Global Marketing Management. British Petroleum - Essay Example

? GLOBAL MARKETING MANAGEMENT Table of Content Introduction 4 British Petroleum Company: 5 Financial Status of British Petroleum: 6 Mission & Vision:7 Market Opportunity: 8 Internal Resources: 9 Marketing Objectives: 10 a)Strength: 10 b)Weakness: 10 c)Opportunity: 10 d)Threat: 11 Segmentation: 11 Competitor Analysis: 12 a)Direct competitor: 13 a)Indirect competitor: 13 b)Future competitor: 13 International Theory: 14 Recommendations: 15 Reference 15 Bibliography 18 Introduction Internationalisation is the demand of the time, but, why does organisations needs to go global? What are the benefits? Is it only to spread its business in other parts of the world? Such questions should strike every organisation before they plan to go international with their business. Internationalisation in terms of marketing can be defined as the outward venture of a company into the international shores to expand its objective, market share and explore new opportunities. Every major company worldwide have ventured or are planning to venture in foreign land to grab the opportunity lying ahead in terms of resource availability, manpower, technology, etc. Internationalisation has helped in bringing the business around globe under one umbrella by making the goods & services available across the different continents and emerging as global brands. Global marketing is the need of the hour in today’s time with more & more organisations making their presence felt in almost all countries. Global venture for the organisations has helped to standardise their products, improve the services and lastly integrated marketing (Johanson, 2008, p. 11-15). There are number of companies from different parts of the world who are now not subjugated as companies concentrating on domestic market, but, can be termed as companies catering to multi-domestic market. Organisations have believed in being a global company then domestic player with their approach of considering every country as their home country and doing business as per the ethics and cultural background of that country. There are various examples of such companies which have been a global partner over many decades and one of them is Britoil Public Limited Company. This company was established in the year 1975 as a nationalised company, named as British National Oil Corporation which was later christened as Britoil Public Limited Company. Later in the year 1988 it was acquired by the British Petroleum Company. British Petroleum is a company which is a pioneer in the petroleum field and has been in this business since 1909. British Petroleum is one of the largest oil producing companies in the world with the revenue standing at USD 297, 107 million as of 2010 (BP, 2012). British Petroleum Company: British Petroleum has made its presence felt in around every corner of the world exploring fuel and natural gas, manufacturing other petroleum products, refining, and marketing and into retail. British Petroleum Company has been venturing into different countries with its mission and vision intact. If further it has to be considered that British Petroleum is planning to enter into different horizon what has to be the internationalisation plan for the company, how will the company process its business plan of internationalisation? What will be the market opportunities? Who will be its competitors? What will be its prime purpose for exploring new country? What has to be the preparedness factor the company to opt for internationalisation in different territory? Will the company be capable of implementing its true skills in offshore market where language and culture can halt the company’s plan? These factors can be analysed in a sequential manner to get a clear picture of the whole plan of internationalisation by British Petroleum (Hollensen, 2009, p. 5-7). Financial Status of British Petroleum: British Petroleum is a cartel firm of different companies with main business interest in discovering, producing and marketing of the natural resources of energy. As a company British Petroleum has grown immensely and its growth as a company dealing with natural energy resource can be further analysed by the following data: Current ratio: 1.15 as of 2010. Analysing the financial report of the company it can very well be seen that the current ratio or the cash ratio of the company has increased over the past few years which has boosted the company’s ability or capability to pay short-term liabilities or obligations. Greater the current ratio more capable a company is to pay the liabilities in terms of short-term debts (FAME, 2012). Net Cash Flow Investing Activities: -2,529 million GBP as of 2010. The net cash flow which determines the net cash of a company after paying off the liabilities, and in case of British Petroleum the net cash flow over past few years has been negative in terms of investment. The company is yet to gain from its investments that it has made in several countries. The company in this case needs to analyse its investment strategies to make sure that the net cash flow shows a positive sign in the near future for the company (FAME, 2012). Operating Profit: -2,364 million GBP as of 2010. Company’s operating profit has seen a big fall from 2008. The figure itself depicts the story for the company which needs to do something different to again see a rise in its profit status of operations (FAME, 2012). Current Asset & Fixed Asset: The current asset and fixed asset for the company stands at 61,859 million GBP and 110,642 million GBP as of 2010. Both current asset and fixed asset has shown a rise from the previous year. With the rise in current asset the company can now have more assets to be converted into cash over a period of time and pay of the liabilities (FAME, 2012). The above stated figures of assets and profit gives a clear view of the company’s financial status. Though the company has seen rise in the current asset and fixed asset but in the same time its operating profit has dipped and so has net cash flow. So, if the company wants to internationalise to different territory it should not only consider the expansion in terms of market share but also in terms of financial stability because a company with shrinking profit margin will be succumbed to other factors which may hamper British Petroleum’s expansion plan and also gaining strategic advantage over its counterparts. If the company successfully restructures its financial status then the internationalisation becomes more valuable and adds a different definition to it. But, the company also has to look at certain other elements which are as important as its financial status. These important components are:- Mission & Vision: Globalisation is the word which defines a company, its mission or goals in context to expansion purpose & a long term vision through internationalisation. British Petroleum standing