LCBB6004 - BP Strategic Management and Sustainability Analysis

This report provides a strategic analysis of British Petroleum (BP), focusing on its strategic management practices and sustainability initiatives. It begins with a PESTLE analysis, examining the political, economic, social, technological, legal, and environmental factors impacting BP's operations. The rep...Read More

Strategic management
and sustainability

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
PESTLE Analysis of British Petroleum:.....................................................................................3
Swot Analysis On British Petroleum :........................................................................................5
Porter's five forces on British petroleum :...................................................................................7
CONCLUSION ...............................................................................................................................8
REFERENCES:.............................................................................................................................10

INTRODUCTION
Strategic management is known to be the technique of understanding of strategy of the firm
which is executed by the manager of the firm in the company. Aim of this management is to
increase total productivity as well as performance in order to gain competitive edge over the
several rivals. It can be examined, as the collection of many decisions and practices which
increases efficiency of the businesses. By executing strategic management , firm maintains their
resources, make clear goals, evaluate competitive environment. Pandemic Covid 19 effects
performance and operationally. So, it gets an essential to execute proper strategy to operates its
business smoothly. The following report is based on British Petroleum which is a British well
recognised oil as well gas company. Company specialises in dealing of oil and gas involving
refining, distributing, extraction, exploration, power generation, trading and marketing as well.
In addition to it the company is having their headquarters in London, England. It is one of the
The following report will cover about the internal as well as external environment examination
such as SWOT and PESTLE analysis in relation to the British Petroleum. It will also include
industry life cycle framework and Porter's fiver forces in order to determine its competitive
environment.
MAIN BODY
PESTLE Analysis of British Petroleum:
PESTLE Analysis:
PESTLE analysis means to the strategic model which is done by the organisation in accordance
to the evaluate the business environment of external environment. Outside elements effects the
productivity as well as performance of the business in a negative and positive way. Elements
linked to the external environment in case of British petroleum is mentioned below briefly:
 Political Analysis – Political factor refers to the instability and stability of political
conditions in the specific area, restrictions and policies of the government, foreign trade
policies and restrictions on trades as well which effects performance of the business. In
context to British Petroleum which is a British multinational firm which conducts its
functions in several other nations (Valeri, 2021). So, it should understand political
atmosphere in their strategies as well as policies in order to do that it is essential for the
firm to evaluate the political situation of several nations and makes the strategies and

develop policies in accordance to conduct their functions. In context to BP,
implementation of new laws regarding taxes, competitive rules and difficult employment
so these elements either increase and decay the functions of the firm in accordance to the
get the approval from the government so British Petroleum has been funding the several
political programs.
 Economic Factor – It has and essential role in operations of the firm effects its long term
success in an optimistic as well as negative way. Wages, interest rates, foreign exchange
rates, rate of inflation, employees working, and consumers spending are some examples
that are involved in this factor. Government is obligatory of making several rules and
regulation in the circumstances of Covid 19 pandemic in order to minimise its effect on
the over all economy. This circumstance increase the rate of unemployment and also
minimise the income of the consumers as well. In relation to BP, management has
concentrating on to minimising environmental risks which gives them a outcome as it has
moved with its indices by the years. Company is concentrating on minimising water
intake, energy etc.
 Social Factor - This element of PESTLE Analysis has an essential role in the marketing
evaluation and develop several strategies. Health consciousness, attitude towards growth,
population enhancement rate, health, safety indirectly or directly effects the performance
of the businesses. Elements of social environment are essential for marketers to focus on
the particular consumers. It gives firms to know about it domestic workforce and their
understanding to operate under those situations. In relation to BP, their marketing
techniques gets impacted by the element of rise in the local prices of oil as well as gas
and company is expecting proper suppliers. Climate change is yet another element that
impacts the operations of the Business Petroleum.
 Technological Factor – As due to the dynamic up gradation in technology in the existing
competitive atmosphere. Automation, innovation, research as well as development in
technology are some elements that effects the performance of the organisation. These
elements effects the operations of the business and if the firm fails to adapt these up As
per above report, it can be concluded that there are various strategic framework and
models are implemented by the organisation to identify internal and external business
environment and gradation in technology than it will immediately impacts the efficiency

