Global Corporate Strategy - Essay Example

Global Corporate Strategy Table of Contents Introduction 2 Critical Assessment of the Issues Corporate Governance and Competitiveness of the Organisations 3 Issues associated with Corporate Governance and Corporate Social Responsibilities (CSR) 3 Improving Performance and Operational Effectiveness 4 Recruiting and Retaining a Skilled Workforce 5 Network Level Strategies and Competitiveness 6 Evaluation of the Current Network Level Strategies Implemented by the Oil and Gas Manufacturers 6 Critical Evaluation of the Network level strategies implemented by BP 8 Strategic Alliances 8 Merger and Acquisition 9 Creating a High-Performance Culture 9 Management and Leadership Ability of BP’s Group Chairman Carl-Henric Svanberg 10 Maintain Consistency of the Leadership Practices and Behaviour 11 Fostering Positive Role by Engaging Staff Members 11 Boost Fair Performance and Talent Management 12 Conclusion 13 References 15 Introduction With fiercely rising demand of energy resources, global oil and gas industry is passing through a broad assortment of opportunities and challenges across the downstream, midstream and upstream sectors. While a number of risk factors continue to exist in the current energy landscape, the prevailing competitive environment is also recognised as one of the leading feature in the global oil and gas industry. In relation to the recent phenomenon, the pricing strategies in global oil and gas has recently emerged up to a significant heights, which reduced the demand level of crude oil, gas as well as various other petroleum products (PwC Network, 2014) The emerging markets of India and China have been recorded as the fastest growing nations in terms of consuming higher rates of oil, gas and petrochemical products. In this context, the global energy companies such as British Petroleum (BP), Shell, Mobil and Total have been highly recognised to involve competitive pricing strategies in order to gain substantial return from their global subsidiaries especially located in the emerging markets (BP Plc., 2014). However, the oil and gas companies have also been witnessing numerous issues not only for their competitive business strategies but also for their radical impact on the global ecosystem. In this context, the organisations associated with global oil and gas manufacturing industry must also contend with changing regulatory requirements involving their corporate governance different environmental issues (EYGM Limited, 2013). Emphasising the unabated challenges and opportunities faced by the dominant marketers in global oil and gas industry, the essay tends to carry out an appropriate analysis of the global corporate strategies adopted by BP and other world-class Oil, Gas and Petrochemical suppliers such as Shell, Mobil, Chevron and Total since 2010 to date. In addition, the essay also critically examines the corporate governance along with network level strategies and competitiveness of BP as well as Shell in the context of current business scenario of global oil and gas industry. Correspondingly, the essay also tends to demonstrate the corporate strategic measures of BP in terms of creating a high-performance culture in its global business locations that enable it to effectively deal with both challenges and opportunities in the global oil and gas industry as well. Critical Assessment of the Issues Corporate Governance and Competitiveness of the Organisations Issues associated with Corporate Governance and Corporate Social Responsibilities (CSR) In relation to the current business scenario in the global oil and gas business industry, organisations are often recognised to face numerous challenges due to their ineffective focus on the corporate governance practices and social responsibility related acts. With regard to the current business practices, both BP and Shell have been critically identified to consider strong framework of corporate governance to minimise potential issues. Both the oil and gas manufacturers have been observed to conserve strong set of standards in terms of reporting their financial performance to the valuable stakeholders (Mariri & Chipunza, 2011). In order to mitigate different governance issues, the reporting practices of both the organisations incorporate adequate transparency, accountability and reliability of each financial attributes. The process of conserving strong ethical standards in auditing and reporting functions have also been identified to enable both BP and Shell to increase value of their governance systems (Hurst, 2004). In the context of CSR, both BP and Shell have been witnessing major set of practices to minimise potential issues associated with the natural environment and the community as well. The CSR activities of both BP and Shell involve wide range of environmental protection related activities across their different overseas and domestic manufacturing subsidiaries. Moreover, a