bp - strategic management - the environment

8/12/2019 BP - Strategic Management - The Environment

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BP

Strategic Management: TheEnvironment

Roxana Olteanu //olteanu_roxana12@yahoocom//!"#"$1$%"&

Oana ' Ma(alina Mihaila//oanama(alinamihaila@gmailcom//!"%$))2"))

Oana *n(reea Tu(orache//Oanaa_a@yahoocom//!")%2+2#&%


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BP, a British multinational oil and gas company, is headquartered in London,

England, United Kingdom. It is the fifth-largest energy company by maret

capitali!ation, the fifth-largest company in the "orld measured by #$%# re&enues,

and the si'th-largest oil and gas company measured by #$%# production. BP is

&ertically integrated and operates in all areas of the oil and gas industry, including

e'ploration and production, refining, distribution and mareting, petrochemicals,

po"er generation and trading. It also has rene"able energy acti&ities in biofuels

and "ind po"er.

BP,- vi-ion an( mi--ion -tatement-are to help the "orld meet its gro"ing

need for heat, light and mobility. (We strive to do that by producing energy that is

affordable, secure and doesnt damage the environment.BP further defines its

mission to be (Progressive, responsible, Innovative and performance driven.

In analy!ing the competiti&e en&ironment of the BP, "e used the fi&e forces

frame"or "hich allo"s us to e'plore the competiti&eness in the industry and also

ho" attracti&e the industry in question is.

The threat o. entranceinto the oil and gas industry is lo" due to the fact that

there is a high barrier of entrance into the industry. )he barrier is high due to

technological focus on alternati&e energy industry, high access to inputs, strict

go&ernment policy and requirements to operate in industry, large economies of

scale required to achie&e cost leadership and large capital requirements to set up

operations.

The argaining 0oer o. -u00lier-is medium and this is because according to

www.oilandgassuppliers.com, there is quite a number of suppliers and also

buyers. *lthough in the case of BP it is &ertical integrated in operation, +ust lie


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some of the other ma+or players in the industry, this means that they can afford to

pro&ide some of their supplies due to their operation and at the same time the

industry is mainly the ey customers to most of the suppliers.

Poer o. uyer- )he balance of po"er shifts to"ard buyers. il is a commodity

and one companys oil is not that much different from another company/s and

this leads buyers to go in fa&or of lo"er prices and or better contract terms. )he

po"er of the buyer "ill be regarded as being medium, because buyers are many

and can s"itch from the consumption of Bp products to another oil and gas

company/s product and at the same time an indi&idual buyer/s decision does not

necessarily ha&e an impact on the company and the industry is the ey supplying

group to the many buyers.

Threat o. -u-titute-is lo" and the substitutes for the oil and gas industry

include alternati&e fuels such as coal, gas, solar po"er, "ind po"er,

hydroelectricity and nuclear energy. )hese are still in the de&eloping phase, as in

the case of BP, and also in&ol&e high cost of production. )he usage of alternati&e

sources of energy is not that high due to its le&el of de&elopment and high cost of

production, in comparison to oil usage for "hich the demand is high.

)he le&el of com0etitive rivalryis high0 the industry is characteri!ed by big

companies "hich produce lo" differentiated products and there is lo" threat of

substitute and also lo" threat of ne" entrance into the oil and gas industry.

)he industry/s ma+or players are the giant companies in the industry, and the le&el

of ri&alry is high and the industry is some"hat attracti&e to an e'tent. *lthough the

po"er of both the suppliers and buyers is medium, the threat of ne" entrance and

substitute is lo"0 "hich means that profitability is not reduced by substitute and

the industry is attracti&e.


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Bibliography

""".bp.com

"""."iiopedia.org

http99""".iea.org9

http99""".ft.com
http://www.bp.com/http://www.wikiopedia.org/http://www.iea.org/http://www.ft.com/http://www.bp.com/http://www.wikiopedia.org/http://www.iea.org/http://www.ft.com/

bp - strategic management - the environment

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