Business Strategies and Environmental Analysis of BP Oil Company

This report provides a comprehensive analysis of BP Oil Company's business strategies. It begins with an introduction to business strategies and their importance, followed by an overview of BP Oil. Task 1 examines the impact of the macro environment on BP Oil's strategies, including benchmarking, budget planning, and scenario planning, as well as competitor and customer influences. PESTLE and stakeholder analyses are also performed. Task 2 delves into BP Oil's internal environment and capabilities, using frameworks like the McKinsey 7S model to assess strengths and weaknesses. Task 3 evaluates the competitive forces within the market sector and explores strategic planning theories, concepts, and models. The report concludes with a summary of findings and a list of references.

Business Strategies

Table of Contents
INTRODUCTION................................................................................................................................3
TASK 1.................................................................................................................................................3
The impact and influence of the macro environment on BP Oil Company as an organization and
its strategy....................................................................................................................................3
PESTLE and Stakeholder analysis for BP Oil...........................................................................4
TASK 2.................................................................................................................................................6
P2 The internal environment and capabilities of BP Oil using appropriate frameworks............6
TASK 3.................................................................................................................................................9
P3 Evaluate the competitive forces of a given market sector for an organisation......................9
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning for
a given organization..................................................................................................................12
CONCLUSION..................................................................................................................................14
REFERENCES...................................................................................................................................16

INTRODUCTION
Business strategies are the plans made by organisation which can help entrepreneur in
gaining the competitive advantages along with their goals and objectives. This help an entrepreneur
to make organised working between their different elements, so that the aims get achieved in
effective manner. BP oils stand for British Petroleum company Ltd, it is an British multinational
company of oil and gas. It was established in 1909, and have head quarter at London, England. In
2010, BP oil faced a disaster of oil leakage in Gulf of Mexico, this lead to reduction in the
reputation of BP oils, and also lead them to face lots of loss in profitability. For solving this
problem, CEO of BP oil has hired a junior manager for making report , which cover some specific
points. These are the impact and influence of macro environment on their strategies. Also the
internal environment of BP oils, along with their capabilities ( Brewster, 2017). This report will also
cover section on the competitive force of organisation in given market. Along with this, appropriate
theories, models, and concepts has have to be discussed, which can help them in making strategies.
TASK 1
The impact and influence of the macro environment on BP Oil Company as an organization and its
strategy.
Strategies are referred to the high level plans, which organisations use to design for
achieving some specific goals and objectives, with in specific time period. BP oil is huge
organisation of Britain, which use to serve peoples in oil and gas sector. It is very important for
them to identify the external factors that can influence their strategies. For this,
Along with this, for making effective strategies, BP oil can use different strategic, which are as
follow :-
1. Benchmarking : It is a strategy, which is used for studying the comparison between
strategies of organisation with their competitors. BP oil can use this, for knowing the
strategies used by their competitors, so that they can make changes in their strategies. This
will help them in gaining some competitive advantages.

2. Budget planning : Budget planning is very much important for an organisation. BP oil is
huge organisation, and making plans for budgets will help them in making strategies
according to the budget assigned to specific task.
Along with this BP oil can use techniques, for making their strategies more accurate, such
as:-
1. Scenario planning : This is a technique of strategic planning, which help an organisation like
BP oil to make study and get knowledge about the future scenario, so that they can make
plans according to it only, which help them in achieving their gaols and objectives.
Macro environment to determine and inform strategic management decisions.
Macro environment involve factors which cannot get controlled by any one, but these
directly affect the decision making of management. Some of these are :-
Competitors : These are the factors due to which, any organisation may need to change their
decisions and strategies. BP oil has huge number of competitors, therefore. It is needed for them to
study strategies used by their competitors, so that they can make their strategies according to it.
Customers : Customers are factors that make organisation to change in their strategies. As to
increase the interest of customers and to make products that can satisfy customers, BP oil have to
make changes in their strategies, that can help them in doing so.
These two factors are considered as factors affecting macro environment. As per Brewster
(Brewster, 2017), these two have signifiant impact on BP Oil. Competitors are organisations which
deals in same industry and may lead to negative impact on growth of organisation. Furthermore,
customers also have signifiant impact on them as is they are not satisfied then they will not look
forward for their services.
PESTLE and Stakeholder analysis for BP Oil.
PESTEL analysis has to be done by junior manager of company, which is as follow :-
3. Political : This factor is one of the most important factor for an organisation. BP oil have to
make deep study of policies made by government of countries where they use to serve their
products. This will help their managers to make strategies which are good for organisation,
and this will lead them in attaining their goals and objectives.
For maintaining sustainability in the market for longer period, government started imposing
Subsidiaries and other sustainable factors. This shows a positive impact of BP oil.
4. Economical : Economic condition of a country as well as of that organisation, plays a huge

