William Knox D’Arcy founded BP plc, formerly known as British Petroleum, in 1909, they are a global company specializing in oil and gas, headquartered in London, England. BP has continued to grow since its inception, and now employs over 80 thousand people in 70 countries worldwide (Company History,N.D.para1). According to CNN money BP is ranked number six among other global 500 companies (Fortune Global 500.BP.n.d.). Its key strengths are in oil and gas exploration and production; the refining, marketing and supply of petroleum products; and the manufacturing and marketing of chemicals. It supports all its businesses with high quality research and technology (Company History, N.D.para3). External Environment
Knowledge is power and the more aware you are of trends within the economy, the more successful you will ultimately be. BP is just one of many companies in the oil and gas industry making an impact on environmental trends. A common goal amongst competitors within this industry is to locate oil and bring it to consumers, due to some of the economical trends this goal is also shifting. The economy is more favorable to lower gas prices, lower carbon emissions, and fuel efficiency. Companies within this industry have to balance the needs of development and the needs of the economy while trying to protect the environment.
BP has two main areas of operation, one being the exploration and production of oil and the other being refining and marketing (BP,PLC(BP), N.D.para1) Currently BP like many others in the industry are focusing on ways to lower carbon emissions, and finding new resources of low-carbon energy. One of the ways BP is helping bring these goals and trends into fruition is the utilization of shale oil. Shale oil resources are being discovered all
throughout the United States. Shale oil has helped lower gas prices (Oil and Gas,2013.,para3). BP recently purchased Chesapeake Energy Corp’s position in the Woodford Shale-gas play in Oklahoma for 1.75 billion; with this purchase they can expand into shale gas and are hoping to add 200 million cubic feet into production (Major Oil, Meet Shale. 2008,para2)
According to BP they are taking various steps in finding ways to reduce the amount of carbon dioxide emissions. One of the ways BP is reducing carbon dioxide emissions is through solar energy, since solar power is carbon free. BP is one of the worlds leading companies within the solar industry, offering various products for consumer’s homes and businesses. BP recently started working with Home Depot to offer solar lighting. BP is also focusing on natural gas, which is making up about 40% of BP’s Portfolio and they are continuing to expand to areas that have a high dependency on carbon, such as the United States, Mexico, and parts of Korea. Wind farms are also sparking debate as BP is looking to expand into this area as well to offer carbon free electricity (What Is BP Doing. N.D.para 23-27).
Another economic trend that affects BP as well as the gas and oil industry as a whole is interests rates, exchange rates, and the rate of inflation. There are many factors to consider when looking at the relationship between these rates and gas prices. For example, if these rates were to be raised it would affect the consumers and the manufacturing costs, which would lower the amount of time and money people spend driving, creating less demand for oil, causing the prices to drop. The same would work if the rates lowered, establishing an influx for consumers, which would result in more traveling and higher demand for gas, causing the price to rise (Parry,P.,2013.Para4). Political/ Legal
There are several factors in the oil and gas markets that are affected by politics and legalities. One of the main factors is political unrest in the Middle East. The ongoing efforts in Iraq and Afghanistan have driven the gasoline prices to all-time highs. More recently the civil war attacks in Syria are causing problems with development of Iraq’s gas and oil supplies. The Syrian forces have focused these attacks on the energy sector in an attempt to take away their wealth since oil is main revenue. Due to this focus the attacks have been primarily on oil export pipelines, power generation and transmissions. Luckily, most of the attacks are not occurring in the southern parts of Iraq where the largest supplies of oils are found (Iraq: Syria War Spillover Hinders Oilfields, Pipelines.2014.para3-4).
Oil spills into the oceans are a major factor on the politics side of the oil and gas industries. One of the major spills by BP’s Deepwater Horizon drill in 2010, not only took its toll on the company and the industry, but tourism, wildlife, and beaches were all heavily affected in the Gulf areas. Due to the Deepwater Horizon disaster BP is on a five-year probationary period, and there are new safety measures being implemented across the industry, there are new training procedure, risk management processes and equipment (BP gets record fine for Deepwater Horion, 2012.para2). Demographics
Demographics refer to a company’s consumers as well as employees. The oil and gas industry consumer base can be related to just about everyone, with the retail aspect of the gas station including gum, drinks, snacks, etc. Gasoline in general is targeted to people that are of age to purchase gasoline generally public over the age of 16, which is the legal driving age.
