Introduction
British Petroleum (BP) is an integrated oil company operating in the field of the energy industry. As it was proposed earlier, the company strives to meet the requirements of the modern world offering the market the most demanded products and operating in the context of the effective strategy. In this connection, the paper will put a particular focus on the specifics of the BP’s strategy. it will likewise involve the overview of the research strategy and the presentation methods, providing some recommendations for the company’s prospective development.
Company Description
Due to the fact that the basic company-related data was examined in the proposal part of the project, it seems appropriate to make a focal point on the nominal data. BP supplies energy products and services consumers from different regions of the world. The company’s two central operating divisions comprise exploration and production, as well as processing and marketing (BP 2016).
In other words, the company operates the energy resources throughout the value chain. In addition, BP actively participates in the global renewable energy implementation, particularly, in the field of biofuels and wind power (BP Global 2016). “BP leads European supermajors with 3.24 million BOE / day of production” (Rapier 2016, para. 5). It has been currently stated that “despite a recent rebound, the average oil price for the quarter was $34 a barrel, $10 less than the previous quarter and $20 less than the same period last year” (Stacey 2016, para. 6).
Research Strategy
In order to search for the credible information on the company, I tried to do my best to examine the most reliable sources. Thus, the FTSE 100, London Stock Exchange, and Financial Times along with the company’s website and several peer-reviewed journal articles were utilized to collect the relevant data. First and foremost, I performed a general examination of the company and its history, branding, and coverage area. Secondly, I designed a consistent plan for BP’s analysis. Finally, I integrated all the acquired information into my research project and analyzed the findings thoroughly in order to suggest possible improvements.
Selected Areas of Analysis
The fact that any research bases on a certain area that serves as a boundary for the analysis seems to be undoubted. In this project, I investigated the company’s investment opportunities area as it appears to be a relevant issue in the framework of the modern global economy, where corporations tend to operate in accordance with the economic, political, and environmental requirements. Thus, for instance, the implementation of environment-friendly approaches and products is one of the most perspective opportunities that will allow receiving successful outcomes and gaining the competitive advantage in the precipitously developing market.
The evaluation of possible risks is another area to be explored in this paper. Since the risk management is a process associated with the identification, risk analysis, and decision-making, it results in maximizing the positive outcomes and minimizing the negative consequences of risk events.
Moreover, the fuel target audience is another point of significance. As long as BP conducts the customer-oriented policy, it is critical to strengthen it in order to achieve better results. In other words, the analysis of the company’s marketing service activities and the relevant competitive environment led to the realization of the need for expanding the fuel target audiences.
Utilised Data
The Statistical Review of World Energy 2016 shows that BP’s energy consumption growth continues to slow down, and the energy balance structure shifts towards the low-carbon fuels (Sadler 2013). The focal purpose of BP is to create long-term value for shareholders helping to meet the world’s growing demand for energy and to maintain safe and responsible performance (Adams 2016).
BP aims to be a world-class company and a good employer with a high level of corporate citizenship responsibility. It provides consumers with fuel for transport, energy for heat and light, motor oils and petrochemical products that are used for the production of a variety of goods such as clothing, packaging materials, and plenty of others (Robinson 2014).
Engineering and research work, carried out within the company, provides technological support for all the business units. The manager of each local division is accountable for the coordination of actions of business units and functional units of the group and represents BP in the region. The direct management of the business units is carried out by senior management of the company. The company works with a number of companies that are not members of BP group in joint ventures, most of which are unincorporated.
Method chosen to Analyse the Data
To analyze the data, I applied the qualitative method for the interpretation of the obtained findings. I used the observation method to examine the company’s strategy. With this in mind, the proposed qualitative research methodology revealed the views concerning BP Corporation. In order to ensure the accuracy of the research, I cited several sources.
BP’s Strategic Direction
Long-term Development
The strategy is a boundary marker that defines the long-term development of the organization, relating to the scope, the forms of activity, and the company’s position in the market. “We aim to create value for our investors and benefits for the communities and societies where we operate,” states the company’s official website (BP Global 2016). Considering the above statement, it can be assumed that BP is convinced that in order to ensure the successful and sustainable development of the company, it is necessary to act in accordance with the long-term interests of shareholders, partners, and society.
John Browne, a former CEO of British Petroleum, stated: “A business has to have a clear purpose. If the purpose is not crystal clear, people in the business will not understand what kind of knowledge is critical and what they have to learn in order to improve performance” (Montgomery 2008, p. 35). In this regard, there is an aim to create long-term value for shareholders participating in the growing demand for energy and working reliably and safely. By supplying energy products, BP maintains economic development and promotes the improvement of the living standard of millions of people (Hitt, Ireland & Hoskisson 2015).
