Structure of the Organization - British Petroleum - Essay Example

? Report on British Petroleum Contents Introduction 3 Structure of the organization 3 Entrepreneurship 5 Innovation 6 Market opportunities 7 Competitive advantage 9 Porters five force 9 Sustainability 11 Corporate social responsibility 12 Future strategy 13 Conclusion 14 Reference 16 Bibliography 18 Introduction British Petroleum is among the top international oil and gas company which aims to provides the customers with energy required for light and heat, fuel required for transportation, petrochemicals product and retail services for everyday living. The business model of BP aims to generate value for the hydrocarbon value chain. The process usually starts through exploration and ends with energy supply (BP, 2012). In 2011, the growth in global oil consumption slowed although robust growth continued in China and other non OECD countries. Despite the slowdown average prices of crude oil were however higher as compared to previous years (BP-a, 2012). BP facts and figure indicates a stable growth where its sales and operating revenue stood at 83,400. The core brands of BP are Castrol, Arco, ampm, Aral and Wild bean cafe (BP, 2012). The paper deals with the above mentioned organization, British Petroleum and discusses the organization in much more detail in order to analyze the company structure its work process, the strategy the organization is currently following and future plan along with its competitive advantage which keeps the company ahead of its competitors. Structure of the organization BP organizes the business in a way so that energy products are and services which are required by the people around the globe are served at an appropriate time and as per the needs. The business model of BP aims to create value in the value chain process and as stated above it starts with exploration and ends with supply of energy. The organization of BP consists of marketing and refining, upstream, people of BP and their values and alternative energy. The upstream usually finds, develops then produces and transports natural gas and oil to the market. BP operates in around 26 countries and it employs approximately 84,000 employees. The major markets are Russia, USA, North Africa, UK, Asia, Canada, Middle East and others. The marketing and refining teams are responsible for trading, supplying, transporting, refining, and also for marketing the products. BP has 17 refineries and it markets them in 100 countries the role of R&M plays an important part. BP constitute of approximately 83,400 people, contractors and suppliers in the organizational chart. BP value lies in safety of the people, respect for the world, excellence through disciplined management and systematic operations, courage to face difficulties and the team, where the employees trust each other (BP-b, 2012). The following is the organizational structure of BP headed by Robert Dudley Figure 1: Organizational structure of BP (Source: The Official Board, 2012) Entrepreneurship BP has also encouraged entrepreneurship among women through its commitment towards upliftment and gender equality. BP Southern Africa entered into partnership with the “Women Development Trust” to provide the women with a stable platform to secure success in the business sector. BP was encouraged by the determination and passion of the women towards their approach for their business and was highly pleased to get associated with WDT who has also contributed towards the transformation process and success among the women entrepreneurs. At the government level, BP has taken various steps in order to advance the position of women in the society and thus encourage the women to take part in business and create business environment. In addition to the above discussion, BP had also developed corporate entrepreneurship model after the most troubled period in 1980s and has managed to develop the brand as a global energy company and has added renewable energies in its portfolio. In an attempt to re invent as a supplier for all forms of energy BP has thus adopted a corporate entrepreneurship model. The model had four main components which are ‘direction’, takes into consideration the strategy of the company, the market, and goal and positioned as a socially responsible company; ‘Space’, refers to the freedom which are given to the business managers in order to deliver according to the objectives which also includes the freedom to innovate and experiment. Third component is ‘Boundaries’ which refers to moral and legal limits in which company operates and the fourth component is ‘Support’ which refers to the information system and training as well as work and life balance services in order to help the managers perform the work. The above four elements are thus indented to create free organization where the individuals will be able to act entrepreneurially within the boundaries of the company (Stokes et al, 2010, p. 98). Innovation At BP, innovation is valued and it believes that strong team has the potential to encourage the performance of each individual. Innovation is important since it is most important driver in the development of human development and also with context to energy; in addition an extraordinary level of modernism is required in order to provide solutions in order to grow in the global energy demand. As one of the global provider of energy BP play an important part in addressing the issues and in order to do this innovative solution needs to be accessed. Innovation in case of BP is much more than the development of new ideas into effective and decisive action at global scale. Innovation which is of a special kind is put to provide vital energy sources from sunlight, wind, and biomass and also decrease carbon content arrived from fossil fuel which at present comprises the major ingredients in global energy mix and are possible to follow the same route for the future (BP-c, 2012). BP incurs innovation through collaboration, commitment and conviction. As BP was confronted with the case of oil spill in Gulf of Mexico, to solve the matter BP innovation has helped it to actively sought ideas and input as well