According to the BP website they offer careers in various fields such as business infrastructure, commercial, engineering, operations, sales and support, and technology just to name a few. BP has employees in Europe, Africa, the Middle East, Asia and North and South America (Career Areas.N.D). Employee talent within the oil and gas industry can impose a problem industry wide. Since training employees in these fields can be very costly, it is expensive to train new employees, and industry leaders generally offer top level pay and incentive packages to retain their employees. (Vogt,C. ND.Talent Retention in the Oil & Gas Industry.para1) Technological Trends
Technology is the center focus of all companies within the gas and oil industries. Technology affects everything from safety operations, locating resources, and converting products to lower-carbon products. The main focus of technology within BP is safety, and has been since the Deepwater Horizon drill spilled 4.9million barrels of oil into the water of the Gulf of Mexico killing 11 men (BP gets record fine for Deepwater Horizon,2012. Para2).
Due to Global warming BP along with their competitors are searching for ways to minimize greenhouse gas emissions. Carbon Capture is a popular method amongst the companies in this industry. Carbon Capture focuses on capturing waste carbon dioxide from sources such as fossil fuel power plants that have an excess of waste. Once the carbon waste has been captured it is transported to storage sites to be released where it cannot re-enter and damage the atmosphere (Sadler, T., 2013.para7).
The Keystone Pipeline is another way technology can help the United States achieve energy and independence. The Keystone Pipeline will run from Alberta, Canada down through the Midwest United States ending in Texas. The Keystone Pipeline project has the goal to prove all oil produces in the US access to oil refineries, which in the long run would cut out the Middle East as our biggest supplier (Kalen, S.2012.para2.). Socio/Cultural
There are several social and cultural impacts on the oil and gas industry. The main factor is the rising domestic energy prices. Gasoline prices are high resulting in the consumer paying more for gas, in turn reducing the amount of money available for other consumption, meaning people are driving less (McKillop,A.2012.para1).
Another factor is government assistance with fuel bills. There are numerous resources to provide help with electric and heating bills, these programs are provided on the federal and state levels for most of the United States. These programs help suppliers such as BP to receive payment for the services, instead of uncollected bills. The Low Income Home Energy Assistance Program (LIHEAP) receives funding from the Federal Department of Health and Human Services (DHHS). There are several sources available such as weatherization assistance program and the home energy assistance program (HEAP). Although most of these programs receive funding from the state and federal government, there are not enough sources for everyone who needs them. Global
BP is an international company specializing in the oil and gas industry. BP no longer just deals with oil and gas as shown by their main business activities which include the exploration and production, refining and marketing and the distribution of energy as well as BP alternative energy. BP is ranked in the top tier of the their competitors such as Exxon, Anadarko, Chevron, Conoco Philips and Shell. Within this industry BP owns several labels as well including, Castrol, Arco, Aral, AM/PM and Wild Bean Café (Our Brands.N.D.para1).
