Strategic Performance Management Of British Petroleum Management Essay

Strategic Performance Management Of British fossil petroleum Management EssayThis study explores the crude giant, British Petroleum likewise known as BP within the spheric oil sector and also it recent activities. Some key external factors have been investigated which includes PESTEL, SWOT, Competition Analysis, Five forces role model (Michael Porters). This study has formulated SMART objectives after putting the above factors into consideration and this has led to the creation of Strategic Plan, Measurement and Implementation of the formulated SMART objectives.1.2 ac family backgroundThe company British petroleum also known as BP was incorporated in 1909 then as Anglo Persian Oil Company with head pull in in London, operating in some(prenominal) upstream (oil exploration) and downstream (oil refining, sales and foodstuffing) of the military personnel oil sector, BP is one of the largest oil company in the world. The company, BP has more than 21,400 returns stations worldw ide and its sh atomic number 18s is quoted on New York, London, Toronto, Paris, Tokyo, Amsterdam, Frankfurt and Zurich stock exchanges.The history of BP will non be complete without making mention of the activities of Williams Knox DArcy, in the form 1901 he was granted concession by Grand vizier (Shah) in to solar days Iran and as a upshot of inadequate fund he entered into an pact with the British political relation which involved investing the sum of 2 meg that led to the transfer of major shares to the governing body at the later end. In the 1990s British Petroleum acquired Amoco, Arco and Burmah-Castrol. BP has several retail brands which include Arco in US, BP connect, BP travel centres, BP Express etc. BP is ranked as one of the top three oil giants in the world with stave strength of more than 97,600. Recently, the brand BP has been undergoing serious scrutiny and criticism as a firmness of it past and recent activities which include Texas refinery explosion in 2005, dumping of toxic waste in some Afri john countries, Prudhoe Bay oil handoutage and the recent Gulf of Mexico oil spillage.This study will think on the brand BP and how to manage brand name damaging crisis.2 External Analysis2.1 PESTEL factorsTable 1 PEST2.1 Political/LegalUK government endorsement/ support for BPUK government support during the gulf of Mexico oil spillage crisisBP activities in the Gulf of Mexico has been banned save the UK government has given the company enterprise to continue on with the search for oil and gas in the deep waters off the coast of Britain.2.2 EconomicThe ball-shaped recession has resulted into reduction in Profit of BP from the previous form.Replacement equal of profit for year 2009 was $14 billion with a return on average capital employed of 11%Gained new resource access in Iraq, Jordan, Egypt, Indonesia and Offshore US.30% increase in lubricants income generated from core foodstuff, and market extension to India, chinaware, Russia and B razil.Strong presence in China with upgraded Zhuhai 2 plant.Reported production increased by 4% and unit and production costs reduced by 12%Refining availability for the year was 93% up around 5% in 2008Investment of $20 billion in business expansionIn Trinidad and Tobago BP recorded launch-to-production time of 18 month with Saronette ProjectDiscovery of Tiber in the gulf of Mexico2.3 Socio-CulturalEncouraging health and fitnessCreation of work environment where diversity and inclusion are valued. modify employee engagementCreation of modernized farming initiative in ArgentinaIncreased employee moralThe number of employees fell from 92,000 in 2008 to 80,300 in 2009 as a result of the transfer of BP US convenience retail site to a franchise model.2.4 TechnologicalImproved operating centering system (OMS)All refineries and petrochemical plants are operating on OMSInvestment in key technology like wind, bio-fuels, solar, hydrogen power and carbon capture and storageImproved form of conveyance of title of products.3. SWOT AnalysisTable 2 SWOT Analysis4.1 StrengthsStrong brand name with the slogan beyond petroleum.Strong market position in both downstream and upstream of the global oil sector.BP (Castrol) Sponsor of the FIFA 2010 world cup.In 2009 BP and Pan American Energy in Argentina offered 63 preadolescent people scholarships with emphasis on engineering.In 2009 the company had a 12.0% market share of the world lubricant oil which put them at 2nd largest market share after ExxonMobil.Ranked among the top three oil in the world pullulate quoted on London stock exchangeThird quarter 2010 profit of $1.8 billionOperates through retail brands and subsidiaries (Amoco ARCO BP Express, BP Connect BP Travel Centre ampm Burmah Castrol etc)BP signed a technical service contract with the Iraqi government in November 2009 to develop the Rumaila oilfield4.2 WeaknessesMoney being lost to clean up of gulf of MexicoUnstable oil price due to the recent recessionBP Texas ref inery explosion in 2005Toxic spillage of methanol in Prudhoe Bay in 2006Total closure of Alaska wells2010 third quarter lossOil spillage in the gulf of MexicoA law suit been instituted by the American governmentSecond quarter loss of $ 17 billionCall to shelve the uptake of all BP product in US during the gulf of Mexico crisisThe recent removal of Tony Harward as the CEO of the company and being replaced by a US citizen4.3 Opportunities governing body of UK endorsementsDiscovery of significant deep gas in Egypts West Nile DeltaAward exploration block in IndonesiaInvestment in Egypt and LibyaIncrease brand sentienceIncrease market share all told new product launch ultimate 1.5Change clients by continuous product development and awarenessCompletely rebranding of company image as a result of the recent spillage in USExpansion into African countriesContinuous research and development outline e.g. $8 billion investment in research of