Robert Gordon University: BP Operations and Strategy Analysis

This report provides a comprehensive analysis of British Petroleum's (BP) strategic operations and operations strategy, utilizing Hill's methodology to assess its business objectives, marketing strategies, product offerings, process choices, and infrastructure. The analysis delves into BP's business-level strategy, highlighting its use of differentiation to maintain a competitive market image and its focus on quality products and diversification. The report also critically examines BP's operations strategy, particularly its performance in the North Sea, identifying challenges such as declining business opportunities and the need for strategic collaboration, cost efficiency, and low-carbon practices. The report recommends a focus on digitalization to improve supply chain transparency and provides a detailed analysis of the feasibility, acceptability, and suitability of this recommendation, including a SWOT analysis, stakeholder mapping, and resource assessment. The report concludes by emphasizing the importance of customer trust and the potential benefits of data analytics in enhancing BP's operations.

Analysis of Strategic Operations and Operations Strategy
[British Petroleum]
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Executive summary

Introduction
British petroleum is the world's largest oil and gas company. Headquartered in
London UK BP has operations in close to 80 countries. The main purpose of this report is to
assess BP for its business strategy and operations strategy. Moreover, the extended purpose
would be to identify one aspect of the current operations in BP where should look for
improvement.
Hill’s Methodology template in context to British Petroleum (BP)
In this section, Hill’s methodology template will be used to present an overall view of
BP, so that, readers can easily digest its contents and also feel to have come across some new
pieces of information. Below is a presentation using Hill’s methodology template:
Step 1: Corporate objectives
 To keep penetrating the existing market by collaborating with strategic partners and
also offering new products like beverages, food and eco-friendly oil;
 To enter new market and get the opportunities there to its advantage through
management contracts both domestically and internationally, and offering ‘No Frills’
product to keep the pricing low;
Step 2: Marketing strategy
BP claims to use such technologies that could fulfil their growing business needs. BP
positions its market image of an energy producer that can meet the rising demand for faster

production as well as reduce its negative environmental impact. BP asserts to be competitive
even when the prices, technology, policy and customer preferences are constantly rising.
Step 3: How do products win orders?
The way ‘British Petroleum’ positions its business helps it win orders. BP invests
heavily into scalable digital strategies and ecosystems to sustain these practices and ensure
constant profits. The company intensively distributes and sells refined products through
effective utilisation of its globally expanded supply chain and the highly capable company’s
workforce.
Step 4: Process choice
BP operates in upstream, midstream and downstream levels of the oil industry.
However, this study is related with discussing the upstream operations of BP. The global
industries seem to have impacted from the use of Internet of Things (IoT) network. The
global oil and gas industry is not behind in this regard. BP is one of these companies to have
shown prompt response to these technologies. BP uses technology to find new resources to
extract oil. It is now into action to drive automation of its supply chain network at scale. For
example, it uses robotic process automation (RPA) across its supply chain to consolidate
data. RPA also helps BP mimic processes those are repeated time and again.
Step 5: Infrastructure
Infrastructural-wide BP is now much smaller and simpler also compared to it was 10
years back. The manpower capacity has reduced; however, their efficiency to perform has
increased. It is due to change that took place in the last decade. BP now is more learning-
oriented. It gives preference to forming informal networks of people, process and technology
where knowledge sharing is essential to it. Learning according to British Petroleum is in
utilising disruptive technologies to automate few activities of the supply chain and

encouraging a cultural formation of knowledge sharing both in informal and formal networks
of people. This means suppliers, customers, employees, and others all have something to
contribute to this learning journey of BP.
A discussion of organisation’s business strategy
Different companies have different strategies to differentiate their market image. It
means positioning strategy of one company differs distinctively from that of another. BPO
also has a very distinct business level strategy. Studies suggest that BP uses differentiation as
its business strategy to position its business. Historically BP has always focused on offering
quality products. It is how they have been different from rival companies. Differentiation
strategy encourages giving unique features such as in terms of quality design and reliability.
This is why customers are ready to pay for the more. British petroleum uses very strategies to
ensure that differentiation is maintained. It regularly considers strategic alliances tie-ups,
subsidiaries, joint ventures to ensure that more and more market is penetrated and that market
share is boosted as well. BP has also enhanced its product portfolio to meet the needs of
many customers. For example, BP also offers high quality foods and beverages. Sensing the
urgency to be more environment friendly in things that they do BP now has other strategies in
place. BP also offers no frills products to meet the rising demand for cheaper products. It's
how BP is using many diversification strategies to meet the needs of a diverse customer base.
A critical analysis of organisation’s operations strategy