BP is the third largest publically traded oil company ranking behind two of its major competitors: Exxon and Shell. BP is the largest gas producer in the United States with fifteen processing plants; they are also considered a top refiner (BP at a glance.2013.para1). Porters Five Forces
Barriers to Entry
The Barrier to Entry level for the oil and gas industry is high. The oil and gas industry is very difficult to enter just because of the start up costs alone. Some of these start up cost would be the drills, trucks, gas station locations, employees and the technology used to locate the resources in the ground or the oceans. Entering into the industry as a specialist such as offering drilling services to the major companies is more common and feasible. The major barrier to entry into this industry is funding, the majority of companies within this industry have been around for a very long time, such as BP, which was established in 1909. Brand loyalty is a huge factor in high barrier entry, since most of these large companies have a loyal customer base. BP is a very well established company and has been building their large customer base for decades. As defined by Hill and Jones brand loyalty is a consumer preference for products by a certain company (Hill, C., Jones, G. 2012pg58.para2) Suppliers Bargaining Power
The bargaining power of suppliers is the ability suppliers have to raise input prices or to raise the cost of the industry. In BP and the oil and gas industry the suppliers bargaining power is high, because there are realistically no substitutes of the product (Hill, C., 2012pg65.para2). There are a variety of oil and gas companies globally, however a few companies dominate the industry: BP, Shell, Exxon, etc. Buyers Bargaining Power
According to Hill and Jones the bargaining power of byers is their ability to negotiate lower prices charged by companies within an industry. They also can raise costs by demanding better services and higher quality products (Hill. C. Jones., G. 2012.page63-64). Right now in the oil and gas industry the balance of power is resting in the hands of the buyer because of economic crisis and oversupply of product. Since oil is considered a commodity and generally all companies within the industry use the same methods for drilling, the buyer is able to seek the lower prices and more rewarding contracts. Substitute Product Threats
Substitute product threats include the products provided by companies or industries as a whole that can meet the needs of customers. The oil and gas industry does not just mean fuel to run our vehicles, which would mean substitutes would include fuels such as gas, coal solar and wind power, nuclear energy and hydroelectricity. Although there are many areas concerning oil and gas, the threat of substitute products are low, there really are no other sources to compare. Competition
The companies in the oil and gas industry operate in a consolidated industry, where the industry is dominated by a small number of companies. BP’s biggest competitors are Exxon, Anadarko, Chevron, and Phillips anytime any of these companies make a move within the industry it warrants a response movement from its competitors. The competitions of the oil and gas industry have high exit barriers, because the demand for the product is static due to the face that all refineries can do the same thing…. produce and refine products. Firms Strategies
According to Hill and Jones the business level strategy “encompasses the businesses overall competitive theme, the way it positions itself in the marketplace to gain a competitive advantage and the different positions strategies that can be used in different industry settings, for example; cost leadership, differentiation, focusing on a particular niche or segment of the industry or some combination of these” (Hill, C., Jones, G., 2012 pg.10). According to BP they compete in both business to business and business to consumer markets with a customer base in over 70 countries. BP uses differentiation in several ways but the major use of this method was the use of technology to transform oil rigs to digital platforms.
BP strives to ensure the best quality and safety standards, and also modified their safety standards after the Deepwater Horizon drill disaster in 2010. BP is considered a leader in the marketplace. They are ranked as the 6th largest company by market capitalization. (Facts and Figures.n.d.) has competitive prices with other companies in the industry, the prices as a whole usually are pretty even across the board and usually only fluctuate by a few cents. Corporate Level Strategy
Corporate level strategy deals with what areas companies should be dealing with in order to maximize profitability (Hill,C 2012. Page10 para3). According to BP they try to create a platform for growth and increased value over long periods of time while continuing to grow and explore new venues. They will continue their research to develop top-level safety and risk management standards, and continue to develop technology to locate and access hydrocarbons and ways to properly extract them.
BP will continue to make its presence in the industry known by exploring alternative energy, spending about one billion per year for this research. The current CEO of BP, Tony Hayward, stated at BP’s annual strategy presentation that he “would be surprised if we saw opportunities at the corporate level…it is not something I am terribly focused on” (Crooks, E.2010 para#12) Technology Strategy
Technology is at the center of everything BP does, it is used in safety precautions discovery, recovery, efficiency and low carbon future development. According to BP they employ over 500-safety and risk specialist working with managers in the field to help improve decision-making regarding standards (BP and Technology.N.D.para1). BP uses a technology called seismic imaging, which is at the forefront of technology in the industry. Through the use of seismic imaging, sound waves are used to determine where oil reserves are in the ground. This procedure gives BP a major head start in discovering oil and gas and pinpointing where to drill. With a focus on a lower carbon future BP’s main area of growth focusing on wind and biofuels because they have the most potential. Firms Competences
BP’s human resource management gives its employees opportunities to see many ways to excel within the company. Throughout their career human resource management personnel will benefit from a broad base of support and training. Personal support is also available through team leaders, mentors, and fellow employees. Among these employees BP also has teams of engineers developing new and safer means of creating energy. BP has employees that deal with safety measures within the company along with the environment. BP’s employees will also act as an essential partner to the business. The employees will also work on real world projects helping the company reach goals in improving organization and human capital resources. BP’s physical resources were used during the massive oil spill in 2010. The physical resources that were used during this time were mainly manpower. The man-power used were numerous employees, volunteers, and other organizations.