and effectiveness also can lead to the loss of its place in the particular market area. In
context to British Petroleum firm adapts several new automation and technologies for
like, use of social media for their marketing instead of traditional way of marketing in
order to connect to their consumers with large reach and in small cost. In context to BP,
the demand of the renewable energy enhances, integrating with the desires to be done for
the automation as well as technology. To better the sub sea technology in company is
majorly investing in technology which can assist them in in the production of gas as well
as oil (Taylor, 2021).
 Legal Analysis – This factor of the PESTLE Analysis involves several elements like
various laws, rule as well as regulation which are made by the government regarding the
safety, health laws, protection of the workers as well as the consumers norms, racism,
discrimination and taxation polices as well. Firms need to focus and obey on these laws
and norms in order to operate their functions in an effectual as well as efficient way. In
relation to the British Petroleum, management need to focus on the various policies
regarding the use of fuel and also in terms of the carbon emission. In relation to BP,
management need to be aware in understanding the trading scheme of EU is to
understand about the emission of carbon.
 Environmental Analysis – This factor is linked to the impact of the encompassing
environment and impacts the ecological features of it. Protection laws linked to
environment, waste disposable laws, consumption of the energy laws are involved in the
environment elements which should be known by the firm. In context to the British
Petroleum, management can functions its operations with low carbon emission which
gives it to managing effectual position in the market. This company need to adapt the
management of the waste as well as also need to initiate various social corporate
responsibilities which assists the firm to be more sustainable in their competitive
organisational environment. In case of BP, management is utilising various strategies in
order to reduce the greenhouse emissions of their company which is better for the long
term sustainability of the firm.
Swot Analysis On British Petroleum :
Swot analysis is a tool that helps in strategic management of a company by identifying
the areas where it is lacking, maintaining a strong position and what are the possible factor on

which it can work by minimizing the risk. The framework identifies these elements by scanning
both, external and internal environment of the related company. The detailed swot analysis on
the chosen company, British Petroleum is as follows :
 Strengths – This element identifies about the strong areas that must be maintained by a
company to enjoy competitive edge over other competitors of the market.
◦ Diverse portfolio – Bharat petroleum is consisted of several different brands dealing
in different product and services that serves and generate revenues form different
kinds of customers (Scharlipp, 2021).
◦ Strong customer relationship – Thorough researching the market it try to fulfil the
needs of its customers and make strong relationship. This avoids the customers to
switch to other brands and thus increase the locality towards it. For building the
customer loyalty it has served BP so well that it is being recognized by other
industries for its participation.
 Weakness – These provide with the decrepit areas of a business entity that are needed to
be rectified or changed for maintaining or building strong presence in the market.
◦ Less availability of natural resources – British petroleum's mainly business is
depended on energy related domain. The way the natural resources are exploiting in
the world have stood chances to effect the company in the long run due to the limited
supply.
◦ Dishonest management – It has faced several issues regarding the expected moral
behaviour of the society due to some of its executive's and employee's cheap and
dishonesty activities. This damaged the brand image of it and also leaded to fines and
losses in some cases (Monish, and Dhanabhakyam, 2021).
 Opportunities – This provide with the elements that when focused and worked, have
potential to lead to the growth of the business entity.
◦ Alternative fuels and energy – Due to the pollution and limited availability, the world
is moulding towards sustainable types of fuels and energy such as solar and wind.
British petroleum has potential to be flexible to provide with these types of fuels and
energy and cover the changing needs of market.

◦ Geographic growth – The company has strong availability of revenues. It can invest
them in diversifying to new geographic territories that will help it in building its
strong presence.
 Threats – This factor of the swot analysis provide with the elements that have potential
to negatively effect a business entity. Through the provided threats, it also helps in
minimising the chances of uncertainties (Liu, and Dong, 2021).
◦ Environmental issues – The sector in which British Petroleum works is consisted of
processes that harm the environment even with the use of most efficient ways. This
builds a threat for it by harming its corporate social responsibility in the market.
◦ Competition and chances of new entrants – The fuel and energy industry is consisted
of high competition. Due to the changing demands of efficient fuels, many new
entrants are establishing in the market with their enhanced and safe techniques. Some
of the peak competitors of British petroleum are Shell and Chevron.
Porter's five forces on British petroleum :
Porter's five forces is a strategic managing tool used for analysing the competitive
environment of a business firm. It's five forces are based on the analysation of external or macro
environmental factors with three from horizontal and two from vertical type of competition.
When the model is applied on British Petroleum, it will help in analysing its position in the
market from its competitors of the related industry (Konadu, Ahinful, and Owusu-Agyei, 2021).
(Yilmaz, 2021). Porter's five forces analysation on British Petroleum according to its operations
in the UK market are discussed in the following points :
 Competition rivalry in the industry – It is one of the biggest determinant of the
competitiveness of any industry. This tells about the choices that the consumers have and
firms with which an enterprise have to compete before making its presence in the market.
The fuel and energy industry in which British Petroleum deals is consisted of many large
scale companies that have major and consisted share in the market and it is making the
market more intense continuously. To avoid this and have competitive edge over other
big competitors, the company is working in merging with the small companies. It can
also work in finding more innovative and efficient ways for renewable resources. Some
of the peak competitors of the firm are – Shell, Total and Petro China.

