Introduction
The contemporary business field is a highly competitive and fast-paced environment. Today, ventures that aim to succeed and become leaders in their sectors cannot rely on merely offering customers high-quality or unique products and services. It is imperative for organizations to have a coherent business strategy in order to achieve the company vision and set objectives and make appropriate decisions. Thus, developing a viable business strategy is vital for organizational success and allows enterprises to stand out from competitors and establish themselves in the market. In large corporations, numerous people are involved in the development of a business strategy, including the identification of company goals and the implementation of major initiatives and steps to reach them. Furthermore, the execution and evaluation of a strategic plan require the continuous involvement of key strategists. This paper will focus on BP, an oil and gas company, and examine who can be considered the strategists in the organization. In addition, the contribution of different stakeholders to the development of BP’s strategy will be discussed.
About BP
BP is a British multinational public limited oil and gas company. Founded in 1909 as the Anglo-Persian Oil Company, due to oil reserves being located in the Persian Gulf, the company quickly became the leader of the industry in the British oil market (BP Global, 2022a). The success of the company is attributed primarily to the British government becoming a major shareholder in 1914 and presenting it with an opportunity to provide oil for the British Navy (BP Global, 2022a). Today, BP is considered one of the world’s largest oil and gas companies. In addition, the company is actively exploring new energy markets. The venture is currently invested in producing renewable fuels from waste and plants, renewable energy, EV charging, as well as hydrogen and carbon capture and storage (BP Global, 2022b). The company is represented by a variety of brands in different countries and remains dedicated to the improvements of the energy, oil and gas, and fuel retail sectors.
BP Strategic Plan
The BP strategy focuses on innovation and the development of new renewable energies. The company drives to support sustainability in the energy industry through its operating model (BP Global, 2022b). Specifically, the primary areas of BP’s attention are emission reduction, carbon energy decrease, customer convenience, and capital discipline (BP Global, 2022b). Furthermore, BP is dedicated to the energy system transitions while providing its customers with the types of energy they require (BP Global, 2022b). The company fully embraces the modern drive towards digitalization and adapts its operations to empower the workforce and engage with customers more efficiently (BP Global, 2022b). In addition, BP strategically engages and builds strong relationships with other business ventures in the field and other industries to deliver effective energy solutions (BP Global, 2022b). Thus, as a company that has operated in the oil and gas energy sector since its foundation, BP is focused on energy transition as well as entering and establishing itself in other energy sectors. Its strategy relies on innovation, digitalization, and the development of new fuels and energies that can offer value to a large target market.
Approach to Strategic Decision Making
For over a century, BP has remained a uniquely successful business venture. The company’s consistent performance can be attributed to its strategy and approach to strategic planning and decision-making. The enterprise’s strategy is informed by a variety of factors, including the global economy, international energy demands, and trends in different energy sectors such as natural gas, oil, and renewables (BP, 2021). Thus, it can be argued that the BP strategy is well aligned with the current environment, company competencies, and the organization as a whole (Paroutis, 2022). The BP strategic report indicates that the company strategy is based on the projected global energy demands (BP, 2021). Specifically, the enterprise implements a scenario-based approach to strategic planning. This approach allows strategists to explore multiple possible alternatives and provides frameworks for the exploration and assessment of key decisions and assumptions about the future (Wright, 2005). The scenario-based method provides the opportunity to meaningfully interpret the existing internal and external environments, their potential interactions, and their impact on the company’s position in the market.
The company utilizes two approaches to scenario-based planning that inform its strategy and the decision-making process. The first approach includes scenarios that account for the possible future timeframe and developments in the context of the existing structure of the energy systems (BP, 2021). Meanwhile, the second approach aims to facilitate “breaking free from the inherent inertia in the energy system” and bases scenarios in the future without relying on the current systems, data about consumption, and demand (BP, 2021: 11). These methods allow BP to determine major future milestones and goals that can impact the energy market and the standing of the company in it. Furthermore, the outcomes of different decisions related to these indicators are analyzed and thoroughly discussed in scenarios (BP, 2021). The scenarios calculate the impact of numerous circumstances on the energy sectors, including the growth of population, economy, technological developments, resource depletion, and government regulations (BP, 2021). Thus, the company analyzes internal and external factors that may affect the global energy system, the need for fuel and energy worldwide, and the company’s ability to reach its goals.