impact on success and failure of that organisation. BP oil has huge source of finance, but in
countries where they use to sell their products economic conditions are stable and same. For
this, they have to study the economic conditions of country, this will help them in knowing
the factors related to economy. Using this study, manager of BP oils can make strategies that
will lead them in achieving their goals and objectives.
BP oil gets support by many countries which helps them to establish in their nation. They
reduce tax rates and inflations which aid BP Oil to develop in their country in and effective and
efficient manner. Before deciding their prices they need to consider both the borrowing and interest
rate which directly effects the consumer's buying power.
5. Social : Social factor is very important for an organisation, as this help in improving their
profitability and position in market ( Burlton, 2015). BP oil provide their products in
different countries, therefore, it is very important for them to study the social factors of that
country. Like, if society of a country use to avoid vehicles which run by oils and gas
products, then invest in such countries can cause loss to them. Therefore, studying such
conditions will help them in making effective strategies which lead them to achieving their
objectives.
To create a positive impact on the society as well as on the environment, BP oil started
producing their products and services in such a way so that they can not negatively effect the
environment. Different countries have different culture which affects the buying and selling power,
before producing any goods and services, companies need to analyse the behaviour of their
consumers.
6. Technological : Change in technology can lead to change in working performance. BP oil
use to make regular investments in new technologies ( Chang, 2016). This has become
possible because of their regular study on change in technology. This help them in making
strategies that help in adopting new technologies, which take then to gain their goals.
BP oil started using new technologies which helps in attracting consumers and satisfies their
needs. By using these latest and expensive technologies, company must analyse their cost structure,
and make sure that they will not suffer any loss due to the technology.
7. Environmental : Environment is a factor, which make companies to make changes in their
strategies. BP oil also have to study the environmental conditions of places where they their
plants. This will help them in modifying their strategies, which are good according to their
future perceptions.

BP oil must consider some factors before starting their business which directly affects the
environment of the country. Such factors are laws relating to pollution, climate change, air and
water pollution laws. By using these laws in their production they do not miscarry to follow these
legal instructions.
8. Legal : Change in legal policies or over lapping these policies can create huge problems for
organisations. BP oil have to study all the legal policies and have to make strategies
according to these policies and rules. This will help in performing their business without any
problem and also help in achievement of their goals and objectives.
To forbid from the loss of confidential information, managers of BP oil must ensure that
their data is protected, patient and copy right well. To avoid any kind of trouble managers must
analyse and follow all the laws and legislations applied by the government of the nation or country.
TASK 2
P2 The internal environment and capabilities of BP Oil using appropriate frameworks.
The collective form of different elements and operations that decides the performance of an
organisation like, management, employees, working culture are known as internal environment of a
an organisation (Chen and Jermias, 2014). The direct control of this environment can be done by
managers and leaders of organisation, for making the performance good it is very essential to make
changes in internal environment. BP oil is one the biggest oil company in UK, but now a days
working of them is not going proper. For this they can make some changes in the internal
environment of their business, so that they can improve their working and achieve their goals and
objective. Before this, junior manager of BP oil have to identify the capabilities of their
organisation. For knowing the capabilities, it is required to know the strengths and weaknesses of
their organisation. Strengths and weaknesses of BP oil is as follow :-
Strengths
 BP is one of the biggest organisation of oil and gas sector, they have many ample number
subsidiaries like, Amoco, ARCO, BP Express, BP Connect, BP Travel Centre, AM/PM,
Burmah Castrol and many other.
 BP oil is one of the most loyal brand in UK, they have several number of loyal customers,
which are keen for their products and services ( Chu, KrishnaKumar and Khosla, 2014).
 BP oil is one of the biggest oil and gas product seller in United States, they not just only use
to sell their products but also plays an important role in the economy of United States.

