Bp Mission Values Business Essay Example

However, the company faced significant losses from the Deepwater Horizon oil spill incident in April 2010 which caused extensive damage and contamination from millions of barrels of crude oil in the sea. To analyze BP's performance, this report will use strategic analysis tools including PEST analysis (Political,Economic,Social,and Technological factors), Porter's Five Forces Analysis , SWOT analysis(Strengths Weaknesses Opportunities Threats)and Value Chain Analysis. These tools are effective in understanding both strengths weaknesses within the company.

Company BACKGROUND AND HISTORY

BP is a global energy company that ranks among the top three based on revenues and is one of the six leading players in the oil and gas industry.With operations in over 80 countries, BP has more than 80,000 employees.BP is a global company involved in all aspects of the oil and gas industry, including exploration, production, refining, petrochemicals, distribution and marketing, power generation, and trading. They also have investments in renewable energy sources such as hydrogen, biofuels, wind power,and solar power. The company operates over 22,400 service stations worldwide and produces around 3.8 million barrels of oil per day. They are particularly dominant in the United States where they hold commercial reserves of over 18.3 billion barrels of oil as of December 31st ,2009.

Despite their success in the industry, BP has faced criticism for its involvement in environmental disasters and safety incidents which have raised concerns about corporate social responsibility. However, since 1997 BP has been taking steps to address climate change by reducing greenhouse gas emissions and investing over $1 billion annually into renewable energy sources. They have committed $8 billion from 2005-2015 towards this cause.

One significant incident that negatively impacted BP was the

Deepwater Horizon incident in the Gulf of Mexico on April 2nd ,2010. As a result of this disaster, BP has spent over ?675m on cleanup efforts and it is estimated that the final cost will exceed ?2bnThis incident resulted in fatalities, injuries, and a massive oil spill, making it one of the largest environmental catastrophes in U.S. history. Despite this, BP remains committed to improving safety measures on their oil rigs and investing in risk reduction to maintain high levels of safety. In the meantime, governments worldwide are prioritizing sustainable forms of power due to high CO2 emissions and increased instability in energy markets. Tensions between countries have arisen as China's unstable economy drives up demand for oil. The global carbon market has grown to $144 billion with a 6% increase since 2008. Although there has been a decrease in carbon finance for developing countries, the Kyoto Agreement signed in 1992 played a significant role in the global emergence of carbon funds and emission trading, as highlighted by the World Bank (2004) and EU (2004). While concerns about sustainability are starting to reshape people's worldview, immediate changes in energy usage are not expected. However, according to the International Energy Agency (IEA), technological advancements play a crucial role in supporting alternative energy markets. The IEA's research identifies 48 critical success factors across various categories such as technology, commerce, socio-politics, and organization. Experts from the IEA stress that renewable energy is essential for limiting global temperature rise.Projections show that the majority of greenhouse gas emissions reductions by 2030 will come from energy efficiency and renewable sources. If current trends continue, CO2 and other greenhouse gas emissions could

cause a long-term global temperature increase of up to 6°C, as projected by the Intergovernmental Panel on Climate Change (IPCC) cited by IEA in 2008. In 2010, graphs provided by the World Bank displayed worldwide income distribution, fund allocation, and projects. The World Bank receives contributions from various organizations and BP plc. In response to pressure from political parties and environmental advocacy groups, the Climate Change Bill was published on March 13, 2007. This legislation establishes a framework for achieving a mandatory 80% reduction in carbon emissions by 2050 in the UK according to DEFRA in 2007. Chancellor Alistair Darling also commits to a binding C budget with a goal of reducing emissions by 34%, as reported by The Guardian in 2009. The recent nuclear crisis in Japan has highlighted deficiencies in industry oversight and renewed concerns about global regulation of nuclear power plants. There have been calls to redefine the authority of the United Nations atomic watchdog for stricter regulations enforcement according to CSMonitor in 2011.

Porters 5 Forces

Barriers to Entry:

• The alternative energy industry has a high level of proprietary acquisition curve due to its technological focus.
• Government policies and requirements for operating in the industry are strict.
• Cost leadership in energy provision requires large economies of scale.
• The industry necessitates significant capital investment, leading to numerous acquisitions and joint ventures.
• An ethical brand identity is crucial due to market nature.
• Extensive distribution access is necessary for widespread energy provision.

Threat of Substitutes:

• In spite of its higher cost, there is a growing tendency for buyers to switch to alternative energy.
• A high price-performance tradeoff exists between traditional energy supply (which is currently cheaper and more reliable) and alternative energy.

Competitive Competition:

• - There are

high exit barriers.- The industry has low concentration.- High fixed costs are present.- Alternative energy is vital for the long-term future despite slow growth in the industry.
In the industry, there are different challengers with varying approaches.Shell Renewables has a high corporate bet, while BP Solar has a low bet.The bargaining power of buyers is low due to limited information and influence.However, buyers are incentivized by the availability of unique products and substitutes. On the supplier side, there is a shortage of alternate energy providers. Nonetheless, industry growth and survival rely on having a large volume. BP's success is supported by several strengths. One advantage is their alliances with other strong businesses, which attract new clients and improve efficiency. Being a market leader enhances BP's reputation, profitability, and market share. Competitive pricing also plays a vital role in their success. Additionally, BP dominates in the niche market by keeping costs lower than competitors and passing on benefits to consumers, further enhancing its reputation and turnover. Moreover, they offer original services/products that make them a preferred choice for many customers. The sales strategy implemented by BP effectively increases its reputation and profits while continuous development of new patents and proprietary technology keeps them ahead in the industry. Experienced employees play a crucial role in driving BP forward with expertise and knowledge as BP invests in top-notch machinery, staff, offices, and equipment to maintain high-quality standards. This strengthens their position in the industry and contributes to their strong reputation. Their extensive customer base further adds to their sales and profits while allowing them to effectively handle problems due to financial stability compared to competitors' performance.BP is widely recognized

for its strong brand within the industry and holds a significant market share. The company's distribution chain is considered a strength that contributes to its success. By providing high-quality products and services, BP ensures customer loyalty. The company's international operations attract a wider customer base, enhance its brand, and expand its global presence. Development and innovation play a role in overall performance as well.