BP Core Strategists
The development of potential scenarios and formulation of the strategic plan is a complex collaborative effort. The BP strategy is developed by the company strategists, economists, senior management, and the board of directors (BP, 2021). In particular, the chief executive officer (CEO), chief financial officer (CFO), executive vice presidents (EVPs), and members of the board of directors have a direct impact on the strategic plan of the company. Nevertheless, the level of input from different parties may vary and relate to their areas of expertise. Furthermore, different actors are involved in separate steps of strategic planning and embody individual facets of the strategist role. Overall, the BP strategy is the result of a careful analysis of potential developments in the energy market developed by the key strategists in the organization.
BP Strategists and their Contributions to Strategic Planning
Role of the Board of Directors
The board of directors is an important governing body of a company. It supervises and directs the activities of an organization. According to Birindelli et al. (2018), the board of directors is “responsible for approving and overseeing the implementation of strategic goals, the system of governance and creating company culture” (p. 1). An effective board of directors is central to the success of a venture. The BP board of directors includes the company CEO, Bernard Looney, the CFO, Murray Auchincloss, and several independent non-executive directors (BP Global, 2021). It should be noted that although the CEO and CFO are members of the board, they act as critical strategists independently and as part of the board.
The 2021 BP annual report provides an in-depth description of the role of the board of directors in the company. It specifies that the BP board of directors fully supports and endorses the strategy of the company and considers it to be “in good faith” (p. 30). Furthermore, the report indicates that the board actively supports the adoption of environmental, social, and governance (ESG) practices, in particular, the Climate Action 100+ climate change resolution (BP, 2021). The board actively guides and participates in the assessment of the BP strategy, engages in risk management and mitigation, and monitors the plan implementation and performance (BP, 2021). Moreover, it is involved in the evaluation of company financial expenditures and approval of substantial investments (BP, 2021). Thus, it can be argued that the BP board of directors plays an active role in developing, monitoring, and evaluating the company’s strategic plan.
The board of directors is assigned a business strategy-oriented role and is concerned with aligning the company strategy with the context within which it currently operates as well as the developed company vision. According to Eisenstein (2019), the board can contribute to a venture having an effective platform for strategic decision-making. It assumes the role of a strategist by assisting in identifying company priorities, setting goals and objectives for a specific period, and allocating resources to support the implementation of strategic decisions (Eisenstein, 2019). The board participates in the ongoing evaluation of the strategy and calls for its amendment and adjustment if necessary (Eisenstein, 2019). Due to the indicated commitment to the company strategy, it can be argued that the quality of BP’s strategic decisions is adequate, and the capability-building efforts are sufficient (Birshan et al., 2014). The board has a specific role of providing industry-specific insights as well as enacting and enabling strategic decisions (Birshan et al., 2014). The board of directors adds value to the company plan and assumes the role of a key strategist by adding to the company vision and goals and evaluating the proposed strategy.
Role of the CEO
Strategy planning is a collaborative effort, and a CEO plays a crucial role in its development. CEO is a sensitive position that requires involvement in all stages of strategic planning, from formulation to evaluation and reassessment. They are expected to fulfill the leading managerial role in the company and engage in main operational management activities, including the development of a strategy (Dillen et al., 2018). CEOs are uniquely positioned to set the strategy and align it with the company vision while leading employees, representing the company to external stakeholders, and working with the board of directors (Dewar et al., 2022). A CEO is not expected to develop a strategy single-handedly but rather direct and evaluate the efforts of other strategists in the organization. Specifically, the CEO should coordinate the decision-making of EVPs and other senior managerial staff, as well as oversee resource assignment to ensure the development, execution, and continuous improvement of the strategy (Dewar et al., 2022). Nevertheless, the CEO can participate in the formulation of a strategic plan and offer insights to refine the strategy. Overall, the position of a CEO is that of a key strategist.
