Strategic Performance Management Of British Petroleum Management Essay

strategicalal Performance commission Of British rock anoint Management EssayThis study explores the crude giant, British Petroleum also known as BP within the ball(a)-shaped embrocate sector and also it up break shine activities. Some distinguish external factors arouse been investigated which includes PESTEL, donkeywork, Competition compendium, Five forces model (Michael Porters). This study has formulated SMART objectives laterward putting the above factors into consideration and this has conduct to the creation of Strategic Plan, beat and Implementation of the formulated SMART objectives.1.2 troupe backgroundThe alliance British petroleum also known as BP was incorporated in 1909 thus as Anglo Persian fossil c over Company with military headquarters in capital of the United Kingdom, run in both upstream (petroleum exploration) and downstream ( crude oil refining, sales and foodstuffing) of the world oil sector, BP is one of the largest oil smart set in the world. The ac caller, BP has more than 21,400 service station worldwide and its sh ars is quoted on New York, London, Toronto, Paris, Tokyo, Amsterdam, Frankfurt and Zurich stock ex trades.The score of BP allow non be complete without making mention of the activities of Williams Knox DArcy, in the yr 1901 he was granted concession by Grand vizier (Shah) in todays Iran and as a result of inadequate fund he entered into an treaty with the British government which involved investing the sum of 2 million that led to the transfer of major shares to the government at the later end. In the mid-nineties British Petroleum acquired Amoco, Arco and Burmah-Castrol. BP has several retail dents which include Arco in US, BP connect, BP motivity centres, BP Express etc. BP is ranked as one of the top trio oil giants in the world with rung saturation of more than 97,600. Recently, the betray BP has been undergoing serious scrutiny and criticism as a result of it bygone and recent a ctivities which include Texas refinery ebullition in 2005, dumping of toxic moulder in some African countries, Prudhoe Bay oil spillage and the recent disconnectedness of Mexico oil spillage.This study will tenseness on the brand BP and how to manage brand name damaging crisis.2 External Analysis2.1 PESTEL factorsTable 1 PEST2.1 Political/LegalUK government s/ support for BPUK government support during the gulf of Mexico oil spillage crisisBP activities in the Gulf of Mexico has been banned but the UK government has given the company plow ahead to continue on with the search for oil and gas in the dusky waters off the coast of Britain.2.2 EconomicThe global recession has resulted into lessening in Profit of BP from the previous year.Replacement cost of return for year 2009 was $14 trillion with a return on average expectant employed of 11%Gained new re kickoff access in Iraq, Jordan, Egypt, Indonesia and offshore US.30% increase in lubricants income generated from core grocery, and market extension to India, China, Russia and Brazil. pixilated presence in China with upgraded Zhuhai 2 plant.Reported occupation change magnitude by 4% and unit and production costs reduced by 12%Refining availability for the year was 93% up approximately 5% in 2008Investment of $20 cardinal in task expansionIn Trinidad and Tobago BP recorded launch-to-production time of 18 month with Saronette insureDiscovery of Tiber in the gulf of Mexico2.3 Socio-CulturalEncouraging health and fitness unveiling of work environment where diversity and inclusion are revalued.Strengthening employee escortCreation of modernized farming initiative in Argentinaincrease 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 Technological alter operating management system (OMS)all(a) refineries and petrochemical plants are operating on OMSInvestment in key technology eq uivalent wind, bio-fuels, solar, hydrogen power and carbon capture and storageImproved form of transportation of products.3. SWOT AnalysisTable 2 SWOT Analysis4.1 Strengths ardent 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 scrap American life force in Argentina offered 63 young 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 by and by ExxonMobil.Ranked among the top three oil in the world investment company quoted on London stock exchangeThird quarter 2010 profit of $1.8 one thousand millionOperates through retail brands and subsidiaries (Amoco ARCO BP Express, BP Connect BP Travel Centre ampm Burmah Castrol etc)BP sign(a) a technical service contract with the Iraqi government in November 2009 to develop the Rumaila oilfie ld4.2 WeaknessesMoney macrocosm lost to clean up of gulf of MexicoUnstable oil price due to the recent recessionBP Texas refinery 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 use of all BP product in US during the gulf of Mexico crisisThe recent removal of Tony Harward as the chief operating officer of the company and being replaced by a US citizen4.3 OpportunitiesGovernment of UK endorsementsDiscovery of significant deep gas in Egypts West Nile DeltaAward exploration block in IndonesiaInvestment in Egypt and LibyaIncrease brand awarenessIncrease market shareCompletely new product launch ultimate 1.5 mixture customers by continuous product development and awarenessCompletely rebranding of company image as a result of the recent spillage in USExpansion into African countr iesContinuous research and development dodging e.g. $8 billion investment in research of alternative source of energy to oil including solar, wind, natural gas and hydrogen etc. ductile pricing 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 unify Energy Group LimitedAgreement to sell interests in Pan American Energy to Bridals CorpoarationPipelines corrosionsGlobal economic recessionRefineries and rig explosions possibility of tax increment