012). The company uses different portfolios
and have different pricing strategies. They find it difficult to do business in current scenario as
they do not have a good political relationship with with Arabian countryfied . They are having
37 refineries mostly based in US so they haunt expanded their reach to many countries like BP
have done. They have practised their business in ethical way in all over UK that is why they are
bigger firm in USA only. They have strength in limited areas only but find it difficult to pierce
new market.
Human resource management - it is a important factor of an effective organisation, in
organisation like BP having a large base of business in many countries require effective
management of resources. HR manager are highly experienced in making planning and
overcoming conflicts. Like at the time of oil spills the brand value of organisation kept on
recreating but smart work by their HR managers have pulled the values back on track whereas in
case of Exxon Mobil it toot time. Managers have planned different invest in gas and advanced
fuel in future which where as Exxon Mobil do not have any such planning . For gaining revenue
BP focus on increases their business by spreading in other contents but in Exxon Mobil focus
on giving quality oil in their contents.
CONCLUSION
From the above report this has been summarised that British petroleum is doing a good
business in the gas and oil industry. The commercial practices of same are effective enough to
give a good rivalry to other in the same field. It strong supply chain management and other
activities has helped it in covering greater market share than the other.

REFERENCES
Books and Journals
Lees, F., 2012. Lees' Loss prevention in the process industries: Hazard identification,
assessment and control. Butterworth-Heinemann.
Inkpen, A. C. and Moffett, M. H., 2011. The global oil & gas industry: management, strategy &
finance. PennWell Books.
Graham, I., 2010. Working conditions of contract workers in the oil and gas industries. ILO.
Szilas, A. P., 2010. Production and transport of oil and gas (Vol. 3). Elsevier.
Skogdalen, J. E. and Vinnem, J. E., 2012. Quantitative risk analysis of oil and gas drilling, using
Deepwater Horizon as case study. Reliability Engineering & System Safety. 100. pp.58-
66.
Reboredo, J. C. and Rivera-Castro, M. A., 2014. Wavelet-based evidence of the impact of oil
prices on stock returns. International Review of Economics & Finance. 29. pp.145-176.
Alkhudhiri, A., Darwish, N. and Hilal, N., 2013. Produced water treatment: application of air
gap membrane distillation. Desalination. 309. pp.46-51.
Chin, H. S., Cheong, K. Y. and Ismail, A.B., 2010. A review on die attach materials for SiC-
based high-temperature power devices.Metallurgical and Materials Transactions
B41(4). pp.824-832.
Mazloumi, A., and et. al, 2012. Work ability index (WAI) and its association with psychosocial
factors in one of the petrochemical industries in Iran. Journal of occupational health.
54(2). pp.112-118.