Business Analysis and Corporate Strategy of BP GROUP Plc - Essay Example

Business Analysis and Corporate Strategy of BP GROUP PLC BP Group Plc is a multinational company that deals with petroleum products and has a branchin at least in every country in the world. The company was originally known as British Petroleum and has it's headquarter offices in London. British Petroleum merged with Amoco Corporation in August 1998 a move that many described as a take of over of Amoco by BP. They immediately changed their name to BPAmoco until 2002 when they again changed their name to BP after adopting tagline 'Beyond Petroleum'. Despite the availability of other petroleum products that served as substitute to BP products, the company continued prevailing in the market. The customers had a high bargaining power in regard to petroleum products. The buyers of BP products are always price sensitive hence the company has always ensured the prices are relative low to maintain them. The bargaining power of the supplier is low in regard to BP Group Plc since the suppliers of petroleum products are few in number. The bargaining power of the supplier is also low because there is availability of suitable substitute products similar to those supplied by BP. There are other petroleum company that produces petroleum products similar to those produced by BP thereby making the bargaining power of the supplier very low. 1 The bargaining power of the buyers of petroleum products is quite higher is high since the buyers are many in number. The buyers purchase a large potion of an industry's total output and a significant potion of a supplier's annual revenue. There is a clear revelation that revenues of the company have been increasing since 2000 since the company's turnover in 2000 was less that 100 billion and in year 2005 they were over 150 billions. 2 The company has significant strengths in regard to brand name. When British Petroleum merged with Amoco, they continued to sell Amoco branded gasoline in some states in the US as it had been rated by consumers for a number of years in a row the number one petroleum brand. BP continued to sell the Amoco product under the original name since Amoco had the highest brand loyalty in the US for gasoline. Strengths of the company can be seen in the brand name since the company is ranked in the third position in producing petroleum products in United States. Their production accounts to three percent of gasoline supply in the US. Another company's strength can be seen where BP is ranked to be the leading company in sale and distribution of solar panels. This resulted after acquiring Lucas Energy Systems and Solarex in 1980 and 2000 respectively. On the sale of photovoltaic, BP had a world market share of twenty percent in 2004 after producing 90 mega watts of solar panels. This ranking increased BP's brand loyalty hence to the advantage of the company as the sales increase drastically. Since 2000, BP Company has been eager to embrace new technology in their product. They have always ensured that their products are integrated to suit their customers' tastes and preference. This opportunity has ensured that the company is produces world class products thereby increasing their market share. BP Company has had a number of threats in terms of competition. Since year 2000, there have been a number of new companies that have been established that deal with petroleum products. This competition is a threat to the growth of BP company hence for them to prevail in the market they have to ensure they use their market strategies properly. The opportunity of BP Company is seen where the company merged with Amoco Company. The company took the merger advantage as it was able to produce other products that included solar panels. The solar panel were produced when Lucas Energy Systems and Solarex were acquired by BP in Amoco acquisition. By increasing the number of product the company dealt with, the company ensure that if the market share is low for one product, it might be high for the other products. This ensures that the company's sales will always be high no matter what happens to the economy. 3 The company's strengths can be seen also where the company started marketing low sulphur fuel that was to replace the other diesel for industrial usage in 2004. This showed that they were concerned of our environmental degradation more so on global warming. With such a move, many customers always want to be associated with a company that is not only there to offer employment opportunity at that expense of not caring for other social responsibility like taking care of our degrading environment. As a result of this, that year's revenue of the company started to increase whereby profits moved 7.5, 10, 12.5 and 17.5 in 2002, 2003, 2004 and 2005 respectively. This was a clear revelation that the company's sales went up as a result of increased social responsibility of the company hence the buyers wanted to be associated with them. This strength ensured that BP's products prevailed in the market. 4 Lord Browne, BP Company's Chief Executive Officer was quoted as saying that they expected the petrol price be sold at 1 per litre and there has been an out cry from the customers that they have been charging high price for their products. This is a weakness the company has of charging higher price for their petrol. 5 Such a move could make the company loss a lot of money as the customer would move and purchase the competitor substitute goods. Another weakness of BP Company is that they brought lawsuits against biodiesel and biofuel producers and countries such as France, a move that was criticised by many people. BP Company has not been left behind technology wise as when they produced low sulphur diesel that is environmental friendly. This fuel ensure that when the fuel burns, they emission does not pollute the environment. For this case, our ozone layer will be protected and this would in turn reduce global warming. This is an opportunity the company exploited thereby making their products prevail in the market. The company products were in a threat due to the substitute products. When the company was being criticised by people of charging high prices for their product, the customer would in turn purchase the substitutes products who's price were relatively lower that the BP's products. On the other hand, the high price charged would affect the company as their stand a threat of substitute products which was still high. This is so because the substitute's products were low and the customer would not face any difficulty to switch to any other substitute product. This is so because the buyers face few switching cost and they would switch to another product with little or no cost at all. 6 When the company was renamed BP after merging with Amoco in 2002, their slogan 'beyond petroleum' went along with rebranding of 'green shield' logo in order to emphasise the company's social responsibility of producing fuels that are environmentally friendly and alternative fuels. Many criticised this move as one that was intended eliminate BP away from other oil company on the negative environmental image. Many even accused the company that was just a public relation ship strategy the company was using since they had not invested heavily on the alternative energy. BP company ensure that their products are produced to suit to the ever growing technology by developing products that are capable of reducing consumption of power. They have also produced hydrogen fuel technology and they have been able to utilize natural gas by producing a gas fired power generation. BP Company by taking advantage of technology, they were able to utilize this opportunity of technology to ensure that their customers get the right products. The world is changing and companies must ensure that their products are upgraded with time to suit the ever changing technology. By doing so, BP Company ensured that their products are in line with those of the competitors. The opportunity of technology should be utilised by all companies for assurance that their products do not become absolute or out dated. 7 BP Company being a multinational company should ensure they study their local market properly in order to produce goods that suit that market. They should also ensure they are the first to introduce a new technology to developing countries where they are producing and marketing their products. By the time their competitor's knows about this, they have already made enough sales and may not be affected by the competition. References Arthur, Y, Woolcock, P and Sullivan J. (1996); "Identifying and Developing HR Competencies for the Future: Keys to Sustaining the Transformation of HR Functions." Human Resource Planning, 1996, pp. 34-58 Blyton and Torn, P (1992): Re-accessing HRM, London, Sage publications Bourne, M., Franco, M. and Wilkes, J. (2003); Corporate Performance Management; Measuring Business Excellence; 2003; 7, 3; pp. 9-20 Boxall, P. (1996); The Strategic HRM Debate and the Resource-Based View of the Firm', Human Resource Management Journal, 6, 3, 52-75. WorkSMART (2005): BP P.L.C., retrieved on December 10, 2006 from http://www.worksmart.org.uk/company/company.phpid=102498#Historical_accounts Read More