 Threat of substitute product – This factor explain the threat of products tat can prove to
be substitute and can be opted by consumers when available at cheap rates and more or
same satisfaction providing level. British Petroleum works in oil industry, the proven
substitutes can be bio fuels and some other renewable resources. Because of the
government policies and changing social preferences ,the substitute products or
renewable products are making a high threat for the company in the coming future (Garri,
2021) .
 Bargaining power of suppliers – This tells about the power that the suppliers have with
them to make changes in amount of supping products and charging high rates from a
business entity that is its buyer. This depends on many different factors such as choices
that the buyer has with them of buying its products. The threat of this factor on the
related company is less as it buys the raw materials and other needed products in high
quantities and the suppliers will not be willing to lose such high reputed and large scale
buyers.
 Bargaining power of buyers – The power of buyers or consumers for making changes in
prices and quantities is concern of this factor. The price of oil and related products in
which British Petroleum deals depend on the global demand. Some countries in which the
company suppliers have high bargaining power due to the native companies, high
demand and government policies. The everyday consumers also have many choices in the
market, so if they find the quality or rates of the firm high, they can easily shift to other
suppliers. The firm has moderate threat of this element.
 Threat of new entrants – The chances of new companies to settle and transact in the
market is defined in this factor. It mainly depends on the investment needed and
complexity of operations. The oil industry need high investment and studies to establish.
British Petroleum is strongly established in the market and if it proves to be flexible and
successful in moulding towards providing efficient types of fuels and energy, it will have
low power of this threat (Balasubramanian, and Balaji, 2021).
CONCLUSION
From the above report it is concluded that there are several strategic techniques and theories are
executed by the firm in order to understand its external as well as its internal business
atmosphere. PESTLE and SWOT evaluation by the firm to understand the elements of the

company's environment in order to make the appropriate strategies for their long term growth
and success. In accordance to increase the knowledge about the competitive forces of the firm
with the help of porter's five forces. By utilising life cycle of the sector company needs to evolute
latest and innovative goods which is different from the other rivals. There are several
competitors which function their working in organisational environment which minimises its
long term growth and profitability.

REFERENCES:
Books and Journals:
Balasubramanian, N. and Balaji, M., 2021. Organisational sustainability scale-measuring
employees’ perception on sustainability of organisation. Measuring Business
Excellence.
Garri, M., 2021. MNE’s sustainability strategies in emerging and developing markets.
International Journal of Organizational Analysis.
Konadu, R., Ahinful, G.S. and Owusu-Agyei, S., 2021. Corporate governance pillars and
business sustainability: does stakeholder engagement matter?. International Journal of
Disclosure and Governance, pp.1-21.
Liu, C.H.S. and Dong, T.P., 2021. Discovering the relationship among knowledge management,
sustainability marketing and service improvement: the moderating role of consumer
interest. International Journal of Contemporary Hospitality Management.
Monish, P. and Dhanabhakyam, M., 2021. Sustainability Strategies for Developing SMEs and
Entrepreneurship. In Handbook of Research on Sustaining SMEs and Entrepreneurial
Innovation in the Post-COVID-19 Era (pp. 527-547). IGI Global.
Scharlipp, H.M., 2021. Sub-supplier Management and Sustainability. In Sub-Supplier
Management (pp. 75-99). Springer, Cham.
Taylor, S., 2021. How to Approach the Development of a Corporate Sustainability Strategy. In
Corporate Sustainability in Practice (pp. 143-164). Springer, Cham.
Valeri, M., 2021. Organizational Studies: Implications for the Strategic Management. Springer
Nature.
Yilmaz, I., 2021. Sustainability and financial performance relationship: international evidence.
World Journal of Entrepreneurship, Management and Sustainable Development.