bp solar growing through challenges

7/31/2019 Bp Solar Growing Through Challenges

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ASSOCIATION OF BUSINESS EXECUTIVE

(UK)

FORTUNE SCHOOL OF TECHNOLOGY AND

MANAGEMENT SINGAPORE

BP SOLAR

GROWING THROUGH CHALLENGES

(Reflection ON Strategic Business Management and Planning)

Submitted By:

Amit Jain

ABE MEMBERSHIP NO: W09541


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Executive Summary

BP is an energy corporation that focuses mainly on petroleum, with a small attention in an

additional energy. However, due to current accidents in the petroleum segment, the BP name

has been blemished. With the limited supply of crude oil, it is also becoming essential for an

oil company to think other investments. Because it has been winning in getting better BPs

status before, it may be strategic to move BP and place better importance on other energy

expansion. Although oil remains gainful, rising public concerns of the unenthusiastic

environmental impacts and of the reliance on oil have changed the energy market. The option

energy market is not as gainful as the oil industry, but a growing require investing in different

energy makes it a possible market in the future. Recognizing this, BP entered the solar marketin 1973. BP, however, does not get an aggressive advantage from its capability in oil to help

them do well in the solar industry. It is significant for BP, therefore, to think whether it would

be in their best interest to exit the solar industry, or whether BP has any competitive

advantage to stay. This plan will show that BP can become the leader of the solar industry. It

needs to, however, exit other alternative energy markets, educate the public and aggressively

advertise, lobby the government, and invest in improving the technology of solar cells.


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CONTENTS

Introduction ............................................................................................................................................. 4

Literature review ..................................................................................................................................... 5

SWOT ANALYSIS: ........................................................................................................................... 5

PORTERS FIVE FORCES................................................................................................................ 6

SWOT Analysis ...................................................................................................................................... 7

Strengths ............................................................................................................................................. 7

Weaknesses ......................................................................................................................................... 8

Opportunities....................................................................................................................................... 8Threats ................................................................................................................................................ 9

Conclusion ............................................................................................................................................ 10

References ............................................................................................................................................. 11

APPENDIX 1: ....................................................................................................................................... 12

APPENDIX 2: ....................................................................................................................................... 14


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Introduction

The Anglo-Persian Oil Company, produced in 1908, was renamed The British Petroleum

Company, shorten to BP, in 1954. In 1998, British Petroleum merged with Amoco and drops

the name British Petroleum to turn into known as simply BP. One of the worlds biggest

integrated oil concern; BP implemented re-positioning strategy in 1997 when Lord John

Browne, group chief executive, acknowledged that BP required addressing the threat of

global warming. Characteristic itself as of other oil companies, BPs status benefited from

this novel situation and had been able to carry on this differentiation ever since. Even though

the oil industry is generally consider the bad guy, BP lead the list of Fortune magazines

worldwide 100 companies on corporate responsibility with the tagline Beyond Petroleum,BP created the subsidiary BP Solar International that focused on solar energy. Due to the

current achievement of BP Solar, in 2005 BP invested $1.8 billion in BP Alternative Energy,

which focused on hydrogen, solar, and wind power generation. (Terry, 2009)

BP is a worldwide oil and gas company head office in London, United Kingdom it is the

third-biggest energy company and fourth-biggest company in the world calculated by

revenues and one of the six oil and gas "super majors". It is energetic in all regions of the oil

and gas industry, as well as exploration and production, refining, distribution and marketing

petrochemicals power and trading. (Dudley Bob, 2010)

BP, one of the worlds largest integrated energy organizations, is looking beyond traditional

energy choices. To assist preserve the earths precious resources, were focusing on novel,

cleaner technologiesincluding solar. With own 30 years of experience and installations in o

160 countries, BP Solar is one of the worlds biggest solar companies, with manufacturing

services in the United States, Spain, India and China. BP Solar aims to give the top quality

products and services. Dependability and longevity are building into our world-class solar

energy cells and modules, which experience exact internal tests and external certifications to

ensure peak performance and safety. (Fezzani Reyad, 2010)

BP's path record of corporate social responsibility has been mixed. The company has been

concerned in a many number of major environmental and safety incidents and received

analysis for its political influence. Its primary listing is on the London stock exchange and it

is a constituent of the FTSE 100 index. It has a secondary listing on the New York Stockexchange. (Fezzani Reyad, 2010)


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Literature review

SWOT ANALYSIS:Swot analysis is base on the weakness, on the opportunities and on the threats that the

organization possesses. The short form SWOT derives from the over mentioned names.

