The Competitive Environment Of British Petroleum Management Essay

The Competitive Environment Of British vegetable oil Management EssayThis authorship is basically about the analysis of British Petroleum PLC (Bp). The analysis covers the competitive environment of the company in ground of its stance in the midst of its miscellaneous competitors and overly how attractive is the manufacture in which the British Petroleum company belongs to. Apart from the competitive environment, this report in any case identifies the key business strategies of the company and also the various resources and capabilities of the company that has given the company an edge over it other competitors.In analyzing the competitive environment, business strategy and identification of the various resources and capabilities of British Petroleum, the pursuance frame works will be used sporter five force, strategic mathematical groups, Bowmans strategy clock, value chain analysis.OVERVIEW OF British PETROLEUM (BP)The British inunct is one of the worlds largest brawn c ompanies and also one of the largest vertically integrated anoint and gas companies in the world, which provides its customers with fuel for transportation, energy for heat and lighting, and also retail service and petrochemicals products for everyday use. The BP Plc operates across six continents which include Africa, Asia, Australasia, Europe, North America and South America and their products and services are available in more than 100 countries in the world. British petroleums operations involve exploration, production of gas and crude embrocate, marketing and also trading of power, and natural gas liquids. British Petroleums headquartered is situated in capital of the United Kingdom United Kingdom, and it has employs about 80,300 people as part of its labor force.Bp has various brands which include the Ampm, Arco, Castrol, Aral, Wild bean caf and Bp itself and the energy mix of the British Petroleum is a mixture of crude oil, gas, solar, wind and biofuels. BP is a company wh ich focuses mainly on petroleum, but has some interest in alternative energy which shows that the company does not except specialize on oil and gas only like some of its competitors does.THE COMPETITIVE ENVIRONMENT OF BRITISH PETROLEUM (BP). In analyzing the competitive environment of the British petroleum, as earlier stated, a very useful tool to consider is the five forces model of competition which was developed by Professor Michael Porter of the Harvard line of merchandise School in 1980, this model identifies factors that affect the organizations competitiveness in the industry and also help the firm to bring ined the appropriate strategy in stage to enhance its competitive advantage and also protect itself from threat as well. The five forces identified by porter includeThreat of entrants from organisations currently outdoor(a) the industryPower of suppliers i.e. providers of inputs e.g. staff, IT, accommodationPower of buyers i.e. recipients of products/servicesThreat o f substitutes i.e. things customers business leader buy insteadCompetitors/rivalry competition within the industryTHREAT OF bleak ENTRANCE The threat of entrance into the oil and gas industry is broken in due to the fact that there is heights barrier of entrance into the industry. Some of the companies that constitutes the oil and gas industry like British Petroleum uses heavy and very expensive equipments at well sites For example, pumping trucks and other huge equipments, huge capital coronation expenses is involved, such as High infrastructure cost i.e. pipeline, road access in fields, land acquisition etc.Availability of human resources in terms of scarcity of subsurface reservoir engineer and geologist all this contribute to the high barrier of entrance into the industry.POWER OF THE SUPPLIER The bargaining power of suppliers is relatively high and this is driven by the presence of high cost of switching from one supplier to another and also the presence of relatively sma ll number of energy and alternative energy suppliers (concentrated suppliers), also some of the buyers such as Bp and some other companies that constitute the industry are vertical integration companies so they might not even have the need to want to require the services of this suppliers so the power of the suppliers is Medium.POWER OF BUYERSThe balance of power shifts toward buyers. Oil is a commodity and one companys oil or oil drilling services is not that much different from another companys and thisleads buyers togo in favor of lower bells and or better contract terms.The power of the buyer will be regarded has being Medium because buyers are powerful and can switch from the consumption of Bp products to another oil and gas companys product and at the same time an individual buyers decision does not necessarily have an impact on the company.THREAT OF SUBSTITUTES Threat of substitutes is Low and theSubstitutes for the oil and gas industry includes alternative fuels such as co al, gas, solar power, wind power, hydroelectricity and nuclear energy which is still in the developing phase and also involves high cost of production. Oil is of great importance it is not only used in fuelling cars alone, it is also used in the production of plastics and other materials. majority of the means of transportation still relies heavily on oil and Oil is needed in order to generate electricity which implies that oil and gas would be depended on rather than the alternative due to its level of development and high cost of production.COMPETITIVE RIVALRY The level of competitive rivalry is high the industry is characterized by big companies which produce low differentiated products and there is low threat of substitute and also low threat of new entrance into the oil and gas industry.Another tool that can also be used in the analysis of the competitive environment of the British Petroleum is the strategy group framework by Porter in 1979. According to porter, a strategic gr oup is defined as a set of companies within an industry pursue strategies that are similar to each other and different from firms outside the group on one or more key dimensions of their strategy.In terms of the oil and gas industry which BP belongs to, the level of competition is very high because major players in the industry such as Royal Dutch shell, Bp, Exxon Mobil, Total, chevron, and Conoco Phillips all adopt similar strategy and competing on similar bases which is adaptation of a vertical integration to an extent and they also produces similar range of products.BUSINESS STRATEGY OF BRITISH PETROLEUM OVER PAST 5YEARSIn analyzing the business strategy being adopted by Bp over the past 5 years, the Bowmans strategic clock would be a useful tool. The strategy clock considers both the price and the perceived added value of goods and services produced by a company and compares it to that of its other competitors.Placing the Bp group at a lower place the strategic clock show that the company uses Hybrid strategy which means that they operate at a low cost based, reinvest in low price and differentiated in operation. BP is one of the largest operators and also one of the most well established globally, the company operates both in the upstream and downstream operation and its operations is also increasingly diversified or differentiated in production offering various oil products to the market. At the same time British Petroleum (BP) has a cost base that permits low prices and which is sufficient for reinvestment to maintain bases for differentiation.BP has been adopting the Hybrid strategy for a long period of time now and the sole fetch of the strategy is to achieve differentiation and a price lower than that of BPs other competitors.