SWOT Analysis for BP
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| Subject | Strategic Analysis |
| Academic Level | Undergraduate |
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| Length | 9 pages |
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Introduction
BP is one of the largest oil and gas companies in the world. The company employs nearly 84,000 people in its operations in a total of 80 countries Europe, Asia, the Pacific, Africa, and North and South America (MarketLine, 2014). In 2013, the company reported profits of $23.5 billion, and produced, on average, 3.2 million barrels of oil per day (BP, 2014). These statistics alone indicate the size and strength of BP. However, in recent years, the company has received a great deal of negative attention due to the Deep Water Horizon oil spill in the Gulf of Mexico that resulted in the deaths of 11 workers and the release of millions of barrels of oil that negatively impacted wildlife and a variety of industries that rely directly and indirectly on the Gulf of Mexico, including fishing industries and tourism (Spencer & Fitzgerald, 2013). Four years after the oil spill, legal claims against the company continue as BP continues to attempt to reduce its overall financial burden from the event (Calkins, 2014).
It is the company’s size, dominance in the oil and gas industry, and the way in which its image has been impacted since the Deep Water Horizon oil spill that make BP worthy of an analysis of its internal operations, as well as the impact of the external environment on its operations and future strategies. While BP may seem strong financially, there are other concerns that the company must consider when determining its strategic future. The purpose of this report is to evaluate BP with regards to its internal strengths and weaknesses, as well as the external opportunities and threats facing the company. Based on the evaluation of the company’s strengths, weaknesses, opportunities, and threats, recommendations are provided with regards to the strategic direction that BP should take in the future in order to remain strong financially, operationally, and socially.
SWOT Analysis
In order to understand the internal and external issues facing BP, a SWOT analysis is provided in which the company’s strengths and weaknesses and the larger opportunities and threats from the external oil and gas industry are examined (Ferrell & Hartline, 2012). Table 1 shows the strengths, weaknesses, opportunities, and threats for BP. In addition, each of the factors are numbered in order of importance to the company and its future strategic direction.
Table 1: SWOT Analysis for BP
Strengths Weaknesses
1. Geographic diversity
2. Financial strength
3. Vertical integration
4. Research and development activities 1. Deep Water Horizon oil spill
2. Maintenance of its brand image
Opportunities Threats
1. Reduced assets and operations
2. Involvement with Rosneft
3. New oil reserves in Brazil 1. Stagnate growth in oil and gas industry
2. Environmental regulations
Strengths
The most important strength in BP’s operations is its geographic diversity. The company has operations in 80 countries. At the same time, the company’s geographic diversity includes operations in countries that are part of the organization for Economic Co-operation and Development (OECD) and non-OECD countries (MarketLine, 2014). This means that the company operates in countries with varied levels of economic and political development, which provides hedges for the company should economic or political issues arise in one area that might negatively impact oil exploration and production, and is the reason why it is the most important strength.
The second most important strength of the company is its financial strength. In 2013, BP reported revenues of $379 billion and net profits of $23.5 billion (MarketLine, 2014). In addition, since 2009, the company’s revenues have increased from $239 billion to the current $379 billion (MarketLine, 2013). Furthermore, the company currently has about $22.5 billion in actual cash on hand available, which is an increase from the $14 billion of cash on hand in 2012 (BP, 2014). BP clearly has the financial reserves on top of new revenues and profits to weather short-term and even medium-term problems.
The third most important strength of BP is its vertical integration. The company is engaged in all areas of oil and gas operations, from exploration of oil and natural gas, to field development and production. BP also operates pipelines, processing facilities, and export terminals. The company also operates oil refineries, transportation activities, manufacturing facilities, and is involved in wholesale and retail services (MarketLine, 2014). BP controls and operates much of its supply chain, which gives the company a great deal of power within the oil and gas industry.
The final strength of BP is its research and development activities. BP invests hundreds of millions of dollars each year in research and development activities related to petroleum and natural gas extraction, safety, computer technology, and consumer and business oils and lubricants (MarketLine, 2014). The company’s continued research and development activities allows it to operate on the cutting edge of technology and to develop new products for its customers. However, this is the least important strength because it is a part of BP that most consumers and the public generally do not see or consider on a daily basis.