 To being one of the biggest oil and gas product seller in UK, BP oil has very large and
strong network. Their network is all around Europe, North America, South America,
America and the Asia Pacific.
Weaknesses
1. BP oil has faced many issues related to their ethics, as they have caught in many scandals of
dishonest transactions with their customers.
2. Controversies are most common for them, as they have faced many scandals related to oil
spills at different locations of the world.
3. BP oil has tried their interest in many different areas of market, like non energy, but they do
not get success in that, which cause them huge loss in their economic conditions and in
goodwill also ( Eaton and Kilby, 2015).
From the above, it is clear that BP oil is big and powerful organisation of energy sector, but
not of non energy sector. Therefore, they are needed to make changes in their environment so that
they can achieve goals and objectives related to energy sector. BP oil have to examine their strategic
capabilities, for this McKinsey’s 7s model is used by them.
McKinsey's 7s model: Strategic capabilities of BP oil are analysed by this model. This model is
further illustrated below:
Structure : Intricate project management structure was very much responsible in the poor
decision making during deep water horizon accident. Along with this, they use vertically integrated
structure while they make decisions for their teams. It represents way in which business units are
managed which are responsible for carrying out different responsibilities and roles.
Strengths: This aids them to formulate strategies by which they can make their decision-
making process strong.
Weaknesses: If vertically integrated system is not used by managers of BP Oil then they
will not be able to formulate effective decisions.
System : The system of BP oils is followed by many safety measure, but their staff and contractors
do not use to follow that. Along with this, leadership styles used by them also not able to understand
their employees about the importance of safety measure. This basically includes procedures and
process which aids BP Oil to maintain function and activities in effective manner.
Strengths: If BP Oil is able to handle and maintain their processes then they will be able to
gain competitive vantage within market and they will be able to build their effective strategies.
Weaknesses: If safety measures are not maintained by managers of BP Oil then they will not

be able to carry out their functionalities in effective manner.
Style : In the year of deep water horizon accident, leadership style used by them was not
able to make their employees and contractors to understand the importance of safety measure
( Jocovic and et. al, 2014). Their corporate culture has stubborn nature, which is very much known
as culture of arrogance. BP Oil needs to be open about ideas which are being given by their
employees.
Strengths: By going for a specific working style which have been mentioned above they
will be able to work in effective way and disputes will not arise within working environment.
Weaknesses: When particular style has been adopted by BP Oil for long term then they will
not be able to sustain as market is developing and there is rapid growth innovations which are
implemented by their competitors.
Staff : The staff of BP oil do not understand the importance of safety, as they do not think that
safety as a core element for their organisation. This is all because of lack in communication of
importance of safety among employees. It essential for manager of BP Oil to allot work to their
employees on the basis of their capabilities so that they can have enhanced results.
Strengths: By understanding needs of employees, they will be able to formulate policies,
rules and regulations in suitable way.
Weaknesses: This process is time consuming as it becomes difficult for employer to
understand each individual.
Skills : The staff of BP oil has lack of skills that are required while dealing with an accident or
preventing it in line with values shared by BP oil safety and environment. This is because,
leadership is not able to communicate with their staff about the importance of these skills in safety
and growth of them. HR department of BP Oil make sure that they have effective staff as per their
requirements and they are able to carry out their functionalities in effective way.
Strengths: When employees of BP Oil have skills and capabilities then they will take
organisation to higher levels and will be able to make them competitive within market.
Weaknesses: Conflicts may arise when people of different culture will work together. Apart
from this, their skills must be improvised so that they can carry out organisational functions in
effective manner.
Strategies : They have adopted a strategy, which make a condition for them of no profit and no
gain, which was named as “federation of assets”. This help them in gaining some incentives in
sharing best practice in risk management and safety. Strategies must be followed by BP Oil through