alternative source of zippo to oil including solar , wind, natural gas and hydrogen etc.Flexible limit to enhance healthy competition with sector rivals4.4 ThreatsThreat of substitution due to high pricesDrop in BP share price as a result of Gulf of Mexico oil spillageSuspension of production in Rhum gas fieldSales of upstream interests in Pakistan to United Energy Group checkAgreement to sell interests in Pan American Energy to Bridals CorpoarationPipelines corrosionsGlobal economic recessionRefineries and rig explosionsPossibility of tax increment in countries wherein BP locomoteEconomical/political change in countries in which BP operates.Legal action against company by US governmentOil price being determine by market forcesExchange rates could affect companies profitabilityRemodification of oil products to reduce pollutionNew technology to substitute the usage of oil in high spirits focus on green fuelGovernment policy in countries where BP operates regarding their oil sector e.g. penalty for oil spillageTermination of lease agreement between Bp and foreign governmentsCompetition from Mobil, banding and Shell.3. External Analysis- Competitor AuditAs British Petroleum (BP) is situated in many different global markets the following competitor audit will focus on BPs main competitors in the global oil industry.Competitors3.1.1 ExxonMobilExxonMobil is the foremost publicly traded petroleum and petro-chemical jeopardy in the globe, it operations encompasses almost all countries of the world, it has different brand names such as Exxon, Mobil and Esso, it is an judicature that is built on a concept of global business which allow it to compete favourable, efficiently and effectively in the world of energy industry. Both Exxon and Mobil have been in existence for more than a century, but ExxonMobil came into being as a result of merger between Exxon and Mobil on 30 November 1999 to form Exxon Mobil Corporation. It headquarters is placed in Irving, Texas, United State with market capitalisation of $323.717 million, revenue of $301.5 billion and assets value of $233.323 billion as at 2009. The CEO of the company is Rex W. Tillerson with staff strength of 90,800, the company is quoted on New York product line Exchange it has thirty seven refineries and operate in most countries of the world.3.1.1 Royal Dutch ShellShell is an energy giant and one of the worlds largest independent oil company with staff strength of around 101,000 and it headquarters is located in The Hague, the Netherlands. The parent company is Royal Dutch Shell Plc and it is incorporated in England and Wales with pecker Voser as the CEO. The company account for 2% of world oil and 3% of gas, it has 44,000 service stations globally and thirty five refineries. Shell operates in both upstream and downstream sector of the world oil industry. As December 2009, its revenue stood at $278.2billion and capital investment of $31.7 billion with market capitalisation of $186.618 million and assets worth of $292.181 billion, the company is quoted on London stock exchange.3.2.1 ChevronChevron is one of the leading energy companies in the world. It activities encompasses crude and natural gas and the company operates in both upstream and downstream sector of the oil industry which includes manufacturing, marketing and transportation, exploration and production, sales and manufacturing of chemicals, power generation and geothermal energy. The organisation Chevron came into being after the merger between Standard Oil Company and of California and Gulf oil Corporation in 1984. Chevron headquarters is located in San Ramon, California, United State with market capitalisation of $154.462 million, revenue of $167.402 billion and assets value of $164.621 billion as at 2009. The CEO of the company is David J ORelly with staff strength of 60,000, the company is quoted on New York Stock Exchange it has sixteen refineries and operate in thirty three countries and it brand includes Texaco and Caltex.3.2.3 ConocoPhilipsCon ocoPhillips is a key global, incorporated energy corporation, with universal scale and scope all over the oil and natural gas value chain. The company came into been as a result of merger between Conoco and Philips Petroleum Company which was completed on 30 August 2002. It headquarters is located at Houston, Texas, United State with market capitalisation of $75.772 million, revenue of $152.843 billion and assets value of $155 billion as at 2009. The CEO of the company is James Mulva with staff strength of 30,000, the company is quoted on New York Stock Exchange it has twelve refineries in US, four in Europe and one in Asia and also operate in thirty countries of the world. ConocoPhilips is the third largest integrated energy company in United State of America.6. Porters Generic StrategiesDiagram 1 British Petroleum and Porters Generic StrategiesFocusMiddle of the pathMiddle of the roadBP in futureBP PresentlyCost leadership DifferentiationPorter (1980) states that there are four t ypes of generic strategies that are required by an organisation to be competitively successful, and these are Focus, Cost Leadership, Middle of the Road and Differentiation. Before now, BP was utilize the Cost leadership strategy but at present, the company is using the generic strategy of Middle of the road as a result of the last Gulf of Mexico oil spillage.British petroleum Brand and the Gulf of Mexico oil disaster.