Weaknesses
The most important weakness facing BP at the present time continues to be the Deep Water Horizon oil spill. The company continues to face fallout from the oil spill that resulted in 4.9 million barrels of oil being released into the Gulf of Mexico (MarketLine, 2014). The Deep Water Horizon Oil Spill came on the heels of other safety issues for the company, including an explosion at a BP refinery in 2005 that resulted in the deaths of 15 workers and the release of 250,000 gallons of oil from a BP pipeline in Alaska due to corrosion of the pipeline (Tharoor, 2010). While the company has already paid out $28 billion for response and cleanup of the spill, the company faces the potential for billions of dollars more than the $9.2 billion it estimated for payments to people impacted by the spills, and an additional $18 billion in pollution fines from the United States Government (Calkins, 2014).
The second most important weakness facing BP at the present time is related to the Deep Water Horizon oil spill, which is the way in which the company has managed its brand image in the aftermath of the spill. BP has drawn criticism from the public, government officials, and even within the oil industry for what seemed to be arrogant and out of touch responses to the impact of the Deep Water Horizon oil spill. Furthermore, while the company has argued that it is environmentally conscious and operates with a focus on environmental safety, the company’s actual safety record indicates less than stellar performance in that regard (Balmer, 2010).
Opportunities
The most important opportunity facing BP is that the company has sold off many of its assets in recent years that were not related to its areas of strength. For example, BP sold off liquefied petroleum gas bottle and tank operations in several parts of the world, as well as other non-refinery wholesale business operations (MarketLine, 2014). Through its own internal decision to sell off businesses not related to core exploration and production activities, BP has an opportunity to take advantage of the areas of the oil and gas industry that are strong, and the areas that contribute the most to BP’s revenues, which will be of great importance in the coming years and makes this the company’s most important opportunity.
The second most important opportunity for BP involves its involvement with Rosneft, the largest oil company in Russia and the largest publicly traded oil company in the world in terms of actual production volume (BP, 2014). In 2013, BP completed deals with Rosneft that resulted in a 19.75% ownership stake in the Russian oil company. Table 2 shows that in 2013, BP’s share of net income from Rosneft was $2.058 billion. While revenues of $2 billion in a single year may seem that great to a company with revenues approaching $400 million, this investment provides BP with a source of income, as well as a greater ability to take advantage of oil reserves in Russia.
Table 2: Income Statement for BP Ownership in Rosneft (BP, 2014)
The third most important opportunity for BP involves deep water oil reserves found off the coast of Brazil (Caldeira, 2014). The discovery of deep water oil reserves off the country’s coast presents a potentially important opportunity for a company that is attempting to recover from its deep water oil spill in the United States. As is shown in Figure 1, BP is already the largest deep water extractor of oil and gas products of any of the major oil and gas companies.
Figure 1: Deep Water Oil and Gas Extraction by Company (Caldeira, 2014)
Threats
The most important threat facing BP is the stagnate growth and projected growth in the oil and gas industry around the world. Table 2 shows that between 2008 and 2012, the overall growth in the market value of the global oil and gas industry was only 1.7%. On a yearly basis, major declines and increases in market value occurred that made for a market filled with turmoil (MarketLine, 2013). This is the most important threat because the company has divested itself of other areas of operations, so it depends mostly on growth in the oil and gas industry for future revenues and profits.
Table 3: Value of Global Oil and Gas Market (in billions) (MarketLine, 2013)
Unfortunately, through 2017, the value of the oil and gas market around the world is not expected to increase. In fact, as is shown in Table 4, the overall increase in the global oil and gas market through 2017 is only expected to be 1.5%. BP may face difficulty in achieving high rates of revenues and profits as it focuses on its core petroleum and gas extraction and production operations.