The BP CEO, Bernard Looney, can be considered a critical strategist in the organization. Notably, BP does not follow a CEO-centric organizational structure, allowing for a collaboration of different stakeholders on company strategy and providing them with an opportunity to fulfill a strategist role (Paroutis et al., 2016). According to the annual report for the fiscal year 2021, the board of directors delegates the management of the enterprise to the CEO (BP, 2021). Thus, the CEO acts as a representative of the board in their responsibility of overseeing the formulation and implementation of a strategic plan, including the strategy’s funding, supervising resource allocation, and risk management. Thus, the CEO considerably contributes to the strategy of the venture, acting as a leading strategist and ensuring the collaboration of other involved parties.
Role of the CFO
CFO should be considered a key actor in a strategy team. Finance managers are sometimes thought to hold non-strategy-related roles (Paroutis & Pettigrew, 2007). However, they are crucial to ensuring the proposed company strategy is financially viable and the enterprise can afford to implement it. CFOs unite the financial and strategic roles and are actively involved in the development of the strategic financial and overall business plan of the organization (Sandner et al., 2020). The duties of a CFO incorporate budgeting, planning, and managing the financial activities of an organization, including forecasting and preparing for potential expenditures or turnover (Birshan et al., 2014). It should be noted that these responsibilities do not necessarily fall under the umbrella of a strategist role. Nevertheless, resource allocation, the process of apportioning a company’s financial assets with the explicit purpose of reaching its strategic goals, fits both the roles of a CFO and a strategist (Birshan et al., 2014). Overall, the CFO can inform the company strategy and ensure it is effective.
The BP CFO, Murray Auchincloss, is instrumental to the success of the enterprise’s strategic plan. Specifically, the CFO bears the responsibility of evaluating the financial performance of a strategy, financial reporting, and oversight of finance, treasury, and trading (BP, 2021). In addition, CFO is involved in the evaluation of the financial risk associated with the implementation of a company strategy or undertaking specific strategic decisions. As a strategist, the CFO undertakes the resource allocation and reporting function and is responsible for the transparency of financial data. According to Sandner et al. (2020), the CFO supports other strategic team members, evaluating and refining the proposed strategy. Thus, the CFO contributes to the strategy of the company through their finance and budgeting expertise.
Role of the EVPs
Leadership in a business venture is not limited to the highest-ranking positions. EVPs are senior-level executives who report directly to the CEO and the board of directors. They have an executive function in a specific responsibility area in a company, for example, human resources, marketing, finance, and other fields. Thus, EVPs are tasked with planning and departmental monitoring operations, furthering the company’s performance, and developing strategic goals. For instance, human resource managers with executive functions are accountable for aligning the goals and values of the organization with the professional values of the employees while ensuring ethical treatment (Foote & Robinson, 1999). Thus, EVPs are tasked with aligning the goals and objectives of different departments with those of the company and informing the strategy through the examination of the strengths and weaknesses of their divisions.
BP employs numerous EVPs who contribute to the development of its strategy. In particular, EVPs participate in leadership team meetings and support the formulation of the strategic plan through risk management and monitoring activities (BP, 2021). The risk assessment informs the strategists on the longer-term risks and opportunities available to the organization (BP, 2021). In addition, it can be argued that the risk monitoring activities performed on the department level enrich the scenarios utilized for the development of the strategic plan. Therefore, the data gathered by EVPs in various departments advise the decisions made by other strategists in the company. Furthermore, based on their insight into the work of their divisions, EVPs, as strategists, can propose specific solutions for the overall strategy of the company. Therefore, EVPs significantly further and inform the strategy of BP.
Conclusion
In summary, a comprehensively formulated strategic plan can help a business venture achieve its goals and objectives and secure its position in the market. A strategy is a multifaceted collaborative effort of numerous strategists. In BP, EVPs, the CFO, the CEO, and the board of directors assume the role of strategists, contributing to the formulation, execution, evaluation, and continuous enhancement of the organization’s strategy. The BP strategy is developed with the use of the scenario-based approach and accounts for a variety of internal and external factors. After finalizing, the company strategy is aligned with its vision and presented to all stakeholders in order to promote transparency and clarify company decisions.
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