Business Environment - Coursework Example

Business environment Any organized human activity, which is done in-group, will be most times constituted into an organization. So, Organization is aphysical structure with a ‘collage’ of workers doing their allocated work under the supervision of a leader, for the benefit of the organization as well as them. These workers will normally be apportioned into different departments for better arrangement or streamlining of work. Among the many departments, which constitute an organization, the marketing department’s role is omnipresent and crucial. Marketing department can only, boost an organization, by building a brand image for it, or for its products. So, when the marketing department creates and thereby entices the prospective customers, the organization can be put on a path of success. This paper will analyze how British Petroleum or Beyond Petroleum or bp, tried to change its brand image and thereby entice the prospective customers, from the perspective of Porters 5 forces analysis. Also, the paper will look at this initiative of bp from a critical point of view, thus making recommendations to improve the firms competitive position. Background British Petroleum, a British oil and energy company, got a brand change, when it ‘merged’ with or ‘acquired’ by the American company, Amoco. According to the official version, British Petroleum merged with the Amoco Corporation (Amoco), forming bp Amoco in August 1998. “In 1998, Amoco and bp announced that they had merged, combining their worldwide operations into a single organization. Overnight, the new company, bp Amoco, became the largest producer of both oil and natural gas in the US.”(bp.com). Then as an exercise to further build on the already strengthened and established brand, “Amoco” was ‘dropped’ from bp Amoco, renaming it as just bp. Finally, to redefine or reorient or re-brand bp in a new direction in the changed setting due to the merger or takeover, the management of bp decided to give a new meaning to the ‘initials’, bp. So, bp started using the punning term “Beyond Petroleum” as part of building a brand, which is breakaway from the past and applicable to the organization’s global vision of providing a cleaner fuel, which is one of its major strengths. Thus, providing cleaner fuel became one of its major targets or goals. Bp had gone for building an image or aptly said rebuilding an image to reflect the fact, that bp had become a part of global business offering cleaner fuels. So, without fully diverting from its past brand image, bp decided to use the newly acquired brand image or name for many official uses in advertising campaigns. “…reinforcing this image with a new logo, makeover for its petrol stations and a media advertising blitz.” (Sussdorff) The intensity of competitive rivalry Even with the change in the direction of bp to look for options, beyond the existing possibilities, there remains the need to maintain a partial status quo, so that it can keep the competitors at bay. That is, for bp, fulfilling the existing customer’s needs should be the important option before going in for the newer avenues. Even the change to look for cleaner fuel should be in tune with the customer’s needs and not forcing the customer to accept the change. If the customer is forced to accept, they may go for another of its competitors. So, any brand that is introduced should have inbuilt capabilities to remain relevant to the existing customer and change in a consistent manner, without giving any space for competitive rivalry. Moreover, bp is trying unsuccessfully to do this by incorporating decisions and values, which will not alienate the existing customers, and at the same time change with the evolution of the brand. This can be summed up by bp’s two values. “Beyond petroleum does not mean that we are... abandoning oil and gas or getting out of hydrocarbons focusing only on alternatives (renewables)” (bp.com) But, the feasibility of this happening is like traveling in two different roads at the same time, which is impossible. “Welcome to the wonderful world of "and" (or paradoxical) thinking-doing two things at the same time that apparently negate each other!.” (Deol) The bargaining power of suppliers The new brand of bp under the name of Beyond Petroleum is positioned to differentiate from the existing brand of British Petroleum, thereby giving the suppliers segment of bp operations the differentiation and leverage. That is, British Petroleum had gone for an image change to shed its image of being the producer of environmentally unstable Petrol. That is, they want to position itself as the environmentally able company who has the ability and care for the environment. This may help the suppliers to approach the customers from a strong position. But, they are not moving towards that target because they are participating in other projects, which is directly opposite to its stance and positioning, thereby reducing the bargaining power of the suppliers. That is, even while wishing to be an environmentally aware company, bp is an indirect supporter for America’s plans to open up and exploit the natural reserves in Alaska in USA. While bp was been spending big on its "Beyond Petroleum" advertising campaign to position itself as an environmentally responsible company, it also publicly backed moves by the Bush government to open up the Arctic National Wildlife Refuge in Alaska to oil drilling. bp, also continues to explore for oil in environmentally sensitive areas such as the Atlantic Frontier, the foothills of the Andes and Alaska. (Sourcewatch) So, the key change bp needs to do as far as its future projects are concerned is not to associate with projects that are not in line with its stated goal and is quite opposite to its goal. To strengthen its brand image and thereby its influence in the supplier segment, bp needs to pick environmentally acceptable projects, which does not have any negative impacts for any sections of human population as well as animals, natural environment, etc. This way it kind of gives favorable scenario for its suppliers to flourish and at the same enrich bp’s brand image. The bargaining power of customers For every organization, the customer is the ‘big piece’ in the solution to solve the puzzle of creating a brand. If the ‘big piece’ or the component of customer fits and helps to form the brand, it will script a success story for the company. This will make the brand appeal to the customer more effectively, leading to the success of the brand. Likewise, the bp is trying to appeal to the customers of its new cleaner version through various avenues. For an organization, which wants to shed its existing brand image and build an all-new brand image, it calls for a change in marketing strategy also. That is, the capability of the company to win the hearts and minds of the customers all over again needs multi-channel market communications. Beyond Petroleum is able to do that with added channels opening in the form of Television, Internet, newspapers, billboards, etc. That is, bp is going for TV advertisement campaigns to ‘imprint’ its brand change to the majority of the people. “TV advertisements are currently screening in Europe and international media stations promoting bp as the company going “Beyond Petroleum”. In the UK, one hundred million dollars per year has been allocated over four years for bp’s television advertising campaign focusing on renewable energies”. (Byrce). However, the important part in the multi-channel communications is the effective logo, and bp should focus on it to optimize it. Corporate brands rely on the use of the corporate name or logo to establish brand identity in the market place. For Phillips, Benetton, Shell, Apple and Nike, the corporate logo is an important element in creating a visual identity for the firm (Schmitt and Simenson, 1997). The logo of the company provides the basic information about the company and what it stands for, thereby enticing the customers on those positive lines. So, the central to any rebranding is the new logo, which has inbuilt meanings. Green, in the new ‘Helios’ logo has been described as the color for environmental responsibility, while the yellow represents the sun. This message of the logo should be more target or customer specific. That is, while using multi channel communications, bp should be able to focus on its specific target group of customers, thereby increasing the bargaining power of the customers. For that, the management of bp should give the necessary financial backing to use the multi channel communication to reach the intended customers. The threat of substitute products The motive of the bp to go in for the brand change comes from the customer’s demand for a quality product with least possible negative impacts, so that inferior quality and cheap products do not form a threat. Bp to find out the exact mindset of the customers conducts a kind of survey regularly, which gives a clear idea about the customer’s definition of highest quality and money. Called customer satisfaction program, it mainly focuses on customer and customer ratings of bp in comparison to relevant competitors and their ability to introduce substitute products. “Measures attained in this study tend to be more operational in nature focusing on market execution. This study is based on feedback from around 50,000 customers/customers in 29 of our businesses and spans 40 countries”. (bp.com). However, this initiative of bp cannot guarantee fullest idea because it is only a sample group with margin of errors. So, in most markets, bp should conduct more surveys with minimal errors. That is, all the important aspects of the studies should be incorporated, so that the margin of errors is brought down and thereby all the information about the substitute products is fully garnered. Apt and effectives results from the survey about the substitute products and customer’s affiliations towards it will aid bp in coming up with better marketing strategies to optimize its brand and importantly its products, to nullify the threat of substitute products. Read More