(Robert, 2000)

Internal analysis of the organization

STRENGTH WEAKNESS

External analysis of the organization

OPPORTUNITY THREAT (Robert, 2000)

For details refer appendix 1

(Source:http://www.google.com.sg/images?hl=en&q=swot+analysis&um=1&ie=UTF-

8&source=univ&ei=FXtVTf_BI8LprAfMojvBw&sa=X&oi=image_result_group&ct=title&r

esnum=2&ved=0CDkQsAQwAQ&biw=1366&bih=667 )


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PORTERS FIVE FORCESThe Porter's 5 Forces implement is a simple but powerful means for understanding where power lies

in a business position. This is helpful, because it helps you understand both the strength of your

existing competitive situation, and the power of a situation you're considering touching into. (E, 1998)

THREAT OF NEW ENTRANTS BUYER POWER SUPPLIER POWER THREAT OF SUBSTITUTE THREAT FROM EXISTING COMPETITORS (E, 1998)

For details refer appendix 1

Source

(http://www.google.com.sg/images?hl=en&biw=1366&bih=667&q=porter+five+forces+image&um=

1&ie=UTF8&source=univ&ei=ELpYTdXlHMTtrQeWhejDBw&sa=X&oi=image_result_group&ct=title&r

esnum=1&ved=0CCIQsAQwAA)
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SWOT Analysis

StrengthsBP main strengths is that it is a major corporation with a lot of financial resources to back up

its alternative energy research. In 2005, BP had returns of $22.341 billion. BP, virtual to the

little expert alternative energy firms, has a big gain as far away as financial backing. BP has

the potential to invest a large deal in research to develop alternative energy technology. BP

newly signed a strategic joint venture to way in Chinas increasing solar market and provides

local built-up capacity. Since BP has been in the solar energy business for thirty years; it has

the understanding and is acquiring the technology it requirements to be a main player in the

solar energy business. In 2004, the BP Solar business first became profitable. (Beijing, 2007)

BP, amid its Energy Max solar electric ground systems technology, which follows the

pathway of the sun from east to west, maximize the performance of the cells, provides for a

good solar technology opportunity to its customers. BP has provided a number of different

firms and groups solar cells. In 2004, BP Solar provided the solar panels to an entire Foods

Inc. store in Edgewater, NJ, which became the first main retailer in the Northeast to use solar

energy as a power resource. BP provided the solar panels to the United States Marine CorpsAir-Ground Combat centre. Some projects built-in the Lufthansa Terminal in the Munich,

Germany airport and the Tennessee Valley Authority in Chattanooga. (Beijing, 2007)

BP has produced a number of programs to boost public awareness of involve for solar energy.

BP formed the BP Solar Neighbours Program, anywhere each time a celebrity has BP solar

panels installed into their home, and BP will contribute a solar system to a low-income

people living in South Central Los Angeles. BP has the opportunity to join with celebrities to

encourage the use of solar cells. It also has the BP Solar Connection Program, which is

intended to raise awareness in schools the huge reimbursement of clean alternative energy.

