《Foundations of Management》

Business Report on British Petroleum

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Table Contents

Table Contents I

Executive Summary II

1. Introduction 1

2. SWOT Analysis 2

2.1 Main Point of SWOT Analysis: 2

2.2 The Strength of Bp 2

2.3 The Weakness of Bp 5

2.4 The Opportunity of Bp 7

2.5 The Threats of Bp 9

3. Conclusions and Recommendation 10

4. References 11

Executive Summary

This report researched mainly according to recent data. It showed the Bp company’s SWOT analysis and its main development direction .In this report you can see the seduction what the company under and how the company facing the development of the world. The report is to show the company’s business work and to make advices to its development too.

The background to the report is based on the economic recession and the tight European debt crisis happened recently.

The main data comes from the Internet searching and a bit of the paper in hand. Finally the report contented the main information of Bp, the new challenge of its development and how it can adapt the new environment.

And at the report, it said insist “Quick fix &Working within Learning” structure is a good development direction .Bring in new technology is good but “Work in Past Way Smooth” is the base demand

1. Introduction

British Petroleum (Bp p. l. c) is one of the world's leading international oil and gas companies. It provide customers with fuel for transportation, energy for heat and light, lubricants to keep engines moving, and the petrochemicals products used to make everyday items as diverse as paints, clothes and packaging.

It employs more than 80,000 people in around 80 countries worldwide.

Through its two main operating segments, Upstream and Downstream, it find, develop and produce essential sources of energy, turning them into products that people need.

Its projects and operations help to generate employment, investment and tax revenues in countries and communities around the world.

This report purpose to analyze the base SWOT structure of Bp p. l. c, and let people know the future development of this company .So it is focus on Bp’s Strength in business battle, Weakness in deal with the environment, Opportunity in gloomy economic and Threat of long term development.

2. SWOT Analysis

2.1 Main Point of SWOT Analysis:

Table 2-1 SWOT Analysis

2.2 The Strength of Bp

For BP in the enterprise competitive advantage, It mainly from its size, products, technology innovation, the management pattern, marketing, and Environmental these six aspects are analyzed.

First of all, BP in scale advantage:

BP is one of the world's largest private oil company, is also one of the world's top ten private enterprise group. BP is one of the world's largest oil and petrochemical group one of companies

Company's current market value of about $200 billion, with millions of shareholders. BP nearly one hundred and ten thousand employees all over the world, in more than one hundred countries with the production and business activities. BP among fortune global 500 in the top five, ranked first in Europe.

Second, the advantages of BP's products:

BP's four core business from the upstream oil and gas production, and the power to the downstream petrochemical industry, product marketing in China have widely developed, and the products range, wide coverage. Include car oil, industrial oil, and Marine oil. BP production, annual output can reach eighty thousand tons.

Third, the BP in marketing advantage:

BP with the international well-known car manufacturers around the world have established a strong partnership, like Benz, established a strong working relationship with renowned automobile manufacturers

The fourth, the BP in technology innovation advantage:

BP's pursuit of innovation. In both technology and ideas, BP is proud to innovation. Technically, BP in exploration and product development innovation, BP, constantly is looking for new ways to better ways to face the challenge. BP in vinyl acetate, polyethylene and has expertise in technology and production. Ethylene, polyethylene production capacity each accounted for 10% of the whole Western Europe, occupies the second place of Europe. With gas phase method of producing the new technology of high density polyethylene and linear low density polyethylene. BP international oil companies in lube oil hydro treating, distillate oil hydro treating, hydro cracking, paraffin wax hydro fining, catalytic dew axing, summarization, etc have patent makes more satisfied partners, customers.

The fifth Environmental aspects:

Green is the precondition of BP all business development, is also the BP commitment to society. Over the years, BP is working to protect the earth's natural resources, and actively develop ways to reduce carbon dioxide emissions to combat climate change. Established in 2005, BP alternative energy business, more big efforts in the field of solar energy, hydrogen power, wind power, etc

The sixth, the advantage of BP's management mode:

BP in the operation of the company's is very good, his eight focus on eight stressed that many companies have to follow the BP model.

