British Petroleum Plc IT Analysis - Assignment Example

? British Petroleum Plc IT Analysis Presented by Question 3 Based on the strategy BP are using in relation to thiscontents, Advise on which of the above strategic options should be implemented, which should be implemented first, and why? In relation BP strategy, two options in strategic clock strategy should be utilized, cost leadership and differentiation. BP aims at incorporating the present technology in all its operations in order to become independent with the rapid advancements in the business environment. The adaptation of cost leadership and differentiation strategies will help the company reach the next level through increased business efficiency, improved data processing and storage among other benefits. The two options go hand-in-hand during their implementation but, BP should consider implementing the cost leadership strategy first then implement differentiation strategy later. Cost leadership strategy enables a firm gain competitive advantage through reduction of economic costs below the competitors’ cost. On the other hand, differentiation strategy enables an organization to shift product development on the bases of cost of marketing of goods and services (Conklin & Sorrell 2010). By first implementing the differentiation strategy, BP will sand a better chance of implementing differentiation strategy. BP’s main objective is to become the leading oil and gas producing industry globally by adaptation of them modern I.T. services that assists in improving business environment. The BP I.T processes will be achieved through various strategies set aside by the company management that include value added preposition, target markets, cost factors, revenue drivers and revenue streams. All these strategies focus on the company becoming the cost leader in the market, which requires an implementation of the cost leadership strategic option. In addition, BP few companies have implemented the cost leadership strategy due to its complexity placing BP in a better position of winning the competitive advantage. In implementing the cost leadership strategy, BP must consider economies of scale. The organization must consider its economies of scales in relation to size. Firm size measures its volume of production, costs, and costs per unit of production. BP is a large industry with an extremely high volume of production of oil and gas. In addition, the company has specialized machines and proficient workforce that enable provide high quality products and services. The high volume of production places BP in a better position of lowering costs per unit production the implementation of cost leadership strategy easier and fast. In addition, the company can reduce its overhead costs through spreading different costs to other areas like advertisement. Moreover, by implementing this strategy BP will hold the strongest position in the industry and will be able to set floor prices for other companies to follow. The second strategy should follow cost leadership is differentiation option. After ensuring the company’s cost security, BP can come up with differentiation strategy that will increase the value of her products and services relative to the perceived value of other companies. BP will implement differentiation strategy by using features that will make customers prefer the company products and services to those offered by competitors. The focus on high revenue and cost margins places BP in a better position to achieve and perfect economic performance. With I.T in place and low cost of products and services, customers will be more attracted to BP products and services because they are more valuable and have differentiation advantage. Question4 Write a proposal to BP on I.T integration to reducing cost Summary BP is the leading oil and gas production company and serves many customers globally. BP wishes to integrate I.T. systems in her operations in order to improve the overall efficiency in terms of customers’ services and products production. By establishing the technological infrastructure the company will have more customer interaction and also provide consultancy services to similar organizations. The establishment of an I.T infrastructure will be achieved through implementing the cost leadership strategy. The cost leadership strategic plan will enable BP become the leading cost initiative company and fall in a position to set fuel prices for other competing companies. Introduction BP I.T. services have always focused on delivering rapid I.T. solutions of high quality to customers and that is the reason why implementation of cost leadership strategy is proposed. The company maintains its activities on the international basis, namely across 70 markets. The implementation process is simple for the company bearing in mind that BP is a big industry with high volume of production and specialized employees. Moreover, BP management can meet the costs of implementing the strategy bearing in mind that it will contribute to the achievement of the company’s competitive advantage. The main revenue drivers of BP are related to the sales price of any product, derived by BP from the ground, namely gas, oil and condensate. In addition, the main cost factors in terms of integration of IT systems within BP organization are related to the maintenance of support and quality management across the information systems. Although the strategy might face some risks associated with technology change and inflation, BP will be assured of high customer turn out since the effects might only affect other smaller companies. Problem statement Over the past decade there have been rapid advances in technology, and companies have correspondingly become more dependent upon technology during this period. The companies have become more dependent on the technology, along with the rapid advancements in this area over the last decade. This proposal wishes to provide the structure and plan of implementing a cost leadership strategy at BP that will help the company establish an effective I.T. infrastructure aimed at reducing costs. Objectives The proposal will be guided by the following objectives; 1. To develop a cost effective strategy for BP 2. To establish an effective I.T. infrastructure at BP through implementation of Cost leadership strategy. Methodology The primary methods for achieving the goals and objectives of the project will be: Determination of competitive strengths Selecting cost initiative production areas Consultation Implementation process Evaluation In order to meet the objectives and goals the following evaluation plan will take place. BP management to surrender all its financial statements to the research team All other strategies will be implemented after the cost leadership strategy has been achieved The company to look for funds for supporting the project in order to make it run fast and effectively. Outline of activities Task Start Duration End Date Determination of competitive strengths $ 41,091.00 10 7/5/2013 Select cost initiative production areas $ 41,100.00 20 7/6/2013 Consultation $ 41,091.00 50 8/7/2013 Implementation $ 41,105.00 30 8/8/2014 List of References CONKLIN, W., & SORRELL, C. (2010). Applying differentiation strategies: teacher's handbook for secondary. Huntington Beach, Calif, Shell Education. Hoskisson, R. E., & Hoskisson, R. E. (2008). Competing for advantage. Mason, OH, Thomson/South-Western, p. 135 Read More