(Rebuilding the broken bond)This oil disaster is the biggest crisis in the history of the oil industry in United States. We can only agree on the cause of the possibility based on the testimonies of the parties involved.The chief mechanic on the Deepwater celestial horizon rig testified at a hearing held by the US coastguard, he said he was present at the meeting between BP manager and the crew from Transocean. That Transoceans chief driller was not comfortable with the request for the removal of the drilling mud from the well that day because he did not think the w ell is fully prepared for shut-down but based on the request and persuasion of the BP manager (as a result of the cost incurred in renting the Deepwater exploration rig which cost $500,000 a day to rent) insisted that they should start removing the mud before plugging the well, which later led to the explosion of the rig and the expiry of eleven crew members. This crisis has really affected the BP brand, because brands are not created by advertising, they are created primary by what organisation does.A Model of Strategic conference (Grunig Hunt, 1984)A model of strategic communication is composed of two components which are aimed to describe the evolution of stakeholders and publics. The contribution of this model is to overall strategic communication and management by diagnosing the environment to make the overall organization aware of stakeholders and publics as they evolve.The Stakeholder StageThe terms of stakeholder and public are often used synonymously. on that point is a subtle difference, however, that attends to understand planning of strategic communication. People are stakeholders because they are in a category affected by decisions of an organization or if their decisions affect the organization (Grunig Hunt, 1984).There are internal and external stakeholders including employees, director of boards of BP Company, society, customers, media, universities, research centres, U.S. and U.K. governments, activist groups, etcInternal Stakeholders External StakeholdersEmployees of BP MediaDirector of Boards British petroleum universe/SocietyCEO Advocate groupsUS and UK governments Customers of BPCompetitorsInvestorsResearch centresUniversitiesShareholdersStakeholder mapping of BP Company in case of the oil spillage. Demirel. K, (2010)After the identification of the various stakeholders, the next distributor point should be the determination of level of relationship i.e. the linkages.Stakeholders State regulators Govt. Regulators Board of directorsE mployees unions SuppliersEnabling linkages InputNormative linkages Functional linkagesCompetitors Association Political groups Professional societyBPCustomers Retailers Distributors outturnDiffused linkagesNGO Residents Advocacy group MediaLinkage model of BP Company, Demirel. K, (2010)Referring to Grunig, J. / Hunt, T. (1984) Managing public Relations. Rinhehart and Winston Holt, P.141. situation A has to do with the enabling linkages that is, stakeholders who have total control and role over BP company operations especially the government of U.S.Part B. functional linkages the input and the output, the input deals with provision of the service and output has to do with the product consumption.Part c is the normative linkages that is, groups and association that has common interest.And lastly, Part D is the diffused linkages these groups do not usually have anything to do with BP, they are only combat-ready during crisis situation.BP Public RelationsIn the first days of oil spill , BP Company downplayed oil spill and CEO Tony Hayward stated relatively tiny for the disaster of oil spill. After two months, BP Company has changed head of public affairs. After that, they started to provide consistent and responsible messages for oil spill through various media channels. As a part of PR strategy, BP Company got sponsored links on Google in order to provide first ranked results of key words related to oil spill direct to special part of BP Companys website. Even though it can be considered as implementation of spin doctrine, sponsored links were successful, because most people are not able to distinguish sponsored and actual links. Demirel. K, (2010)Crisis response and rebuilding stakeholders confidenceIt involves seven specific steps to obtain public forgivenessVoluntarily admit that shift has been made.Explain why the mistakes occurred (no matter how stupid).Show/say/demonstrate contrition and sincere concern.Agree to take the step necessary to fix the problem. Ask for help from the victims/accept counsel from the communityPromise (or publicly commit to) never to let it happen again.Find a way to leave (do penance)/alleviate/ revivifyPenitential model by Gottschalk. J (1993)We can conclude based on the penitential model that BP company responded to the crisis by voluntarily admitted that mistake has been made, and this can be seen by the stepping down of Tony Hayward as the CEO of the company, we all know the cause of the disaster based on the chief mechanic on the Deepwater Horizon rig testimony and the company has really shown concern and the U.S. government has requested compensation for the cleanup of the gulf of Mexico which the company has agreed to pay . BP vowed on to pay all necessary and appropriate clean-up costs from the massive oil spill in the Gulf of Mexico as the Obama administration called on the energy giant to light up how it plans to do so.Other models that can be use to earn stakeholders confidence and trustKey lever s to building customer trust, Dr Aaron Sum Wei Wern and David Levi (2009).Building allow customer trust1. IntegrityBridge gap betweenpromise and reality2. Competence 3. TransparencyKnow whats right for me Be honest with meBuilding enduring trust1 Return to the fundamental trust leversFocus on meeting fundamental expectations before addressing higher-order2 De-risk and simplifyMinimise uncertainty in the customers decision-making process3 Build and solidify enabling capabilitiesPrioritise capability-building through the lens of the trust leversuingConclusionAs stated by Edward Artzt Brand faithfulness is very much like an onion. It has layers and a core. The core is the user who will stick with you until the end. Shaun and Wheeler, (2002 p.25).BP was able to get out of the mess as a result of the followingQuick/prompt responseAcceptance of blameTotal responsibilityAccepted solutions providedTook realistic approachInvolvement of top management squad