During programs like these, BP is growing the awareness and as a result the demand of solar

energy. BP Solar even donated panels to ABCs Emmy award-winning reality series

Extreme-Makeover: Home Edition. (Fazzani Reyad, 2010)


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WeaknessesBP is at a difficulty by its unhelpful dirty oil image. In March of 2006, a main BP pipeline

ruptures on the North Slope of Alaska spill thousands of litters of crude oil into the Arctic

marine. Accidents like these are harmfully impacting the firms attempts to re-brand itsreputation to a more environmentally friendly oil company. Environmentalists are calling BP

out on the re-branding as now a method to green washgiving a helpful public reputation to

unsafe environmental practicestheir public reputation. The BP brand is very well-built for

oil, but not almost as much as it is for its other energy segment. The average person does not

essentially know that BP has entered into the solar energy market. (Beijing, 2007)

One more main weakness of BP Solar is that the photovoltaic company very little in general

with the petroleum company. BP has perfected the capability to refine able to create chips,

store energy in batteries and such. In entering the solar energy market, BP had no competitive

benefit over other firms to be able to use its vast knowledge in petroleum. Thus, it is very

hard for BP to make synergies between the oil side of the company and the solar side . (Joy,

2009)

OpportunitiesWith its income from oil, BP has an amount of opportunities to invest and gain more in the

solar energy segment. BP has also begun to sell its photovoltaic cells and modules that

provide power for homes at Home Depot. At present, BP Solar has teamed up with Home

Depot in offering a BP Solar Home Solutions in California, New Jersey, and Long Island,

New York. The BP Solar Home Solution offers free of charge in-home discussion,

specialized installation, and free of charge six-month checkups. The solar systems purchased

include a five year full service guarantee and a twenty five year inadequate guarantee on the

panels, which helps to assure consumers on switching over to solar energy. BP can also sell

to other home development stores such as Lowes and Ace. (Fazzani Reyad, 2010)

BP has an amount of opportunities through the government to boost its income. One such

thing includes passing legislature that provides tax breaks to those and corporations that opt

for energy as a means of electricity. It can also encourage states like California, Arizona and

Florida to pass a permission that homes built after an unsure year should be necessarily to

have some solar energy tool. Though this would also be serving its rivals, it would still

advantage BP Solar as well. (Terry, 2009)


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BP has a few opportunities to make synergies among the petroleum side of the business and

the solar side. It can very well use solar energy to power its operations such as its business

offices, plants, and even gas stations. If BP Solar improves the technology to create

photovoltaic cells extra cost efficient, it can very well produce connections between the two

sides of the company. (Terry, 2009)

ThreatsA lot of people realize the requirement for energy sources in the futures, there are a number

of firms specialize in exact energy, including particularly photovoltaic solar cells. BP,

however, is very expand and has its resources in a number of dissimilar products, with the

obvious being oil, but in other another energies as well. The extreme diversification couldperhaps pose trouble to BP in the future. Shell, another doing well oil company has entered

into the solar energy market, and it is at present one of the four major solar energy leaders

along with BP Solar, Sharp, and Kyocera. (Beijing, 2007)

Solar market will be more competitive with BP because of their comparable attachments to

petroleum. Any act that BP will take to create synergy between solar and petroleum can be

copied by solar market. KSI and Sharp Solar will be more aggressive with every one because

both have electrical division close. KSI and Sharp Solar have an additional benefit over solar

market and BP due to their electronics division. If customers desire to install solar systems

from Sharp, they would also be confident to buy electronics from Sharp in order to get the

fully integrated discount. In addition, if a family were already using Sharp electronics, it

would be cheaper to get a solar system from Sharp Solar than from any other farms. Getting a

entire set from one firm is all time cheaper than getting the individual components from

different firms. (Anon., 2009)

For the porters analysis refer appendix 2


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Conclusion

With flagging profits and an increasingly negative reputation, it would be a strategic move

for BP to reposition itself in the alternative energy industry that is focus on solar and exit

other alternative industries. With the possible returns and with previous experience in the

solar market, BP can surely become the leader of the industry. Some key strategies that BP

can take which includes advertising, increasing funding and investment in solar energy

technology, educating the public, expanding into other geographical markets, and lobbying

the governments. If BP wants to sustain its market share in the solar industry, it will require

devoting more of its investments and resources to BP Solar. Strategy is to sustain in the long

run.


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References

Anon., 2009.An internal and external analysis of BP Solar and competitors. [Online] Available at:

http://www.ivoryresearch.com/sample1.php .

