Analysis of British Petroleum's Competitive Strategies and Challenges

This report provides a comprehensive analysis of British Petroleum's (BP) business strategies and competitive position within the oil and gas industry. It begins with an introduction to business objectives and the importance of competitive advantage, followed by a detailed examination of BP's operations, including its diverse areas of activity and global presence. The main body of the report is divided into two parts. Part 1 offers a comparative analysis of BP's competitive standing, utilizing Porter's Five Forces to assess its market position, bargaining power of suppliers and buyers, threats of new entrants and substitutes, and competitive rivalry. It also explores the challenges BP faces in cross-border trade, such as lack of local market knowledge and logistical issues. Part 2 discusses how BP can enhance its business using the Ansoff matrix to achieve its objectives. The report concludes with a summary of the key findings and insights, emphasizing the importance of adapting to market trends and leveraging competitive strategies for sustained success in the global market.

Business Project

Contents
INTRODUCTION.................................................................................................................................3
MAIN BODY........................................................................................................................................4
PART 1..................................................................................................................................................4
Comparative analysis of organisation in their competitive position in industry and determine how
the functions of organisation result in gaining competitive advantage...............................................4
Challenges faced by the companies in cross border trade..................................................................6
PART 2..................................................................................................................................................8
Using appropriate theoretical tools, discuss what your company needs to consider to enhance their
business.............................................................................................................................................8
CONCLUSION.....................................................................................................................................9
REFERENCES....................................................................................................................................11

INTRODUCTION
Business is a term which means that they operate in market that defines that they buy
and sell goods and services but organisation perform their activities in order to achieve
business objectives. The business can be incarnate either for profit making or non-profit
making. The main purpose of this report is that to understand the need and demand of
customer in order to sustain in market for long period of time. The other reason for gaining
competitive advantage is that when they have to explore their business and enhance
opportunities so that they can effectively operate in future. There are many competitors in
every type of industry so that the organisation can identify what is the current trend in market
and can analyse product of competitor. With the help of this organisation can develop
strategies as they have to retain their market position and can gain competitive advantage in
particular industry. They can easily identify in which market or area they can expand their
business which help them to achieve business objectives.
British Petroleum is taken as organisation in the present report. British Petroleum is a
public limited company and multinational gas and oil organisation as it is one of the super
major organisation and hold seven position in the world. The headquarter of the organisation
is located in London, England and they are operating in all areas in industry which include
gas and oil. There are various areas where they operate such as power generation, production,
marketing, distribution of gas and oil. They are now also operating in other field which
include wind power, smart grid, energy and technology of solar. British Petroleum is
currently operating in 80 countries. Currently, the selected organisation has employed 70,100
till the year 2020. In the report, it include the competitive strategies and it include the Porter’s
five forces which include various forces which help selected organisation to gain competitive
advantage to retain new as well as existing customer in market. There are various challenges
that British Petroleum have to consider while they trading across borders. By understanding
these challenges they can effectively operate their petrol, oil and gas business in various
countries. To enhance their business they have use the theoretical tool which is Ansoff matrix
as this helps them to achieve business objectives. Moreover, the selected organisation can
expand their business in other countries such as rural and urban areas. British Petroleum
operates in countries which include United States, United Kingdom and many other
countries.
MAIN BODY
PART 1
Comparative analysis of organisation in their competitive position in industry and determine
how the functions of organisation result in gaining competitive advantage
The important term competitive analysis is defined as an analysis in order to assess
and identify competitors which help organisation to understand the interval environment