Table 4: Projected Global Oil and Gas Industry Value (in billions) (MarketLine, 2013)
The second most important threat to BP is new environmental regulations around the world. Existing environmental regulations in the European Union call for a 20% reduction in carbon dioxide emissions by 2020 (MarketLine, 2014). If the United States, European Union, and other nations around the world impose additional environmental regulations and restrictions, the result to BP could be billions of dollars in required changes in technology and operations, as well as the potential for billions of dollars in fines. In 2013, the company paid nearly $2 million in fines for only two violations of environmental regulations in the United States (HSE Fines and Penalties, 2014). As more stringent environmental regulations take effect, the company could indeed pay large sums of money to a variety of governments around the world on an annual basis.
Strategic Recommendations
While BP is strong financially and operationally, it must do more to improve its brand image and to demonstrate a desire to operate with a concern for the environment. The strategic direction for the company must be to demonstrate honesty and humility regarding the impact of the company on the environment. At the same time, the company must be aware that the future strength of the oil and gas industry may be question. While the oil and gas industry is expected to experience some increase in value in the short-term, that increase will be very small. In this regard, BP needs to consider investments in more so-called “green” sources of energy and “green” technologies. Based on the strategic direction that has been outlined for the company, three key recommendations are put forth. These recommendations are discussed in order of their importance.
The first and most important recommendation for BP for the strategic direction of the company is to focus on creating an image of the company and its executives that is based on humility and honesty with regards to its environmental record. At the present time, the company is viewed as being arrogant and overly confident of its environmental record (Balmer, 2010). While the company has continued to brag about its concern for the environment, it continues to face claims of not only harming the environment, but attempting to avoid paying out claims to people who have been harmed as a result of BP’s operations. BP continues to fight some civil claims from the Deep Water Horizon oil spill in order to attempt to reduce its costs (Calkins, 2014).
BP’s advertising and marketing should not demonstrate wishful thinking about how the company protects the environment. Instead, the company’s advertising, interaction with consumers, and even dealings with continued claims from the Deep Water Horizon oil spill should demonstrate a recognition that the company needs to improve its environmental record (Balmer, 2010). At the same time, the company needs to actually take actions to improve its environmental and safety record. The company must demonstrate that environmental and employee safety is as important, if not more important, than its revenues and profits.
The second most important recommendation for BP for its strategic direction is to invest more resources in the development and use of green technologies. The move from environmental regulators, the public, and even the industry is toward green technologies. BP must take advantage of the trend toward the use of green sources of energy. The projected growth in the global oil and gas industry of only 1.5% through 2017 does raise concerns that BP may be harmed if it continues to only focus on oil and gas. The company has divested some of its other operations to focus almost exclusively on the extraction and production of oil and gas. With nearly stagnate growth projected for the industry, BP can only remain financially strong over the longer-term by focusing on new areas of energy production.
At the same time, focusing resources and efforts on non-fossil fuel sources of energy will be another way for the company to demonstrate a true desire to protect the environment. BP is in a position in which it needs to show that it is actually concerned about the environment. Investing large sums of capital in the development and actual use of green technologies and green energies would serve as a way for the company to acknowledge its own past, and a desire to improve its operations for the future. By using this second recommendation with the first recommendation, BP could truly become a company that is a leader in protecting the environment in the oil and gas industry, while also finding new ways to generate revenues that might be lost with any future declines in the overall value of the oil and gas industry.
The third and final recommendation that is made for BP is to continue to seek out opportunities for new oil exploration such as those that have become available in Brazil. The reason that this recommendation is the least important of the three recommendations because it should be part of BP’s current operations. This recommendation is about BP being able to maintain its current oil and gas exploration leadership in the oil and gas industry. While finding new sources of oil and gas are important, this cannot be the primary concern for the company at the present time. Instead, this must be secondary to the more pressing issue of changing the company’s image and demonstrating a true desire to change its environmental record.
Conclusion
The purpose of this report was to evaluate BP with regards to its internal strengths and weaknesses, as well as the external opportunities and threats facing the company in order to make key recommendations for the company’s future strategic direction. BP must overcome the negative image that it has created from a record of environmental and regulatory problems in the past few years. This is likely to be particularly important given the projected stagnate growth in the oil and gas industry through 2017. The company needs to focus on creating an image of humility and honesty about its environmental impact, rather than make claims about its environmental responsibility that seem to be overstated. In addition, BP needs to make a true effort at developing and using green technologies and non-fossil fuel sources of energy as a mean of demonstrating its desire to protect the environment, as well as a means of overcoming the stagnate growth in the global oil and gas industry.
