Company overview

British petroleum (BP) is one of the mammothst muscularity companies dealing in fuel for transportation, heftiness for heat and light, retail work and petroleum products. The fel gloomyships international headquarters is in London. The confederation has operations in to a greater extent than 100 countries and employs over 96,000 people. The political party has products beneath the BP, Castrol, Arco, am/pm, and Wild Bean Cafe brand (BPplc, ab emerge(predicate) Bp, 2009). The union operates under two major business segments exploration and production, refining and selling and BP preference muscularity.The corporation basic entirelyy finds, extract, move oil and gas. The actroupe similarly makes fuels and products, sells fuels and products as vigorous as generating low carbon nothing in a responsible way. The conjunction operates in six continents South America, jointure America, Europe, Australasia, Asia and Africa (Vault. com, 2009). BP is also well known for its innovative technology which tendencys at providing energy to meet the customers demand by means of efficient products. Investing in low carbon energy is also another option that the caller-out is exploring (BPplc, About Bp, 2009). Strategic analyzeThe strategic back toothvas of a corporation is an eight clapperclaw transition that generally encompasses a holistic analysis of the familiarity. The basic aim in strategic audit is to establish the flow rate position which leave behind help the familiarity chart the way forward. A strategic audit helps the caller-out to formulate strategies and select the outflank strategic alternative(s) for executing. The first footfall is the analysis of the current situation. This involves the audit of the current murder and strategic locating. legitimate carrying out is evaluated in terms of profit force, market sh are, and return on investment.Strategic posture looks at the mission, objectives, strategies and policies (BPplc, 20 09 Strategy presentation, 2009). The second step is a look at the corporate governance. This authority analysis of the board of directors and top management in terms of their structure, names and contribution to the company S send wordning the extraneous environment for opportunities and threats is the next step of a strategic audit. Under this stage, the company looks at the societal environment, task environment and finally listing all the supra factors.The next step is the analysis of the internal environment i. e. strengths and weaknesses. Here, the corporate structure, culture, resources (marketing, finance, research and development, operations and logistics, human resource management and information systems) is looked into. A synopsis of these factors is then prepared (BPplc, 2009 Strategy presentation, 2009). After aspect at the external and internal environments, the company then analyses its strengths, weaknesses, opportunities and threats (SWOT).These are then linked to the companys mission and objectives to establish any relevance. The next step of the strategic audit is the analysis of the strategic alternatives in entrap to select the best strategy (ies) to be recommended. The recommendation should be justified by looking for at the potential, changes and impacts of the strategy. After making the recommendations, the next step is the implementation of the proposed strategy (ies). The implementation will include assigning duties on who is to develop these strategies. The fiscal aspect and operating(a) procedures should be analyzed.The last step of the strategic audit is the evaluation and command. Evaluation and control involves a look at the current information system i. e. whether it can provide sufficient feedback and whether there are enough controls (BPplc, 2009 Strategy presentation, 2009). Strategic Alternatives In formulating the best strategic alternatives, the company has to consider the economic, socio-cultural, political-legal, technological and financial strengths and challenges facing the company. Economic environment This involves looking at the economic environment.The company operates in an industry that has other large companies e. g. Shell, Chevron, Exxon Mobil, Total and other smaller companies. All these companies return the resources and technical ability to compete at the same level as BP Plc. This is why the company has foc employ on cost reducing by dint of rates like provide reduction and efficient production. The company has also focused on alternative energy e. g. solar and wind. This is as a result of the challenging operating environment where there has been a obtaining shift to green energy that has minimal pollution.In an industry faced with procession production costs, the company has been on track by focusing on means and ways of decrease their costs. The focus has been on lessen the do of staff and reducing the number of senior positions in the company by 20%. This strategy has borne proceeds with the flattening of the cost curve of the company while those of the competitors keep on rising. The companys focus on unsanded technologies has resulted into improved production capacity. In fact the overall production geld for all the major companies has been declining. BP Plc.has defied this trend by increasing its production in the year 2007-2008. The technology used by the company includes Advanced Gas Injection and Water floodlight technologies that have en sufficientd the company to push the limits of the reservoirs. The drop in oil prices means declining revenues. In order to increase revenues, the company has focused on reducing the performance gap by restoring revenues in areas like Toledo, improving bring optimization in petrochemical and marketing. The company area of focus for petrochemicals is Asia where there is rising demand. The company has also established value arrange for its fuel production.Value chains are those activities that crea te value from the publish to the final delivery to the consumer. This has been achieved through integrated supply and trading which has lead to much revenues. In a bid to increase its oil militia, the company has also partnered with TNK of Russia. The compact has resulted in 30% increase in production. Socio-cultural The company has tried to endear itself to the connection in which it operates. BP achieves this through training and employing topical anaesthetic staff at all levels. The aim here is to be a local company by creating partnerships with the local connection.BP strategic aim is to reduce the levels of resistance to its operations by avoiding cultural conflicts as well as social effects. The company has entered into partnerships with the local community in terms of education, encouraging enterprise, fostering good governance, partnership in public health, access to energy, giving and volunteering, safeguarding human rights, as well as