Anon., 2010. swot analysis diagram. [Online] Available at:

http://www.google.com.sg/images?hl=en&q=swot+analysis&um=1&ie=UTF-

8&source=univ&ei=FXtVTf_BI8LprAfM-

ojvBw&sa=X&oi=image_result_group&ct=title&resnum=2&ved=0CDkQsAQwAQ&biw=1366&bih

=667.

Beijing, H., 2007.BP: Going Beyond Petroleum. [Online] Available at:

http://www.mcafee.cc/Classes/BEM106/Papers/2007/BP.pdf.

Drazga, B.M., 2007. Commercial Market Potential for Solar Power Technologies.

Dudley Bob, 2010. The BP story, from first oil to tomorrows energies. [Online] Available at:

http://www.bp.com/multipleimagesection.do?categoryId=2010123&contentId=7059226 .

E, P.M., 1998. In Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free

Press.

Fazzani Reyad, 2010. how To Buy. [Online] Available at:

http://www.bp.com/sectiongenericarticle.do?categoryId=9074&contentId=7038333 .

Fezzani Reyad, 2010. Solar power is the answer if youre concerned about using cleaner energy that

helps you save money. [Online] Available at:http://www.bp.com/sectiongenericarticle.do?categoryId=9071&contentId=7038231 .

Joy, S., 2009. BP Position in alternative energy business.

Robert, B.W., 2000. swot. In Simplified Strategic Planning. Chandler House Press.

Terry, M., 2009. A Different Era for the Alternative Energy Business.New York Times.
http://www.ivoryresearch.com/sample1.phphttp://www.ivoryresearch.com/sample1.phphttp://www.google.com.sg/images?hl=en&q=swot+analysis&um=1&ie=UTF-8&source=univ&ei=FXtVTf_BI8LprAfM-ojvBw&sa=X&oi=image_result_group&ct=title&resnum=2&ved=0CDkQsAQwAQ&biw=1366&bih=667http://www.google.com.sg/images?hl=en&q=swot+analysis&um=1&ie=UTF-8&source=univ&ei=FXtVTf_BI8LprAfM-ojvBw&sa=X&oi=image_result_group&ct=title&resnum=2&ved=0CDkQsAQwAQ&biw=1366&bih=667http://www.google.com.sg/images?hl=en&q=swot+analysis&um=1&ie=UTF-8&source=univ&ei=FXtVTf_BI8LprAfM-ojvBw&sa=X&oi=image_result_group&ct=title&resnum=2&ved=0CDkQsAQwAQ&biw=1366&bih=667http://www.google.com.sg/images?hl=en&q=swot+analysis&um=1&ie=UTF-8&source=univ&ei=FXtVTf_BI8LprAfM-ojvBw&sa=X&oi=image_result_group&ct=title&resnum=2&ved=0CDkQsAQwAQ&biw=1366&bih=667http://www.google.com.sg/images?hl=en&q=swot+analysis&um=1&ie=UTF-8&source=univ&ei=FXtVTf_BI8LprAfM-ojvBw&sa=X&oi=image_result_group&ct=title&resnum=2&ved=0CDkQsAQwAQ&biw=1366&bih=667http://www.mcafee.cc/Classes/BEM106/Papers/2007/BP.pdfhttp://www.mcafee.cc/Classes/BEM106/Papers/2007/BP.pdfhttp://www.bp.com/multipleimagesection.do?categoryId=2010123&contentId=7059226http://www.bp.com/multipleimagesection.do?categoryId=2010123&contentId=7059226http://www.bp.com/sectiongenericarticle.do?categoryId=9074&contentId=7038333http://www.bp.com/sectiongenericarticle.do?categoryId=9074&contentId=7038333http://www.bp.com/sectiongenericarticle.do?categoryId=9071&contentId=7038231http://www.bp.com/sectiongenericarticle.do?categoryId=9071&contentId=7038231http://www.bp.com/sectiongenericarticle.do?categoryId=9071&contentId=7038231http://www.bp.com/sectiongenericarticle.do?categoryId=9074&contentId=7038333http://www.bp.com/multipleimagesection.do?categoryId=2010123&contentId=7059226http://www.mcafee.cc/Classes/BEM106/Papers/2007/BP.pdfhttp://www.google.com.sg/images?hl=en&q=swot+analysis&um=1&ie=UTF-8&source=univ&ei=FXtVTf_BI8LprAfM-ojvBw&sa=X&oi=image_result_group&ct=title&resnum=2&ved=0CDkQsAQwAQ&biw=1366&bih=667http://www.google.com.sg/images?hl=en&q=swot+analysis&um=1&ie=UTF-8&source=univ&ei=FXtVTf_BI8LprAfM-ojvBw&sa=X&oi=image_result_group&ct=title&resnum=2&ved=0CDkQsAQwAQ&biw=1366&bih=667http://www.google.com.sg/images?hl=en&q=swot+analysis&um=1&ie=UTF-8&source=univ&ei=FXtVTf_BI8LprAfM-ojvBw&sa=X&oi=image_result_group&ct=title&resnum=2&ved=0CDkQsAQwAQ&biw=1366&bih=667http://www.google.com.sg/images?hl=en&q=swot+analysis&um=1&ie=UTF-8&source=univ&ei=FXtVTf_BI8LprAfM-ojvBw&sa=X&oi=image_result_group&ct=title&resnum=2&ved=0CDkQsAQwAQ&biw=1366&bih=667http://www.ivoryresearch.com/sample1.php