which they can have their unique position within market.
Strengths: This reflects assumptions which are made by BP Oil with respect to external
environment. This assist them to make enhanced strategies.
Weaknesses: If assumptions which are made by BP Oil are wrong then they will fail
miserably to attain their organisational objectives and goals.
VRIO model of BP oil is illustrated below:
1. Value : BP oil is very big oil company of Europe, and they are always ready to grab
opportunities that come in market. Tracking systems can be used by BP Oil by which they
will be able to track data in enhanced way. This will aid them to have exact information
about their services.
2. Rarity : BP oil has huge mining plant in Gulf which is a unique resource for them. Global
presence of organisation is very rare as it becomes difficult for an organisation to adopt
different strategies as per latest technologies as it can be cost effective.
3. Imitability : It can cause a huge amount of money for any other organisation to copy or buy
same mining resource as BP oil have. Global presence of any organisation cannot be derived
by other organisation. Skills and capabilities of employees cannot be imitated by other
organisation.
4. Organisation : BP oil use their resources in very effective manner, so that the working gain
competitive advantages. When organisation is organised then their employees will also work
as a team to accomplish objectives and goals of organisation in effective way.
Strengths: It aids organisation in decision-making and provides information which aids
them to gain competitive vantage. It also assist them to identify different resources which help BP
Oil to carry out their functionalities in enhanced way.
Weaknesses: If BP Oil do not have adequate knowledge of resources and they do not
provide any kind of benefit then it be useless. An example can be considered in this context that if
BP Oil has opted for expensive resources and it do not proves useful to them , then it will be
wastage of time and money. This money can be used somewhere else.
TASK 3
P3 Evaluate the competitive forces of a given market sector for an organisation.
BP oil is a huge organisation of Europe, for evaluating their competitive force it is required

for the junior manager make Porter's five force model ( Klettner, Clarke and Boersma, 2014). It is
model which is used for analysing the force of different factors that can affect the working of
organisation and their profitability. Following is the Porter's five force model :-
Porter's Five Force of Model for BP Oils: With the help of this model BP oil management
can effectively able to evlauate overall internal and external factor that will affect their organisation.
BP oil can utilze their model to analyse their internal and external strength and weaknesses as to
formulate their future strategies competitive forces of a given market sector for an organisation as
per according to it.
1. Threat of substitutes : Substitutes are the products which are use for replacing one when it
is not available or on permanent basis. The best example of substitutes are tea and coffee, a
person who use to drink coffee, some time drink tea when it is not available. BP oil is a big
organisation of UK in oil and sector, and substitutes in this sector are narrow. As a vehicle
can run only on one either it can be liquid or can be gas, therefore, substituting their product
is not possible till now. And the force of substitutes are negligible for them. In context with
BP oil substitution effect is comparetively less as other organisations are working towrads
their development.
2. Bargaining power of buyer : This factor is considered with the powers related to
organisation's customers. As customer are the biggest factors that can lead a business to
meet success and also have power to fail a successful business. BP oil has ample number of
loyal customers, this is all because they provide products at lower price and at best quality.
The bargaining power of buyer in oil sector is also negligible, as the rates of products are
decided by government, and the difference between rates goes down to narrow ( Lawton,
2017). High number of loyal customers and decrease in difference between rate reduces the
force of buyer on their bargaining power. Company prices mainly depend on global demand
therefore barganing power is high in level.
3. Bargaining power of supplier : Suppliers in oil and gas sectors are limited and generally are
government agencies of supplier countries. BP oil has all these suppliers in their contact, as
it is huge organisation of oil and gas sector of Europe. Suppliers in oil sector have their own
terms and conditions, but in the case of BP oil suppliers use to get agree at their terms
condition. This is all because competitive forces of a given market sector for an organisation
because no want to lose such a big importer of product. This influence of BP oil reduces the
force of their supplier's bargaining power. In relation with BP oil, barganing power of
supplier is mainly in engineering field, technicians field and oil field as to have more edge
over their suppliers.