On a smaller level, BP should focus on new deep water oil reserves off the coast of Brazil. However, the focus on these new reserves cannot be more important than the focus on changing the company’s image. Otherwise, BP may begin to experience declines in its own revenues and profits that will harm its financial strength.
References
Balmer, J. M. (2010). The BP Deepwater Horizon débâcle and corporate brand exuberance.
Journal of Brand Management, 18(2), 97-104.
BP. (2014). Annual Report and Form 20F. Retrieved from:
http://www.bp.com/content/dam/bp/pdf/investors/BP_Annual_Report_and_Form_20F_2013.pdf.
Caldeira, R. (2014). British Petroleum (Bp) Expansion In Brazil And Marketing Opportunities:
How BP Can Develop Its Portfolio In The Brazilian Crude Oil Market? Retrieved from: http://www.dundee.ac.uk/cepmlp/gateway/files.php?file=cepmlp_car14_52_174182542.pdf.
Calkins, L. B. (2014). BP Seeking Payment Reversals May Reignite Damages Fight. Retrieved
from http://www.bloomberg.com/news/2014-10-06/bp-seeking-payment-reversals-may-reignite-damages-fight.html.
Ferrell, O. C. & Hartline, M. (2012). Marketing Strategy. Belmont, CA: Cengage Learning.
HSE Fines and Penalties. (2014). Retrieved from:
http://www.bp.com/en/global/corporate/sustainability/bp-and-sustainability/bp-in-figures/hse-fines-and-penalties.html.
MarketLine. (2013). Global Oil & Gas. New York: MarketLine, Inc.
MarketLine. (2014). BP Plc. New York: MarketLine, Inc.
Spencer, D. C., & Fitzgerald, A. (2013). Three ecologies, transversality and victimization: the
case of the British Petroleum oil spill. Crime, law and social change, 59(2), 209-223.
Tharoor, I. (2010). A Brief History of BP. Retrieved from:
http://content.time.com/time/magazine/article/0,9171,1993882,00.html.
BP is one of the largest oil and gas companies in the world. The company employs nearly 84,000 people in its operations in a total of 80 countries Europe, Asia, the Pacific, Africa, and North and South America (MarketLine, 2014). In 2013, the company reported profits of $23.5 billion, and produced, on average, 3.2 million barrels of oil per day (BP, 2014). These statistics alone indicate the size and strength of BP. However, in recent years, the company has received a great deal of negative attention due to the Deep Water Horizon oil spill in the Gulf of Mexico that resulted in the deaths of 11 workers and the release of millions of barrels of oil that negatively impacted wildlife and a variety of industries that rely directly and indirectly on the Gulf of Mexico, including fishing industries and tourism (Spencer & Fitzgerald, 2013). Four years after the oil spill, legal claims against the company continue as BP continues to attempt to reduce its overall financial burden from the event (Calkins, 2014).
It is the company’s size, dominance in the oil and gas industry, and the way in which its image has been impacted since the Deep Water Horizon oil spill that make BP worthy of an analysis of its internal operations, as well as the impact of the external environment on its operations and future strategies. While BP may seem strong financially, there are other concerns that the company must consider when determining its strategic future. The purpose of this report is to evaluate BP with regards to its internal strengths and weaknesses, as well as the external opportunities and threats facing the company. Based on the evaluation of the company’s strengths, weaknesses, opportunities, and threats, recommendations are provided with regards to the strategic direction that BP should take in the future in order to remain strong financially, operationally, and socially.
SWOT Analysis
In order to understand the internal and external issues facing BP, a SWOT analysis is provided in which the company’s strengths and weaknesses and the larger opportunities and threats from the external oil and gas industry are examined (Ferrell & Hartline, 2012). Table 1 shows the strengths, weaknesses, opportunities, and threats for BP. In addition, each of the factors are numbered in order of importance to the company and its future strategic direction.
