British Petroleum: PESTEL and SWOT

British Petroleum PESTEL and liftThis Report will assess the altering trading background of a ane of the largest perpendicularly incorporated oil and bollocks companies British Petroleum, e genuinelyplace the last five years.The Micro and Macro business purlieu of the gild confirm settled by around main factors and the motive of this report is to accent on them to recognize, analyze and understand. In grade to do this, any(prenominal) essential tools need to be considered. PESTEL epitome is oneness of the tools set up support the organisations to augur large- environsal factors which john have an impact on them. oerdress analysis is an new(prenominal)(prenominal) important tool, which assists organisations in additional developing their self consciousness.Introduction backing environment sight be defined as a complex of constitution, legal, institutional, and regulatory circumstances that administrate industry activities. It is a sub-set of the enthroneme nt indemnity and includes the administration and enforcement mechanisms that implement government policy, as healthful as the institutional activities influence the way key factors operate (e.g., government agencies, regulatory authorities, and business membership organisations including businesswomen associations, civil society organisations, trade unions, etc.).Macro-environmentMacro-environment is the uppermost level of the environment, which consists of large extraneous factors that hobo influence the business. In this case, PESTEL analysis is a helpful tool to identify these factors and this mint be based on the analyses of prox trends such as political, frugal, social, environment and legal etc. Using this tool, managers can categorize the key drivers of modifications and this can be used to build the dominance trend to future scenario (Johnson et al, 2009). harmonise to Worthington and Britton (2003), nearly manners may influence the business renovate the inputs (r esources such as labour force, technology, finance and materials) in outputs such as goods (products that can be touched such as foods, cars, and so on) or services (products that cannot be touched such as insure services). These performances can be used and prejudiced by companies in order to create their policy.Considering that this macro environment is very complex and companies cannot cut back it, its analysis is very important. Companies need to identify them and understand the negative impacts they can produce, thitherfore they can be prepared to reduce them (Palmer and Hartley 2009).Political FactorsAccording to Palmer and Hartley (2009), politicians are usu all(prenominal)y responsible to create and outgo legislation to companies and once in a while they may create direct influence somewhat types of businesses, such as client defence law, workers protection laws, regulates of effluence and so on. In addition, gibe to Lancaster (2008) others political decisions as the w orkforce education, health and environment, and even the thriftiness radix can likewise influence businesses operations.Economic FactorsEconomic factors are very monumental for an organization because it is directly associated to GDP (gross domestic product), economic development, tautology rate, inflation rate and so on. Any modification in the economy can influence businesses. One good example is the oil splosh at disconnectedness of Mexico has made BP a huge quantity of fiscal loss. The increase in the crude oil price cloaked all the chain such as power charge, oil-based raw material, plastic, synthetic fibres and so on (Lancaster 2008). This example indicates the significance of supervise the economy, either nationally or internationally, in order to recognize possible opportunities and threats.Social and Cultural factorsThe socio-cultural environment is possibly one of the most difficult factors to pass judgment, considering that is based on multitude manners changes, such as religion, ethics, priorities, attitudes, philosophy and social changes (Lancaster, 2008). On the other hand, Palmer and Hartley (2009) state that a crucial area for businesses is to understand the cultural set of a society companies should be monitoring this frequently to infract arrest to customers desires and contractments.Technological FactorsAccording to Lancaster (2008), technology is an important macro-environmental feature which is presented in umpteen products that we use on our daily breathes, as television, calculators, video records, computers and so on. Companies manoeuvre an important responsibility on generating more technologies due to this some of them has their consume re look to and development department or work in confederation with universities or research institutes, anticipateing to provide new products or with better excellence to clients.Environmental FactorsThis factor has been constantly increasing, especially for multinationals, due to the repugn of social responsibility