Since the oil spill happened in the middle of the ocean, the toxins within the oil spread throughout the Gulf, along with making its way to the US. Over 30,000 people responded to this major oil spill working to collect oil, clean up beaches, take care of animals and plant life effected, and performed other various duties. Another physical resource that BP uses is the natural resource of oil and gases. BP is currently in the production The Chirag Oil Project. This project has started operations, increasing production from a giant oil field in the Azerbaijan sector of the Caspian Sea. Its major physical resource would have to be its massive oilrigs and pipelines. These rigs and pipelines help extract and transport the oil and gases that have been found and gathered. According to the NASDAQ Annual Income Statement, BP has gone up 29% since 2009 to 2012 in its Current Liquidity Ratio, and the Cash Liquidity Ratio has gone up about 12% from 2009 to 2012. The reason BP’s liquidity ratio has risen the past years is due to the current liabilities. The company’s income has lowered after the massive oil spill. The company has lost large amounts of income due to the spill by having to provide cleaning crews, settlements to the people affected by the spill, and the loss of business from consumers.
The loss of consumers came due to the negative view of the company after the oil spill in the Gulf. Since, the Gulf oil spill, the company now stresses the importance of development without polluting the environment. Finding alternative forms of energy like solar and hydrogen is part of that vision. This development also brings in more funds to the research and development. The liability caps and the role they may have played in encouraging moral hazard. Just as bank deposits are guaranteed by government deposit insurance, and large banks themselves are probably to big to fail, liability for property damage from oil spills off US waters is limited to $75 million (plus cleanup costs), based on a 1990 law passed after the Exxon Valdiz spill. This presumably mitigates drillers’ incentives to manage environmental risk. Indeed, oil companies enjoy a very cozy relationship with their ostensible guardians; as the NY Times noted, “ decades of law and custom have joined government and the oil industry in the pursuit of petroleum and profit.” The federal agency that oversees drilling, the Minerals Management Service, rakes $13 billion a year in fees in what amounts to a public-private partnership.
The business benefits of applying a consistent approach to knowledge management have been significant. BP business managers attributed hundreds of millions of dollars of added value as a direct result of using this approach. A practical example of this has been in the cost reduction in the construction of European retail sites. At the beginning of 1998 a challenge is set of reducing the build costs of retail sites in Europe by 10%. The Alliance (a joint venture between BP and Bovis) is responsible for the management of these activities in Europe. The Alliance was engaged in the benefits of knowledge management and invited the BP KM Team to help them achieve this outcome. Step change in costs was delivered in 1998 (savings of $74 million) due to the harvesting and sharing of knowledge between the project engineers in Europe.
This gave BP Downstream Retail competitive advantage in the Mature European Marketplace. Project engineers in Venezuela, China, Poland, and Japan are now also leveraging this knowledge on a global scale. Similar examples of increased performance have come from BP’s KM application in speeding up business restructuring, developing new oil & gas fields, improving plant productivity and accelerating new retail market entry. Intangible Resources
BP has a negative reputation among consumers and other people throughout the world. Due to the massive oil spill and the company almost going bankrupt, its CEO and board of directors have tried to bring a more positive look to the company, by searching for new forms of clean energy. The company has always been known for its big production of oil for numerous countries worldwide. Since the oil spill the company has been implementing a higher and more intense safety standard. Although, BP has a negative reputation, it has a well-known name in the oil and energy business. Some may think that BP is too large to fail due its name and some government backing and funding. BP has been in the oil industry since 1909, starting out drilling in Persia. Along with BP having the largest pipeline in the world has brought solar power to remote villages in the Philippines due the hard work of its employees.
BP has used technology throughout its business to keep up with the changing times and the demand for fuel and energy. It has scientist finding new forms of low-carbon energy while reducing BP’s own contributions to carbon in the atmosphere. Under this new banner BP took bigger and bigger steps towards addressing climate change. It installed solar panels at its service stations, brought solar power to remote villages in the Philippines, helped bring hydrogen-fuelled buses to London and introduced new, cleaner types of motor fuel. It created a unit, BP Alternative Energy, devoted to making from all the various types of low-carbon energy viable, large-scale and profitable business. These low-carbon energy sources are solar, wind, natural gas, and biofuels. Along with these new low-carbon energy sources being made, BP has also unveiled a new way of extracting oil, producing more oil and extending the life span of its oilrigs.
