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British Petroleum (BP)

Presentation: Global Competitive Strategy
by

doruntina hasani

on 25 November 2013

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Transcript of British Petroleum (BP)

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Governance
Stakeholder
Mapping
Porter’s generic strategies
- Cost Leadership:
Not much difference in the price in the oil industry
Crude oil price is determined in oil markets

- Differentiation:
Different products and services
British Petroleum (BP Plc.)
Ansoff Matrix BP
Market penetration
BP has a clear and focused strategy

Product Development
Best used when a product or service is in the maturity or decline stage

Market Development
Further development of the market

Diversification
Very risky strategy to ensure the future of BP
BCG Matrix BP
Internal Assessment
Financial assets
Dominant market position
Wide geographical presence
Brand recognition
TOWS using a SWOT matrix
Global Competitive Strategy


BP was established in 1901

British multinational oil and gas company headquartered in London, UK

Industry: Oil and gas

Operates in all areas of the oil and gas industry through the network of its subsidiaries and retail brands

Third-largest energy company

Fourth-largest company in the world

Brands: ARAL, ARCO, ampm, Castrol, Wild Bean Cafe

BP operates over 80 countries

Produced around 3.3 million barrels per day of oil equivalent

Around 20,700 service stations worldwide

Its largest division is BP America

BP owns 19.75% stake in the Russian oil major Rosneft

Market capitalization of £81.4 billion as of 6 July 2012
Porter Five Force Analysis of the industry
PESTLE Analysis
"
We have a fundamental belief that we can make a difference in the world"

To help the world meet its growing need for heat, light and mobility.
"We strive to do that by producing energy that is affordable, secure and does not damage the environment"

BP further defines its mission to be "
progressive, responsible, innovative, and performance driven"
Cash cows
-Right strategy to maintain profit

Stars
-There is still room for growth

Question Marks
- Expand into a new market by investing into sustainable and renewable energy sources

Dogs
-Constant strategic business unit
High access to inputs
High importance of volume to industry development and survival
Focus on low cost and economies of scale to compete in industry


High due to technological focus on alternative energy industry
High access to inputs
Strict government policy and requirements to operate in industry
Large economies of scale required to achieve cost leadership
Large capital requirements to set-up operations
Importance of ethical brand identity because of nature of market


Low bargaining power of buyers
Low buyer volume
Low buyer information
High importance of brand identity
Low availability of substitutes
In the oil and gas industry there is not much difference in products

Low- substitute to alternative energy


High level of rivalry

High exit barriers

High fixed costs

Slow industry growth
External Assessment
Opportunities and Threats:
Opportunities:

Increasing fuel/oil prices
Increasing demand for natural gas market
More oil well discoveries
Oil and gas exploration projects
Investment in alternative energy projects
Expand export market
Threats:

Government regulations
High Competition
Environment Regulations
Increasing Cost of Operations
Law suits relating to company’s ecological activities
High risks of refinery explosions
Analysis and choice of strategies for the future


Technology
Deep waters oil exploration
More discovery
Create better image
Vision/Mission statement

World energy markets are becoming more volatile due to the threat of geopolitical instability

Greater climate destabilization are leading governments to encourage more sustainable forms of energy

The global energy market is becoming more elastic due to continued oil demands from the thirds world countries
The economy is supported by the energy reserves in that country

Due substantial increase in the alternative energy source supply are expected to grow in the next few decades rapidly
The Kyoto Agreement, signed in 1992, has led to carbon funds (World Bank, 2004) and emission trading (EU, 2004) in Europe and around the world, which is becoming a legal requirement

New laws from governments

Higher EU Pollution standards

International Environment Organizations

More attention has been drawn towards the concerns on sustainability of the future, other forms of alternative energy such as solar and wind energy
Major driver of change in the global energy markets,
other ways of alternative energy

Mexican oil Spill- the cleanup methods have not been effective at cleaning up the mess

Invent new methods of cleaning up an oil spill
Current ratio

2012 = 1.43%
2011 = 1.15%
Inventory

2012 = 13,47
2011 = 14,63
Accounts Receivables:

2012= 25,98
2011= 27,93
Total asset turnover:
2012 = 1,80
2011 = 1,95
Debt Ratio
2012 = 0,60
2011 = 0,61
Interest Coverage
2012 = 17,7
2011 = 32.1
ROA
2012 = 1,19
2011 = 1,17
ROE
2012 = 10.02%
2011 = 24.46%
Ratios:
Net profit margin
2012 = 3,14%
2011 = 6%
ROCE ratio
2012 = 0,08
2011 = 0,19
P/B Ratio 10,65

Market book Ratio
Cash Flow
Income Statement
Internal Assessment
Strengths:
Weaknesses:
Negative consumer perception
Unstable oil industry
Cost of environmental hazards
Decline in Production

Create a more meticulous training program for new employee, thus, cutting the need to expatriate own personnel to the market


Reduce possibilities of decreases in the domestic demand through cutting costs by means of cutting cost of production mainly by R&D activities and marketing operations which would strengthen the company’s competitive position


Use advantage of first mover status in all of the areas of the business.
1. TOWS
Focused on the whole market and the external factors of the company

2. Ansoff Matrix
Investments in R&D and creating alternative energy sources to be the first in the market

3. BCG
Maintain profit and expand into new areas
Comparison
EXXON Mobil=1.01
0.94
Exxon Mobil =31.16
31.09
Exxon Mobil = 1.36
1.41
Exxon Mobil = 0.06 0.10
Exxon Mobil = 17.7
32.1
Exxon Mobil = 8.64% 7.62%
Exxon Mobil = 1.005% 0.94%
Exxon Mobile = 13,45%
12,40%
Exxon Mobil = 27,06%
26,58%

Vast logistics network
Low cost fields
Product processing
Change, corporate culture
Core competencies
WT
ST
Expand further the presence of the company on the market by expanding production using technology and licenses for new field’s development
WO
SO
Strength
Weakness
Opportunities
Threat
Swot Analysis
Financial assets
Dominant market position
Wide geographical presence
Brand recognition.
Negative consumer perception
Unstable oil industry
Recent oil leakage in Mexico
Increasing fuel/oil prices
Expansion of territories
Increasing demand for natural gas market
Government regulations
Environment Regulations
Increasing Cost of Operations
Lawsuits relating to company’s ecological activates
High risks of refinery explosions
Political
Economical
Barrier's of entry:
Buyer power:
Threat of Substitute:
Competitive Rivalry:
Bargaining power of Suppliers:
Value Chain
Value Chain
Crude shipment
Refining operations
Distribution
Marketing and sales
Conclusion
Visible growth after recent decline in revenue
Future looking strategy will lead to more development through developments in alternative energies
Who controls oil, controls the country
Presented by:

Doruntina Hasani
Azat Niyazov
Lyes Boufares
Legal / Environmental
Technology
Management issues
-Focus:
Exxon Mobil = 22.90
18.3
Full transcript