Analysis of British Petroleum Organizations Sample for Students

Qusetion: Discuss about the Industry Analysis. Answer: Introduction: British Petroleum (BP) is an oil and gas company. Headquarter is situated in London, United Kingdom. It has been founded in 1908. It preserves the history of 108 years. It is known as worlds largest Oil and Gas Company. It earns huge revenue every year. The organization almost covers all the areas of oil and gas industry, such as- production, exploration, refining, distribution, promotion, power generation and business and so on. BP is associated with various other countries like United States, Russia. In Rosneft, BP possesses 19.75% shares. Rosneft is known as worlds largest oil and gas trading company. British Petroleum has started a new venture with Sidanko in the year of 1997. BP has bought then percent share of Sidanko. BP has associated with TNK in 2005. Apart from the successful ventures, British Petroleum has faced various negative aspects as well. In the year of 2011 Deepwater Horizon Spill has occurred. It is known as the worst incident in the history of Worlds oil and gas industry. The organization has faced massive crisis due to this unwelcomed incident (bp.com, 2017). The below mentioned article has concentrated on British Petroleum. It has enlightened every aspect of the organization to understand the potential opportunities and threats of the organization. Industry Analysis: Profitability: Profitability refers to a procedure that measures the potential of an organization to generate profit from its assets. Profitability consists of the ratio of gross profit margin, operating profit margin and net profit margin, return of equity and return of assets. Gross profit margin signifies the revenues that an organization produces. As per the annual report of British Petroleum, the profit margin of BP has risen in 2012-2013. However, the margin has deteriorated in 2013-2014. Operating profit margin of BP also has risen in the year of 2012-2013 but it has failed to maintain that margin in 2013-2014. The return of equity an return of assets also significantly deteriorated in 2013-2014 (Abbaszadeh et al. 2013). Porters Five Forces Model: Fig: Porters Five Force Model Created by: Author Threat of New Entry: The threat of new entrants defines that an established organization may be influenced by the entry of a new organization. The threat of new entrants is comparatively low in the oil and gas industry. Due to high barriers for the new entry, disadvantages of new entry, the leading and established oil and gas companies like British Petroleum do not face many difficulties (Andreasson 2015). Bargaining Power of Buyers: Bargaining power of buyers signifies the power of the consumers. In many industry buyers are capable of forcing down the prices or products. However, in the oil and gas industry prices of the products are fixed and it depends upon the economic infrastructure of the world. Thus, British Petroleum does not face many challenges due to buyers (Bianconi and Yoshino 2014). Threats of Substitute products: The substitutes of oil and gas are renewable energy and biofuels products, but these products are in the developing process. Thus, leading oil and gas companies like British Petroleum d not have much threat from the substitutes (Cao et al. 2016). Bargaining Power of Suppliers: Suppliers play crucial role in establishing the future of any organization. Oil and Gas Companies are surrounded by many suppliers like oil field suppliers, engineers, pipeline installers and organizational management and so on. The energy companies deal with a complex chain of supply management which provides huge choice of suppliers. Eventually it decreases the bargaining power of the suppliers (Uldam 2016). Rivalry between the Competitors: The competition in the oil and gas industry is not high since the renewable energies are in developing stage. The risk of rivalry is comparatively low in the oil and gas industry. Competitor Analysis: There are two major competitor of British Petroleum- Exxon Mobile Corporation and Royal Dutch Shell PLC. Exxon Mobile Corporation: Exxon is one of the leading oil companies in the world. It is also known for exploring and producing oil and gas. Like BP it also covers almost all the areas of oil and gas industry. It has total twenty Three refineries in fourteen countries. It is associated with more than 19,000 gas stations in several countries. It delivers refined products to these gas stations. The organization is capable of manufacturing 136,000 barrels (Collins, Hribar and Tian 2014). Royal and Dutch Shell PLC: Royal and Dutch PLC is one of the leading oil and gas organization in the word. The organization is associated with 44,000 gas stations. Like British Petroleum is also These previously mentioned companies are giving tough competition to British Petroleum. These companies are considered as the giant in the oil and gas industry. These three companies cover all the areas of oil and gas industry and offer many products to its consumers (Vsconez et al 2015). Macro Analysis: To observe the environmental factors that influence British Petroleum PESTLE analysis can be conducted: PESTLE Analysis: Political Factors: Political factors of influence the decision making process and organizational strategies. It is often evident that many organizations often face various challenges due to unstable political condition. Oil and Gas Companies often experience several difficulties due to the political influence. Government of many country pressurize thee oil companies to choose the path of sustainability to save the environment from global warming the effect of greenhouse gases. It leads the oil and gas companies like British Petroleum to face many difficulties (Eichengreen, Chi?u and Mehl 2016). Economic Factors: The influence of economic factors plays crucial role in oil and gas industry. British Petroleum provides support to financial structure of many countries. The growth of the substitutes like- renewable energy. Biofuels ay lead British petroleum to face various threats. Social Factors: Oil and Gas companies often face various social barriers. According to many people, these companies are responsible for the global warming and growth of green house gases. It leads the oil and gas companies like British Petroleum to face various challenges (Rushton et al. 2014). Technological Factors: Emergence of new technologies is considered as one of the major issue for British Petroleum. The organization performs in various sectors like exploration of oil, refining, production and so on. In order to achieve the desired position in the industry it must embrace all the