as recommendation from other industry. Thus as a result the company benefitted from innovative and advanced solutions in various areas such as containment, remotely operated usage of vehicle, reservoir visualization, vessel retro fitting and application for the dispersant. The company has also tapped in the modern spirit of the nation across the world for their suggestion and ideas in the process of stopping the well which contained oil as well as restoring the impacted shorelines. In response the company had received 123,000 innovative ideas from across 100 countries which thus have set up an extraordinary team which comprised of the senior engineers, leaders and also government agencies such as EPA and US coast Guard in order to assess them. Almost two third of ideas were dealt in handling the leak while the remaining ideas had focused on cleaning up the oil spills. Thus it can be said that the development and deployment of innovation has helped the organization to improve the ability to response towards future spills (BP-d, 2012). Seeing the innovation at BP it can be said that innovation just not takes place with products in market place but also can be used in dealing with disasters and also prevent them from occurring (Kuczmarski, 2010). Market opportunities After a strong economic growth rate in 2010, 2011 experienced a slow growth rate as compared to the previous financial year and is expected to subdue the global growth in the current financial year 2012. Emerging economies such as India and China with stronger productivity as well as increase in population are the key drivers of growth while the developed countries are expected to lag behind. Energy demand, mainly oil has recovered strongly in 2010 but has been facing stiff and challenging condition mainly in the OECD market. BP has a huge opportunity in energy demand as it is directly linked with economic growth, population and development. The global population is expected to increase by 1.4 billion with growth in real income by 100% in the next 20 years. Oil and gas are expected to play a significant role in meeting the demands and will represent about 53% of the total consumption of energy by 2030. Technology also serves as an opportunity for BP as they expect it to lead new as well as efficient ways to transform hydrocarbon into a useable form of energy, lubricants and petrochemicals. Income and population tends to remain the key drivers of energy demand. The GDP growth globally is likely to accelerate which are further driven by low and also medium income economies. It is projected that the GDP will rise in the next 20 years and will account to 3.7%. Figure 2: Global growth Rates (Source: BP, 2012) BP has estimated that the exits enough resources to meet the demand which is increasing at a faster rate. Oil reserve has the capacity to meet about 45 years of demand and the natural supplies have the capacity to meet up with the demand for the next 60 years or so. In addition to the natural gas and oil and the opportunity with the sector, another opportunity with BP lie is expansion in crude oil segment in other countries such as Brazil (BP-1, 2012). As a global company BP exists in some of the energy segment such as aviation sector, lubricants and also in biofuels in Brazil. The Brazilian oil industry it can be said that it is highly dominated by many large oil corporations and the main industry is Petrobras. There exists a huge demand and need of crude oil by the customers, the target market and thus real opportunity for BP exits in the Brazilian crude oil market. Competitive advantage After the incident took place in Gulf of Mexico the competitive advantage for BP lies in the safety and not cost. At BP safety of the employees and the people across the globe is the first concern and is doing relatively well in this sector. In addition to the safety concern, BP competitive advantage also lies with multi faced digital campaign through which BP managed to connect with the markets sectors successfully and enhance brand loyalty in the fuel industry (MU Marketing Update, 2011). BP has also adopted green path in order to achieve competitive advantage. The recent oil spill indicates the lack of green strategies which can impact the short and long term performance of the company thus adopting the green marketing strategy will help BP to achieve a competitive advantage and deal with further spills if any (Cronin et al, 2010). Porters five force Porters five force helps to determine the attractiveness of the industry. Porters five force was coined by Michael E. Porter and focus on five forces which tends to shape the competition in a given industry. The five forces are bargaining power of supplier and the customer, threat of new entrant, threat of substitute and rivalry among the firms (Hill & Jones, 2009, p. 43). Figure 3: Porters Five force In case of BP, Porters five force will help to determine the attractiveness of the industry by taking into consideration the five given forces, The bargaining power of supplier can be said to be strong for BP because there exists a large number of suppliers and thus the switching cost to another suppliers will cost more for the retailers. There also exists a high degree of forward integration from the oil and gas industry making the supplier much stronger and BP being the largest oil industry the bargaining power is high. The bargaining power of buyer is moderate as need of consumers are high and as discussed above the demand for fuel will increase in the next 20 years. There are o substitutes for oil and motor fuels which indicate low degree of bargaining power of the customers. Although there exists various competitors making the brand loyalty low and thus can be said that the bargaining power of customer is moderate. Threat of substitute for oil is low as switching on to other alternative source of energy would cost more and time duration will also be high making it unattractive to the customers. Although BP has been working on alternative source of energy and is investing huge amount in new technologies. Threat of new entrant is moderate to high for the oil industry and BP being the market leader but