The new technology would be beneficial for oilfields worldwide. The company is using new technology everyday as they find new and safer ways to create energy extract, and store oil. The company has used innovations to help with its image in the public eye. They have begun turning used oil and gathered oil from the massive spill to asphalt to be used on roads. Proof-of-concept testing confirmed that the product could meet technical requirements. BP worked with transportation and environmental officials from several states to conduct tests on using the material for highway paving projects. Along with the reuse of oil to asphalt, there has been a movement in the restoration of the Gulf Coast with hard and soft containment booms as well as segregated plastics also were gathered in staging areas along affected area and then sent to waste-to-energy facilities or recycled into new plastic products. One program developed during the Deepwater Horizon incident resulted in routing skimmed fluids to oil reclamation facilities. The fluids were then sent through a recovery process, which was able to reclaim and convert some of them into marketable petroleum products. Value-Added Chain
BP’s inbound logistics activities are comprised of a series of many pipelines, oil tankers, and other forms of transportation that move the extracted crude oil to refining plants worldwide. The company’s massive global operations make efficient and effective logistics that help keep the costs of transporting crude oil low. This efficient global network of transporting crude supply makes more cost advantage for BP in the long run. Light transport is BP’s way of outbound logistics as it utilizes its global networking to perform this logistic. The large supply and distribution logistics network allows BP to perform its light transport and distribution of refined oil with great efficiencies, which help in lowering costs for BP. By lowering the costs of transport of refined oil BP would be able to conduct more research and upgrading the low-carbon energy research. Also this would give the company bigger budget to expand its new technology for creating a safer drilling process.
BP’s main operation is refining crude oil brought in from throughout the world. The refining activities of this company are distributed strategically around the world, with close proximity to its demand markets. With its refineries strategically placed BP has the ability to reach maximum efficient balances between its inbound and its outbound logistics. BP positions its refineries to have proximity to their oil and gas fields while also being to those energy markets. The company markets its oil and gas through its vast global retail network, which is made up of mainly its BP Service Stations. BP has excelled in sales due to its advertising campaign by using the latest social media and television commercials.
Another form of advertising many people have seen from BP is though the news stations, by doing positive actions BP is making a better name for itself, which markets BP’s commitment to sustainability and cleanliness in the biotic area in spite of its past failures. The company has rebranded itself as to appear more-green friendly in today’s energy market. It has went as far changing its name from British Petroleum to BP, by which inferring but not stating it stands for “Beyond Petroleum”. This campaign includes a new look that asserts the company’ commitment to sustainability. The advertised commitment to sustainability and green energy has created a competitive advantage for BP. Competitive Advantage Factors
If it is these resources and capabilities, in all their various forms, that create the potential for competitive advantage, the question about how they can actually create it remains. The initial answer is that they must be developed, coordinated and then deployed in such a way that the company can provide goods or services more economically than others or be able to satisfy customers’ needs and wants better than rivals, the ideal being a combination of the two. Whether such competitive advantage yields good profit streams, however depends on a second set of judgments and decisions. The actual products/services to be provided are: the nature and size of the customer market chosen, and the competitive nature of that marketplace. The ability to repeatedly get this right is another set of capabilities. If this is done correctly, the ensuing competitive advantage and its profit stream may not be sustainable. Competitors, anxious to share in the profitable opportunity, the company has uncovered will seek to follow suit.
BP has two basic ways of doing this, either directly imitating the product/service or by providing a good/better alternative. In the product/market arena there are myriad ways of achieving this. Products may be reverse-engineered to discover their component parts and how they were made. Service delivery can be sampled repeatedly until the key elements are identified, and then replicated. Marketing expenditure can be matched, alternative distribution channels found. Even in-company resources and capabilities can be readily emulated or copied. Good competitor analysis can rapidly identify anything from newly installed IT systems to specialist machine tools that have provided a competitive edge.