number of community-based initiatives in order to promote health and safety of the society members have also been recognised as a major set of CSR programmes performed by BP and Shell (Fontaine, 2013; Ghose & Phil, 2012). In the context of recent CSR initiatives, BP has been started its environment protection related activities by working with trustees from state and federal governments. In this regard, Natural Resource Damage Assessment (NRDA) can be regarded as one of the major processes in BP in terms of implementing different initiatives towards its CSR strategies. The initiatives through NRDA process help the organisation in collecting data and evaluating effective facilitation programmes for recreational use of the natural resources (1BP Plc., 2014). Improving Performance and Operational Effectiveness The issues associated with improving performance and operational effectiveness has also been witnessed as a major set of challenges for any organisation to attain long-term sustainability (Smart & et. al.,2010). In the context of BP and Shell, both the petrochemical manufacturers have also passed through issues associated with their business performance and operational efficiency as well. The strategy of providing appropriate training and development activities to each group of employees by deploying cutting edge technological aspects can be identified as the major aspects of both BP and Shell to reduce issues associated with operational efficiency and performance of its business functions. In addition, the strong values and strategic directions of the leaders often enable staff members to assimilate quality based operational skills to improve their performance. In this process, strong set of leadership skills that empower individual performance can also be considered as a major supporting aspect to improve performance and operational efficiency in both Shell and BP (BP Plc., 2013). In addition to the strategic values and practices, the process of empowering operational performance and effectiveness are also influenced by BP through conducting appropriate training and development activities. The strong set of compliances in the Human Resource Management (HRM) department of the organisation play an essential role by segregating employees in accordance with their performance and provide appropriate training and development sessions. More significantly, the HRM department of BP is also liable to build strong relationship with each individual or group of employees. The strategy of building relationship and prioritising their needs has further enable the department to increase operational efficiency (BP Plc., 2013). Recruiting and Retaining a Skilled Workforce Recruiting and retaining skilled workforce can have a major bearing on the organisations for its continuous growth in the operational performance. The factors including recruitment of qualified staff members or retaining skilled employees can also be identified to create a number of issues that can negatively impact the organisations. In the context of BP and Shell, both of the petrochemical manufacturing giants often maintain and articulate strategic measures in terms of hiring new staff members for their numerous operating units. The appropriate analysis of the skills and abilities required for the job positions helps both the organisations to reduce the risks associated with their recruitment processes. In the context of employee retention, the strategy of providing adequate growth prospect to every staff member along with ensuring their adequate security regarding their job position play a major role for both Shell and BP to reduce risks associated with employee retention processes. Furthermore, continuous focus on increasing training and development for each group and individuals as well as providing rewards and recognition schemes on the basis of the performance levels of the employees enable both Shell and BP to efficiently retain its qualified and highly skilled workforce (Stiel, 2003). Network Level Strategies and Competitiveness Evaluation of the Current Network Level Strategies Implemented by the Oil and Gas Manufacturers With regard to the current increasing competitiveness in the global oil and gas manufacturing industry, organisations are often recognised to extend their participation across the different marketplaces. The process of stretching business network across different competitive markets provides a major support to the organisations to attain a number of potential clients throughout different marketplaces (Girod & Rugman, 2005). In order to extend business network across different domestic and overseas locations, there are number of effective strategies that are often executed by the multinationals. In this regard, Merger and Acquisition (M&A), joint venture and franchising organisations across different overseas locations are few of the major strategic measures of the multinationals