1. Focus on the performance, emphasizing the evaluation, BP play to the role of the performance of the contract Emphasis on performance first.

2. Focus on the budget, emphasizing the communication. It increases all aspects of participation, the budget management as an important means to strengthen the management of enterprise.

3. Focus on Service, emphasizing convenience, BP development through the development of other business increase the efficiency of the assets and other business when market conditions are not mature, but the company will exceed expectations other businesses to provide customers with convenient services.

4. Focus on the program, emphasizing the standard,

5. Focusing mechanisms, emphasizing the efficient,

6. Focus on implementation, emphasizing the details required to do a good job of foundation. Existing rules and regulations to implement to employees, from the little things.

7. Emphasis on training, emphasizing quality people-oriented and a growth platform for staff to pay attention to the gas station staff quality enhancement.

8. Focus on philosophy, emphasizing the identity, BP will enterprise culture into the staff's conscious action, oil sales enterprise culture rich in content, form the system.

2.3 The Weakness of Bp

1. Explosion in the Texas refinery

In March 2005, an explosion and fire occurred in the isomerization unit of BP Texas City refinery. Fifteen workers died in the incident and many others were injured. In October 2007, the US Department of Justice announced that it had entered into a criminal plea agreement with BP related to the explosion and fire. In February 2008, BP pleads guilty; The Company paid a $50 million criminal fine and was sentenced to three years’ probation.

Such events causing environmental damage could result in heavy financial penalties for the company eroding its profits. In addition, such law suits could also tarnish its brand image.

2. Violation of tax laws in Turkey

The Turkish Finance Ministry levied a tax fine of $275 million on BP in March 2009 for cross-border duty-free petrol sales between 2006 and 2008. BP is one of the largest energy companies in Turkey. The company also operates Turkey’s second-biggest chain of petrol stations. The tax fine was related to BP’s operations by its dealer, Balham, which transported petrol over the Turkish border to Greece and Bulgaria through duty-free refueling areas for trucks used for exports.

In addition to huge penalties, such violation of laws could affect BP’s business operations in the country with tightened surveillance.

3. Oil spill in the Gulf of Mexico

BP is involved in one of the worst environmental disasters in the US. The explosion killed 11 workers. Subsequently, the rig sank triggering an oil spill in the Gulf of Mexico. BP’s repeated attempts to control the oil spill have failed. In June 2010, BP announced an agreed package of measures, including the creation of a $20 billion fund to satisfy certain obligations arising from the oil and gas spill.

The Gulf of Mexico oil spill has damaged BP’s reputation, which may have a long-term impact on the group’s ability to access new opportunities, both in the US and elsewhere. It may damage the company's counterparties, partners, and existing business relationships of the host Government. Regulators and cleaning costs of heavy financial penalties that may affect BP's profit margins significantly. In addition, BP is a large outflow of cash flow over the next few years. It may also hamper its investment in new opportunities and ability to achieve long-term growth.

The main cause of this accident is that the operating system is aging, outdated equipment and does not update. The operator did not follow the normal procedures. Managers do not establish a sound operating system. Many infrastructure and refinery process equipment has fallen into disrepair, but BP continues to cut costs, resulting in inadequate investment in safety.

In the conclusion, Aging equipment and management confusion is BP's undeniable weakness. This is a direct result of BP is facing a serious crisis of confidence, corporate image seriously damaged. As we all know, a multinational company into disrepute, this caused losses to the enterprise can’t be reversed. Not only will directly lead to significant decline in sales, and will make it significantly decreased competition in the same industry. If BP wants to restore the good image in the international arena and obtain the new international trust, it won’t happen overnight. Therefore, in the short term BP's reputation at a disadvantage.