It can uncover new sales or marketing techniques, component sourcing arrangements, specialized service training, supplier partnerships, outsourcing deals and even which alliances or joint ventures are providing new knowledge. All provide keys to imitation or substitution. Widespread recognition of this has led many companies to despair of achieving sustainable competitive advantage. For example, during the 1980s, many financial institutions spent billions on IT systems that would give them a market edge, only to watch rivals buy better, newer, faster equipment that negated any brief advantage they had. In the 1990s, retailers launched credit and loyalty cards to build marketing databases, only to watch rivals do the same. Each apparent advantage quickly turns into just another entry ticket to play in the game. SWOT Analysis
A SWOT analysis of BP will show their strengths, weakness, opportunities, and threats. BP is one of the largest vertically integrated oil and gas companies in the world (Research and Markets, 2010A). They are investing millions in research and development. Times and demand are changing, more and more consumers are going green, and to stay in competition with other companies they need to come up with something different. In 2010, BP is the company behind the Gulf of Mexico oil spill. Because of this crisis the company needed to do something to gain the peoples trust. In the past BP has made serious communication mistakes with its stakeholders. BP’s crisis communication was a weak link in its crisis management strategy (Valvi & Fragkos, 2013). Strengths
The strength of the company comes from demand, marketing, brand, and research and development. The company’s operations primarily include the exploration and production of gas and crude oil, as well as the marketing and trading of natural gas, power, and natural gas liquids (Research and Markets, 2010B). BP is ranked at the world’s 3rd largest energy company and is positioned as a multinational oil company headquartered in London (Essay UK, 2013A):
Since 2012 BP will have invested $500 million into marketing in the US in an attempt to revamp its brand (Bhasin, 1012, para 1)
As I sit here watching the 2014 winter Olympics, I have seen several commercials about BP partnering with the United States, part of its marketing campaign.
BP is the number one leading vertically integrated company, involved in upstream, midstream and downstream oil businesses (Bp, plc swot analysis, 2013, pg.5). BP upstream technology programs, involves investing in incremental improvements and new technology that can transform the industry. The new technology will strengthen in exploration, deepwater, giant fields, and gas value chains (“Our major technology,” N.D, para1). Many people today are concerning themselves with the environment. BP is developing alternative energy, including solar. BP has invested in solar, wind, and biofuel power, trying to provide power without harming the environment (Hitchcock, 2012). Because of upstream technology flagships, BP has been able to maximize resources, increase recovery rates; real-time data technologies are enabling safety, reliability and efficiency across operations (“Our major technology, N.D., para2). The company began construction of a new high-performance computing (HPC) center in Houston (Bp,plc swot analysis, 2013, pg.4).
BP was awarded a contract to unlock high pressure oil and gas resources in deep water, and planned on investing $100 million over 10 years to set up the International Center for Advanced Materials (ICAM) to fund research into fundamental understanding and use of advanced materials, from self-healing coatings to membranes, across the energy industry The advantages that BP has with being a vertically integrated businesses allows them completive advantage from other companies in the global oil market, It provides control over the entire value chain, enabling the company to produce products which are used at different stages in the value chain (Bp,plc swot analysis, 2013, pg.5). Weakness
Between the years 1965 and 2010 BP has spent millions from the many problems endured: ranging from oil rigs capsizing, hazardous substance dumping, refinery explosion, corrosion in pipelines resulting in insulating agent leakage propane price manipulation, North sea helicopter accident, and finally Deepwater Horizon well explosion (Andrews, 2010). From these problems many died, while others were injured.
The Deepwater Horizon well explosion was the worst. Congress accused the company “of withholding data from the ocean floor and blocking efforts by independent scientists to com up with estimates of crude flowing into the Gulf each day”. The US government has named BP as the “responsible party” for this incident (Andrews, 2010, pg. 20). In November 2012, BP reached an agreement with the US government to pay $4 billion to resolve all federal criminal claims arising out of the Gulf of Mexico incident, leaving BP with a bad reputation, burdened cash flow, which could impede its ability to invest in new opportunities, and deliver long-term growth (Bp,plc swot analysis, 2013, pg.6).