activities and projects with focus on the centre of population and the environment. These corporations have an important function on contributing to the social development (Worthington and Britton 2009).BP, in the last five years, has worked proactively to reduce environmental risks and, as a result, it has modify its indices across the years. In its eco efficiency activities, they have focused on step-down water consumption, energy, generation of effluents, production of residues solids and pastes. Moreover, it is also preoccupied with the society and develops projects in partnerships with the communities to improve factors such as people education, case of life, social projects and so on (BP plc, 2010).Legal FactorsCompanies should work according to the law otherwise they can have important collision on their businesses. Some laws are ever-changing to defend clients (municipal licences, anti-monopoly laws) workers (minimum wage, workers safe ty) and suppliers (copy tractor trailerht and patent laws which favour business investments). Some of them can circumvent market constitution and performance (Worthington and Britton 2009).MicroenvironmentMicroenvironment, on the other hand, is the internal factors which mainly business decisions are made. The internal environment is composed of divers(a) components such as employees, suppliers, customers and so on. Therefore, microenvironment can be divided in various small parts inside a go with and each part is extremely important for the business.Lancaster (2008) argues that one of the main objectives of marketing is to concentrate the requirements of consumers. In order to achieve this, companies can make use of their internal lieu and capabilities, their microenvironment, over which they have control, and use this as a foundation of selective information to create the better policy to please costumers requirements.In addition, the microenvironment is easier to realize th an the macro environment because it refers to everything that is part of a federation such as suppliers, employee and so on. Everything that is direct or indirect interrelated to the company (Palmer and Hartley, 2009).CustomersThey are one of the most important parts of the microenvironment. Companies need to focus on monitoring possible changes on consumers trends and on creating an efficient transactionhip with them. In other words, companies need to be one step ahead, trying to calculate consumers requirements and necessitate and developing products to concentrate these demands. Moreover, companies must not focus just on this simple replica (creating a good products to customers), but think international from it (Palmer and Hartley, 2009).IntermediariesThey correspond to associations between companies and customers. Some companies, mainly large ones, have some complications to attend all final costumers therefore they choose to sell their products with mediators to be presen t even in small supermarkets. Some companies can fail because they do not recognize this as an important policy (Palmer and Hartley, 2009).ShareholdersAt the end of 2010, there were 345,581 holders of BP public shares and a further 163,397 holders of American depository shares. One American depository share (ADS) represents six common shares. One of the holders of ADSs represents some 824,700 underlying holders. ADSs can be bought and sold on North American line of work markets. The total number of actual shareholders in the US and UK is in excess of 1 million. About 80% of the ordinary shares and American depository shares are held by institutions such as award shops and insurance companies. For more than 20 years, BP has encouraged its employees to purchase shares in the company on favourable terms, giving them an extra s restoration in the companys success.CompetitorsCompanies need to keep their eyes on their competitors, monitoring them and trying to stock their next steps . Furthermore, there are two distinct types of competitors direct competitor, which sells like products and indirect competitor, which is more difficult to identify, because some cartridge holders competitors can appear in different forms. For example, who is the indirect competitor for a movie theater? Is it another cinema? A home rent movie? (Palmer and Hartley 2009)The following companies are some competitors of BP PlcChevron CorporationExxon Mobil CorporationTOTAL S.A.Petrobras (Petroleo Brasileiro S.A.)