Case Study on Corporate Business Strategy British Petroleum
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Introduction to Corporate Business
Corporate business strategy is an overall scope as well as direction of a business enterprise by means of which number of operations in business enterprise are carried out for the purpose to attain organizational aims and objectives (Ojiako, Maguire and Guo, 2009). It plays a very significant role in functioning of a business enterprise as through this they can easily create effective presence in international market place within stipulated period of time. Here, in this present report, case study of British Petroleum is going to be discussed. It is a multinational oil and gas company situated in London. In terms of market capitalization, it stands on the sixth position and carries out its functioning in more than 80 countries (Fassin and Buelens, 2011).
The report will lay focus on varied types of challenges which are being faced by the organization. Along with this, it represents a range of network related strategies that can be adopted by the management of British Petroleum in order to improve their presence in global market place. The statement will be followed by suggestions for developing performance culture to higher authorities of business enterprise.
Question One: Corporate Governance and Competitiveness
British Petroleum and Shell are very successful and renowned organizations in the field of oil, gas and petrochemical industry. There exists a range of methods by means of which they can address challenges faced by them with utmost effectiveness and efficiency. Some of them are mentioned as under:
Corporate governance and corporate social responsibility issues: This concept of corporate governance is based on the assumption that working of a company can be controlled with the help of numerous types of rules and regulations along with practices. In the similar manner, by following corporate social responsibility, a business enterprise can direct its actions towards safeguarding environment and provide benefit to the community so that it can develop in a much better way. In terms of corporate governance, range of challenges are being faced by British Petroleum and Shell as it is negatively influencing their overall functioning. Lack of adequate transparency, unequal treatment of existing workforce within place of work is some of issues which are taking place (Alon, Littrell and Chan, 2009). For the purpose of handling the issue of lack of transparency, administration of the organizations has formed severe and stern guiding principles. With the help of this, they are able to maintain constant check on the performance level of the employees so that any type of discrepancies can be eradicated at initial level.
On the contrary, it has been observed that Mobil and Total who are major rivals of BP and Shell have followed the concept of code of good practice in order to deal with the same issue. In this course of action, role of every single employee is clear and well defined with reduced chances of confusion (Getz and Lee, 2011). Likewise, in order to resolve the issue of unequal treatment in workforce, organizations such as BP and Shell have make best possible use of various discrimination acts. With the help of this, they carried out some modifications in their existing policies. However, their competitors have started training and counseling sessions for their employees as well as managers. In recent times, the major challenge which is being faced by both the companies is lack of adequate environmental norms (Jacopin and Fontrodona, 2009). For resolving this, they have directed their efforts in bringing out changes in regulations and creating employment opportunities as well as started many programs for the same. But on the other hand, their rivals have started a number of campaigns and drives by including college students and their employees so that awareness among them can be generated (Viswanathan and Dickson, 2007).
Improving performance and operational effectiveness: This is yet another challenge which needs to be undertaken by the management of Shell and BP for ensuring their effective performance and competitive edge. In order to enhance the operational effectiveness of organizations, number of changes can be carried out in prevailing culture as well as organizational aims and objectives. As per the research, it has been observed that personal culture has been followed in British Petroleum in which employees can effectively present their views and suggestions without any difficulty (Nijhof and Jeurissen, 2010). With the help of this, problems are settled at initial level which improves operational effectiveness and chances of conflicts and grievance reduces up to a great extent. In case of Shell, for the purpose of advancing performance and operational effectiveness, they have developed innovative and result oriented teams which carry out entire course of action by motivating the workforce so that betterment of organization takes place and excellence can be achieved within stipulated period of time (Høgevold, 2014). But on the flip side, it has been revealed that their major competitors such as Mobil and Total have formulated a range of training and development programs for their employees so that they can attain competitive edge and enhance their existing level of performance. So, it can be articulated that if senior executives follow programs for carrying out improvements in their workforce, then operational effectiveness as well as performance can be attained easily (Johnson, Scholes and Whittington, 2005).
