SWOT Analysis about Petroleum in the Kingdom of Bahrain - Essay Example

Lecturer: SWOT Analysis about Petroleum in the Kingdom of Bahrain Introduction SWOT analysis is a strategic planning tool vital for evaluating the strengths, weakness, opportunities and threats of a business venture. It also identifies the internal and external aspects, which are favorable or unfavorable for achieving the desired business objectives. The kingdom of Bahrain is the freest economy well known for abundant petroleum production. It is the tenth leading economies across the globe, which accounts for higher exportation of petroleum and increased government revenues. The large export shares for the Bahrain economy are from the exported crude oil. The Bahrain kingdom has one largest company known as BAPCO (Bahrain Petroleum Company), which is owned by the Bahrain government. BAPCO is an integrated industry, which was instituted, in 1929 by Standard Oil industry. The company involves in oil refining, prospecting, exploration, drilling, production and distribution of gasoline products. It also exports crude oil and refined products as well as sales oil products in the global market. Therefore, the essay focuses on SWOT analysis as an effective tool for analyzing Bahrain petroleum industry, in the Kingdom of Bahrain. SWOT Analysis The SWOT analysis involves the internal and external factors that may be favorable or unfavorable in an industry. Many companies employ SWOT analysis in order to analyze the strengths and weaknesses as well as opportunities and threats for the business venture in order to achieve their stated objectives effectively. Bahrain is one of the economies that have been impacted by the economic crisis and the World War II deteriorated the economy. The kingdom also has little petroleum wealth than other economies in the Persian Gulf neighbors. Therefore, employing SWOT analysis will enable Bahrain Petroleum to improve their business activities; thus increasing their competitive advantage in the global market. Strength Strength is the features of the business venture that provides advantages to the business over others. Therefore, assessing the strength of the company will enable it to achieve the set objectives efficiently (Gupta et al. 123). Bahrain Petroleum industry has enabled the Bahrain economy to diversify because of petroleum products, which is the main resource for Bahrain. The company has considerably improved it is performance rate in the recent because of successful diversification initiatives and abundant oil reserve resources. The higher economic diversification is also among the strengths that can enable the BAPCO Company to achieve effective business performance. The company has economically diversified from its limited petroleum supply into investing in other activities such as banking in order to stabilize their business activities. The deepening of securities markets in the Gulf region can enable the company to diversify and improve their performance rate. The BAPCO Company can also offer their customers cheaper services than other companies operating in the Bahrain Kingdom; hence an advantage to improved business performance. The company is positioned to exploit the additional revenues generated in the Bahrain kingdom because of the sustained oil prices in the Bahrain region. Apart from cheaper oil products, the Bahrain region is financial hub with well-developed banking sectors and advancing Islamic finance industries; thus the strength to better performance of the BAPCO Company. Companies operating in the countries with strong financial industries such as Bahrain industry have significantly improved their performance rate. This is because of financial security that can enable the company to meet the organization demands successfully. Additionally, the Bahrain government can spend below its targets and implements prudent fiscal policy. These add as advantages to the BAPCO Company in that they can enable the company to operate their business successfully in the Bahrain region. For instance, implementing sensible fiscal policies in an economy can enable entrepreneurs or companies operating within the country to perform business activities efficiently. Prudent fiscal policy in an economy enables companies to maintain proper expenditure, borrowing and savings as well as encourages companies to improve their economic performance (Blythe and Phil 27). Therefore, it is through this policy that BAPCO Company can economically increase their level of economic performance; thus achieving the competitive advantage. Weaknesses Weaknesses are the features that place the company at the competitive advantage. They are also aspects that hinder the company from achieving their stated objectives or place the company at a disadvantage (Stasch 17). Therefore, analyzing the weaknesses in the BAPCO Company will enable it to seek ways of reducing or eliminating the weaknesses, which may impact effective business performance. The management should view weaknesses as potential aspects for making improvements in the business venture. One of the potential weaknesses that BAPCO Company encounters is small market share. The local stock market share is small; thus affecting successful business performance. Therefore, the management should expand their market share within the local and international markets in order to improve their business performance in the competitive business market. Secondly, the Bahrain region is currently facing the rise and increased dependency on gasoline exports. The company is currently exporting 75 percent of the total petroleum products. This may lead to the exhaustion of the resources; thus impacting not only the BAPCO Company but also the Bahrain Kingdom at large. Moreover, even with the ever-increasing population growth rate, the local consumption of petroleum products is low; thus, the higher percentages of petroleum products are meant for exports. Therefore, the low market for petroleum products forces the company to exports the oil products; hence encountering high transportation costs. The public finance are not clearly or transparent, which accounts for a disadvantage to the company in the business operation process. The extra budgetary transaction is the main reason behind unclear public finances. This indirectly impacts the organizational performance of BAPCO Company. Therefore, the company should analyze these aspects in order to enable them implement effective strategies for reducing the impacts that may hinder them from achieving their stated objectives. Opportunity The opportunity is the external factors that can create a positive potential for the company to achieve their stated goals effectively. BAPCO Company can add value to their products and services as this will offer them an opportunity to compete favorably in the competitive global market. Bensoussan and Craig (27) argue that managers need effective tools for making better decisions vital for