Maintaining Risks
According to Hartung (2010), “everything within BP was designed to do more of what had helped the company grow profitably in the past–and not to do anything else” (para. 5). The company continues to enhance its processes, systems, and standards involving the approach to risk management applied throughout the joint venture. Therefore, BP comprehends that the work in the politically and technically complicated areas demands special attention to the local context. According to Andrews (2010), BP’s key priority is a relentless focus on the industry standards security. A precise control of risk helps to protect people in the areas within which they operate.
Investment Opportunities
Another current strategy is the simplification and the openness of business and the subsequent improvement of its efficiency. In this regard, the company strengthens the portfolio of high-yield and long-term assets in the oil industry in the parallel to developing high-quality processing and production of premium products based on innovative technologies (Smith 2015).
This approach allows focusing on those areas where production can generate a large cost but not necessarily large volumes (Hitt, Ireland & Hoskisson 2015). In addition, BP’s experience, technology, and the ability to build long-term relations serve as the supplemental factor. A considered financial performance strategy is vital for the implementation of investments needed to meet the demand for energy products, as well as for shareholders’ reward and future support.
BP’ leadership realizes that maintaining the trust of the people both within the company and outside will contribute to the successful operation. The company wins the trust of the people by acting honestly and responsibly (Robinson 2014). It seems that without a full and open dialogue, BP cannot correspond to the requirements of their customers, shareholders, and regions in which they perform.
The other investment opportunity lies in the support of the alternative energy production. The company has a BP Solar division in Vietnam that manufactures and installs photovoltaic cells – one of the major players in hydrogen energy. The company is building hydrogen fueling station supplying hydrogen based on the exploitation of solar energy. In addition, it participates in a variety of hydrogen projects across the globe. Generally speaking, the company has an immediate interest in the development of the newest and the most environmentally friendly fuels and energy.
BP continues to invest in the development of oil sands and conventional oil along with gas fields. At the same time, the company realizes that certain stocks should remain on the ground to cope with global warming. However, the company representatives claim that 56 percent of all mining operations are currently performed in gas production compared to oil (McKillop 2012).
In addition, BP insists that the company performs consistent activity in the field of biofuels as it has a large-scale energy efficiency program (Skjaerseth & Skodvin 2013). Nevertheless, some of the more active shareholders urge the leadership to pay attention to the fight against climate change. In response, BP’s top managers confirm that the company will certainly support the idea of the fight against global warming, but the primary responsibility to protect the environment lies on the politicians.
Fuel Target Audience
Reflecting upon the peculiarities of the target audience, it is appropriate to choose the fuel target audience as an instance and reveal the relevant research findings. In the role of an impetus for the revaluation of actual and potential customers, there was a global market research conducted by the company’s marketing department in 2011, which showed that BP refuel stations were typically used by people from 35 to 55 years old with middle and higher income. It turned out that the company covered the young and promising audience insufficiently.
This was the first critical findings. The second finding was the fact that the majority of young people got filled at competitors’ gas stations. Therefore, the study largely changed the outlook on BP’s customers in this field and led to the analysis of the lifestyle and hobbies of the unreached audience. In this situation, the company used automobile clubs developing on the Internet.
In forums of such clubs, BP managers conduct online surveys asking questions like “What gas stations you use to refuel?”, “How often?”, or “Have you refueled with the new fuel yet?” This helped to understand the consumers’ activity. In addition, in the framework of these forums, there were online consultation specialists who responded to questions on technical characteristics of the fuel, its impact on the engine, and numerous other issues.
In the course of such events, in order to attract more customers and increase customers’ loyalty to BP, the number of active users increased significantly. Thus, the range of actual and potential customers for the company began to grow as each target segment required an individual approach and the selection of the means of influence on it.
Conclusions and Recommendations
In conclusion, it should be emphasized that people live in the world, where, because of the population growth, energy consumption grows gradually yet steadily. Consequently, British Petroleum plays an important role in the modern world due to its activity in the energy industry. This paper scrutinized such strategic directions as investment opportunities, risks management, and target audience. The conducted strategy analysis shows the potential growth of BP Company stocks. The upward trends in the oil and gas markets are likely to lead the company’s stock price to new highs.
Speaking of the recommendations, it is necessary to note that the company should invest more in research and development. Moreover, the company might invest in natural gas mining. From the global perspective, these investments will help to improve the environmental conditions to some extent and obtain increased profits. Additionally, it is appropriate to recommend a continuous focus on the target audience, whether it will comprise fuel consumers or larger purchasers.
References
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