Table 1: SWOT Analysis for BP
Strengths Weaknesses
1. Geographic diversity
2. Financial strength
3. Vertical integration
4. Research and development activities 1. Deep Water Horizon oil spill
2. Maintenance of its brand image
Opportunities Threats
1. Reduced assets and operations
2. Involvement with Rosneft
3. New oil reserves in Brazil 1. Stagnate growth in oil and gas industry
2. Environmental regulations
Strengths
The most important strength in BP’s operations is its geographic diversity. The company has operations in 80 countries. At the same time, the company’s geographic diversity includes operations in countries that are part of the organization for Economic Co-operation and Development (OECD) and non-OECD countries (MarketLine, 2014). This means that the company operates in countries with varied levels of economic and political development, which provides hedges for the company should economic or political issues arise in one area that might negatively impact oil exploration and production, and is the reason why it is the most important strength.
The second most important strength of the company is its financial strength. In 2013, BP reported revenues of $379 billion and net profits of $23.5 billion (MarketLine, 2014). In addition, since 2009, the company’s revenues have increased from $239 billion to the current $379 billion (MarketLine, 2013). Furthermore, the company currently has about $22.5 billion in actual cash on hand available, which is an increase from the $14 billion of cash on hand in 2012 (BP, 2014). BP clearly has the financial reserves on top of new revenues and profits to weather short-term and even medium-term problems.
The third most important strength of BP is its vertical integration. The company is engaged in all areas of oil and gas operations, from exploration of oil and natural gas, to field development and production. BP also operates pipelines, processing facilities, and export terminals. The company also operates oil refineries, transportation activities, manufacturing facilities, and is involved in wholesale and retail services (MarketLine, 2014). BP controls and operates much of its supply chain, which gives the company a great deal of power within the oil and gas industry.
The final strength of BP is its research and development activities. BP invests hundreds of millions of dollars each year in research and development activities related to petroleum and natural gas extraction, safety, computer technology, and consumer and business oils and lubricants (MarketLine, 2014). The company’s continued research and development activities allows it to operate on the cutting edge of technology and to develop new products for its customers. However, this is the least important strength because it is a part of BP that most consumers and the public generally do not see or consider on a daily basis.
Weaknesses
The most important weakness facing BP at the present time continues to be the Deep Water Horizon oil spill. The company continues to face fallout from the oil spill that resulted in 4.9 million barrels of oil being released into the Gulf of Mexico (MarketLine, 2014). The Deep Water Horizon Oil Spill came on the heels of other safety issues for the company, including an explosion at a BP refinery in 2005 that resulted in the deaths of 15 workers and the release of 250,000 gallons of oil from a BP pipeline in Alaska due to corrosion of the pipeline (Tharoor, 2010). While the company has already paid out $28 billion for response and cleanup of the spill, the company faces the potential for billions of dollars more than the $9.2 billion it estimated for payments to people impacted by the spills, and an additional $18 billion in pollution fines from the United States Government (Calkins, 2014).
The second most important weakness facing BP at the present time is related to the Deep Water Horizon oil spill, which is the way in which the company has managed its brand image in the aftermath of the spill. BP has drawn criticism from the public, government officials, and even within the oil industry for what seemed to be arrogant and out of touch responses to the impact of the Deep Water Horizon oil spill. Furthermore, while the company has argued that it is environmentally conscious and operates with a focus on environmental safety, the company’s actual safety record indicates less than stellar performance in that regard (Balmer, 2010).
Opportunities
The most important opportunity facing BP is that the company has sold off many of its assets in recent years that were not related to its areas of strength. For example, BP sold off liquefied petroleum gas bottle and tank operations in several parts of the world, as well as other non-refinery wholesale business operations (MarketLine, 2014). Through its own internal decision to sell off businesses not related to core exploration and production activities, BP has an opportunity to take advantage of the areas of the oil and gas industry that are strong, and the areas that contribute the most to BP’s revenues, which will be of great importance in the coming years and makes this the company’s most important opportunity.