Recruiting and retaining skilled workers: It is one of the major tasks which each and every business enterprise is facing in present state. According to the view of Moon 2010, both internal and external source of recruitment is being followed by administration of Shell and British Petroleum for the purpose of attracting candidates. Internal source of recruitment consists of taking on a person from within the business enterprise by means of transfer, promotion, demotion and so on. While on the other hand, in external source, attention of candidates is drawn from giving ads in newspapers and other forms of media. It is very crucial to retain workforce within workplace for longer period of time so that goals and objectives can be attained within set framework of time (Moon, 2010). In order to keep hold of skilled employees, both the organizations are providing adequate rewards to their staff on the basis of their performance.
This act as a motivating force and inspire employees to perform better as a result to this, employees can be retained in long run. Business enterprises can motivate employees by providing them monetary and non monetary rewards which have the capacity to satisfy their inner self (Turner and Gardiner, 2007). As per study conducted, it has been found that by means of providing training and development programs, existing workforce can also be retained. In the similar manner, management of Shell and British Petroleum has started open communication in which they can freely discuss their views and problems which provides assistance in creating sound and favorable working environment (Franz and Petersen, 2012). This enhances motivational level of employees and they remain with organizations for the longer period of time and provide their services. But on the contrary, their competitors such as Mobil and Total use fair appraisal technique along with employee engagement activities. By means of this, they involve the workforce in decision making process which makes them feel as an important part of the organization. In addition to this, they also make the best possible use of career advancement opportunities and provide feedbacks as per performance level so that they constantly know about their positive and negative points and take necessary actions for improving the same. Thus, they carry out their functioning for longer period of time (De Wit and Meyer, 2010).
Question Two: Network Level Strategies and Competitiveness
As per the view of many researchers, competitive environment of oil and gas companies such as British Petroleum is constantly changing. The basic reason behind occurrence of such type of situation is presence of large number of competitors in this particular field. In addition to this, huge amount of uncertainty and vagueness has also been found in oil and gas industry. However, these kinds of problems can be eradicated by managers by formulating suitable networking related strategies with utmost effectiveness and efficiency (Fassin and Buelens, 2011). This can be carried out by undertaking detailed and extensive examination of the environment. Apart from such type of limitations and problems, it is necessary for the management of business enterprise such as British Petroleum, to frame effectual strategies for the purpose of ensuring financial along with operational success of the organization in long run. In regard to this, in recent times, there exist two types of strategies which are being used by executives of BP for making sure adequate success in competitive as well as global environment. This enables business enterprises to easily supply and expand into new markets within the stipulated period of time. Strategic alliance, mergers and acquisitions are some of them (Nijhof and Jeurissen, 2010).
As per the point of view of Getz and Lee 2011, strategic alliance is a type of strategy in which two or more organizations can willingly share their available resources in order to carry out common benefit from entire course of action. This will enable and facilitate managers of British Petroleum for devising effective procedure for the same within the workplace. In the similar manner, they will be able to maximize adequate amount of profits as well as revenues as compared to their rivals in the field of oil and gas industry (Getz and Lee, 2011). But on the flip side, it has been found that it can create problem of resistance to change among the employees as a result to which rate of turnover among staff can rise up to a certain extent. According to the research done, it has been revealed that British Petroleum has made alliance with one of the famous oil manufacturing company of India, Reliance Industries in the year 2011 (BP and Reliance Commence Strategic Alliance for India, 2011). Likewise, for the purpose of thriving in Russia, the organization has allied with Roseneft for making smooth entry in Russian market place without posing any difficulty (ROSNEFT Strategic Alliance with BP, 2011).
This has proved advantageous for the company, because of the reason that presently India is emerging in the world map at a very fast pace and the rate of consumption of products such as oil, gas etc. is quite high. With the help of this, better quality products along with the range of goods and services can be presented to end users by means of which market share rises up to a great extent. In addition to this, strategic alliance will prove advantageous for managers of British Petroleum as they can easily examine competitive environment of a country (Johnson, Scholes and Whittington, 2005). However, it is to be critically evaluated that in order to attain huge amount of success from such type of strategic alliance it is necessary on the part of business enterprise to be capable enough so that goals and objectives of British Petroleum can be attained within stipulated period of time. With the help of this, financial along with operational success can be achieved in the long run. In case if any issues occurred between organizations, then distrust of ownership and control issues takes place (Viswanathan and Dickson, 2007).