while emphasising on their network level strategies (Dumitrescu & Scalera, 2012). The approach of conducting effective network level strategies helps organisations to build new demographics and increase its market share as compared to the other competitors. The selection of an effective network level strategy in this regard can be stated as one of the most successive and competitive advantage for the organisations. The organisations from the global oil and gas industry are often observed to execute different strategic measures to stimulate their growth across different countries and territories. The execution of network level strategies has been found to be quite effective for the global oil and gas manufacturing organisation in order to mitigate a number of unwanted risk factors that might be derived from the unabated changes in global economy (Girod & Rugman, 2005). Moreover, the strategies also provide adequate opportunity to the organisations in terms of reaching to a large number of potential suppliers. This is owing to the fact that the increasing the number of potential suppliers helps the oil and gas manufacturing organisation to stimulate vital resources that further strengthen the competitive position of the organisations. In the similar context, the execution of effective network level strategies also empowers organisations’ capabilities to make expansion of their business. The strategy in this regard, helps to acquire large group of potential buyers as well as investors that play a key role for the global oil and gas manufacturers to achieve competitive advantages (BP Plc., 2013). Critical Evaluation of the Network level strategies implemented by BP In the context of BP, the organisation has been observed to achieve wide extend of its marketplace by executing effective types of network level strategies. Few of the major network level strategies have been briefly discussed that enables BP to achieve competitive position than the other rivals in the present oil and gas manufacturing industry. Strategic Alliances Making strategic alliance with other global organisations has long been witnessed to be a major advantageous decision of BP in the current oil and gas business industry. The organisation has achieved greater extent of its competitive position by entering into strategic alliance with other leading oil manufacturers in its domestic and overseas business locations. In this context, conducting strong strategic alliance with Russian venture LUK Oil (LUKARCO) has been widely accepted as one of the major decisions of BP. Moreover, the strategic alliance with TNK and Rosneft, two other major Russian oil and gas ventures have also been observed to radically stimulate business performance of BP in order to enhance its position. The process of network level strategies with executing strategic alliance had played a major role for BP to increase its numbers of potential suppliers across different nations (James, 2011). Merger and Acquisition Merger and Acquisition (M&A) has also been identified as a major competitive decision of BP to stimulate its expansion across different global markets. The decision of making strong merger with Amoco in the year 1998 and Atlantic Richfield Company (ARCO) during the mid of 2000 has been observed to bring major business success to BP. The success not only enabled the organisation to acquire large group of valuable stakeholders, it had also influenced the organisation to stimulate massive flow of M&A with other petroleum manufacturing companies. Throughout the decade, continuous M&A strategy has been witnessed to stimulate the merger reserve of BP and help the company to meet the desired expectation of each group of stakeholders (James, 2011). Creating a High-Performance Culture The increasing pace of competitiveness in the global oil and gas manufacturing industry has been highly observed to acquire number of opportunities due to the rising demand of petrochemical products. In relation to the recent business operations of BP, the organisation has been performing a dominant role due to its exceptional strategic directions and practices. In this regard, the continuous focus on improving performance and operational efficiency of the workforce has been considered as a major successive factor for BP to build its strong position in the respective business industry. Moreover, the process of its network level strategies and competitiveness has also been assimilated to strengthen long-term sustainability of the organisation. In addition to its operational efficiency and network level strategies, the management leadership abilities of the most prominent leaders can also be considered as a major supportive factor for BP to achieve its current sustainable position. The following discussion therefore, provides a clear understanding about the role of the management and leadership abilities possess by the Group Chairman of BP Carl-Henric