The company has experienced a decline in profits. FY2012 recorded operating profit was $19,733 million, a decrease of 50.4% compared to FY2011. The net profit was $11,582 million, a decrease of 54% compared to FY2011. The decrease in the operating and net profits of the company affected the overall profitability of the company (Bp,plc swot analysis, 2013, pg.7).
You would think this was the straw that broke the camels back. Not only did it affect the company but it also compacted several states. How would BP ever recover? They will be paying for many years to come. Opportunities
BP has been disposing many of its assets to concentrate more on its strengths. So far they have sold $38bn worth of assets since the Deepwater Horizon catastrophe, and plan to sell of approximately $10bn more of assets by the end of next year (BBC News, 2014 para 17 & 19). BP has several external opportunities, including by acquisition in the North Sea area, BP’s future profit by acting in the suitable boundaries area in the Russia region, implement plan to achieve alternative energy methods insist of Hydrogen, natural gas, wind and solar investment (Nhid, 2011, pg. 9A). Not to mention numerous investments. Threats
Many of BP’s threats are external, mainly from the Deepwater Horizon reputation, other threats are: environmental activist, legal and political issues, which will increase the cost of operations for the company investment (Nhid, 2011, pg. 9B), and ethics.
The oil, gas, and petrochemicals industry is highly competitive. High competition puts pressure on accessing new opportunities, license costs, and product prices, affects oil products marketing, and requires continuous management focus on reducing unit costs and improving efficiency, while ensuring safety and operational risk is not compromised. The implementation of group strategy requires continued technological advances and innovation including advances in exploration, production, refining, and petrochemicals manufacturing technology (Bp,plc swot analysis, 2013, pg.9). Conclusion
In conclusion, BP start up company was British Petroleum, providing gas and oil. The company is evolving with research and development in other avenues. BP has had its ups and downs in the company, the latest being Deepwater Horizon oil spill. From this catastrophe they needed to take a step back and look at things in a new light Through all of this they are ranked number six among other global companies specializing in oil and gas, the third largest publically traded oil company, the world’s third largest energy company, and the number one leading vertically integrated company, who employs over 80 thousand people. Since the cost of training top-level employees is expensive, BP offers an attractive incentive package to keep them with the company. As gas prices soar, and transportation changing the company needs to also change with the demand. BP is in the process of finding new resources of low- carbon energy to lower carbon emission. BP is one of the worlds leading companies within the solar industry, working with Home Depot offering solar lighting. Within the industry BP owns several labels.
BP doesn’t have an official mission statement, but provides several different statements called: “what we do”, “What we stand for” & “What we value” (“Mission statement of,” 2013 para 1) “What we do: We find, develop and produce essential sources of energy. We turn these sources into products that people need everywhere. The world needs energy and this need is growing. This energy will be in many forms. It is, and will always be, vital for people and progress everywhere. We expect to be held to high standards in what we do. We strive to be a safety leader in our industry, a world-class operator, a good corporate citizen and a great employer.
We are BP. What we stand for: Above everything, that starts with safety and excellence in our operations. This is fundamental to our success. Our approach is built on respect, being consistent and having the courage to do the right thing. We believe success comes from the energy of our people. We have a determination to learn and to do things better. We depend upon developing and deploying the best technology, and building long-lasting relationships. We are committed to making a real difference in providing the energy the world needs today, and in the changing world of tomorrow. We work as one team. We are BP. What we value:
One Team” (“Mission statement of,” 2013 para 2-4)
With the amount of money the Deepwater Horizon disaster costs the company, BP had to figure out how they were going to survive. Through SWOT analysis, and research and development they are coming up with ways to help the future grow the company.
Recommended Strategic Action
People in the U.S. who weren’t aware of BP, before 2010, their brand became well known after the Deepwater oil spill in the Gulf of Mexico. It left BP with a bad reputation. BP needs to continue to re-build their image. Although there are many environmental challenges, BP is adapting to the needs of a more sustainable society, wanting to be an energy company, rather than an oil company, they need to continue to keep the consumer in mind. BP R & D team continues to come up with new ideas and ways to improve the environment by providing solar, and wind energy, hydrogen, and natural gas. They have sold many assets, continue to sell more, and invest in various projects, they may want to look donating to private organizations to help communities. In their mission, BP claims they value safety; they need to use scenarios before starting a project with safety top priority.
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