4. Threat of new entrance : Rules and regulations of Europe legislations (EU) are very tough
and handy to handle. It is not easy in UK to start a small business, lengthy paper work and
highly time consuming process make it very irritating for any one to get permission for a
small business even. Rules and regulations for oil industry are tough, and it is not easier for
any one to get permission for this sector. Along with this, the investment rate for a new
entrance in this sector is very high, and cunt goes in trillions of dollar. Therefore, these
factor together make it just like impossible for any one to come and launch their venture in
this sector. This all make the threat of new entrance as Zero for BP oils. Company is one of
the attractive industry but as they have huge cost minimal threat of new entrants are in
industry.
5. Industry rivalry : BP is a government organisation of Europe, which deals in oil and gas
sector. When it come to competitors, BP oil has about 10 competitors which are affecting
their profit share in market. As they also have ample number of loyal customers which do
not get disturbed by their competitors strategies. As the fossil are going towards drying,
therefore, it is very important for every organisation of this sector to gain fair part of
customers ( Peng, 2017). For this, BP oil has started merging with small organisation of this
industries, which help the competitive forces of a given market sector for an organisatio
them in gaining some competitive advantages. Main rivals of BP oil is gulf coasts, shell who
are already established their extensive brand image in global marker therefore, they have
high rivalry industries.
From the above discussion, it is stated that, step taken by BP oil of merging with small
industries will help them in gaining the most competitive advantages and also help in gaining some
long term advancements.
Ansoff matrix of BP oils is as follow :-
1. Market development : This will lead them to grow their business by proving same products
in new market. With the help of market development BP oil can effectively able to sell their
different range of market products in marketplace as a resonsable prices with more market
growth.
2. Market penetration : In this, BP oil can increase their profitability by providing their existing
products in existing market, for this they can use promotional activities. With the help of
different promotional sources BP oil can maixmise their area of product selling which will
help them to gain more competitive advancements.
3. Product development : In this, BP oil use to make new products for existing market. It is

essential for BP oil to formulate new and innovative products and services as to generate
numerous rage of products in a marketplace as to gain more productivity in a marketplace.
With this company can effectively able to generate their market share.
4. Diversification : This is the most risky strategy for an organisation, in this, BP oil has to
launch new product in new market. For this BP oil is required to formulate new strategies
with the help of innovation as to launch a new product in a marketplace. In addition to this,
it is required for them to conduct a former market analyses so to avoid any kind of future
uncertainty and maximise their growth subsequently.
TASK 4
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning for a
given organization
For making effective strategies, it is very much essential for organisations to use some basic
theories and models, which can help them in designing workable strategies. Some of these are as
follow :-
1. Porters Generic Model : Porters Generic Model is use for describing how an organisation
will pursues competitive advantages in selected market scope. This was developed by
Michael Porter in 1980 ( Rosemann and vom Brocke, 2015). BP oil can use this model in
order to make strategies which can help them in gaining some competitive advantages.
Under this, they can adopt any of three strategies for their products, which are as follow :-
Cost Leadership : It is a strategy which BP can use in their products for gaining some
competitive advantages. According to this, they have to produce some products which are lower in
cost, and are able to attract customers. This will help them in gaining some competitive advantages,
along with increase in their profitability. With the help of cost leadership approach BP oil can
effectively able to sell their products and services at a cost effective and resonable prices as
compared to their rivals such as shell, golf coasts etc. hence, by implementing this strategy BP oil
can raise themselves as a market leader.
Differentiation : It is a type of making different strategy. This can help BP oil in looking
their organisation different from other organisations of their industry. For this they have to make
some different and unique products, which can fulfil the demands of their customers and also give
some competitive advantages. This also help them in gaining some extra profitability from market.
Products and services of BP oil are of high quality and more purify which difeerentiate them form
their rivals which will help them to gain more shares in market.