(Datamonitor, 2010) overdressSWOT is a tactical development tool, used in management and strategy cookery in order to identify strength, weakness, opportunities and threats of a particular company. It mainly focuses on analysis and understanding the organisations internal and external environment.Strengths are considered internal collateral factors within an organization which can add nurture Weaknesses, on the other hand, are negative aspects, which can disrupt the busines s from achieving its goals. Opportunities are external factors which help business and can represent one possibility of acquiring competitive advantage if the company has the ability of identifying them quicker than its competitors. Threats are also external factors but which can affect businesses operations negatively (Campbell and Craig, 2005).SWOT analysis is used as an analytical tool to achieve significant information about the company in order to take suited actions. A company can do better decision reservations when it understands the tooshie points of a SWOT analysis. Strength factors can be used as a foundation for constructing advantages, enchanting the opportunities weakness can be seen as a challenge and used to correct errors (NetMBA, 2010).Applying SWOT analysis on BP, we can see their strengths, weakness, threats and opportunities(S)trengthsDominant market positionVertically incorporated operationsWide geographical presence(W)eaknessesOil throw in the gulf of Mex icoExplosion in the Texas refineryViolation of tax laws in washout(O)pportunitiesAcquisition of Devon Energys assets in Brazil, Azerbaijan, and the US deepwater disjunction of MexicoOil and petrol geographic expedition projects(T)hreatsSaturation of resources in the North SeaInstability in some oil-producing regionsEnvironmental regulations(Datamonitor, 2010)Company OverviewBP is one of the biggest perpendicularly incorporated oil and gas companies in the public. The companys operations principally include the searching and production of gas and crude oil, as wellspring as the marketing and trading of ingrained gas, power, and natural gas liquids. BP is headquartered in London, the UK and employs about 80,300 people.Case StudyThe Deepwater sight oil spill out (also referred as the BP oil spill, the Gulf of Mexico oil spill, the BP oil disaster or the Macon do blowout) is an oil spill in the Gulf of Mexico which flowed for three months in 2010. The impact of the spill continue s since the well was capped. It is the largest accidental marine oil spill in the history of the petroleum industry. The spill stemmed from a sea-floor oil gusher that resulted from the April 20, 2010 Deepwater Horizon drilling rig explosion. The explosion killed 11 platform workers and injured 17others.On July 15, the natural spring was stopped by capping the gushing wellhead, after it had released about 4.9million set (780-103m3), or 185 million gallons of crude oil. It was predictable that 53,000barrels per day (8,400 m3/d) were evading from the well just before it was capped. It is supposed that the daily flow rate lessen over time, starting at about 62,000barrels per day (9,900 m3/d) and lessen as the reservoir of hydrocarbons feeding the gusher was gradually exhausted. On September 19, the easement well process was successfully finished and the federal government declare the well successfully departed.Impact on BP and the UK economyBP at the time the United Kingdoms lar gest corporation and a major business in the UK investment world came under powerful popular, media, and political pressure to terminate its 2010 dividends in their entirety. Media reports state that BP is of such a size and significance in that country, that one pound in every seven of investment and pension fund income in the UK is derived from BP. Local media offered views on what this might mean for citizens. As BP was inform to be offloading millions of dollars in assets in preparation, some estimates suggested the total legal responsibility could amount to as much as US $100 billion (UK 67.5 bn) by the conclusion of the tragedy. Financial analysts commented that BP was able of addressing the probable liabilities that might effect, and BP stock rose to some extent on the news that the preliminary US $20 billion compensation fund had been arranged.Political and foreign relations impactThe disaster was seen by some as placing stress on US-UK relationships, insofar as BP is a B ritish company. Both US chair Barack Obama and UK Prime Minister David Cameron were under considerable pressure to comment politically on the matter. Insurance Times describe an open letter from the chairwoman of RSA Insurance Group, the head of one of the countrys leading companies, to President Obama (text of letter) that expressed a concern over double standards compared to the sub-prime based banking crisis of 2007-2010 and over prejudicial and individualized comments in the media.Boris Johnson, the mayor of London, was also reported to have made a similar comment, and similar concerns related to the tenor of media releases were also expressed by Labour MP and ex-Parliamentary Secretary Tom Watson, Vince Cable the Business Secretary, and the UK distant Office. The Department of State stated that the issue will not affect US-UK relationships, calling the UK its closest ally. Cameron stated that sensible dialog was needed and BP would require certainty over its obligation fo r compensation. Obama was later reported to have give tongue to that his frustration over the mammoth oil spill in