A strategic management analysis of BP global

British Petroleum (BP) is the world’s one of the largest and leading petroleum product manufactures. It has headquarters in London. It operates from six continents and has products and services across 80 countries. In past it has faced safety and environmental controversies in its operations it could overcome all negative images through a concrete focus and consistent efforts towards sustainable developments. [i] It has operations in different parts of world with some of the difficult terrains and extreme climate conditions which is a biggest challenge , BP wants to minimize the environmental impacts by putting a systemic and disciplined approach in its operations , using sophisticated risk assessment techniques which will also help it in their business plans, therefore BP is incorporating its environmental management system into group-wide operating management system that helps BP to set priorities for operations based on assessment of the key risks, including those related to environmental and social performance. [ii] 

Due to recent oil spill, leaking pipelines in Alaska and the explosion at a Texas refinery company’s worldwide reputation has been negative so company has given the task to me as student of U21 global university to produce a report on how company has to look at their strategic stability to remain as standalone oil giant and how company should design its overall global strategy and continuous growth.

BP – Introduction

Website: http://www.bp.com

Location of Headquarters: 1 St. James’s Sq., London, SW1Y 4PD, United Kingdom

Sector & Industry: Basic Materials & Energy

Nature of Business:

1. Oil & Natural Gas Business

2. Wind & Solar Energy Business

3. Bio-fuel Business

4. Energy Security & Energy Diversity Business

5. Technology & Partnership


1. BP petroleum and derived products

2. BP service stations

3. Air BP Aviation Fuels

4. Castrol motor oil

5. ARCO gas stations

6. am/pm convenience stores

7. Aral service stations solar panels

Historical Background:

BP (NYSE:BP) In 2009, the company’s production and exploration segment produced approx 8.48 million cubic feet of natural gas and 2.53 million barrels of oil per day and company’s refining throughput was average of 2.28 million barrels/day. BP has expanded its production capacity through improved rig equipment and technology and expansions into other countries. As of April 2009, BP operates in 29 countries including Russia, Algeria, Mexico and many Middle East and African countries, while BP’s global reach gives the company an ability to access “untapped” reserves, many of its operations are exposed to political risk in those countries. In particular, BP’s Russian operations faced significantly managerial problems in 2008, but these tensions eased in January 2010, History says that company has involvement in some environmental, safety and political controversies in its history these are 1965 Sea Gem incident and 2010 Deepwater Horizon oil spill. [iii] 

Its primary listing is on the London Stock Exchange and it is a constituent of the FTSE 100 Index. It has a secondary listing on the New York Stock Exchange.

BP – Strategy

Current Strategy of BP and its operations revolves around 5 key areas those are [iv] 

Health , security , safety and environment


Business partners

Government and communities

Company assets and financial integrity

BP is also working on some lower carbon future initiatives internally they are [v] 

Energy efficiency within BP operations

Including the price of carbon in investment decisions

Promoting lowest-cost energy pathways e.g. gas for power generation

Continued investment in Alternative Energy

− biofuels

− wind

− solar

− carbon capture and sequestration

Investing in research and technology

Apart from this BP also focuses on production and Exploration and its strategy is growing value for long-term to build a portfolio of enduring positions in the key hydrocarbon around the world, Refining and Marketing, which is to hold a portfolio of quality, efficient positions, integrated and accessing available market growth in emerging markets and focus on achieving safe, reliable and compliant operations.

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Potential issues

There are Certain External and internal environment of BP which can create issues for future, External environment consists of social and cultural, technical, economic, political, legal and government factors. These factors are providing opportunities and threats to the company. Internal environment consists of structures, resources, values, competencies, culture and systems of a company. This helps to identify BP strengths and weaknesses in relation to the market. The some of the potential issues are as under.

Gulf of Mexico oil spill has damaged BP’s reputation, which in turn has made long-term impact on its ability to access new opportunities, both around the world and in US . This created public, political, and industry sentiment towards BP in oil and gas drilling activities, it could damage or impair the company’s existing commercial relationships with partners, and host governments. It has also created a massive burden of cash on it when it was ensuring to bring back everything back to normal and this will in future as well create lot of burden on cash for BP , this may lead to its ability to invest in new opportunities and deliver long-term growth. [vi] 

Ensure that BP suppliers understand the process and design , and look at potential issues of choosing the suppliers based on merit

Need to review work of contractors for all onshore and offshore rig activities

Partners and employees approach towards the issues which BP faces in their projects

BP – Strategic stability Analysis [vii] 

BP needs to strengthen safety, compliance and risk management across the group,

BP needs to address its growing skills gap in energy industry and hire right resources

BP need to look at important aspect which needs attention is diversity and inclusion.

BP also needs to ensure that it has No tolerance for inappropriate behavior.

BP needs to engage the local communities in their vital element of work.

BP needs to keep its shareholders and investors informed about group’s progress.

BP need to engage with government whenever required in regards to consulting on environment.

BP needs to ensure that its security understand the nature of the job and protect their employees and facilities

Core Compititors

BP has four major core competitors today they are Exxon Mobil, Royal Dutch Shell, Chevron and Total S.A.

