Case Study: Analyzing Factors Behind BP's Declining Sales (2024)

This case study analyzes the factors contributing to the decline in sales of British Petroleum (BP), a major player in the oil and gas industry. The report delves into various aspects, including the company's background, the research problem of declining sales, and the research questions and objectives guiding the study. It explores the petroleum industry, the research methodology employed, including the research onion, paradigm, and design. The study utilizes surveys and interviews for data collection, addressing accessibility and ethical considerations. The analysis covers strategic aspects using business models and proposes solutions for management, including strategies for success. The case study examines financial issues like falling crude oil prices and the impact of the Gulf of Mexico oil spill, environmental concerns related to incidents, and human resource management challenges. The conclusion summarizes the findings, offering recommendations and acknowledging limitations, providing a comprehensive overview of BP's challenges and potential solutions.

Running head: CASE STUDY: BRITISH PETROLEUM
Case Study: British Petroleum
Name of the Student
Name of the University
Author Note

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Table of Contents
Chapter 1: Introduction..............................................................................................................2
1.1 Background of the case study..........................................................................................2
1.2 Research Problem.............................................................................................................5
1.3 Research Questions..........................................................................................................6
1.4 Research Aim...................................................................................................................7
1.5 Research Objectives.........................................................................................................7
1.6 Structure of the Report.....................................................................................................7
Chapter 2: Literature Review.....................................................................................................9
2.1 Introduction......................................................................................................................9
2.2 Analysis of the Petroleum Industry..................................................................................9
Chapter 3: Research Methodology...........................................................................................19
3.0 Introduction....................................................................................................................19
3.1 Research Outline............................................................................................................20
3.2 Research Onion..............................................................................................................21
Figure 3.1: Research Onion..................................................................................................21
3.3 Research Paradigm.........................................................................................................22
3.3.1 Research Philosophy...............................................................................................22
Figure 3.2: Research Paradigm............................................................................................23
3.3.2 Research approach..................................................................................................23
3.3.3 Research Design......................................................................................................24

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3.4 Sampling method...........................................................................................................25
3.5 Research Strategy...........................................................................................................26
3.5.1 Justification for selection of research strategy (Survey and interviews).................27
3.6 Data collection methods.................................................................................................27
3.6.1 Primary research......................................................................................................27
3.7Accessibility issues.........................................................................................................28
3.8 Ethical consideration......................................................................................................28
3.9 Data analysis..................................................................................................................29
3.10 Time Frame of the Research........................................................................................29
Chapter 4: Data Analysis.........................................................................................................31
4.1 Introduction....................................................................................................................31
4.2 Strategic analysis using relevant Business models........................................................31
4.3 Findings from the Analysis............................................................................................40
4.4 Proposed Solution for the Management.........................................................................41
4.5 Selection of strategies of Success..................................................................................42
Chapter 5: Conclusion and Recommendations........................................................................43
5.1 Introduction....................................................................................................................43
5.2 Conclusion Review that is drawn from the objective of the research............................43
5.3 Action Plan and Recommendations...............................................................................44
5.4 Limitations of the research work....................................................................................45
5.5 Chapter Summary...........................................................................................................46

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References................................................................................................................................47

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The Factors behind declining sales of BP (British Petroleum)
Chapter 1: Introduction
1.1 Background of the case study
British Petroleum is a multinational oil and gas company, which is the largest of its kind in
the UK and seventh largest in the globe in terms of revenue. It is also thereby considered to
be one the major superpowers in the matters of dealing with the market capitalization and
deciding upon the marketing policies in the industry of oil and gas all over the globe. The
operational department of the organization includes production, refining and exploration of
the oil mining fields. The marketing department of the organization also ensures that the
petrochemical products are being properly distributed within the market along with that of the
trade. The company also has their operations within the department of renewable energy.
The company has its headquarter located at London and was established in the year
1908. The initial brand name of the company is that of Anglo-Persian Oil company (bp.com,
2017). The company currently operates in more than 70 nations all across the globe and the
fuel that are being produced are used in the operations of all types of automobiles and
electronic units. The types of fuel that are being produced by the engines and also used as a
part of the lubricants. The company also operates in diverse types of portfolios, which make
use of the different types of resources. The expansion of geographic segmentation helps in
the matters of improving the range of business. This helps them to make use of different
types geographical resources that are available across different parts. With the diverse range
of resources that are available within the company, it will help in the matters of procuring the
resources for the future and use the same during the time of crisis. The company is always