which means strength and weakness of business, so, they can improve their efficiency and
can compete with their rivals. This also help organisation to develop their strategies so they
can use their opportunities in order to overcome the threat and weakness of organisation. In
context to British Petroleum, they can identify the competitive market and can establish their
plans to compete with them effectively which in turn selected organisation can gain
competitive advantage in consumer market (Bruijl, 2018).To remain competitive in market
they have to introduce new product which help them to attract customer which lead to
increase in profit and sales of organisation. In this way, they can increase their brand image in
front of different customer so they can easily target different types of customers in consumer
market. However, they sell their products in different countries as this can build their brand
image and can develop strategies so they remain in competition with other organisation for
long time period. In other words, it can be said that British Petroleum sells their petrol in
different countries. So, that they can innovate many other products and first identify which
product is most used by customer or what are the needs and requirements of customer in
consumer market.
Porter’s five forces model is a model which is introduced by Michael E Porter as the
main reason is to establish this model so that every organisation can identify their competitors
in market when they are operating in different countries. The Porter’s five forces help British
Petroleum to monitor and identify the current and future trend, in which product in consumer
market they should compete and how they can also analyse how they can segment, target and
position their product in order to accomplish business objectives (Išoraitė, 2018). In other
words, it can be said that, it is a model that analyse the strategies used by competitor so that
they company use their own strategies it remain competitive and maintain their position in
market. The Porter’s five forces are explained in detail below which Rae as follows:
 Bargaining power of supplier (moderate force): Many of them all
purchase inventory from various vendors in the petroleum sector. The Bp Plc profits on
the industry may be reduced by suppliers in the competitive position. Strong Oil and
Natural gas producers are leveraging their bargaining ability to draw increased rates from
the Oil & Gas businesses. The net effect of greater negotiated leverage for suppliers is
that it reduces Oil & Gas' which affect the overall profitability.
 Bargaining power of buyers (weak force): After costing the lowest amount, they choose
to purchase the highest selling bid. Mostly in longer term that put a lot of pressure on Bp
Plc's profits. Bp Plc's reduced and stronger target market is greater the negotiating power
and the willingness of consumers to pursue ever greater promotions and deals.
 Threats of new entrants(low force): Oil and gas new entrants add creativity, innovative
methods of doing business which increase strain on British Petroleum Plc by decreasing
marketing as well as strategies cutting costs and giving consumers current price ideas.
These obstacles need to be dealt with BP and successful obstacles to its competitive
advantage. There is strong threat as the new entering companies can invest huge amount
to launch energy resource organisation (Kinlock, 2019).
 Threats of substitutes (low force): If an innovative good or services responds in various
manners related consumer demands, the viability of the business declines. The danger of

a replacement good or service is strong as it presents a value proposal that vary
considerably from the existing market options. Renewable resources as well as biofuel
may be substitute in oil industry. This is less threat of substitute products or services as
organisation which is coming with the new innovation for their development of business
in order to replace oil resources which help management of British Petroleum to replace
their oil resources.
 Competitive rivalry (strong force): If the competition between current market participants
is strong, so costs will be lowered and the total output of the business will be reduced.
The company works in an Oil & Gas market which is highly competitive. The analysis of
total performance of the company is influenced by this uncertainty. There are many
competitors of British Petroleum such as Shell, Texaco, OMP as well as Petro China in
their market place. This distinct their items by product differentiation, economies of scale
and their costs.
There are various strategies which are adopted by them so that they can implement their
strategies in order to sustain in market and run their business effectively and efficiently.
British Petroleum is joining with other companies so they can help them to tackle plastic
waste which is used in recycling technology (Tatham and Christopher, 2018). The main
point is that they have various charging station as this help them to reduce carbon
emissions to around 300 tonnes. As well as they have established a BP Charge master
network of 7000 electric vehicle and now they are powering around 1.5 miles a week.
They are investing money to reduce carbon emissions in airport, shopping malls by using
Artificial intelligence technology to control and optima energy use. In this way it helps
British Petroleum to succeed in their industry and can increase their market share by
enhancing their producing. By using this they can gain competitive advantage, as the
major is that they have to decrees the level of carbon emissions which will help them to
achieve their target successfully. Nowadays, people are buying electric vehicle so the
major opportunity with them is that they can expand their power or charging station in
different countries which lead to increase profit and can enhance the market share. In this
way they can enhance their productivity and can achieve success in oil and gas industry.
By applying Porter’s five forces they can identify and help them to monitor what are
strategies are adopted by them so they can also introduce those strategies which help them
to remain competitive in market.
Challenges faced by the companies in cross border trade
While doing cross border trade the company comes across major challenges which serves as
the hurdles or obstacles in the growth and success of the company. Some of the obstacles are
given below:
Lack of knowledge of Local market: Sellers must understand the importance of
proper market research which will enable the seller to know about the latest trends prevailing
in the market. Trends vary from area to area and region to region and the marketer must know
about the market in which they are entering in order to find potential customers. The
company must understand the needs and wants of the customers in order to improve their
product accordingly. It is very important for a company to have the knowledge about the
local market of the area in which they are entering with their product (Motta, V., 2020.). In