development through community c ase studies. All these activities are targeted at enhancing and fostering the relationship between the company and all the community in which it operates thus reducing conflicts between the community and the company.Political-legal Some of the challenges that the company could face are the political/ legal. This is because the company has operations in galore(postnominal) countries that whitethorn be subject to political instability. To mitigate this, the company has make partnerships with local companies and thus reduces resistance towards the company whence the company is able to increase its operations and revenues. Rigid legal regimes concerning the operations of foreign companies may negatively impact the operations of the company. The company has reduced this by good-natured in partnerships with local companies.Taxation and licensing may vary from country to country. This may have negative impacts on the companys operations. Exploration and production rights may not be gr anted to the company. BP has overcome this challenge by partnering with the governments of respective(prenominal) countries through agreements. Technological In a bid to improve its operations and increase productivity, the company has adopted innovative technologies. Some of these technologies include the promising water which uses new inter-well polymer treatment which ultimately improves water flood Recovery.The ships company has focused on technology to come up with innovative approaches that can increase production as well as solve energy challenges Financial information BP plc has been able to grow its net income by 39% to $26. 2 jillion which is the highest growth rate registered by major energy companies. Cash flow from operations also grew 54% to $ 38. 1 billion on a year on year percentage basis. The company was also the only super major to register growth in reported volumes in new reserves. The company registered a growth of 1% on year on year percentage basis. Apart from operations, the company utilizes debt to finance its activities.The debt is at the rate of 20-30%. All these financial data indicates that the company is focused on growth by efficiently using its hard cash resources to generate more sales and improve on the shareholders wealth by engaging in share buy backs. Recommended strategy Based on the analysis of all the above factors, some of the available strategies are damage reduction strategies Alternative energy by diversification Focus on growing markets growth Creating value on existing products Partnership to grow Technology leadership Continuous improvement These strategies can be in general classified into two directional i.e. growth and retrenchment strategies. The company can utilize the growth strategies in its upstream segment (exploration and production) and retrenchment strategies on its down stream business (refining, convenience, refining) (Wheelen, 2006) Implementation of the strategy Strategy implementatio n involves all the activities and choices that are required for the execution of a strategy. The implementation process basically deciding who is to carry out the end what must be done and how are the selected people selected to carry out the strategic plan going to do it (Wheelen, 2006).These strategies are normally executed by several(a) heads of business segments subordinated by other employees within the business segments. This has been done through budget allocations, programs that indicate the age frame in which the various strategies admit to be implemented and the use of procedures e. g. the Operating Management System that covers employee capabilities to insecurity assessment. Some of the programs used by the company are those of closing the performance gap which runs from 2008 to 2011, and the reduction of the number of employees in refining and marketing from mid(prenominal) 2007 to the end of 2009 by 3,500.After deciding on who and what must be done, the company mus t decide on how the strategy is going to be implemented. How a strategy is to be implemented might involve developing new organizational structure. For BP plc, to implement some of its strategies, the company has decided to eliminate certain(a) senior and junior positions. Evaluation and control This is the process by which a company can monitor its corporate activities and performance results in order to compare the echt performance with the desired performance. Evaluation and control provides a feedback mechanism where corrective measures can be taken where necessary (Wheelen, 2006)Evaluation and control can be summarized into the following 5 steps Determine what to measure Establish standards of performance Measure actual performance Compare actual performance with the standards Take corrective action The company has set out plans to reduce costs and improve on efficiency on its operations. The company wants to grow its upstream business (exploration and production) while at the same duration turning around its downstream business. Upstream business growth is metrical by growth in reserves, increased replacement percentage, and getting more out of reservoirs.Downstream business is to be improved through cost reduction by restructuring the companys operations e. g. by downsizing and recapitalizations change bottom-line, high reserve replacement percentages, efficient operations, growth in reserves are some of the standards of performance that the company uses to gauge performance. Actual performance is measured at specified times e. g. for BP plc, restoring revenues from refining performance, improved supply optimization and margin capture in petrochemical and marketing has a time frame of 2008-2011The comparison of actual performance against standard performance has to be done in order to establish the current position for mannikin in 2008 the production grew 1. 5% while the replacement reserve was 136% which was more than the minimum 100% replac ement. If the actual performance does not match the pass judgment results, then corrective action needs to be taken. An example is the takings of capacities in Texas City so as to boost refining and consequently revenues. References BPplc. (2009, March 3rd). 2009 Strategy presentation. Retrieved April 15th, 2009, from Bp. com http//www. bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/I/IC_bp_strategy_presentation_march_2009_script. pdf BPplc. (2009, March 3rd). About Bp. Retrieved April 15th, 2009, from Bp. com http//www. bp. com/marketingsection. do? categoryId=2&contentId=7013628 Vault. com. (2009, April 14th). Indusrty Overview. Oil and Gas. Retrieved April 15th, 2009, from Vault. com http//www. vault. com/nr/main_article_detail. jsp? article_id=22843159&cat_id=0&ht_type=7. Wheelen, J. D. (2006). Essentials of Strategic Mnagement. New Jersey scholar Hall. (BPplc, 2009 Strategy presentation, 2009)