The advantage BP has over competitors stems from their strong position in the market, limited competition, and unique product/service offering which helps build a strong online presence and public image. Additionally, convenient transportation through road, rail, and air benefits BP due to their strategic location. Strong relationships with suppliers also enhance their performance.

However, BP faces challenges due to weaknesses that affect their reputation and customer trust. The damaged reputation poses a hurdle as consumers hesitate to invest money with them. Moreover, the low quality of their products/services makes them less appealing compared to competitors who offer superior alternatives. Furthermore, by not reducing costs like industry peers do, BP ends up spending more of their profits leading to higher costs compared to others in the industry. Additionally, creating new products proves difficult due to insufficient research and development efforts by BP.
The company's reliance on outdated technologies and its ineffective marketing strategy significantly hamper its success compared to competitors who adopt more reliable technologies. Additionally, the excessive pricing of BP's products/services proves to be a major failing point. Moreover, BP's disregard for alliances and partnerships limits their ability to acquire trades and favors. Furthermore, the company's poor financial position weakens it in comparison to rivals. The absence of innovative thinking also restricts BP's success

along with the poor relationship with its staff that affects performance. With limited international presence, BP struggles to succeed in overseas markets.

The weaknesses faced by BP, such as stock management issues and the absence of an online presence, hinder their success in today's market. Their narrow-minded approach of lacking original products/services further hampers their future success. Additionally, being disadvantageously located results in missed growth opportunities. The absence of patents/proprietary technology puts BP at a disadvantage compared to competitors.

Ultimately, the weak brand name fails to effectively attract customers and undermines BP's overall success. The limited customer base and weak market position hinder its sales and marketing efforts compared to competitors. The restricted merchandise line and poor provider relationships limit negotiation abilities, impacting its success further.In addition, BP's market share is lower compared to its rivals, resulting in decreased turnover. However, the company has various opportunities it can take advantage of. Government support in the form of grants, allowances, and development opportunities can be advantageous for BP. Additionally, exploring export possibilities has the potential to boost profits. Technological advancements provide an opportunity for future success by improving online presence and targeting internet users. Furthermore, changing consumer spending habits offer a significant exploration opportunity. Moreover, BP is financially stable, allowing investments in new projects. Reduced taxation creates an opportunity to either decrease prices or increase profitability that BP can capitalize on. The company can also seize growth opportunities by entering niche markets and securing a leading position within the industry to enhance financial performance. Expanding into other markets through geographical or product diversification holds great potential for BP as well. Exploring options such as coup d'etat or amalgamation

would enable BP to acquire new clients and resources while entering new markets. Diversifying their range of products and services would result in higher revenues and an expanded merchandise portfolio too. A decrease in interest rates would greatly benefit BP by reducing business costs too. Lastly, forming strategic alliances and joint ventures offer the potential for market expansion and maximizing profit generation for BP.
BP must consider several threats that could impact its growth and success in the market. Changes in consumer lifestyles and tax increases may lead to decreased demand for BP's products and services, as well as impose additional financial burdens on the company. Demographic changes and increasing interest rates also pose risks to BP's operations. However, despite these potential threats, BP should take advantage of opportunities presented by the structural changes in the industry to ensure sustained growth. Regulations, competition, changes in consumer habits, low-priced imports, technological advancements, slow market growth and decline, increased international competition, entry of new competitors, actions taken by rival companies such as price wars and cuts, a sluggish economy or financial downturns, declining demand without recovery prospects and fluctuations in foreign exchange rates all pose various threats to BP's business performance and profitability. These threats can have a significant financial impact on the company and potentially harm its overall business performance. The rising costs within the industry have the potential to severely impact profits for BP. Additionally, increasing customer power over prices is also seen as a threatening factor for BP. Therefore, it is crucial for BP management not to overlook these threats arising from changes within the industry structure.In addition, the increasing bargaining power of suppliers in

setting prices poses a threat to operations. The presence of substitute products on the market is also a significant threat. This paper examines the business environment and key drivers of change in the energy industry, specifically focusing on the alternative energy market. The text discusses two competing Strategic Business Units (SBUs), BP Solar and Shell Renewables, within this industry. These SBUs are part of larger corporate groups, BP Group and Royal/Dutch Shell Group respectively. The industry is currently dominated by oil production and is influenced by demographics, urbanization, income levels, market liberalization, and demand. However, as oil supplies decline, future development in the industry will depend on renewable energy sources becoming a strategic necessity. Critical success factors (CSFs) for the alternative energy industry include technology leadership that both BP Solar and Shell Renewables must leverage their resources and capabilities to achieve across various domains. The two SBUs have implemented different business strategies in the alternative energy sector which can be seen in their resources and capabilities over the past five years and beyond.BP Solar has utilized its considerable financial resources to retain a prominent position in the alternative energy market, while also prioritizing its primary oil business. Conversely, Shell Renewables has encountered difficulties due to overestimating its oil reserves, necessitating financial restructuring. Nevertheless, Shell Renewables capitalizes on its proficiency in project management, strategic acquisitions, and partnerships to enhance market presence and achieve a competitive edge. The examination of these two strategic business units is captivating as it showcases their divergent approaches in the alternative energy sector, taking into account the distinct resources and capabilities of their respective parent companies.