tall amidst its competitors in exploring natural gas and fuel across the world has been following its mission being amongst the top petroleum company and longer vision to be the top notch company. Global marketing has to have certain parameters attached to its name, like the company’s motive or purpose for internationalisation, its main objective, its mission to serve its customers in better way with better service and keep satisfying them continuously and try building a strong and long-standing relationship. Though British Petroleum is present in almost every country but still there are various countries where it needs create a name for itself and build strong brand equity thereby promoting its various brands which include AMCO, Castrol, Aral, Wild Beans coffee chain, etc (FAO Corporate Document Repository, 1997). Over past few years British Petroleum has been working towards the betterment of world’s climatic conditions by supporting for renewable energy which can cut down the emission of hazardous gases in the atmosphere and for this British petroleum have determined a separate budget. Going for internationalisation brings in responsibility for the company as it has to take care of the cultural sentiments of the different countries people and work accordingly. Also it has to impart the company’s long- standing values to the employees from the country and them to carry forward the legacy, mission & vision of the company. Here it can be justified to say that mission & vision along with other factors holds an important place in the plan or strategy of British Petroleum in exploring other countries where it still lacks its presence. Market Opportunity: Market opportunity can be said to be reason behind internationalisation of a company. Every company seeks opportunity to further increase its brand value, customer base and larger market share. But, before deciding on the internationalisation purely on the basis of opportunity a company needs to transform itself in a different entity where it wants to build an empire of its own by rising above competition and planning to be different in the world of cutthroat competition. A company should create an image in the minds of its customer that they rather also see the company as opportunity for them in the long run. British Petroleum over 100 years has been constantly making progress in terms of market share, revenue, promotion and availability of its products all across the world but now the time has come that it needs to think beyond these factors, needs to think beyond competition, needs to build a new ocean where it rules and all this should be performed if it sees market opportunity beyond the usual perspective, beyond the usual exploration of natural gas resources, may be becoming a pioneer of alternative energy to make the world less dependent on the fuel (Kim, Mauborgne, 2005, p. 3-7). Internal Resources: The most important component of any organisation’s success or failure in the business world is the internal resources. To elaborate on the internal resources which mainly consists of the well trained and highly talented company employees there are things which can make a company global leader through proper handling of the employees of the company. British Petroleum Company which all these years has been global leaders in gas and other natural resources exploration, marketing and refining industry cannot neglect the fact that for any company its employees are the utmost important resources besides other factors like infrastructure, machinery, resources availability, etc. To expand in further new horizons British Petroleum as a company should follow certain basic rules to keep its mission & vision alive. The company’s managers should make the employees feel satisfied with the work culture, they should be motivated, and loyalty development & retention of talented & skilled employees should also be a part of the company’s agenda (DAO, n. D, p. 1-3). Marketing Objectives: Marketing objective for a company should always be based on certain elements such as the strength, weakness, opportunity & threat and the importance of understanding them and then designing the marketing objective for the company. British Petroleum as a company is present in around 80 countries but still to engage itself and build a marketing objective it needs to do a SWOT analysis and then set its objectives right (Business Link, 2012). SWOT Analysis of British Petroleum a) Strength: The strength of British Petroleum lies in vast experience into the field of oil exploration with multi-talented and well organised internal resources. Strong brand equity and loyalty with brands like ampm, Amoco, Aral, Castrol being the frontrunners in generating revenue for the company. b) Weakness: The primary weakness which British Petroleum can come across to is the rising petrol prices and other natural resources prices. It has been involved in oil spill cases which have hampered the company’s image. c) Opportunity: British Petroleum has been opportunistic in its approach of internationalisation and the biggest opportunity lies in the quest of developing alternative energy resources as the petroleum projects are on the verge of extinction. British petroleum’s investment plan in such projects can be a great opportunity which later can be company’s biggest strength. d) Threat: The threat for British petroleum in the wake of expansion lies in its brand value degrading with refinery explosions, oil spills in oceans and threat from competitors. Also increasing fuel prices has become a threat because bargaining power of the company may fall between its customers. The above mentioned SWOT analysis gives a view as how the company should manage its internationalisation plan based on internal & external analysis and work on its weakness and threat to turn them into opportunity and strength to overpower its competitors and prosper smoothly across different business markets (Business Teacher, 2011). Segmentation: Internationalisation through segmentation of market is the process of knowing different segments to target such as country or specific group of consumer or individually with attributes which are homogenous and account for similar pattern of buying behaviour. Segmentation is necessary for any company because of few reasons such as process of segmentation of products according to their life cycle, then finding as to which product to be segmented as per the country where the company is planning to expand (Kumar, Nagpal, 2001, p. 1-8). Other reason for segmentation being an important aspect is British Petroleum before exploring a new territory has to analyse its target market based on several components such as the country as growth opportunity, availability of natural resources in abundance, man power availability, technologically at par, etc. Based on these research made by the company it can zero on its internationalisation plan of expanding