The business was started in 1909 by one of the mega merger of Anglo-Persian Oil Company. It was renamed as British Petroleum in 1954. The head office is located in the city of Westminster, United Kingdom. It operates throughout the globe and owns approximately 93,000 employees. Today there are BP 2go, BP Castrol, BP Express, BP Shop, BP Connect and BP Travel Center. The business has diversified intensively across its core business.
BP (British Petroleum) is one of the prevalent vertically integrated conglomerates in oil and gas sector. It explores and produces crude oil and different gases. The colossal business also participates in trading and marketing of power resources, liquid and natural gases. Research and Markets (2010) conducted the SWOT Analysis of British Petroleum as follows: Strength: • Prior to the oil spill catastrophe, the business owned leadership position in oil and gas sector and performed vertically integrated business operations • The business has well established plants which are widened geographically
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• It performs business worldwide and has collaborated with retail brands and subsidiaries like AMPM, AMOCO, Burmah Castrol, ARCO, BP travel center, Express, Connect and many more • In 2007 the net profit improved by 83% due to the increase in oil and petroleum prices • It owns loyal and committed customers Weakness: • Over the past years the production of natural gas and crude oil has been reduced • Other than the oil spill disaster the business is faced with lots of internal criticism and controversies • The launch of Baku-Tbilisi-Ceyhan pipeline resulted into large numbers of controversies
• In 2005 BP refinery explosion in Texas resulted into 15 deaths and 100 injuries • The 2006 oil spill of 250 gallons in Alaskan Tundra has imposed different criminal charges • BP faced immense crisis of poor management due to toxic spill of about 2000 gallon of methanol in Prudhoe bay • The Alaskan oil well operations got seized • The business formulated unsound policies related to environment • Brand image might get worsened due to the recent oil spill crisis • The business lacks contingency plan in order to overcome major issues Opportunity: • Natural gas stipulation in North America has amplified
• Recently petrochemicals and refined product requirements has increased in China • Due to prevailing environmental issues more and more businesses are investing in alternative sources of energy • To a greater extent gas and oil exploration plants are being established specifically in developed countries • The business has decided to invest USD 8 billion in alternative energy comprising of hydrogen gas, solar power, wind energy and natural gas • It has decided to further expand in Post Soviet areas and acquire plants in North Sea • Flexible pricing policy will enable the business to compete with major rivals
Threat: • Environmental regulations have imposed one of the chief threat on diverse business operations • In North sea alone resource has reduced to a major extent • Majority of the oil exploration and production areas have been faced with ups and downs • Major competitors like Chevron and Shell might adversely affect the business • USA government has filed major lawsuit against one of the recent BP oil spill crisis Action Plan for British Petroleum: A novel route: The business presentation reveals that it has adapted to changing environment and opted for sustainable future strategy.
The top most priority highlighted includes reliability and safety and the business aims that the future business operations will specifically focus on personal safety. The 2015 forecast reveals immense opportunities in deepwater operations, gigantic fields and producing alternative energy sources. In contrary to this, although BP is not the only player responsible for the problem, even then numerous issues have been surfaced and political influence has further threatened the operation by imposing strict regulations and control.
It has incurred increase in cost due to political influence from USA and Brazil and safety measures criteria. It can be said that business itself destabilized, demoralized and weakened its future directions. Prior to this it was a world class corporation with premium brands and strong customer base and everything changed in three weeks (Rowell, 2010). Future growth strategy: Macalister (2010) states that the business has to recompense USD 20 billion as a liability for the oil spill issue.
Nevertheless the business opted for the betterment and claimed that it will be establishing exploration and production plants in Libya, Egypt and Azerbaijan in the imminent years. The business came up with a comprehensive DRP (disaster recovery plan) which involves investigation, bringing changes at management level, looking into group performance and opting for future strategy formulation. The business introduced Bob Dudley as new face to clear up the business image. The strategy focuses on rehabilitation and compensation plan and improving the global image of BP and transforming into a good corporate citizenship across all over the globe.
In order to gain confidence of stakeholders, the business particularly participated with communities in order to rebuild those areas which have been adversely affected by the crisis. The business stated that the crisis will have an impact on the future strategy in terms of liabilities but it aims in protecting and growth expansion of the business. The corporation collaborated with US agencies in order to pay off all the legitimate claims and deploy massive systems for the purpose of environmental restitution. About more than 15, 000 volunteers participated and committed to the appropriate strategy.
Lesson learned as a future contingency plan: Winston (2010) analyzed philosophical, geopolitical and corporate level strategy of BP and highlighted key learning points: • The conventional fossil fuel technology is disastrous for species, business and overall society. Rather than investing in carbon emitting fossil fuels the business must look into safety and minimizing risk. • Everything never goes right and there exist an element of uncertainty. The spreadsheet models being used in businesses only resemble positive numbers and they cannot forecast and formulate proactive measures.
Oil companies found future success in deepwater oil exploration and they went for it and forget to look into clean up technologies and oil spill shielding measures. • One of the prominent examples was reflected by Johnson & Johnson who called back all the Tylenol medicines and established one of the prominent corporate behavior paradigms. In contrast to this, BP CEO Mr. Hayward always said that it was an insignificant issue in comparison to massive sea and it resulted into awful response in the form of slow actions and took them three months to impede the leakage. Nonetheless Mr. Hayward has learnt a lot for future debacles.
• Conventionally risk management was the primary concern however abiding to green provision will result into sustainability and decrease in risk. The poor risk management by BP reveals that it lost USD 70 billion market value within one week of the disaster. However the impact of its products on the overall ocean was massive and unquantifiable which killed precious species. Therefore BP will transform into green leader and further improve its supply chain so that it can perform socially and environmentally in an outclass manner. • Businesses spend decades to build brand equity and it takes small fraction of time for everything to be lost.
BP invested in businesses beyond petroleum but major diminution can be highlighted in the case of renewable energy just because of slight decrease in current profits therefore the business must invest in renewable sources in future sustainability. Conclusion: It can be concluded that the business opted for a holistic approach. The demeanor remains with adapting to environmental changes and performing as a good corporate citizen. The business gained vast experience from the disaster and opted for finest outcome. It formulated an aggressive marketing strategy with business expansion in Azerbaijan, Egypt and Libya.
Although there are political influences even then the business looked into personal safety and reliability measures. The future remains with deep water exploration and alternative energy resources. The corporation formulated a disaster management plan and worked in order to gain confidence from diverse stakeholders. Some of the lesson engrossed includes investing in renewable resources, including risk management in financial modules, opting for swiftness and responsiveness and taking proactive measures for different business processes and operations. References: Research and Markets. (2010). British Petroleum Company: Company Analysis.
Retrieved August 20, 2010, from http://www. researchandmarkets. com/reports/354859/ Rowell, A. (2010). BP’s Long Term Business Strategy in Chaos... Retrieved August 20, 2010, from http://priceofoil. org/2010/06/29/bp%E2%80%99s-long-term-business-strategy-in-chaos/ Macalister, T. (2010). BP chief Tony Hayward to outline strategy that restores firm's fortunes. Retrieved August 20, 2010, from http://www. guardian. co. uk/business/2010/jul/21/bp-oil-spill-tony-hayward Winston, A. (2010). Five Lessons from the BP Oil Spill. Retrieved August 20, 2010, from http://blogs. hbr. org/winston/2010/06/the-bp-oil-spill-top-5-lessons. html
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