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APPENDIX 1:

Models

Porters five forces

Details

Threat of new entrantsOf it. Power is also artificial by the capacityof people to go in your market. If it costssmall in time or money to go into market andfight well, if readily available are a smallnumber of economies of scale in place, or ifyou have small protection for your keytechnologies, then novel competitors can fastenter your market and weak your situation. Ifyou have well-built and tough barriers toentrance, then you can maintain a goodsituation and take fair benefit

Buyer power Low price is driven by the number of buyers,the significance of every individual buyer toyour commerce, the cost to them of switchingfrom goods and services to persons ofsomeone else, and so on. If deal with onlysome, influential buyers, then they are oftenable to say terms to you.

Supplier power High price is driven by the number ofsuppliers of each type contribution, theindividuality of their product or service, theirforce and control, the cost of switching fromone to one more, and so on. The less thesupplier choices we have, and the more.Require suppliers' help.

Threat of substitutes capacity of customers to discover a differentmethod of doing what you dofor example,if you provide a exclusive IT product that

automates an vital process, people maysubstitute by doing the procedure yourself orby outsourcing it. If substitution is simpleand substitution is feasible, then this weakensof your influence.

Threat from existing competitor Many competitors, and they proffer evenlyattractive products and services, then you'llmainly expected have small power in thecircumstance, because suppliers and buyerswill go somewhere else if they don't get afinest contract. other hand, if no-one else cando what you do, after that you can frequently


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have great authority

Swot

Strength Describes the possessions and the skills thatour corporation has acquired Strengths arethe merits that facilitate us to get done theorganizations mission. These are the base onwhich continued achievement can be madeand sustained regularly. Strengths can beeither touchable or insubstantial.

Weakness Describes the factors in which we haveadverse situation with view to the capability.In order to generate the inside examination.

Than to be measured the study ofpossessions, of activities and risks.

Opportunity Describe the potential markets, businessniches that can be seen by everybody, but ifthey are not accepted on time that wouldmean the defeat of the competitive benefit.

Threat Explain the factors that cab put in risk thesustained continuation of the organization, ifthey are accepted on time they can move or

they can turn out to be opportunity. In orderto create the inner scrutiny we have to takeinto account the examination of thesurroundings, of the interested groups.