context to British Petroleum, they have entered the markets of London, United States, United
Kingdom and they have done a proper market research before entering any of these markets
as a huge amount of investment as well as reputation of the company is involved.
Logistics partner: A good logistics partner is very much important for the company
doing cross border trade as the company does not know much about the logistics policy of
that area. The logistics partner can make sure that the company is complying with all the
rules and regulations regarding to their services also they can provide storage facilities to the
company along with that they can also provide the facility of fast delivery and can handle the
returns. If the services regarding logistics are good then it is a big possibility that the
customer will again place an order. In context to British Petroleum, the company tries to
provide best in class logistics services to the customer so that the customer can have their
product without any delay and with convenience. They make sure that the pricing of logistics
is appropriate as international shipments can be costly and the burden will shift on the
customer which in turns increases the cost of the product.
Additional cost: in order to trade cross border the company needs to bear additional
overhead cost which will otherwise be avoided. The first overhead cost is invested in the
improvisation of the website of the company (Olga and et. al., 2019.). The company needs to
make changes in the website in terms of language as they need to use local language so that
the general people can easily understand what are the offerings of the company and secondly
to change the prices according to the local currency in order to make it easily understandable
for the common people. In reference to British Petroleum, the company makes sure that they
do not invest large amount of their budget on overhead expenses so that there is a less
pressure on the cost of the products.
Optimum payment system: The payment systems must be appropriate. Often it is
the main reason because of which the company loses its potential customers because they
cannot offer the payment system that is required by the customer. The payment preferences
differ from region to region as people in India prefer cash on delivery where as people of
many different countries prefer card to make their payment (Rong and et. al., 2017.). In
context to British Petroleum, they do a proper research about the about local payment system
and preferences and analyse what will work best for them. Also the company understands
that having a single payment gateway will be expensive for the company.
Local promotion and marketing: It is very important for a business to understand the needs
and demands of their customer before developing a new product. The company needs to
research properly about the market before presenting a new product to the potential customer
via advertisement or promotion. Locally promoting the products by giving a touch of culture,
religion and beliefs help the company to attract more customers and to attract a big share of
market in order to increase the profits of the customer (Searle, G. and Legacy, C., 2019.).
Promotion and marketing schemes of the company must be according to the local market
which means the company needs to make new advertisement every time they launch new or
existing products in the market. In reference to British Petroleum, they are really trying hard
to approach the customers with the help of the promotion policies that attract customers.
They make the product specifications clear to the customers with the help of advertisements
which attract customers as they can find the products according to their needs and wants.
Lack of leadership: the major reason of difficulties in border trade is lack of
leadership skills in the top management of the company. If the leaders are inefficient than
how will they contribute in the growth and success of the company. Ineffective leaders will
only bring losses to the company and will not be able to handle any situation which requires
their immediate reaction. They always want support of other in order to make any decision.

Leaders who are inefficient will never be able to give right directions to the company (Silvius
and et. al., 2017.). There must be a good leader leading the transactions of cross border trade
in order to have an effective and efficient management and to make the cross border trade
profitable. In context to British Petroleum, the company understands the importance of good
leadership and make sure that the company is having efficient and effective leaders who can
manage the company in the times of difficulties and can give creative ideas to handle any
problem within the company and in the market.
Price fluctuations of the resources: The difficulty of price fluctuations has a huge
impact of the company. The company must make sure that they are aware of the market
conditions of the market they are dealing in and must make sure that they act on price
fluctuations proactively. Every market has their own ways of deciding prices and managing
prices. The company needs to deal with the price fluctuations of every market individually.
Some of the major reasons of price fluctuations are terrorist attack, riots, strikes, natural
calamities. All these factors fluctuate the prices of the commodities and have a huge impact
on the prices as well as markets. In reference to Petroleum, the company always tries to
manage price fluctuations proactively. The company makes sure that they are fully prepared
for price fluctuations and small fluctuations in the company do not affect the workings of the
company majorly.
Subsidies for domestic industries: One of the major drawbacks to the company
doing cross border trade is that they need to compete with the domestic companies who are
already enjoying subsidies given by local government. These subsidies are provided by local
governments to the domestic company in order to make sure that the market is not dominated
by the outside companies (Stoyanova, T. and Angelova, M., 2018, June.). These subsidies
provide a competitive advantage to the home companies and a disadvantage to outside
companies as these subsidies will make the product of the domestic company cheaper and the
product of outside company expensive as the ultimate burden of the cost is going to shift on
the customer. In reference to British Petroleum, the company is trying to make their product
as much affordable as they can so that they can reach to a wider audience and be able to
capture a large amount of market. They are competing with the domestic companies with the
help of wide range of products and also good quality of products.
Exchange rates: there is a major change in the exchange rates of the country. When a
company do a business in country other than its domestic country then the company doing
business in another country have to receive payments in the currency of that other country.
All the customers pay the company in terms of their own country currency and in order to
take that money back to the domestic country of that company, the company needs to
exchange their currency. The exchanging of the currency involves some extra cost that can be
termed as commission which is an expense for the company(Turner, J.R. and Lecoeuvre, L.,
2017.). The company must think and research about the most profitable way of currency
exchange so that the commission remains low. In context to British Petroleum, the company
makes sure that all the costs related to exchanging of currency remains low and profitable for
the company. High profitability and low cost helps the company in future growth.