Mergers and acquisition is yet another type of strategy that can be adopted by the administration of British Petroleum. In merger, two or more than two separate entities come together in order to develop a new one. In the similar manner, in case of acquisition, no formation of new company takes place. Instead, one firm purchases another one (Williams and Seguí-Mas, 2010). In regard to this, British Petroleum has merged with one of the most renowned US oil company Amoco in the year 2011 for making their presence strong in international market place. In recent times, both the corporations are known to be as BP Amoco (Business: The Company File BP and Amoco in oil mega-merger, 2011). This has proved to be of great use for both the business enterprises. This is due to the fact that it facilitates generation of more amounts of profit as well as revenue so that more research and development activities can be undertaken. In addition to this, it will also provides assistance to both the corporations in creating monopoly in the field of oil and gas industry (Letza and et.al., 2008).
As per the view of Moon 2010, it helps in development of strategies related to marketing and product as a result to which financial and operational success of firms is ensured in near future. But on the contrary, due to such kind of practices, many individuals have to lose their jobs. It has been found that because of the merger of British Petroleum and Amoco, they have made an official statement that they will cut jobs of around 6000 employees (Moon, 2010). This has laid negative influence on the productivity of the employees as it lowers down the morale of employees, which directly or indirectly affects the brand image of the organization. Moreover, this creates the feeling of discontentment in minds of existing workforce which might create obstacles in attainment of desired outcomes. In order to deal with aspects related to vagueness as well as risk, it is essential on the part of managers to devise effectual tactics. Senior executives of British Petroleum have successfully marked their presence on the global platform and maximized profits and marked excellence in enhanced sales as compared to its competitors (Ojiako, Maguire and Guo, 2009).
Question Three: Creating High Performance Culture
In recent times, it has been observed that for the purpose of attaining competitive advantage over their rivals in long run, it is very essential for a business enterprise to develop high performance culture. This is because of the reason that this provides assistance in achieving organizational aims and objectives within stipulated period of time with utmost effectiveness and efficiency (Høgevold, 2014). With an aim to make British Petroleum simpler and one of the most efficient organization, it is required on side of its chairman, Carl-Henric Svanberg to make best possible use of a variety of management as well as leadership abilities. This will prove advantageous for enhancing the overall behavior of the existing workforce along with providing assistance in development of high performance culture (Alon, Littrell and Chan, 2009).
As per the research conducted, it has been stated that by means of following such type of skills, objectives of business enterprise can be fulfilled which has been derived by their chairman in their annual letter in effective and efficient way. In the similar manner, needs and wants of potential clientele can also be satisfied without posing any difficulty as a result to which they can produce goods and services as per the taste and preference of end users (Nijhof and Jeurissen, 2010). Some of the identified sets of skills which can be appropriately used by the chairman of British Petroleum are mentioned as under:
Team building skills: This specific type of capability is of utmost importance for developing a suitable team within place of work. With the help of following team building approach, business enterprise has marked global presence at international market place by senior executives. This is because of the reason that by means of this, existing team of employees employed at British Petroleum makes joint efforts towards accomplishment of given set of work (Høgevold, 2014). In addition to this, it provides assistance to manager in developing high performance culture at place of work. But on the flip side, it creates severe issues in terms of unequal participation from some of the employees; it consumes more time as well as efforts. Last but not the least, it creates conflicts among personnel having different point of view and suggestions (De Wit and Meyer, 2010).
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Communication skills: According to point of view of many authors, it has been revealed that by means of adequate communication skills, goals and objectives of business enterprise such as British Petroleum can be attained within stipulated period of time. This is due to the fact that through this trait, message can be conveyed in a much easy way among the team members and all levels of managerial hierarchy (Williams and Seguí-Mas, 2010). This proves beneficial in making workers well informed regarding different set of activities that need to be undertaken and accomplished in set framework of time. This also generated feedback on the basis of which changes can be made without posing any difficulty. With the help of all such activities, the chairman of British Petroleum can easily manage entire course of action and take actions based on that. But on the contrary, it does not contain any proof of message, due to which it is not considered suitable for future references (Getz and Lee, 2011).