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APPENDIX 2:

ANALYSISThroughporters five forces

EntryAt the present the solar cell industry position is

very different across geological market sectors.The U.S. Market- The solar industry has notbeen promoting greatly in the United States dueto the short of enthusiasm of the nationalgovernment. Hard work for solar panelinstallations, such as giving tax credits andproperty tax exemptions, are intense at the statelevel in certain states such as California and

Arizona. Overall, the U.S. market is spread soit is not easy to get a successful nationalbusiness. There are a lot of small and self-governing companies, but a small number ofmajor domestic players. As a result, the U.S.does not have a big market share in solarenergy. Presently the market is unbeneficialand does not support many new entrants. Evenoverseas companies that have experiencedvictory in Japan and Germany are uncertain tocrack into the U.S. market; lack of familiar in

U.S. operations and uncertainty in demands putoff them from devote money for the highshipping costs and tariffs. However, BP alreadyhas a familiar base in the U.S. owing to itsincreasing petroleum market; it has the possibleto enter and build up a localized monopolyover the solar industry In addition, the Bushgovernment has just recently accepted therequire to dedicate research and developmentinto renewable energy; this provides expectthat U.S. will be more interested to solarenergy in the future.

Market in Germany is more energetic andquickly growing. The solar energy business is anovel and rising industry and is one that has thepossible to support entrants willingly. Germangovernment is completely support of thistechnology, especially with the RenewableEnergy Act (EEG). As the place for the biggesttrade fair for Europes solar technology,

Germany can be confident to keep up with theinnovations.As an effect, there are a set ofopportunities for entrants to approach in with

better innovation and succeed above themarket. The potential for product separation is


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great because the technology has many far-reaching consequences: the products can marka variety of consumers, from manipulativelarge-scale solar panel systems used to createelectric energy for firms focus on the each day

consumer that can buy little solar appliances touse for the home. The main players in themarket are just opening to emerge, other thanno one has yet a big adequate corporation andmanufacture capacity to drive out minorcompetitions by economies of scale. BP Solarhas its base in the European market and can useits situation as a big business to prevent entry.Japanese market is close to its infiltration pointand that discourages entrants to the market.The requirement for the product has rising

every year, through installations of solar panelsin residential homes becoming more prevalent;so a lot of companies have been involved bythe profitability. Main players have developedin this market, mostly Sharp and KyoceraSolar, with sharp controlling the market share. A more common difficulty to way in all threemarket sectors is the shortage of silicon. Thereis a worldwide shortage of ultrapurepolysilicon (the raw material for siliconwafers), which is a main element in thecreation of solar energy

SubstitutesThe major substitute for solar energy businessright now is the standard electricity created bycoal and natural gas. The risk from thissubstitute is great because it has been the mainsource of energy for household devices. Thestandard electricity is still lower in cost thanthe solar & wind energy so there is very smallincentive for customers to switch to solartechnology. However, with improvement andresearch, companies are wounding the cost per

watt of the solar energy by 5% a year and canregularly to get better the cost to watt ratiosignificantly until it is equivalent to that ofstandard electricity. Since natural gas and coalare limited in supply, their prices will finallyincrease, causing demands for energy sourcessuch as solar energy to increase. However,solar energy technologies are not the onlyalternative source for generating electricity.According to Energy InformationAdministration, solar only accounts for 0.2% of

the renewable electricity produced in theUnited States. The largest sector in the


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renewable energy area belongs to hydropower(75.2%).Hydropower plants, although moreprevalent and not expensive, have itsshortcomings, including decreased waterquality and negative effects upon natural

wildlife habitats. Solar energy technology canplay upon that weakness as one of the cleanestrenewable energies currently known.

RivalryThe present main players in solar energyindustry are Sharp, Kyocera Solar, Shell Solarand BP. cost rivalry is not significant amongstthe companies, because solar energy is alreadya costly technology to produce. It will damagethe industry to undercut prices, as thetechnology is not inexpensive and well

understood sufficient that an increasing butlittle consumer demand will not compensate areduction in cost. In addition, the main playersin the industry have separate geographicalmarkets and not much overseas establishments.The high price and the segregated consumerbase reduce competition. Only with mass-production and increased popularity can pricerivalry happen.

bp solar growing through challenges

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