Focus : Focus is basically divided in two parts, first on cost focus and second on
differentiation focus. In cost focus, organisation use to make strategies which can make their focus
only on the cost of product in selected market. This can help BP oils in making proper strategies
that can help in increasing their profitability. Where as, differentiation focus can help BP oil in
making strategies which has main focus on making a product which can make their organisation
different in market. Traget market of BP oil include both upper and middle class individuals as to
grab more market share.
2. Bowman's Strategy Clock Model : It is type of model which is used by organisations for
making strategies, that can help in positioning their products, so that it can give most
competitive position in market ( Scholes, 2015). BP oil can use any of 8 positions made in
Bowman's Strategy Clock Model, which are as follow :- Low price and low value added (position 1) : This is considered as no competitive
positioning. In this, products or BP oil are perceives very little value by customers rather
then low price. Low price (position 2) : This position help a business in keeping them self at low cost
leader. BP oil can gain advantage by this, as low in cost but high in revenue can help in
maximising their profits ( Spender, 2014). Hybrid (position 3) : This is according to the name, it help in designing strategies for
making the price of product low along with some differentiated products. BP oil can use
this to lower the price of their unique products. Differentiation (position 4) : This main aim of this strategy is to make and provide
product which are very different in market. This will help BP oil in making a different
image in market. Focused differentiation (position 5) : This is a strategy which is used for making high
14priced different products. This can help BP oil in making luxury products, customers
who use to buy product by it's cost can get affected. Risky high margin (position 6) : This strategy can cause a two way for organisation, this
can lead an organisation to failure ( Veit and et. al, 2014). BP oil can make high pricing
of their products but without offering much extra in that product can lead them to meet
failure.

 Monopoly pricing (position 7) : Monopoly refers to offering of specific product or
service by only one organisation. This lead to higher the cost of product or service. BP
oil make a product which is unique in market and no other is offering that product can
lead them in pricing the product very high.
 Loss of market share (position 8) : This is known as higher the value and lower the price
( Wheelen and et. al, 2017). This can help BP oil in gaining competitive advantage at the
most from their competitors.
Strategic Management:
Strategic management plan is a document which is used by organisations to communicate
their plans and goals in organisation along with other essential informations. Strategic plan for BP
oil is as follow :-
Mission: The mission of BP oil is to increase their profitability in market along with their
reputation.
Vision: The vision of BP oil is to have high-grade competitory house, and improve in all the region.
SMART objective: To increase sales by 20% in 2 months.
TUCKMAN TEAM DEVELOPMENT
This theory was developed by Dr. Bruce Tuckman in the year 1970. This theory has five
stages:
Forming: This is the first stage in which staff of an organisation highly depend on their
leader, for guidance and direction. In BP oil, managers helps their employees with their roles and
responsibilities.
Storming: This is the second stage of tuck man theory in which employees need to be more
focused about the organisations goal and objectives.
Norming: In this stage, team members started doing their work more efficiently and
effectively. In BP oil, team members started resolving conflicts between their team mates and focus
on working together rather than individual.
Performing: In this stage of tuck man theory, employees and staff is generally aware about
their duties. In BP oil, staff is sharing common vision, and they know about what they are doing and
why they are doing this.
Adjourning: This is the last stage of the theory, which means that the project comes to an
end. All the team members started moving in different directions.

CONCLUSION
Form the above report it has been concluded that, business strategies are the plans that
entrepreneur use to attain their future goals and objectives. BP oil is huge organisation of world,
which use to provide products in oil and gas sector. Macro environment have factors which can
affect the strategies of an organisation, for BP oil can use different strategic techniques for making
different strategies according to the factors. For identifying their capabilities they have to identify
their strengths and weaknesses, along with that McKinsey’s 7s model can also help in this. For
identifying the affect or macro factors on competency of BP oils, junior manager of them can use
Porter's Five force model. At last, Porters Generic Model and Bowman's Strategy Clock Model can
be used for making the strategies of BP oil.
With the implementaion of diversified strategy company can expand their range of products
. By transforming their generic strategy to differeneciation company can effectively able to increase
their market share. This assignment provide basic understanding about strategic management plan
which will help company to increase their goodwill and maximise their reputaion in marketplace.