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seeking to improve upon their utilization capability of the hydrocarbon resources. The
company has developed upon the hydrocarbon resources in order to facilitate their global
operational function. The pipeline project that has been installed by the company will help in
the matters of dealing with that of trade and distribution of the petrochemical products across
different nations. The business model of the company is mainly aimed to maintain
sustainability within the petrochemical business. The company also has a wide range of
supply chain network that are utilized properly in all parts of the trading business. The traders
of the company completed the transactions of 550,000 that is meant to serve the business for
over 12,000 customers all across the globe (bp.com, 2017). The company also has dedicated
market intelligence that are used to analyze the changes that occurs within the trade business
and deal with the global network. Hence, the firm is able to meet up with the growing
demand for the petroleum products. The refineries of the company are able to produce the
best quality products, which has been able to maintain the reputation of the premium brands
of the company. The use of highly advanced technology along with that of the effective
policy in the matters of customer relationship management has helped the company to gain
significant competitive advantage. The company also has been set up business partnership as
outsourcing unit that are mainly aimed to improve upon the logistics and supply chain for the
traders.
As of calculated in the year first quarter of 2017, the total revenue of the company
was calculated to that to be $183 billion. The total assets value is estimated to be that of $263
billion. A total of more than 74,500 employees have been currently recruited by the company.
The profit value of the company was estimated to be that of US$ 115 million (bp.com, 2017).
The average rate of the energy growth and that of energy consumption has been
increasing at an average rate of 1.8% for the last 10 years. In the year of 2015, the average

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growth rate for the petroleum products was much below compared to that of the all other
forms fuel that includes nuclear power and other forms of the renewable sources of energy
supply. Nevertheless, till date, the petroleum products remained the world's largest supplier
of fuel and it helps to fulfil the energy needs of the world. The average rate of oil
consumption is estimated to be that of 1.6 million barrels per day. The highest consumer of
the oil is estimated to be that in China with having 400,000 barrels per day followed by India
with 330,000 barrels per day. The British Petroleum plays a major role in deciding upon the
price and the supply rate of the petrol in the markets all over the globe (D’Andrea and Reddy
2014).
1.2 Research Problem
Financial issues
In spite of being one of the biggest revenue holders in the petroleum market, the BP in
the recent times have not been able to maintain their high levels of profit. As per as the latest
reports the sales record of the company has been the worst in 2015 within the past 30 years.
There was 91% decline in the overall rate of sales that was calculated in the fourth financial
quarter if 2015 (Katakey, 2017). This is mainly due to the fall in the rates of the crude oil
price in all over the globe. The rate was recorded to be the lowest in over a decade. The crude
oil spill in the region of the Gulf of Mexico has resulted in the loss of $10.8 billion. As the
period of lower level of the crude oil price decreased and the lower level of price is
maintained for a longer period, the BP has to cut their costs and the annual capital spending.
The annual expenditure was lowered from the rate of $20 billion from $22.9 billion. The
financial officials of BP have predicted that this downfall. The level of profit of the company

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has also fallen at the margin of $600 million. The security issues of the company are one of
the prime causes of concerns that has occurred within the region of Libya. This has been the
major causes decline in the total amount of revenue income for the company. The company
has to cut the cost of 5000 employees, which has resulted in the restructuring of the of the
overall organization. The cost of the restructuring of the overall organization has increased
from $1.5 billion to $1 billion (Tankiewicz et al. 2013).
This decreased level of income cost of the overall organization has resulted loss of
overall revenue decline of the company. Nevertheless, the company has maintained an
effective level of relationship with their investors by maintaining the dividend payment rate
of 10% per share. In the given context the current research will aim to highlight upon the fact
that have been causing lower level of sales for the British Petroleum over the past many
years. The loss of revenue and the overall net income is one of the primary problems that has
been faced by the organization. It is highly essential for the company to deal with the issues
that at the global market level. The main purpose of the research is to gather the evidence that
will help the British Petroleum to identify upon their issues. The research will mainly focus
on the information that is obtained from the case study related to the sales record of the
British Petroleum.
Environmental issues
From a report related to the Deepwater Horizon incident, there was a record in fall of
55% of the shareholder of the British Petroleum. The incident was caused due to the
explosion in the region of Macondao Prospect, which resulted in the death of 11 crew
members. The BP was also not allowed by the US Environmental Agency for the
development of further new work related to that of bidding new work. Hence, it was not