The second most important opportunity for BP involves its involvement with Rosneft, the largest oil company in Russia and the largest publicly traded oil company in the world in terms of actual production volume (BP, 2014). In 2013, BP completed deals with Rosneft that resulted in a 19.75% ownership stake in the Russian oil company. Table 2 shows that in 2013, BP’s share of net income from Rosneft was $2.058 billion. While revenues of $2 billion in a single year may seem that great to a company with revenues approaching $400 million, this investment provides BP with a source of income, as well as a greater ability to take advantage of oil reserves in Russia.
Table 2: Income Statement for BP Ownership in Rosneft (BP, 2014)
The third most important opportunity for BP involves deep water oil reserves found off the coast of Brazil (Caldeira, 2014). The discovery of deep water oil reserves off the country’s coast presents a potentially important opportunity for a company that is attempting to recover from its deep water oil spill in the United States. As is shown in Figure 1, BP is already the largest deep water extractor of oil and gas products of any of the major oil and gas companies.
Figure 1: Deep Water Oil and Gas Extraction by Company (Caldeira, 2014)
Threats
The most important threat facing BP is the stagnate growth and projected growth in the oil and gas industry around the world. Table 2 shows that between 2008 and 2012, the overall growth in the market value of the global oil and gas industry was only 1.7%. On a yearly basis, major declines and increases in market value occurred that made for a market filled with turmoil (MarketLine, 2013). This is the most important threat because the company has divested itself of other areas of operations, so it depends mostly on growth in the oil and gas industry for future revenues and profits.
Table 3: Value of Global Oil and Gas Market (in billions) (MarketLine, 2013)
Unfortunately, through 2017, the value of the oil and gas market around the world is not expected to increase. In fact, as is shown in Table 4, the overall increase in the global oil and gas market through 2017 is only expected to be 1.5%. BP may face difficulty in achieving high rates of revenues and profits as it focuses on its core petroleum and gas extraction and production operations.
Table 4: Projected Global Oil and Gas Industry Value (in billions) (MarketLine, 2013)
The second most important threat to BP is new environmental regulations around the world. Existing environmental regulations in the European Union call for a 20% reduction in carbon dioxide emissions by 2020 (MarketLine, 2014). If the United States, European Union, and other nations around the world impose additional environmental regulations and restrictions, the result to BP could be billions of dollars in required changes in technology and operations, as well as the potential for billions of dollars in fines. In 2013, the company paid nearly $2 million in fines for only two violations of environmental regulations in the United States (HSE Fines and Penalties, 2014). As more stringent environmental regulations take effect, the company could indeed pay large sums of money to a variety of governments around the world on an annual basis.
Strategic Recommendations
While BP is strong financially and operationally, it must do more to improve its brand image and to demonstrate a desire to operate with a concern for the environment. The strategic direction for the company must be to demonstrate honesty and humility regarding the impact of the company on the environment. At the same time, the company must be aware that the future strength of the oil and gas industry may be question. While the oil and gas industry is expected to experience some increase in value in the short-term, that increase will be very small. In this regard, BP needs to consider investments in more so-called “green” sources of energy and “green” technologies. Based on the strategic direction that has been outlined for the company, three key recommendations are put forth. These recommendations are discussed in order of their importance.
The first and most important recommendation for BP for the strategic direction of the company is to focus on creating an image of the company and its executives that is based on humility and honesty with regards to its environmental record. At the present time, the company is viewed as being arrogant and overly confident of its environmental record (Balmer, 2010). While the company has continued to brag about its concern for the environment, it continues to face claims of not only harming the environment, but attempting to avoid paying out claims to people who have been harmed as a result of BP’s operations. BP continues to fight some civil claims from the Deep Water Horizon oil spill in order to attempt to reduce its costs (Calkins, 2014).
BP’s advertising and marketing should not demonstrate wishful thinking about how the company protects the environment. Instead, the company’s advertising, interaction with consumers, and even dealings with continued claims from the Deep Water Horizon oil spill should demonstrate a recognition that the company needs to improve its environmental record (Balmer, 2010). At the same time, the company needs to actually take actions to improve its environmental and safety record. The company must demonstrate that environmental and employee safety is as important, if not more important, than its revenues and profits.