the strong growth of the industry has allowed new entrant to enter in the oil industry. Finally rivalry among the competitors is moderate due to high switching cost, competitor’s size and similarities in the competitor’s product. Sustainability 2011 can be said to be a year of recovery, change and consolidation for BP. Employees of BP worked harder to make the organization much stronger and a safer company to work with. As a part of its sustainability the company worked to ensure risk management and safety and earn trust as well as grow value with respect to the accident occurred in Gulf of Mexico. BP strives to become safety leader in the industry, become world class operator along with good employer and responsible corporate citizen. The top priority of BP is the safety and with rigorous management it aims to protect the people at the frontline. Operating in regions surrounded with politically complex environment and demanding geographies like deep water and oil sand tends to require special sensitivity towards the local environment and thus BP enhances the processes, system and the standard. As a sustainability strategy BP is in the process to create trust back by being fair and also responsible in every work the organization does. The performance of the company is reported closely and is maintained in a transparent way. BP main objective is creation of value for the shareholders by growing energy needs responsibly and safely and help to meet the demands of the world. BP distinctive capabilities which are exploration, its operation in deep water, management of giant field, gas value chains and downstream business of BP which gets underpinned by relationship and technology. BP strong financial performance has enabled them to make investment to produce sufficient energy which the society requires. By way of supplying energy BP supports economic development and helps in improving the life’s of people across the globe. Other activities of BP also include investment, revenues for the government, infrastructure, and generation of jobs (BP-e, 2012). Corporate social responsibility BP has been experiencing and increased pressure in order to showcase a greater commitment towards CSR activities. Compliance of CSR can be ceremonial if the task is not accompanied through genuine corporate responsibility. The main question aroused was whether the organization was able to gain credibility for their commitment towards CSR. During the year 2010 BP has experienced proverbial warning with respect to corporate integrity which can be referred to as privilege which often takes years to build but only few moments to lose it. With the explosion of the Deepwater Horizon which took place in the Gulf of Mexico it was founded that BP was in two fold crises, firstly where BP not just failed in fulfilling the CSR towards stakeholders, environment and also for the shareholders. Secondly BP was exposed a organization who was willing to do green image just for the sake of it without any backing of operational and strategic change. The BP oil incident was one of the biggest environmental disasters which has left impression as to how he organization views drilling and is is one of th most high profile CSR disaster. BP however has a questionable safety records, but if seen practically the spill could have taken place with any of the oil organizations operating in deep sea. BP has accepted the blame for the oil disaster but also the PR of the company has been badly affected which gets reflected on the CSR profile also. BP has been trying hard to fight against the oil spill and has implemented safety for future practice of oil drilling. There are yet many questions about the standards set by the organizations. The residents in the affected area has said to be affected from various diseases and other related health issues. The marine life was also affected and despite the cleanup efforts, the incident of oil spill has damaged fragile coral reefs and will be felt of years (Just Means, 2011). Future strategy BP as part of its business strategy plans to follow a 10 point plan in order to grow value for the respective shareholders. The 10 point plans starts with relentless focus towards safety and aims to act as strength for the company. The 10 points plans of BP are Relentless focus on safety as well as in managing risk Displaying the strength Focused and stronger BP Simple but standardized BP Visible and transparent value Continuation of portfolio management Upstream projects Generate more than 50% annually Strong balance sheet of BP (BP-f, 2012) Conclusion It can be concluded that BP is still the leading oil and Gas Company across the globe and after the Gulf incident the company has been trying out various means to clean up and not to repeat the incident in future. A high degree of concern lies with the safety and it is one of the primary issues for BP and to deal with it the company has introduced new technology and system. Apart from safety concerns of the front line men and also for the people across the globe, building trust is also essential and has set up various goals which are set to achieve in years to come. BP has been able to meet with its commitment and is moving forward with its strong leadership team. Thus the future of BP seems to be bright for BP and has a huge opportunity to explore and expand into various other segments across the globe. Reference BP. (2012). About BP. [Online]. Available at: http://www.bp.com/sectionbodycopy.do?categoryId=2&contentId=7065607 (Accessed 11 December 2012). BP. (2012). BP Energy Outlook 2030. [Pdf]. Available at: http://www.imemo.ru/ru/conf/2012/03022012/03022012_RUL_B.pdf (Accessed 12 December 2012) BP-a. (2012). Annual Report and Form 20-F 2011. [Online]. Available at: http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/I/BP_Annual_Report_and_Form_20F_2011.pdf (Accessed 11 December 2012). BP-b. (2012). BP Overview. [Online]. Available at: http://www.bp.com/sectiongenericarticle.do?categoryId=9031567&contentId=7057899 (Accessed 11 December 2012) BP-c. (2012). Innovation through conviction, collaboration and commitment. 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