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British Petroleum Case Study Analysis 

BP plc, also known as The British Petroleum Company & BP Amoco, is a British multinational oil & gas company headquartered in London. In addition to that, the company is considered one of the seven oil & gas supermajors. The British Petroleum Company is a vertically integrated organisation that operates in various areas of the oil & gas sector. This includes refining, trading, power generation, exploration as well as distribution & marketing. Even though the market cap of this brand is huge however, the outbreak of coronavirus pandemic has influenced the decline of revenue in more than 180.4 billion dollars. 

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SWOT Analysis

Strength

Loyal customers: It has been observed that the brand has focussed on developing effective customer relationship management for gaining higher customer satisfaction. Study shows that British Petroleum emphasizes on gaining customer satisfaction by retaining strong ties with the customers.

Network: Study shows that supply chain network plays an important role for any business to improve their brand image and deliver quality services or products to their range of customers. In this case, it has been observed that the firm executes business operations around the world in various sectors (of territories such as United States, Europe, Asia Pacific, South America among many others).

Global leadership: British Petroleum is considered as a market leader. In addition to that, the company is one of the biggest suppliers of oil and gas in UK. Other than that, the firm has been able to retain an appropriate economic balance in this region that helped them to become one of the biggest sellers of gasoline in US as well.

Diversified interests: The concerned firm has diversified into many businesses such as energy, lubricants, aviation fuel as well as information technology among many others. Subsidiaries associated with this organization includes Amoco, BP express, BP Travel Centre, Burmah Castrol, ARCO and BP Connect among many others, which further helped them to diversify potential risks.

Weakness

Controversies: Various controversies due to oil spills across several regions affected the ‘sustainability’ rating of this firm to a huge extent. This also affected their goodwill or brand reputation to the stakeholders. Study shows that oil spills caused major loss of marine lives and influenced environment deterioration.

Ethical issues: As discussed, British Petroleum faced major threat due to various scandals occurred from dishonest transactions with the workers. In addition to that, the such controversies led to development of negative brand image which reflects their negligence towards environment or the overall society.

Lack of market penetration strategy: The demand for oil and gas is high across the world due to which, this firm might witness potential threat from the external marketplace. British Petroleum operates in diverse markets however inability to penetrate in the nonenergy sectors might affect their profit margin in the long run.

Opportunity

Overall infrastructural development: Due to diversified market approach, British Petroleum can gain major benefits from the market. Study shows that infrastructural development helps a brand to gain potential benefit with their overall sales. Hence, the firm has implemented appropriate infrastructure to use the alternate energy options that can help British Petroleum to improve their brand image and portray the firm as environmentally savvy.

Presence of substitutes: British Petroleum holds a prominent presence in the entire energy sector. Furthermore, in order to gain higher profits or benefits, this firm expanded their business operations in other sectors as well (such as tidal and wind energy). The global focus over sustainability has helped to create various opportunities in the alternative energy sector, which can benefit the firm in gaining higher growth for this company.

Threat

Stiff competition: Study shows that stiff market competition affects the ability of a firm to gain higher revenue from the market. It has been observed that British Petroleum is faced with stiff market competition from the domestic and international market. Some of the closest competitors of British Petroleum are Chevron and Shell.

PESTLE Analysis

PESTLE analysis is considered as an effective tool for strategic planning of an organization. In addition to that, the pestle analysis includes political, economic, technology, social as well as legal apart from environmental factors. In this case, PESTLE analysis is used to understand the external factors that is influencing the concerned firm (British Petroleum).

Political factor: Political factors is considered to be an essential component associated with a business. The political factor in United Kingdom is studied to be highly favourable for the brands operating in this market. However, Brexit have caused potential challenges for British Petroleum as it influenced political instability to a huge extent. As it has been observed that British Petroleum operates in multiple markets and customer segments hence, change in political stability can cause strong political influence over this business. This can further create a negative impact on this firm both in short term as well as in the long term.   

Economic factor: Study shows that economic stability of a nation plays an important role for any business around the world. In this case, it has been observed that economic factors help to determine how British Petroleum operates for developing effective strategic decisions. Recent global recession has resulted in reduction of profit margin and interest rates thereby impacting the cost of capital influencing overall growth and expansion as well as exchange rates of the energy products. Although, the concerned brand operates in several regions across the world yet, economic stability of United Kingdom is studied to be highly favourable due to rising consumer demand. On the other hand, outbreak of pandemic might cause negative influence on inflation rate of the business.

Social factor: Change in various social media trends can impact on demand of a firm’s products or service thereby resulting in significant profit or loss of the firm. The ageing population in United Kingdom might cause the overall allocation of pension funds, which can further lead to rise in demand of oil products across the nation. On the other hand, rising concern regarding various environmental issues have influenced the overall demand for oil industry in this region. However, experts believe that the customers will tend to purchase products that are environmentally sustainable and customer might also change the nature of products to address their need.

Technology factor: Study shows that technology plays a vital role for any business that also holds the ability to alter customer demand and increase sales in the market. In addition to that, technology also helps a firm to develop current or present global energy products (innovative products) that might help them to gain a competitive edge from the market. In this case, the concerned firm (British Petroleum) has analysed their market demand or customer demand in the United Kingdom, which helped them to implement appropriate innovative strategies towards customization of products or services. As it has been observed that some of the oil distributing companies includes oil flow through long pipelines hence, it has adapted with the utilization of various IT system. This helps them with monitoring as well as controlling overall movement of oil. Furthermore, many companies in this sector have developed official websites for providing better customer experience and also in order to improve their overall brand image. Communicating with the customers through official website might help them to address various issues present in the company. It has been observed that this brand is also focused on production of alternate energy sources.

Legal factor: Study shows that legal factors is also a major part in a business that helps a firm with their business operations in any specific region. In addition to that, the legal factors in United Kingdom have been observed to be highly favourable that further helped British Petroleum to execute their business operations effectively. On the other hand, enactment of age discrimination as well as disability discrimination law has affected the entire business operations of this company in the UK. Similarly, increase in minimum wage rate and health & safety laws influenced strict employment regulations.

Environment factor: It has been observed that rising environment concern among customers around the world has created a major impact over entire oil industry. Furthermore, it can be analysed that many businesses have emphasized over environmental sustainability in order to maximise sales or customer traffic. In addition to that, various environmental groups are raising concerns regarding environmental degradation, which is caused due to pollution. It affected the customer traffic of British Petroleum as consumer attitude towards climate change can create a major impact over the demand of company’s products or services. It has been studied that the concerned company (British Petroleum) was a nominee to Greenwash Awards due to their ability to focus on alternative energy sources. Hence, it can be assumed that companies who are not focussed on root causes of climate change of any causes of environmental degradation, might witness a major downfall in their revenue generation as well as with their overall brand image. In addition to that, companies those are operating in the oil industry of United Kingdom should be concerned with environmental pollution.

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