It is evident from the business level strategy of British Petroleum that there is Keen
interest meeting the diverse needs of customers. However, the reality is something different
which gets exposed when viewing to its performance in regards to North Sea operations.
British petroleum hasn't really found the ultimate solution to deliver a sustained performance
or sustainable business practice in North Sea area. Studies indicate that BP has been
reshaping its portfolio in the North Sea area to be able to focus more on core growth areas
that also includes the Clair, Quad 204 and ETAP hubs. The purpose was being told to have
advantaged production sports hubs in the area through the Seagull tieback projects or others.
Due to the change in focus British Petroleum has decided to divest its interest from Andrew
and Shearwater. BP believes that Premier Oil which is already a huge operator in the North
Sea region should be the right owner of these assets. They already exist in the North Sea
region looking to extend their life with valuable outputs.
The changes are happening in BP in regards to its North Sea operations. The North
Sea value chain is also going through changes. Many trade experts believe that business
opportunities are declining in this region. However, a survey done on 30 senior stakeholders
from the UK and other parts of Europe reveal some interesting truths about the future
business prospects in North Sea. According to these stakeholders, North Sea trading can
produce sustainable success provided if there are strategic attempts to repair the issues in the
value chain of North Sean. Some of the issues to be addressed are mentioned below:
 According to a few experts, the turnaround performance can take around 24 months.
However, this timeframe could be an important factor in the sustainable development
of North Sea if a set of the solutions can be deployed for rescuing the basin.
 Collaboration has been identified as key to foster efficient operations in the North
Sea region. Studies suggest that collaboration will provide an access to resources
needed to drive sustainable supply chain.

 Leadership is being identified as key to drive any significant change in the cause of
developing a sustainable value chain along the North Sea region. A leadership effort
is needed to identify areas that still need improvement. More importantly it is the
availability of resources, business terms with strategic partners, favourable
government regulations, etc. that will set things on track. More specifically it requires
a whole-hearted approach towards the sustainable development of the North Sea
supply chain.
 Cost efficiency is another point of consideration that could make a difference to the
overall supply chain. Cost efficiency will result in reduced operational cost and
increased profit margin.
 Low carbon practice was not earlier into the focus as entire focus was on driving cost-
effective operations. However, responses from the Netherlands sector reveal that they
are planning an expansion of renewable energy resources.
The issues concerning the North Sea operations suggest few points of consideration for
British Petroleum. These are taking strategic approach towards low-carbon operations,
achieving cost-efficiency, showing effective leadership skills and doing strategic
collaboration to boost the supply chain efficiency. On top of all these, BP must ensure that
everything that it does is known to its customers, so that; they have more trust on their brand.
The changes that are taking place in BP can take longer than expected. However, letting its
customers know about these changes and the relevant progress is more important to keep
their trust of the brand alive. With regards to this concern, the use of digitalization will be
recommended to BP for facilitating a transparent supply chain.
One aspect of the current operation to improve

In the operations strategy analysis section it was being recommended to BP that it
should focus more on driving its operations towards digitalization. In this section, the
recommendation will be analysed for its feasibility, acceptability and suitability for the
management of British Petroleum. The findings of this suitability, feasibility and
acceptability check will conclude how British Petroleum can implement digitalization at
scale. The suitability check will be performed doing a SWOT analysis of the
recommendation. Stakeholder mapping will be done to assess the acceptability level.
Resource deployment and financial feasibility will be analysed to assess the feasibility check
for the recommendation. Therefore;
SUITABILITY
Strengths:
Digitalisation of few trading practices can speed up the delivery compared to that with
manual handling. The service companies that used to map and trace underground pockets of
oil, drill the hidden wells inside the oceans and generate crude from within it never know that
the use of digital technologies can be useful in accessing huge amount of data. However, the
increasing customer demand for knowing anything that comes out of wells has put oil
companies to look for digital solutions. Therefore, there is a growing need for digital
technologies that could be helpful in handing off data to customers including also the streams
of zeroes. Oil companies used to hand off pieces of data such as seismic files, which
contractors gather for submitting those for their customers. However, generating data for the
minute of activities and handing it off to customers will require oil companies to generate a
whole new revenue stream to generate millions of new data. It would mean selling
subscriptions to huge data libraries. In other words, it would mean a Netflix for Oil and Gas.
Weaknesses:

