British Petrolium Exploration - Case Study Example

BPE British Petroleum Exploration of the Roll Number: Guide's of the Department: of the Institute: Place: Date: BPE 2 Executive Summary: The global production chain involves dependable and cost-effective transfer throughout vast distances, and a constant globalize economic development is exactly fueled by the productions of the oil and gas industry. But since oil and gas resources are not renewable so their extraction simply comes to an end. But unexplored oil resources are still to be explored and this can be done only by financially well off companies. This report is based on the comparative analysis of BP with other giants in the same field. A study on the generic strategic choices that BP Exploration appears to have made with use of Bowman's strategic clock is also carried out in this report. Finally BP Explorations current strategies against future competitions they face are also discussed. BPE 3 Comparative Analysis: According to Forbes (2004), BP was compared with, Shell, ExxonMobil and Total. The data were taken from the companies non-financial reports (CnFR), added on with more information on their CSR website. This data was made available at the time of the analysis (BP, 2005; ExxonMobil,2004; Shell, 2004; Total, 2004). The prime objective of the analysis was to get information on the actions which the companies attributed to CSR, what the inducements, aims, and targets for these actions were, and how they designed to attain this. A real study of the four companies reveals the fact that they are very similar in many respects. The table below presents some vital information about the 4 companies. Table 1: Key information of the 4 companies Apart from the information presented in the above table all the companies possess a major part of the value chain of oil and gas resources. The four companies are concerned from extraction to retailing and they have a large petro-chemical activity. BPE 4 Corporate governance of the companies: Corporate governance is a mode of the direction and control which the companies have on their operations. This means that "the distribution of rights and responsibilities among different participants in the organization and the rules and procedures for making decisions on corporate affairs" (Total, 2004). This term derived force only after the corporate scandals like Enron in which leaders profited themselves rather then the company. The companies deal with this issue by giving a description of proper assessment making procedure and the economic interests of those making these determinations, i.e. stock options, participation in other companies etc. Extended producer liability is regarding the responsibility for the products after they have been sold, generally for the use and removal phase of the life cycle. BP centers on modifying their customers to use their products safely (BP, 2001, BP Business Policies: What we stand for. Retrieved April 21, 2009 from www.bp.com). Smart technology moves Getting the right technology is vital for building a competitive energy business and for creating a sustainable future. The strategy which was instituted on tackling precise technologies in back up of clear business goals (Frontiers, December 2003), is now bearing fruit in the case of BP. The company is developing so that it faces to meet the challenge of the world's rising energy demand by discovering new ways of getting at more hydrocarbons from on hand and new resources. The company also believes in BPE 5 developing and delivering new products to customers. In a way by investing in technology the business in BP is shaping up and is opening up new alternatives. At present BP ranks as the number two oil and gas company and this company has achieved through its market capitalization.'Market Capital is nothing but the share price multiplied by the number of shares in issue, Rankings are normally done on a $ basis.' When calculating in dollars for BP the ADR price (American Depository Receipt - the mechanism which allows you to hold shares in non-American companies in the US) is multiplied by the number of ADRs (one ordinary share equals an ADR) the same applies for Exxon.' Royal Dutch Shell's market cap is summed up by combining Shell and Royal Dutch ADR's. BPs' Adoption of Bowman's Competitive Strategy Options The 'Strategy Clock' is founded on the work of Cliff Bowman (C. Bowman and D. Faulkner 'Competitive and Corporate Strategy - Irwin - 1996). It is a way in which a company can analyze its competitive position when compared with its competitors. Like Porter's Generic Strategies, Bowman believes competitive advantage in relation to cost advantage or differentiation advantage. He has put forward six core strategic options: BPE 6 Option one - low price/low added value. -liable to be segment specific. Option two - low price. -increase of price war and little margins/has to be a 'cost leader'. Option three - Hybrid. -Less cost base and reinvestment in low priced and differentiation. Option four - Differentiation. (a)without a price premium: -apparent extra value by consumer, resulting in market share gain. (b)with a price premium: -apparent extra value with enough to bear price premium. Option five - concentrated differentiation. -apparent extra value to a 'specific segment' justifying a premium price. BPE 7 Option six - altered price/standard. -larger margins if competitors do not value or even follow risk of losing market share. Option seven - enhanced price/low values. -only possible in a monopoly situation. Option eight - low value/standard price. -loss of market share. BP has been able to meet the challenges of its competitors through the use of the different strategies put forward by Bowman. A sustainable existence is, " Sustainability is fundamental to our purpose as a group. Everything we do is designed to achieve the goal that our board sets on behalf of our shareholders, to maximize shareholder value on a long-term basis. In order to maintain value in the long term, we not only have to develop a successful business strategy but pursue it in such a way that we earn the trust of shareholders, customers, local communities, governments and others whose support is critical to our long-term future. To retain that trust we have to behave responsibly and consistently" BP's Sustainability Report 2004 (published April 2005). Current strategies against future competitions Ideas in abundance MAZ, WATS, Nodes and permanent LoFS recorders are not the only means of seismic innovations which BP has developed. When it comes to innovations BP always shows a fairly major presence. The reason is not because BP has a monopoly on brain power but it has a drive and confidence in their people and the company believes that their BPE 8 men will surely come up with good things. These good things will surely in the long term lead to commercially viable activities. Current energy privatizations in a number of global regions have ensued in a significant number of new investment chances for BP. In recent years, BP has sustained to develop its retail networks in Eastern Europe and it has contributed nearly 100 service stations in eastern Germany, the Czech Republic, and Hungary. Planning a route of multi billion dollars pipeline and under cost effective and safest conditions is a challenge that very often confronts BP's exploration and production business. Looking into a pipeline investment chance, assessing pipeline projects or scheduling a pipeline route, all need a large amount of data to be composed up front, addressing factors arraying from geography and topography to local politics, present infrastructure and the location of environ sensitive areas. BP is concerned in pipeline projects around the world, calling for pipelines to be routed out through a multiplicity of tracts. BP has innovated a new Pipeline Project Facilitation Tool (PPFT) which is an incorporated suite of superior software programmes. These programs changes the scenario (http://www.bp.com/sectiongenericarticle. do'categoryId=9019307&contentId=7035194, retrieved on 21st April, 2009). BPE 9 References: 1. BP Business Policies: What we stand for. Retrieved April 21, 2009 from www.bp.com 2. Shell (1998), Profits and Principles - does there have to be a choice' Report. 3. Shell (1999), People, Planet and Profits. An Act of Commitment. Report. London. 4. Shell (2001) People Planet & Profit. Report. Appendices: Read More