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possible foe BP to get the supply of the raw materials from the respective regions. The
accident also caused destruction of the wealth of shareholders. The value of per share went
down to the amount of $27 per share to the amount of $59.48 that was lower than 55% of the
normal value. Even after recovery of the sales record, the value of each share was that of $37
to $52 (Marketrealist.com, 2017). The average value of the stocks was also lesser compared
to that of the normal value.
One of the major causes of concerns for that of British Petroleum is due to the matter
related to the environmental degradation. This can be said that due to the effects of oil spill
incidents, there has been huge fall in the sales values. This is also one of the major issues that
have compromised on the social reputation of the company and they were not able to follow
the legal policies. Hence, the company has not been able to deal with the policies of the
corporate social reputation.
The global demand for the energy in the forms of fuel consumption is changing fast
due to the fast pace of technological development in all parts of the globe. The energy mix is
also driven and continued by the improvements that have taken place due to the technological
development within the last few decades. The global marker of the technology is also driving
fast due to increase in the demand for fuel. The fast pacing developmental rate of the
economy is also causing huge change in the supply chain network of the petroleum products.
This is mainly due to the fact that most of the emerging economic nations of the globe are
highly dependent on the petroleum products. this has also resulted in the increase of the
world’s energy demand by over 30% within the last 10 years (bp.com, 2017). The oil and the
petroleum markets in all parts of the globe have responded swiftly in order to deal with the
change in demand. According to Hodgetts (2013), it is essential to have diverse range of fuels

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that needed to meet up with the growing demand within caused due to the innovative forms
of technology that are being introduced within the consumer market.
Issues in the Human resource management
Due to the poor level of sales and revenue within the organization, BP has to lower
the compensating level that is provided to the employees. The company also has been
criticized for not providing the proper values within the payroll of the senior workers. In the
recent times, as the company planned to incorporate the new and the short-term changes
within the operations. However, most of the old employees within the management have not
been able to deal with the changes. This is mainly due to the fact that the organization has not
been able to provide the training that is needed to incorporate changes for improving the sales
strategy. The company also has not been able to provide proper information to the employees
that could have helped them to deal with the changes. As the company has not been able to
maintain clarity, it is not possible to improve the level of coordination between the
employees.
In the year 1989, the company has initiated the plan for Sohio pension, which has the
policy for the cash balance for the retirement plan of the employees. Nevertheless, the main
cause of concern for the employees was that due to the initiation of this scheme, more than
half amount of retirement plan is being lost.
Issues in the Operational Management
The main issues with the operation department of BP is mainly due to the sustainably
factors. It is important to note that most of the sustainability issues within the business
operations of BP is mostly due to inability to deal with the changes within the business

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environment. Due to the existing operational issues within the organization, the company is
not able to improve upon the infrastructure that are needed to deal with the issues related to
product sustainability. Due to the implementation of new promotional strategies, it is not
possible for the company to improve on the investment planning that can result with the
issues related with that of the engaging in the social activities. It is also not possible to
maximize the social values that can help to improve upon the sales rates. The operational
department of the organization are not able to deal with the issues related to maintain
transparency.
1.3 Research Questions
Following are the research questions:
 What are the causes of decline in the sales of British Petroleum?
 What are the effects of sales decline that occurs due to low sales record of
British Petroleum?
 What are the intervention policies that can be adopted by British Petroleum to
deal with the issues of low level of sales?
1.4 Research Aim
The aim of the study is to identify the causes that are causing poor level of sales for British
Petroleum and identify following intervention measures.

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1.5 Research Objectives
 To identify the causes that have caused decline in the total volume of sales for British
Petroleum
 To identify the effects that are caused due to lower level of sales for British Petroleum
 To suggest intervention strategies that can be adopted by British Petroleum to deal
with the issues of low sales record
1.6 Structure of the Report
Chapter 1: Background information on the case study, research problem, aim and objectives
of the study is given within this chapter
Chapter 2: The following chapter highlights about the relevant existing literature related to
the subject of the research
Chapter 3: This chapter will highlight about the research methods and techniques that will
be used to collect relevant data and analyze the same for making up the conclusion of the
study
Chapter 4: In this chapter, the given the collected data will be interpreted to make
conclusion of the research
Chapter 5: The final chapter draws the suitable conclusion for the overall research and also
will provide proper recommendations.