PART 2
Using appropriate theoretical tools, discuss what your company needs to consider to enhance
their business
The Ansoff matrix is a framework that provides strategic planning tools to managers and
executives in order to help them in planning future growth of the company. The concept of
Ansoff matrix was first introduced by Igor Ansoff who was an applied business manager and
a mathematician. Successful leaders understand that for the long term success and growth of
the organization they need to be dynamic. One strategy is not enough to run a business the
strategies must be changed according to the situations. In order to reach the potential
customers and to increase the profits of the company the managers need to make plans
continuously. In context to the company, British petroleum which is one of the best leading
organisation in oil and gas industry. The company has an aim to provide quality products to
the consumers. The company was started in 14 April 1909 and since then they are focusing
on the long term success rather than short term success.
Ansoff matrix analysis
Market penetration: The company develops a marketing strategy through which
they stays in the existing market with the already existing product but they try to give new
offers or options with the products in order to increase the market share of the product
(Andone, D. and Frydenberg, M., 2019.). By this strategy the company tries to attract new
customers with the help of attractive offers and prices. In reference to British petroleum, the
company always focused on market penetration in order to gain long term success with
existing product. The company believes in economies of scale and does not focus on few
customers for the success of the product.
Product development: It refers to selling a new product in the same market. The
product is changed but the market is same n this strategy. The company develop their
charging stations for electric vehicle by offering them charging point to charge their electric
vehicle which help them to reduce carbon emissions as it become new which can be taken by
the market as a new electric vehicle. In a service industry it can be achieved by shortening the
time taken or by improving customer experience. It is actually a way of giving new product
to the customer with the help of creativity and innovation of an organization. In context to
British Petroleum, they produce their oil, energy and gas in different countries which has
created a diverse customer base for the company which is very beneficial for the company.
Market development: With the help of this strategy the company is trying to sell an
existing product in a new market or new areas of an existing market. In order to increase the
profits and the market share of the company the company tries to find new customers (Cabool
and et. al., 2017.). In reference to British Petroleum, the company is currently present in over
80 countries. They initially started from London and after that they enter the markets and then
expand their operation in United States, United Kingdom and many other which states that
the company continuously moved toward the success of the company through market
development strategy.
Diversification: This strategy is a bit risky as the company is entering a completely
new market with a completely new product. There’s often a little scope for achieving
economies of scale. The advantage in this strategy is that maybe one business is not much

successful and will be suffering from losses but that will not affect the workings of the other
business. In order to have unrelated diversification in the company the company sometimes
takes acquisition and ownership of different subsidiaries (Miralinaghi and et. al., 2020.)
. In respect to British Petroleum, they have expanded their products which include petrol,
natural gas, motor fuels and aviation fuels. A continuous improvement or increment of
product line is termed as related diversification.
CONCLUSION
From the above discussion, it is concluded that every industry face competition in
market when they offer products and services in market. To operate in industry organisation
have to identify and monitor their competitor in market. As the competitor directly affect the
performance of business as they are the external factors which adversely affect the functions
of any organisation. For this, they have to effectively operate for their success and
development in market. The term competitors is the one who sell same product to their
customer in industry where they are operating and the other company analyse their
competitor and introduce new product in market. In this way they can maintain their position
in industry for long time period and can increase their market share. In the report, it is
analysed that there is competitive analysis which include the Porter’s five forces such as
Bargaining power of supplier, bargaining power of buyer, threat of substitute goods, threats
of new entrants and competitive rivalry. By identifying and analysing all these five forces, in
this way the can develop effective strategies and implement them successfully. This help
selected organisation to attain business objective and can gain competitive advantage. There
are various challenges which are to be considering by British Petroleum so that they can trade
their business in different countries. These challenges include lack of knowledge of local
market, logistic partner, additional cost, optimum payment system, local promotion and
marketing, lack of leadership, price fluctuation of resources, subsidies of domestic resources
and exchange rates. All these changes should be considered by them when trading across
countries or borders. As all these effects the development in global market because they are
trading in different countries so they have to follow their legal rules and regulation according
to the trend, usage of pertrols, price fluctuation in different countries of gas and oil or other
energy. By using these they can effectively and efficiently enhance their business for their
future growth and development and can remain competitive in oil and gas industry. There are
various theoretical tools such as Porter’s generic strategies, ansoff matrix, ECG matrix and
many more theoretical tools which will help them to enhance their business. But according to
the selected organisation which is British Petroleum the best theoretical tool which should be
adopted by them is Ansoff Matrix where they can develop their strategies and implement
them effectively. The ansoff matrix includes market penetration, product development,
market development and diversification. With the help of this they can innovate their own
strategies so they can maintain their position greater than their competitor. The competitor of
British Petroleum is ExxonMobil, Valero energy and many more competitors in oil and gas
industry.

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