The second most important recommendation for BP for its strategic direction is to invest more resources in the development and use of green technologies. The move from environmental regulators, the public, and even the industry is toward green technologies. BP must take advantage of the trend toward the use of green sources of energy. The projected growth in the global oil and gas industry of only 1.5% through 2017 does raise concerns that BP may be harmed if it continues to only focus on oil and gas. The company has divested some of its other operations to focus almost exclusively on the extraction and production of oil and gas. With nearly stagnate growth projected for the industry, BP can only remain financially strong over the longer-term by focusing on new areas of energy production.
At the same time, focusing resources and efforts on non-fossil fuel sources of energy will be another way for the company to demonstrate a true desire to protect the environment. BP is in a position in which it needs to show that it is actually concerned about the environment. Investing large sums of capital in the development and actual use of green technologies and green energies would serve as a way for the company to acknowledge its own past, and a desire to improve its operations for the future. By using this second recommendation with the first recommendation, BP could truly become a company that is a leader in protecting the environment in the oil and gas industry, while also finding new ways to generate revenues that might be lost with any future declines in the overall value of the oil and gas industry.
The third and final recommendation that is made for BP is to continue to seek out opportunities for new oil exploration such as those that have become available in Brazil. The reason that this recommendation is the least important of the three recommendations because it should be part of BP’s current operations. This recommendation is about BP being able to maintain its current oil and gas exploration leadership in the oil and gas industry. While finding new sources of oil and gas are important, this cannot be the primary concern for the company at the present time. Instead, this must be secondary to the more pressing issue of changing the company’s image and demonstrating a true desire to change its environmental record.
Conclusion
The purpose of this report was to evaluate BP with regards to its internal strengths and weaknesses, as well as the external opportunities and threats facing the company in order to make key recommendations for the company’s future strategic direction. BP must overcome the negative image that it has created from a record of environmental and regulatory problems in the past few years. This is likely to be particularly important given the projected stagnate growth in the oil and gas industry through 2017. The company needs to focus on creating an image of humility and honesty about its environmental impact, rather than make claims about its environmental responsibility that seem to be overstated. In addition, BP needs to make a true effort at developing and using green technologies and non-fossil fuel sources of energy as a mean of demonstrating its desire to protect the environment, as well as a means of overcoming the stagnate growth in the global oil and gas industry.
On a smaller level, BP should focus on new deep water oil reserves off the coast of Brazil. However, the focus on these new reserves cannot be more important than the focus on changing the company’s image. Otherwise, BP may begin to experience declines in its own revenues and profits that will harm its financial strength.
References
Balmer, J. M. (2010). The BP Deepwater Horizon débâcle and corporate brand exuberance.
Journal of Brand Management, 18(2), 97-104.
BP. (2014). Annual Report and Form 20F. Retrieved from:
http://www.bp.com/content/dam/bp/pdf/investors/BP_Annual_Report_and_Form_20F_2013.pdf.
Caldeira, R. (2014). British Petroleum (Bp) Expansion In Brazil And Marketing Opportunities:
How BP Can Develop Its Portfolio In The Brazilian Crude Oil Market? Retrieved from: http://www.dundee.ac.uk/cepmlp/gateway/files.php?file=cepmlp_car14_52_174182542.pdf.
Calkins, L. B. (2014). BP Seeking Payment Reversals May Reignite Damages Fight. Retrieved
from http://www.bloomberg.com/news/2014-10-06/bp-seeking-payment-reversals-may-reignite-damages-fight.html.
Ferrell, O. C. & Hartline, M. (2012). Marketing Strategy. Belmont, CA: Cengage Learning.
HSE Fines and Penalties. (2014). Retrieved from:
http://www.bp.com/en/global/corporate/sustainability/bp-and-sustainability/bp-in-figures/hse-fines-and-penalties.html.
MarketLine. (2013). Global Oil & Gas. New York: MarketLine, Inc.
MarketLine. (2014). BP Plc. New York: MarketLine, Inc.
Spencer, D. C., & Fitzgerald, A. (2013). Three ecologies, transversality and victimization: the
case of the British Petroleum oil spill. Crime, law and social change, 59(2), 209-223.
Tharoor, I. (2010). A Brief History of BP. Retrieved from:
http://content.time.com/time/magazine/article/0,9171,1993882,00.html.