Doing business globally and internationally (ARR) - Essay Example

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Group number Course number Your names Date submitted TABLE OF CONTENTS Part A 1. Identification of ARR as “Partner”……………………………. 3 2. National and Corporate Culture………….…….…………………
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Download file to see previous pages .. 14 Appendices …………………………………………………………..…... 16 Part A 1. With reference to the academic literature and using your analysis of relevant environmental factors, speculate how and why BP identified AAR as a potential ‘partner’. In which areas are the expected benefits and synergies for both companies involved? BP and ARR met in March 2003 to establish a joint venture having the equal proportion i.e. 50-50% in the oil and gas sector of Russia (Sylvia, 2011). TNK and Sidanco were the target companies of this joint venture. BP i.e. British Petroleum is one of the most renowned oil and gas exploration based companies which is running many sub divisions under various different forms across the globe. The other party to the joint venture is ARR which is a consortium developed by some richest investor groups of Russia namely as Alfa Group, Access Industries and Renova. This joint venture was quite important for both BP and AAR as both these firms had their own unique expertise due to which they could exploit the synergy effect if they could work together as a combined entity. There were numerous environmental factors associated with both the companies due to which both of these companies became indispensible for each other. Following are some of the factors due to which BP identified AAR as its partner under this joint venture: 1. ...
In such case, BP preferred AAR, a private consortium but with billions of dollars in their pockets to safeguard the interest of TNK-BP. 2. Local knowledge and working relations with government Another important reason for the selection of ARR by BP is local knowledge, expertise, industry practices, and cultural awareness of ARR being a rich investor group of Russia, which could help TNK-BP easier than BP. In order to meet any confrontation with the Russian government, AAR can manage this situation in a better and efficient manner than that of BP because of maintaining appropriate level of working relations with their government, local community and other environmental stakeholders. Expected Benefits and Synergies TNK-BP is such a joint venture that could not only provide major benefits and synergies to both BP and AAR but also to Russian government. Being a multi-national company, BP has the ultimate expertise, knowledge and business skills in the massive field of oil and gas exploration, refining, marketing, and retail business. The exposure, that BP carries with itself is unmatchable and allow other participants to use such expertise for their benefits. With the entry of BP into Russian oil and gas sector, Russia itself got an enormous opportunity to upgrade and develop its energy sector (Yenikeyeff, 2011). However, due to mismanagement and lack of government’s interest, BP could not avail those facilities, which it was realizing at initial projections. The joint venture TNK-BP benefitted from the synergy effect of the combination of BP and ARR. BP is world market leader in the field of oil and gas whereas AAR is consortium of the richest investors of Russia. The ...Download file to see next pagesRead More
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