to the particular country it wants to carry forward its business and successfully be a part of the country’s economic growth and increase its market share and customer base. To further make things simpler for the company, British Petroleum can do a PESTEL analysis of the desired country and find out about its political, economic, technology, etc, attributes and based on that execute or implement the plan of venturing into that country which will give the company a clear view whether the country can emerge as another star for the company and how viable will it be to explore that country (Baumann, 2010, p. 2). British petroleum needs segmentation of market is well understood but why it is necessary is the question to be framed. Why companies prefer segmentation of market? Why segmentation has become an important tool for internationalisation? All these questions are of utmost importance to have an idea about the purpose behind segmentation. Segmentation is dividing or separating or catering to the needs of different groups or segments distinctly based on their needs and taste. It is not possible for everyone to have the same view about a product or a company. Companies also cannot cater to everyone’s needs & wants as there are limitations for the companies also in providing the product and service for different segments of consumers. Similarly for British Petroleum also segmentation of its market is very important as it cannot venture into every country worldwide and cater to different wants and needs. It has to plan its segmentation of the market and then go ahead with the expansion of its business plan (Goyat. S, 2011, p. 45-46). Competitor Analysis: British Petroleum after analysing all the factors necessary in expanding its business cannot ignore the biggest challenge of competition. Competition in any field is bound to occur for the greater market share. British Petroleum being the 3rd largest oil exploration company in the world is also facing stiff competition from its counterparts such as Royal Dutch Shell and Exxon Mobil in terms of oil exploration and product sale worldwide. British Petroleum having its footprints in over 80 countries through its services & products and in around 30 countries as oil exploring unit is still not assorted from other companies in terms of healthy competition. With the rise in fuel prices the competition is bound to be stiffer and the company which can cost-efficiently run its business and grasp an opportunity in different countries to have an edge over its competitor (Hoovers, 2012). Competitor analysis is mainly based on three fundamental aspects- a) Direct competitor: Direct competitor for British Petroleum can be those companies which have products similar to that of British Petroleum. a) Indirect competitor: Indirect competitors can be those companies which has substitutes for the products of British Petroleum. b) Future competitor: Future competitors can be defined as those competitors who in near future can be a tough competitor for the company with their source of energy which can be more cost-effective and renewable as well. It may be further noted that identifying each and every competitor for British Petroleum may not be literally possible but to some extent having a brief idea of who can be its arch rivals can help the company plan in a better way to setup a business in other international markets without any difficulty and competition (Barringer, 2008, p. 89-90). International Theory: There are various internationalisation theories regarding the organisation preferring to cross national borders to achieve greater value for the firm. One of the theories which can be discussed extensively is “Internationalisation entrepreneurship”, this theory specifies on the main aspect of firms going international and the main reason behind that. There are organisations that have being doing well at home country and not cross national borders even being in business for decades. But, on the other there are organisations that are venturing into different offshore countries and have been a successful entity across the globe. Firms like Mc Donald’s, KFC, Starbucks, etc, have been the pioneers in the internationalisation entrepreneurship theory by making their presence felt throughout the world and are still expanding and exploring new territories (Jones, 2009, p. 21-23). Further discussing about the internationalisation theory the important questions that the organisations need to ask themselves are- “Why cross borders for business purpose?” and “What will they do to make it possible? These two questions are of utmost important nature for any firm that want internationalise and be a part of the global business entity. The internationalisation process for any company has to be or is rather in a sequence process to make the proceedings hassle free and more productive rather than jumping directly into the ocean of global marketing. Every firm indirectly or directly want to a part of the global business community but the approach is through better understanding of the target market, segmentation analysis and marketing objective (Kuada, Sorensen, 2000, p. 9-13). Recommendations: British Petroleum is one company which has experience and quality as well for internationalisation. Over the years it has been in the field of engine oil, exploring oil and natural gas in many parts of the world and still the hunger is intact to grow as company. This hunger for growth has led British Petroleum to become a top company competing with the very best in the business. Also it has had its share of ups and downs through controversies, cases slapped on the company for being irresponsible in certain situations which caused lives of people. But, on the other hand it is investing billions of dollars in developing and promoting alternate sources of energy and striving for the betterment of the society. British Petroleum as a company should take care of one thing that whichever country it explores it has to be for the betterment of the society and the internationalisation should be something which creates new opportunities not only for the company but for the whole world in terms of new discoveries in the field of energy where new energy resources are discovered which are renewable and non- hazardous. Then only British Petroleum can become a world leader in sustaining itself at global stage and lead from the front for the betterment of the people and emerge as world leader. Reference Barringer. (2008). Enterpreneurship: Successfully Launching New Ventures. India: Pearson Education India. Baumann, C. (2010). International Marketing Plan for Volkswagen. Germany: GRIN Verlag. BP. (2012). About BP. [Online]. Available at: http://www.bp.com/sectiongenericarticle.do?categoryId=3&contentId=2006926. [Accessed on February 29, 2012]. Business Link. (2012). Your Marketing Objective. [online]. 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