Business Report - Bp International

BUSINESS AND MANAGEMENT CHALLENGES

SOP08101

BP INSIGHT

Rui Cardoso 08011362

Dominic Lynch 09002795

Hannah Sundqvist 09010747

Abdullah‎ Alenzi 09015926

Tomasz Kubala 09007527

Wenqiong Wang 09900118

1. INTRODUCTION

BP p.l.c. is a global company headquarted in London and operates in the oil and natural gas business. It's the fourth largest company in the world and operates in over 80 countries. The 'BP' initials derive from the former company name, "British Petroleum".

The company was founded in 1908, with the first oil found in a rugged part of Persia, by the name "Anglo-Persian Oil Company".

"To find oil in Persia, George Reynolds and his caravan of explorers had lived through seven years of harsh heat, gastric illnesses and disappointments. The next seven years would be no less difficult for the Anglo-Persian Oil Company, which would one day become BP" (BP.com, 2010)

In 2009 the sales revenue of the company exceeded $239 billion, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items.

The core BP brands are Castrol, BP, Arco, Aral, AmPm and WildBean Café.

Carl-Henric Svanberg is the chairman of the board; he is a 58 years old Swedish business man with a masters degree in Applied physics. He was surprisingly appointed by BP in 2009, the former chief executive of Swedish telecoms group Ericsson. He was characterized by the Guardian, 2009 as a "energy newcomer and a relatively low-key figure on the political circuit"

Recently, BP has been largely affected by the 20th of April accident, when "the Deepwater Horizon rig disaster caused the deaths of 11 crew members and a massive oil spill in the Gulf of Mexico."(BBC.co.uk, 2010)

In this report we are going to focus on the reaction of BP to the recent oil spilling accident and how are they coping with it.

Rui Cardoso

2. KEY FORCES IN THE GENERAL ENVIRONMENT

There are many factors in the macro-environment that will affect the decisions of the managers of any organisation. Not only national environment, but also international environment will impact organisation's business and their development. There are five sectors that will influence the business of the organisation -- political, social responsibility, economic, technological and demographic.

2.1 Social Responsibility

BP is one of the most controversial companies in the whole world. Even though they are involved in a series of environmental causes and claim adherence to the principles of corporate social responsibility, they are also involved in a series of environmental accidents.

The Gulf of Mexico accident is the most extravagant example, but hardly the only one. This company has been, for many years, the target of immense criticism for they lack of social responsibility. The Greenpeace have inclusively closed a series of BP stations in form of protest, in an act against the company policy to the world. (BBC, 2010)

This company claims to be social adherent and responsible, but, somehow have been hit with some of the largest fines ever relating to social irresponsibility. "BP is just a symptom of a dangerous addiction to oil" (Guardian.co.uk, 2010)

Recently, and following the Gulf of Mexico accident, BP has agreed to create a $20 billion fund to make an economic compensation to the people affected by this catastrophe. (reuters.com, 2010)

Rui Cardoso

2.2 Political behaviour

From the political aspect, there is no doubt that the oil spill event will have future repercussions on the company. The political image of BP suffered, maybe irreversible damages, as U.S. president Barrack Obama compared the accident to the 9/11 terrorist attacks (Guardian.co.uk, 2010).

Following the accident, Barrack Obama held up a move he had made just weeks earlier, setting a suspension of all further drilling expansion.

California governor ended all offshore drilling plans in the state of California.

Senator Harry Reid said that "this spill should help rallying support for clean energy legislation"

All this are good examples of political impact over BP. (abcnews.com, 2010)

Rui Cardoso

2.3 Ecological / Demographic impact

The Ecological impacts of the spill are the most noticeable ones, the coastlines of various American states are being severely affected by the 130 miles long and 70 miles wide spill. The oil leak was, in June, thought to be between 840,000 and 1.7 million gallons, according to U.S. scientist estimative. Even though the first estimative by BP was of 42,000 gallons, the government quickly revised that number. (reuteus.com, 2010)

The already fragile Gulf ecosystem has suffered a huge impact, it is not known what the full impact of the spill will be but Greenpeace believes that "Gulf coast beaches, marshes, and bayous, the sheer number of rare and endangered species in the area create an urgent need to protect the fragile Gulf ecosystem from further damage from fossil fuel pollution" (Greenpeace.org, 2010)

Rui Cardoso

2.4 Technological process

BP uses Specific technologies and the latest techniques to find oil and gas underground, most often under sea level. In the past, they used to focus and minimize their search which had a 10% or less chance in finding an oil field. BP developed new technologies such as Hydrophones which gather data underwater by using microphones and reflections, geologist gather the information brought up by the latest technologies and calculate the distance of the current field. As technology developed over years, geologists are able to create 3-D images of the undersea level field. BP has been the biggest oil locator of the decade, which was explored in BP's main centre in