in countries wherein BP curbEconomical/political change in countries in which BP operates.Legal action against company by US governmentOil price being determine by market forces supplant rates could affect companies profitabilityRemodification of oil products to reduce contaminationNew technology to substitute the usage of oilHigh focus on g reen fuelGovernment policy in countries where BP operates regarding their oil sector e.g. penalty for oil spillageTermination of lease allotment between Bp and foreign governmentsCompetition from Mobil, Chevron and type.3. External Analysis- Competitor take stockAs British Petroleum (BP) is situated in many antithetical global markets the following competitor audit will focus on BPs main competitors in the global oil industry.Competitors3.1.1 ExxonMobilExxonMobil is the foremost in overt traded petroleum and petro-chemical venture in the globe, it operations encompasses almost all countries of the world, it has incompatible brand names such as Exxon, Mobil and Esso, it is an establishment 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 located in Irving, Texas, United present with market capitalisation of $323.717 million, tax 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 Stock Exchange it has thirty heptad 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 Peter 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 st ood 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 16 refineries and operate in thirty three countries and it brand includes Texaco and Caltex.3.2.3 ConocoPhilipsConocoPhillips is a key global, integrated 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 Strat egiesFocusMiddle of the roadMiddle of the roadBP in futureBP PresentlyCost leadership DifferentiationPorter (1980) states that on that point are four types 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 using 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 scar 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 accident found on the testimonies of the parties involved.The chief operative on the Deepwater Horizon rig testified at a hearing held by the US coastguard, he said he was present at the opposition between BP manager and the crew from Transocean. That Transocean s chief driller was not comfortable with the prayer for the removal of the drilling mud from the well that day because he did not think the well 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 remainder 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 Communication (Grunig Hunt, 1984)A model of strategic communication is composed of ii components which are aimed to describe the evolution of stakeholders and publics. The contribution of this model is to boilersuit 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. in that location is a subtle difference, however, that helps to understand readiness of strategic communication. People are stakeholders because they are in a folk affected by decisions of an organization or if their decisions affect the organization (Grunig Hunt, 1984).There are internal and external stakeholders including employees, signalor of boards of BP Company, society, customers, media, universities, research centres, U.S. and U.K. governments, activist groups, etc versed Stakeholders External StakeholdersEmployees of BP MediaDirector of Boards British petroleum Public/SocietyCEO Advocate groupsUS and UK governments Customers of BPCompetitorsInvestorsResearch centresUniversitiesShareholdersStakeholder mapping of BP Company in strip of the oil spillage. Demirel. K, (2010)After the identification of the various stakeholders, the next stage sho uld be the determination of level of relationship i.e. the linkages.Stakeholders State regulators Govt. Regulators Board of directorsEmployees unions SuppliersEnabling linkages inputNormative linkages Functional linkagesCompetitors Association Political groups Professional societyBPCustomers Retailers Distributors outputDiffused 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. plowshare A has to do with the enabling linkages that is, stakeholders who have total halt and authority over BP company operations especially the government of U.S. eccentric 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 active during crisis situation.BP Public RelationsIn the outset days of oil spill, BP Company downplayed oil spill and CEO Tony Hayward utter 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 firstborn 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 impudenceIt involves seven specific steps to obtain public forgivenessVoluntarily involve that mistake has been made.Explain why the mistakes occurred (no matter how stupid).Show/say/ indorse contrition and sincere concern.Agree to take the step necessary to lay out the problem.Ask for help from the victims/accept counsel from the communityPromise (or in public commit to) never to let it happen again.Find a agency to pay (do penance)/alleviate/remediatePenitential 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 deposition and the company has really shown concern and the U.S. government has requested compensation for the cleanup position 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 elucidate how it plans to do so.Other models that can be use to earn stakeholders confidence and trustKey levers to building customer trust, Dr Aaron Sum Wei Wern and David Levi (2009).Building allow customer trust1. IntegrityBridge gap between scream and reality2. Competence 3. TransparencyKnow whats right for me Be skillful 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 loyalty 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 remove out of the mess as a result of the following sprightly/pr ompt responseAcceptance of blameTotal responsibility real solutions providedTook realistic approachInvolvement of top management team