the Gulf of Mexico is not an attack on Britain and that he had no interest in undermining BPs prize, as the two leaders tried to soothe trans-Atlantic tensions over the disaster.Impact on BP due to US tourismOn whitethorn 25 BP gave Florida $25million to promote the beaches where the oil had not reached, and the company planned $15million each for Alabama, Louisiana and Mississippi. The Bay field Tourist Development Council bought digital billboards showing recent photos from the gulf sliding board beaches as far north as Nashville, Tennessee and Atlanta. The U.S. Travel Association estimated that the economic impact of the oil spill on tourism across the Gulf Coast over a three-year period could exceed approximately $23 billion, in a region that supports over 400,000 travel industry business organizations generating $34 billion in revenue annually.On November 1 BP announced plans to exceed $78 million to help Louisiana tourism and test and bear on seafood.Other economic consequencesOn July 5 BP reported that its own expenditures on the oil spill had reached $3.12billion, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and federal costs. The United States Oil Pollution Act of 1990 limits BPs liability for non-cleanup costs to $75million unless gross negligence is proven. BP has said it would render for all cleanup and remediation regardless of the statutory liability cap. Nevertheless, some Democratic lawmakers are seeking to pass legislation that would increase the liability limit to $10billion. Analysts for Swiss Re have estimated that the total insured person losses from the accident could reach $3.5billion. According to UBS, final losses could be $12billion. According to Willis Group Holdings, total losses could amount to $30billion, of which estimated total claims to the market from the disaster, including control of well, re-drilling, third-party liability and seepage and pollution costs, could exceed $1.2billion.On June 25 BPs market value reached a 1 year low. The companys total value lost since April 20 was $105billion. Investors precept their holdings in BP shrink to $27.02, a nearly 54% loss of value in 2010. A month later, the companys loss in market value totaled $60 billion, a 35% decline since the explosion. At that time, BP reported a second-quarter loss of $17 billion, its first loss in 18 years. This includes a one-time $32.2 billion charge, including $20 billion for the fund created for reparations and $2.9 billion in actual costs.On October 1, BP pledged as collateral all royalties from the scag Horse, Atlantis, Mad Dog, Great White, Mars, Ursa and Na Kika fields in the Gulf of Mexico. At that time, BP also said it had worn out(p) $11.2 billion, while the companys London Stock switch over price reached 439.75 pence, the highe st point since May 28.By the end of September, BP reported that it had spent $11.2 billion. Third-quarter profit of $1.79 billion (compared to $5.3 billion in 2009) showed, however, that BP continues to do well and should be able to pay total costs estimated at $40 billion.RecommendationsCompanies should get wind regularly for new challenges, by focusing on developing strategies which can allow them to develop them better than their competitors. On this case, BP should do the same and seek for a strategy to become the first company in the world of petroleum industries, selling products with quality and diversity, achieving customers first choice.If the company wants to be competitive, companies should evaluate its products with the ones from foremost competitors. They can also achieve competitive benefit by investing on its employees looking for joint ventures with other companies in different countries so that they can achieve information from different markets in search of operat ional efficiency and cost regulation seeking for new partnerships, assessing where there are greater opportunities for export.ConclusionThe micro and macro business environment of companies are influenced by various factors. They can change them when necessary (such as production, marketing strategy, etc) by taking immediate actions with respect to internal factors. Conversely, companies cannot take action directly on external factors. But in order to minimize their impact they can identify them with appropriate time.Managers decision making capability can be based on the use of these tools and analysis the company can obtain a general overview about the company and aspects what kinds of impacts can happen such as politics, laws and regulations, economy, environment, technology and so on. receivable to high competition, with demanding requirement companies should use these tools such as PESTEL or SWOT to build up a successful policy and competitive with the market. BP has positive a variety of strategies by focus on customers, by producing quality products for domestic and international market and it is always doing a great job for the benefit of the society, employees, and environment.