Svanberg. Moreover, the discussion also recommends a set of effective management and leadership practices that can enable the organisation to sustain its dominant position in the global oil and gas manufacturing business industry. Management and Leadership Ability of BP’s Group Chairman Carl-Henric Svanberg The leadership skills and abilities of Carl-Henric Svanberg, the Chairperson of BP group have been recognised to play a key role for the organisation to influence the operational strategies and activities towards the achievement of the organisational vision and objectives. With reference to the chairman’s letter to the organisation’s valuable stakeholders, it has been ascertained that achieving the growing expectation of the shareholders and ensuring them with their expected return is one of the major objectives of BP. In addition, effectively addressing the average increase in demand for energy up to 1.5% annually is also a major consideration of the leader while performing his exceptional roles in the organisation. The commitment of meeting expectation of the societies along with building people’s trust and confidence have also been identified as few major long-term goal of Mr. Svanberg (BP Plc., 2013). In order to critically address the needs and expectation of the shareholders along with people across different global communities, it is highly essential for the leaders to reinforce their leadership abilities into an effective set of practices. Therefore, few major set of leadership skills and abilities can be critically identified that can enable Mr. Svanberg to make BP a simpler and more efficient organisation with embedding a high-performance culture. Maintain Consistency of the Leadership Practices and Behaviour The process of maintaining adequate consistency in the leadership skills and abilities of Mr. Svanberg provide a major support to BP towards its long-term sustainability. This is owing to the fact that the ability of conserving appropriate behavioural and communication skills would play critical role for the leader to make operational environment simpler. The process of performing an effective behavioural and communication would further help the leader to strengthen his interpersonal relationship with each group or individuals of the organisation. Moreover, the leader should also need to establish trust regarding the performance capabilities of the staff members with utmost discipline and commitment. The practice would enable the leader to generate confidence and trust among each group or individual in different operational and managerial activities (Kouzes & Posner, 2012). Fostering Positive Role by Engaging Staff Members Engaging staff members irrespective of their job roles in a shared organisational vision and values can also be a major factor for Mr. Svanberg to build a high-performance culture in BP. In this regard, the leader should highly emphasis upon fostering his positive roles while engaging employees from different operational and managerial levels. Moreover, providing a clear strategic direction along with appropriate alignment and understanding the capability of the workforce can also enable the leaders to make the operational process more efficient and form high-performance working culture (The King’s Fund Leadership Review, 2012). Boost Fair Performance and Talent Management Focussing upon boosting fair performance of the groups or individuals can also be duly considered to empower the leadership abilities of Mr. Svanberg in increasing organisational efficiency. In this regard, leaders should focus on providing continuous support and strategic direction to each individual irrespective of their job position. Moreover, encouraging individual talent and equally promoting their skills and abilities can also enable the leader to increase operational performance of the organisation. The process of managing and equally prioritising individual talent will also enable Mr Svanberg to foster innovative and more productive culture in the working environment of BP. On the other hand, managing performance of each individual or group can also be a key factor for the leader to stimulate continuous improvement of the organisation. This is owing to the fact that encouraging individual talent and managing their performance can substantially improve the innate capability of the workforce and enforce them to build long-term relationship with the organisation’s vision and objectives (Kouzes & Posner, 2012; The King’s Fund Leadership Review, 2012). In addition to the aforesaid leadership abilities, the leadership traits of Mr. Svanberg have been identified to be quite successful due to his strong commitment towards the three imperative factors of BP including clear priority, a quality portfolio as well as distinctive abilities. In this regard, it is affirmed that the leadership abilities of the Chairman should emphasise consistency in his leadership traits to