2.4 The Opportunity of Bp

British Petroleum has a long history, which they are putting in place strong foundations to make BP a safer, more trusted and more valuable company. In terms of opportunities what BP has, there are several aspects, such as technology, market, government and etc.

According to technology, it is the most important for BP to become stronger and stronger. As global warming intensifying, the climatic effect of oil industry becomes the focus, the slogan of low carbon is spread all over the world, and new clean energy is faced with good opportunities for development. As to the concept of green environmental protection for BP, it devotes itself to protect the resources on the earth and actively develop ways to reduce carbon dioxide emissions to combat climate change for years. As early as in 2005, it founded the alternative energy business, paying more attention to solar energy, hydrogen energy, wind energy and other fields. From enhancing the safety and reliability of BP’s operations to creating competitive advantage in energy discovery, recovery and efficiency. In the future of mainstream concept of lower-carbon energy, BP has a unique advantage, because it is concerned more about green energy.

Figure 2-1Green gas emissions

Figure 2-2 Number of oil spills

According to the figure 1 and 2, greenhouse gas emissions and number of oil spills have significant decline. BP aims to manage its operational GHG emissions through operational energy efficiency, reductions in flaring and venting, and by factoring a carbon cost into our investment appraisals and the engineering design of new projects. It decreases about 5.2% from 2009 to 2012.

As far as market is concerned, BP has a large market of demand. Firstly, with the development of social economy, the demand for cars becomes higher and higher, so the demand for oil gets higher and higher. Now oil still is the primary resource, oil industry development space is still large. Secondly, Natural gas resources play an increasingly important role in supplying lower-carbon fuel to meet growing energy demand, BP has been working to find out more natural gas resources and it is BP’s strength. Thirdly, the rapid population growth and economic development, the demand for product variety is also more and more, but BP has a variety of products and services, Such as fuel for transportation, energy for heat and light, lubricants to keep engines moving, and the petrochemicals products used to make everyday items as diverse as paints, clothes and packaging .A wide range of products and services for the BP provides a larger market.

Government’s support has a far-reaching influence on the development of a company. As for BP, government’s support provides a greater platform and creates a greater environment. As for the Chinese market, globalization drove BP to open the Chinese market. Under the Chinese government’s support, BP cooperates with China, mutual benefit and win-win results.

2.5 The Threats of Bp

With the world economic recession, the European debt crisis becomes more and more tight. The oil industry began to walk into gloomy; the price of oil has shrunk dramatically, and shows a fell signs in sales. The demand for oil has gradually reduced, so, the prospect of oil industry becomes darkness. In a word, the oil industry outlook is not optimistic. BP will be in challenge every time in the future. But there is always be an opportunity with the threat. BP must have got ready for it.

3. Conclusions and Recommendation

This report is to show the base information and the superficial analysis of the Bp p. l. c. It’s a purely personal view, does NOT represent the official views.

Through this report, there is one question comes out: how to adjust the company’s inside management to suit the flexible environment.

According to this report, it show if Bp insist on its original way（High speed high efficiency）, it can cause a lot of damage to the environment. But if Bp reduces its efficiency, The Company’s interests will be damaged.

So, it advices Bp to use “Learn while working” structure to keep environmentally friendly development trend. Use the situational leadership theory to strengthen the management, while getting new advice from other management layer. And get ready for every challenge.

Low carbon energy will play an increasingly significant role in meeting world energy demand. BP is committed to producing biofuels to help meet this demand. Insisting on developing the Low carbon energy production can help BP get more opportunities in the market. It can make more profits and more competitive.

4. References

靳婷 ， 《从英国石油公司墨西哥湾漏油事件看美国环境刑事责任的追究机制》 2010年

赵禹臣， 《对英国石油公司在伊朗历史经验的多维总结》2010年 个人论文

王涛， 《英国石油公司能否加速转型_超越石油》2010年 第二页

新华网，新华新闻 http://news.xinhuanet.com/world/2010-05/06/c_13280132.htm

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