marketing, product development, positioning and achieving competitive advantage. These authors reveal the effective tools such as Porter’s five forces and SWOT analysis that are vital for achieving the competitive advantage in the competitive global market. Therefore, adding value for the products can offer the company an opportunity to achieve a competitive advantage in the global market. This is because consumers prefer products of high quality and value; hence distributing these products to the market can satisfy the needs of customers. Designing and distributing more products into the market can offer the company opportunities to achieve their stated goals successfully. Many companies strive to increase their profitability level; thus producing supplementary products or variety of petroleum oil products, which meets the needs of customers are vital. This is because it enables the company to increase their profitability level and out-compete their rivals in the market. Hunt (78) argues that managers should implement effective marketing strategy that can enable them to achieve a competitive advantage in the global market. Therefore, despite the production of more products in the market, the BAPCO Company can differentiate their petroleum products in a unique way. This will add the company advantage because differentiated products may capture the attention of many customers; hence an opportunity to increased marketing of petroleum products. The diversification opportunity can enable the company to sustain their competitive advantage. The Bahrain region has well diversified because of strong financial security and emergence of Islamic banking sectors. The leading force for development of the Islamic financial sector is among the diversification opportunities for the Bahrain Petroleum industry. Walker and Walker (56) argue that diversification of economic activities can enable the company to achieve their stated goals effectively; hence achieving successful business performance. Therefore, the company can diversify their economic activities in order to improve the economic growth. Moreover, deregulating the market and labor market reform can enable BAPCO Company to achieve successful business performance. Deregulation will widen inequalities in the European market, and enable the company to widen their marketing activities. This will increase the profitability of the company and help them to sustain their business in the competitive market. Reforming the labor market is essential in the industry because creating flexible labor market can offer support to increased employment opportunities and reducing economic inactivity. This is crucial because reforming the labor market can contribute to increased productivity and high organizational performance in the competitive global market. Threat Threats are the external factors that can hinder effective performance of the company and they can also impede the company from achieving their stated goals. However, analyzing the threat can enable the company to implement effective strategies for eliminating threats or overcoming threats in the business environment. One of the threats to the BAPCO Company is the increased completion from other companies producing similar petroleum products. The new market entrants will take the market share of the company; thereby posing a great threat to the company. Competitors may impact the performance of the company and new industries entering into the market may produce new substitute products. These products may create a threat to the original products of the company as many customers may go for substitute products, which may be sold at cheaper prices. This may hinder the company from achieving successful business performance because of the reduced productivity level. Additionally, competitors might produce oil products from oil sands, and customers may change their tastes or needs. Producing oil products from oil sands is a threat to the company and the competitors will start reducing the prices for petroleum products in order to get many customers. This will also in turn affect the consumption pattern of the BAPCO Company because many of their customers will change to the substitute and cheaper products produced by the competitors of the BAPCO Company. Lastly, other sources of power, electricity and new exploration of oil as well as high prices for petroleum products are among the threats to the BAPCO Company. For instance, the company may introduce new method of exploring the oil products, which is expensive and this will enable the company to increase the prices for oil products. The increased prices for oil products will discourage the potential buyers; thus making them to change the demanding needs for substitute products to other companies. The emergences of other sources of power and increased demand for sources of power such as electricity and use of coal may create a threat to the company. This will impact the performance of the company as their customers will start consuming other sources of power; thus impacting the profitability level of the company. Conclusion The essay the essay focused on SWOT analysis as an effective tool for analyzing Bahrain petroleum industry, in the Kingdom of Bahrain. The SWOT analysis involves the internal and external factors that favors or does not favor an industry. The essay examined the strength of the company such as petroleum reserves, which are the main products to the company, offering customers products at cheaper prices and diversification initiatives can enable the company to achieve successful business performance. The weaknesses involved small market share, local consumption of petroleum products and increased dependency on gasoline exports. However, the company can add vale, increase substitute products and diversify their industry as opportunities for achieving their stated goals. Despite this, competition from new entrants into the markets, changing in the consumption demands, high prices for products and other sources of power can impact the successful organizational performance. Works Cited Blythe, Jim, and Phil Megicks. “Marketing Planning: Strategy, Environment and Context.” Harlow, England: Financial Times / Prentice Hall, 2010. Print. Bensoussan, Babette and Craig Fleisher. “Analysis Without Paralysis: 10 Tools to Make Better Strategic Decisions.” Upper Saddle River, N.J: FT Press, 2008. Print. Gupta et al. “Innovative Marketing Strategy: Balancing Commercial Goal and Corporate Social Responsibility.” Mumbai [India: Himalaya Pub. House, 2010. Print. Hunt, Shelby. “Marketing Theory: Foundations, Controversy, Strategy, Resource-Advantage Theory.” Armonk, N.Y: M.E. Sharpe, 2010. Print. Stasch, Stanley . “Creating a Successful Marketing Strategy for Your Small New Business.” Santa Barbara, Calif: Praeger/ABC-CLIO, 2010. Print. Walker, Orville and Orville Walker. “Marketing Strategy: A Decision-Focused Approach.” Boston: McGraw-Hill/Irwin, 2003. Print. Read More