make BP a simpler and more efficient organisation with embedding a high-performance culture. Conclusion With reference to the critical observation of the major strategic measures, it is affirmed that the strategic attributes undertaken by BP are the key factors underpinning the continuous success of the organisation. The strategic management and leadership competencies have long been witnessing to provide major opportunities to BP in achieving its competitive position in the global oil and gas manufacturing business industry. In relation to the aforesaid discussion, the strategic decisions towards continuing global expansion and strategic capabilities leading to competitive advantage have been critically recognised to strengthen the current financial performance of BP. Moreover, the well-managed network level strategies as well as emphasising continuous innovation in order to increase efficiency of the operational functions have enabled the organisation to establish its dominant position in the global oil and gas manufacturing business industry. According to an in-depth understanding about the current business operation of BP, it has been ascertained that the leadership skills and practices have major contribution towards the continuous success of BP in its respective business industry. The leadership competencies of Mr. Svanberg play an essential role for the organisation towards effectively dealing with numerous operational and managerial issues. Moreover, the leadership traits of Mr. Svanberg have also provided a major support to BP in terms of improving its operational efficiency especially to maintain community wellness and conserve effective balance of the global ecosystem. References 1BP Plc., 2014. Restoring the Environment. Gulf of Mexico Restoration. [Online] Available at: http://www.bp.com/en/global/corporate/gulf-of-mexico-restoration/restoring-the-environment.html [Accessed August 02, 2014]. BP Plc., 2014. BP Energy Outlook 2035. Energy Economics. [Online] Available at: http://www.bp.com/content/dam/bp/pdf/Energy-economics/Energy-Outlook/Energy_Outlook_2035_booklet.pdf [Accessed August 02, 2014]. BP Plc., 2013. Annual Report and Form 20-F 2013. Investors. [Online] Available at: http://www.bp.com/content/dam/bp/pdf/investors/BP_Annual_Report_and_Form_20F_2013.pdf [Accessed August 02, 2014]. Dumitrescu, C. & Scalera, F., 2012. Strategies of Multinational Enterprises. International Journal of Business and Commerce, Vol. 1, No. 7, pp. 12-26. EYGM Limited, 2013. Business Pulse: Exploring Dual Perspectives on the Top 10 Risks and Opportunities in 2013 and Beyond. Oil and gas Report. [Online] Available at: http://www.ey.com/Publication/vwLUAssets/Risk_and_Opps__Business_pulse_Oil_and_Gas/$FILE/Risk_and_Opps__Business_pulse_Oil_and_Gas_HR.pdf [Accessed August 02, 2014]. Fontaine, M., 2013. Corporate Social Responsibility and Sustainability: The New Bottom Line? International Journal of Business and Social Science, Vol. 4, No. 4, pp. 110-119. Ghose, S. & Phil, M., 2012. A look into Corporate Social Responsibility in Indian and emerging Economies. International Journal of Business and Management Invention, Vol. 1, No. 1, pp. 22-29. Girod, S. J. G. & Rugman, A. M., 2005. Regional Business Networks and the Multinational Retail Sector. Long Range Planning, Vol. 38, pp. 335-357. Hurst, N. E., 2004. Corporate Ethics, Governance and Social Responsibility: Comparing European Business Practices to those in the United States. Publications. [Online] Available at: http://www.scu.edu/ethics/publications/submitted/hurst/comparitive_study.pdf [Accessed August 02, 2014]. James, R. A., 2011. Strategic Alliances between National and International Oil Companies. Program on Energy and Sustainability Development, pp. 1-25. Kouzes, J. M. & Posner, B. Z., 2012. The Leadership Challenge: How to Make Extraordinary Things Happen in Organizations. John Wiley & Sons. Mariri, T. & Chipunza, C., 2011. Corporate Governance, Corporate Social Responsibility and Sustainability: Comparing Corporate Priorities within the South African Mining Industry. J. Hum. Ecol., Vol. 35, No. 2, pp. 95-111. PwC Network, 2014. Oil and Gas. Publications. [Online] Available at: http://www.pwc.co.uk/publications/index.jhtml [Accessed August 02, 2014]. Stiel, P., 2003. British Petroleum: A Global Company in a Global World. Globalisation. Smart, V. & et. al.,2010. Incorporating Ethics into Strategy: Developing Sustainable Business Models. Discussion Paper. [Online] Available at: http://www.cimaglobal.com/Documents/Professional%20ethics%20docs/Incorporatingethicsintostrategyweb1.pdf [Accessed August 02, 2014]. The King’s Fund Leadership Review, 2012. Leadership and engagement for improvement in the NHS. Engaging Different Groups. [Online] Available at: http://www.kingsfund.org.uk/sites/files/kf/field/field_publication_file/leadership-for-engagement-improvement-nhs-final-review2012.pdf [Accessed August 02, 2014]. Read More