new techniques. It may lead the organization to face various challenges (Petroleum 2015). Legal factors: Oil and Gas companies like British Petroleum often face various legal issues. The labor safety rules are produced by the government to ensure good health of the employees who works in the oil and gas field. Government of United Kingdom pays special attention to the health and safety issues of the oil and gas field workers. This may lead British Petroleum to face some legal issues (Onwuteaka 2016). Company Corporate Strategy: Corporate strategy of British Petroleum is to cover all the aspect of energy industry by providing renewable energy and other products of Gas and Oil Company. The strategy of organizational management is to set an example for the future generation as a leading oil and gas cooperation. The organizational management of British petroleum has concentrated on embracing new technologies to save the environment from the harmful effect of oil and gas production. The management aims at modifying their organizational strategy. They want to make their strategies flexible enough so they can improve the quality of their service with the time (Morgan et al. 2014). Business Strategy: The organizational management of British petroleum focuses on strengthening the internal quality of the organization to achieve the leading position in the oil and gas industry. The organizational management has planned to start their many new projects by 2021. British Petroleum is encouraging the use of new and innovative technique to achieve long-term goal. The organizational management wants to enhance the productivity level of the organization. They are embracing new changes and implementing various techniques to influence the growth of the organization. The organizational management wants to strengthen their competitiveness of their refineries and petrochemical plants as well to ensure the development of the organization. Another important strategy of British Petroleum is to promote the use of renewable energy. The organizational management of British Petroleum has concentrated on producing renewable energy. They are encouraging the use of new techniques into their plats to avoi d the any kind of activities that are harmful for the environment (Lei, Li and Pan 2014). Strategic Leadership evident: Being a leading organization, British Petroleum possesses a huge team of leaders. These leaders are well-experienced and skilled and all the leaders have knowledge about oil and gas industry. This team of leaders helps the organization to fight against many crises. In this competitive era, every organization is introducing new strategies in the organization to achieve desired position in the industry and earn reputation in the society. Being a renowned name in the world of oil and gas industry, British Petroleum also focuses on implementing new techniques to improve the quality of their service (Jimnez-Preciado, Cruz-Ak and Venegas-Martnez 2017). The team of the board of directors always encourages the employees to give their best performance to achieve the organizational target. The leaders of British Petroleum are capable of taking efficient decisions according to the organizational strategy to influence the growth of the organization. The leaders ensure that they provide flawless service to their consumers as well as they try to maintain the environmental balance to avoid any kind of social barriers. It is important for every organization especially for the oil and gas companies to maintain healthy relation with the society. The organizational management of British Petroleum always tries to maintain healthy relation with its stakeholders as well as the society to ensure the development of the organization. The organizational management always maintains healthy atmosphere within the organization so that the employees of the organization can perform for achieving the organizational goal. They encourage team work, so their employees can work together to achieve common goal. The organizational management of British Petroleum always considers the organizational goal while establishing their strategy. The organizational leaders of BP are well-known for taking efficient steps to achieve the desired target. They have set an example of efficient and effective leaders hip. Under the leadership of these talented and experienced leaders British Petroleum has successfully won the position of leading oil and gas company. According to many reports, British Petroleum is one of the profit making organization in the oil and gas company. The successful and skilled leaders are highly responsible for the development of British Petroleum (Lai, O'Hara and Wysoczanska, 2015). Conclusion: As per the previous discussion, it can be concluded that British Petroleum has a bright future in the oil and gas industry, as it has incorporated some efficient strategies into its rule book, like production of renewable energy, prevention of co2 and other greenhouse gas. These effective steps will be beneficial for the growth of the organization. Such activities will be helpful to earn reputation in the society as well. The organization has associated with the various other countries like Russia. It has helped the organization to establish a bright future. There are many environmental factors that often influence the decision making process and organizational strategies. However, the skilled and efficient leaders of help the organization to overcome such issues and achieve organizational target. The organizational management has made their strategies flexible enough to update their organizational structure with the time. The primary objective of the organizational management of Bri tish petroleum is to set an example for the future generation. They have taken some innovative initiatives to help the environment, such practices influences the growth of the organization. Although, there are some incidents like Oil Spill in the Mexican Gulf, that can be harmful for the reputation of the organization. However, the efficient leadership has helped the organization to maintain healthy relation with the society and people around the organizations as well as it are highly beneficial for the future of the organization. Thus, it can be concluded that the future of the British Petroleum is extremely bright. It can be stated from the annual report of the organization. It has been nominated as worlds one of the wealthy oil and gas organization Reference: Abbaszadeh, P., Maleki, A., Alipour, M. and Maman, Y.K., 2013. Iran's oil development scenarios by 2025.Energy policy,56, pp.612-622. Andreasson, S., 2015. 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