One of the major drawbacks of digitalisation is a fact that it disrupts the entire value
chain. It does not just affect the value chain but also the organisational structures and
operational processes. The change can be disruptive; however, the management of change is
what more concerning. A change at such large scale would require focussed and strong
leadership at the core of oil companies. A successful implemented will require the support of
a leader, which has the resilience against the change barriers and passion to drive towards the
goal. Digitalisation should be made a part of the business strategy to show it to be a major
priority for the company. A shift in organisational culture required to adapt to the change will
also require a leadership input into the change process. Both employees and the contractors
should be made aware of the changes. They should be trained on it to let them realise the
mutual benefits of the change.
Opportunities:
There are rising opportunities in data analytics. Data analytics is a potential option for
the sector. Extracting data from the entire value chain should not be the only goal in pursuing
the digitalisation of the value chain. Instead, the focus should also be on understanding the
data, so that, a bridge between oil companies and customers can be formed. There should be
an understanding regarding what data to share with the customer. It indeed makes the most
sense. Data analytics can prove beneficial in this regard. Data analytics can assist on
generating real-time drilling data as well as production data to achieve better results by
utilising better drilling strategy. Data analytics can also be used in multiple ways to predict
risk, improve cost certainty and boost efficiency by creating possibilities for oil companies to
be flexible as well as do more even working with fewer personnel.
Threats:

The course of digitalisation can be vulnerable to many threats. These are significant
economic risk while during the exploration phase caused from manipulation and leakage of
exploration data. Manipulation of exploration data during the well drilling process can result
in loss of life, risk of harm and loss of environmental catastrophe.
ACCEPTABILITY
Stakeholder mapping will be used to check the acceptability for the digitalisation of
operations. The stakeholder mapping will consider the level of interest from low to high to
locate different stakeholders of BP. Therefore;
 Keep informed: This includes customers, government, legal bodies, etc. The
digitalisation of operations is to begin to let customers access the exploration data.
Hence, keeping them informed on the data to share should be one of the priorities for
BP. However, in doing so BP will need to utilise ‘Data Analytics’ to identify the kind
of data to share and the one to avoid. The extraction of exploration data and sharing it
with the customers should be done under the regulatory governance of the UK
government.
 Keep satisfied: In the ‘keep satisfied’ quadrant of the stakeholder mapping, there will
be the shareholders, investors, creditors and debtors. Corporate citizenship spirit will
be needed from BP’s shareholders or otherwise the change will be negatively
affected. British Petroleum has not been able to live up to the expectations of its
shareholders over carbon targets. Company was among the energy firms those being
urged to set their goals in relevance to the ‘Paris Agreement’. The disinterest raised in
shareholders was not effectively controlled in this regard. Hence, BP must set its
operations objectives in line with the rising industry trends and in the concerns of its
shareholders to lead the development of digitalisation effectively.

 Key players: Collaborating institutions will essentially help in pursuing the
digitalisation journey. On the contrary, British Petroleum has finally decided to divest
its interests from Andrew and Shearwater. BP finds ‘Premier Oil’ as the most
appropriate operator and owner of these assets as Premier seek to enhance its value to
extend its life.
FEASIBILITY
Feasibility will be checked for financial feasibility of the concept and resource
deployment capabilities of organisations. With regards to resource deployment, there will be
few areas of considerations. These are strength of the brand image, skilled workforce,
availability of cash to be able to fund for the increased stocks and company’s reputation of
being a quality service provider. Financial feasibility includes cash flow forecasting as well
as analysis. Being the global company British Petroleum has a diverse workforce expertise in
different skills. It has many staffs possessing the managerial capabilities. British Petroleum
also has contracts with strategic suppliers all around the globe. It is because quality is the real
identity of British Petroleum. However, the leaders of BP will be recommended to increase
their efficiency in understanding the local demand to realise the specific customer needs. This
will also help establish long-term trusted relationships with the target customers. The
digitalisation of operations may consume 6-7 years to be completed at scale. During that
period BP will need to secure the funds as well as do extensive research of the industry
trends.
Conclusion