Problem solving skills: In order to develop high performance culture in British Petroleum, it is significant to solve queries as well as problems which are faced by employees during carrying out their set of duties and responsibilities. As per the view of Cohen 2010, in case if existing workforce is well informed about the areas in which they face severe problems, they take necessary steps for resolving the same (Cohen, 2010). It is the first and foremost responsibility of management of British Petroleum to solve problems and issues at initial level so that smooth functioning of work can be carried out. But on the other hand, there exists range of factors which create hurdles in forming adequate solution of problems such as cultural difference, emotional and environmental factors (Fassin and Buelens, 2011).
Adequate interpersonal skills: As per the survey, it has been observed that a good interpersonal skill provides assistance in integration of work done by an individual with utmost effectiveness and efficiency. In the similar manner, it proves to be of great use in improving the productivity and profitability ratio of business enterprise such as British Petroleum in the long run (Turner and Gardiner, 2007). Moreover, range of problems from which professionals are suffering can be identified at initial level and on the basis of them, a number of solutions are provided for resolving the same. This proves beneficial in maintaining adequate high performance culture within place of work. But on the flip side, it is very crucial to keep a strict check on the usage of language in order to achieve desired outcomes. In case if a conflict does not resolve effectively then this set of skills will prove to be of no use (Letza and et.al., 2008).
Capabilities to lead in democratic manner: According to the views of many researchers, it has been observed that by means of this particular type of leadership skill, employees of a business enterprise are presented with power in which they can freely present their views and suggestions in front of top management. This style of leadership can prove beneficial for the betterment of British Petroleum for longer period of time. In the similar manner, it leads to innovative and creative solutions to any of work based problems and existing workforce can be motivated to perform better (Jacopin and Fontrodona, 2009). With the help of this, sales related condition and productivity can be raised up to a great extent. But it is to be critically evaluated that such type of democracy can even lead to disastrous results. This is because of the reason that more amount of freedom can reduce the impact and power level of higher authorities. Likewise, it is quite time consuming process as lot of views and opinions can delay the decision making process which acts as a source of frustration to impatient management (Ojiako, Maguire and Guo, 2009).
Time management skill: For the purpose of developing high performance culture within British Petroleum, it is evident to undertake adequate time management skills. According to Alon, Littrell and Chan 2009, by means of this, administration will be able to manage work as per availability of time so that expected results can be attained within stipulated period of time (Alon, Littrell and Chan, 2009). In the similar manner, entire course can be prioritized which leads to flexibility of work and it can be accomplished as per planning. But on the contrary, it is revealed that in case if things do not complete in the set framework of time, then other related activities undertaken by BP will also get affected severely (Viswanathan and Dickson, 2007).
By summing up facts from above mentioned report, it can be rightly articulated that by framing appropriate global corporate strategy, a business enterprise such as British Petroleum has to mark its presence on global platform. For this, there are ranges of issues along with challenges which need to be dealt with conerening CSR (Corporate social responsibility), Corporate governance, improving performance of workforce along with recruiting and retaining staff for longer period of time so that positive working environment can be developed. In order to expand existing business at international level, management of British Petroleum can take assistance from a number of network level strategies such as strategic alliance and merger and acquisition. For improving the performance of existing workforce of BP, various types of management as well as leadership related skills can be used.
Arieff, A., 2010. Global Economic Crisis: Impact on Sub-Saharan Africa and Global Policy Responses. DIANE Publishing.
Brink, A., 2011. Corporate Governance and Business Ethics. Springer Science and Business Media.
Cohen, S. L., 2010. Effective global leadership requires a global mindset. Industrial and Commercial Training.
De Wit, B. and Meyer, R. 2010. Strategy Process, Content, and Context International Perspective. 4th ed. Thomson Learning.
Fassin, Y. and Buelens, M., 2011. The hypocrisy-sincerity continuum in corporate communication and decision making: A model of corporate social responsibility and business ethics practices. Management Decision.
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