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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 organization 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 the coronavirus pandemic has influenced the decline of revenue by 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 gaining customer satisfaction by retaining strong ties with the customers.

Network: A study shows that a 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 the United States, Europe, Asia Pacific, and South America among many others).

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

Ethical issues: As discussed, British Petroleum faced a major threat due to various scandals that occurred from dishonest transactions with the workers. In addition to that, such controversies led to the development of a negative brand image which reflects their negligence towards the 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 threats from the external marketplace. British Petroleum operates in diverse markets however the inability to penetrate in the nonenergy sectors might affect its profit margin in the long run.

Opportunity

Overall infrastructural development: Due to a 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 alternative energy options that can help British Petroleum to improve its 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 its business operations in other sectors as well (such as tidal and wind energy). The global focus on 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: A 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 markets. Some of the closest competitors of British Petroleum are Chevron and Shell.

PESTLE Analysis

PESTLE analysis is considered an effective tool for the strategic planning of an organization. In addition to that, the pestle analysis includes political, economic, technological, 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 are considered to be an essential component associated with a business. The political factor in the United Kingdom is studied to be highly favorable for the brands operating in this market. However, Brexit has 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, a 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 the 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. The recent global recession has resulted in a 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, the economic stability of the United Kingdom is studied to be highly favorable due to rising consumer demand. On the other hand, an outbreak of a pandemic might cause a negative influence on the inflation rate of the business.

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

The 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 in the market. In this case, the concerned firm (British Petroleum) has analyzed their market demand or customer demand in the United Kingdom, which helped them to implement appropriate innovative strategies for the customization of products or services. As it has been observed that some of the oil distributing companies include oil flow through long pipelines hence, it has adapted with the utilization of various IT systems. This helps them with monitoring as well as controlling the 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 the official website might help them to address various issues present in the company. It has been observed that this brand is also focused on the 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, the legal factors in the United Kingdom have been observed to be highly favorable that further helping British Petroleum to execute its business operations effectively. On the other hand, the enactment of age discrimination as well as disability discrimination law has affected the entire business operations of this company in the UK. Similarly, an increase in the minimum wage rate and health & safety laws influenced strict employment regulations.

Environment factor: It has been observed that rising environmental concern among customers around the world has created a major impact on the entire oil industry. Furthermore, it can be analyzed that many businesses have emphasized environmental sustainability in order to maximize 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 on the demand for the company’s products or services. It has been studied that the concerned company (British Petroleum) was a nominee for the Greenwash Awards due to its ability to focus on alternative energy sources. Hence, it can be assumed that companies who are not focused on the root causes of climate change of any causes of environmental degradation, might witness a major downfall in their revenue generation as well as their overall brand image. In addition, companies those are operating in the oil industry of the United Kingdom should be concerned with environmental pollution.

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