Exxon Mobil has employed best technology by maintaining a high-quality portfolio of productive assets It has continually improved on it work force in a high-performance climate across the organization leading to strong financial position by ensuring the financial resources are employed wisely. [viii] 

Total S.A. has good experience of operation in extreme-cold conditions, it is meeting the associated economic, technological and environmental challenges in Canada and Venezuela, home to the most extensive reserves. [ix] 

Shell has a strong emphasis on a long-term strategic thinking that plans its horizon extended 20 years into the future, which is much further that 4 or 5 years planning that most companies engage in. [x] 

Chevron is one of the major competitors who has been successful in exploration among its other players and also has lowest unit funding costs in its group. [xi] 

BP oil drilling platforms [xii] 

Current oil drilling : US Shale gas Eagle Ford, US Gulf of Mexico , Egypt Nile Delta , Jordan Risha , Iraq Rumaila ,Pakistan Onshore ,Indonesia West Papua ,Indonesia Kalimantan


Current Exploration: Canada Ellice , US Gulf of Mexico Tiber , Angola (Leda, Oberon, Tebe)

Future potential sites: Trinidad & Tobago , Algeria , Egypt , Azerbaijan,Oman , Russia & North Sea

Based on the above site details we can say that BP has vast presence in all the major countries and can leverage this for future productions.

Further to this I would suggest that BP should look at mainly onshore, shallow water oil drilling, as it is much safer and can give a boost to the production and would be less risk to disasters.

Some of the factors which need to be taken in consideration in this area are:

BP should have good access roads and power station and water supply in case of on shore and in case of off shore should have helicopters and barges for managing the transportation and access to the facilities.

BP should ensure that they have right people for right work as , as working in these complex environment require complex skills and also they are face of organization and its capability to perform these safely and avoid any major disasters.

BP should ensure that they have right partners and contractors in place when it comes to drilling, as they are best known to operate in certain areas and understand the geology of earth.

BP should also ensure that they have a framework in place when it comes to drilling and which looks at right scoping, technical limits and no drilling surprises and drilling values assurance.

Acquisitions & mergers [xiii] 

Below are some of the acquisitions which BP needs to look at to expand its business.

Reliance Industries Limited – Oil and Gas Production Sharing Contracts – India (India)

BP Exploration Company (Colombia) Limited (Colombia)

Pan American Energy, LLC (Argentina)

BP p.l.c. – Upstream Gas Assets – Canada (Canada)

Devon Energy Corporation – Deepwater Assets – Azerbaijan (Azerbaijan)

BP p.l.c. – Permian Basin Assets – US (United States)

Devon Energy Corporation – Deepwater Assets – Gulf of Mexico (United States)

Devon Energy Corporation – Deepwater Assets – Brazil (Brazil)

LukArco B.V. (Netherlands)

BP p.l.c. – Coryton Refinery (United Kingdom)

BP should look at following aspects when it comes to any acquisitions these are that it can increase its market power , overcome entry barriers , reduce the cost of new product development , increase speed to market , reduce risk , increase diversification , reshape competitive scope and develop and learn new capabilities.

Some of the other factors also need to be taken in consideration in case of any acquisition they are evaluation of target , Lack of management focus , integration difficulties ,over-diversification , firm size , high degree of leverage and inability to achieve synergies , if we ensure that these are properly address then we won’t have any problems in acquisitions.

And for a effective acquisition BP should look acquiring firms which have complementary resources, and also ensure that acquisition is friendly which facilitates integration in two firms and its resources, the target needs to be evaluated effectively, the target firm needs to have slack in the form of cash or debt, the acquired firm should have experience in adapting change and also exiting research and developments can be emphasized in the new firm. [xiv] 

BP – Future Global Strategies

Based on the above analysis on different areas, I would like to recommend that BP should focus on below aspects when it comes to applying Multidomestic strategy to its organization.

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The key factors which I propose here are

BP should look at all type of energy sectors and need to have a mix of technologies which produce reliable and more ecologically acceptable and affordable and competitively priced.

BP needs to look at secure supply and access to oil, and they should also look at emerging economies outside Europe and Americas.

BP needs to specially focus on three factors when it comes to any future strategy these are environment, economy and social performance.

BP needs to build a strong corporate governance to address all the issues and negative impact which has caused because of recent disasters.

BP needs to build a strong focus on safety and operational risk management to ensure that all its contractors, partners and employees understand importance of this in any project.

BP needs to start focusing on alternative energy sources like Bio-fuels, wind, solar and carbon capture as they are the future of energy sources going forward, and more & more companies are going towards it considering the current environment conditions.

BP should also focus on its cultural diverse employee community when it comes to operation in different countries.

BP should create a Disaster recovery plan for all the existing sites to ensure that they are ready for quick response when it comes to any issue on any of its existing sites.

BP needs to follow the above given conditions when it comes to any new acquisition, as its very important for a positive and smooth working of its organization.

BP should move mainly in on shore drilling and oil exploration, as its already had trouble in gulf of Mexico off-shore , and if they are doing offshore drilling then all the safety measures should be followed from time to time.

BP needs to ensure that it invests in research and technology to check for future opportunities.

BP should also look at the current investment and potential markets when it comes to its future expansion, which will ensure that they are not venerable to other giant oil players.

BP should also look at energy requirement 20 years ahead so that it will give more insight into the demand and based on that it can then strategically plan its supply locations around the world.

BP needs to look at its security considering the current threat of terror attacks and other calamities in the world, which will help it to safeguard its assets.

BP needs to build a good competitive advantage by having right resources in place with good capabilities which will help drive its business without any major issues.

BP has good scope in acquisition with reliance in India and also Devon Energy in Brazil to focus on bio-fuels in that area.


Based on all the recommendation and strategic approach BP can apply Multidomestic strategy to its organization keeping in mind all the factors above and specially giving stress on governance, compliance , operations management ,personal safety and reduce complexity and cost as major contributors.

BP should follow the above strategies in each area and strengthen its position in global marketplace, the main focus areas should be on-shore oil drilling and alternative energy, as it will be key for future.

BP doesn’t have threat of acquisition by other major global giants, as it already has good plans and procedures in place to tackle the situation and which can be improved by applying points suggested by me.

Best Regards

Aneej Cuncolienkar


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