BPCL: Countering Deregulation

Topics: Customer, Privatization, Decision making Pages: 7 (2006 words) Published: December 6, 2010
Freedom of change in a free economy|
Mid-term Submission|

Submitted to: Sandeep Krishnan
Submitted by: Ramees Mohammed (Roll No: 2009208)

BPCL’s Capabilities to cope with change2
BPCL: Why redesign became a necessity3
Issues with the current structure5
Steps to effective Organizational change6
Issues to be addressed in Organization redesign8

In 2004, Bharat Petroleum Corporation Ltd (BPCL) was one of the leading state-controlled oil retailing companies in India. The case talks about the evolution of the oil industry, its structure, its changing regulatory environment, the resulting competitive scenario and its implication for BPCL. With the partial liberalization of the industry and the entry of private players, state-owned downstream marketers were forced to focus on marketing in order to protect their customer base. Objectives

* To discuss the strengths of BPCL as an oil marketer over the years, and the initiatives taken by the company in the wake of changes in the business environment * To discuss the challenges faced by BPCL

* To discuss BPCL's foray into the upstream sector of exploration and production consequent to the deregulation, and the crude supply scenario * To discuss the following points
1. The growth motives of companies in a regulated and a deregulated environment 2. Oil industry economics and the pros and cons of vertical integration in an industry such as oil and gas 3. Analyze the changes in the oil industry structure due to deregulation and how it affects new and established companies BPCL’s Capabilities to cope with change

A privatization drive has been initiated for all government sector units to become profitable and more efficient. Privatization would force the top heavy organisations to wither change their structure and reduce bureaucracy or go extinct leaving only the fitter organisations to fight it out for the market pie. To survive in such a highly competitive market scenario BPCL has undergone a multitude of changes. The new structure adopted by the BPCL, aims to convert the production centric organization into a customer centric one. Consumers needs can be better understood and catered to in the new structure and decentralized decision making would go a long way in helping understanding and reacting to local customer needs at a much quicker pace. Another important feature of the new organizational framework is that it would help build empowered employees who are committed to the firm and achievement of its long term objectives. The challenges that the company could face in the future are: Fluctuating international market – The government has subsidized the price of fuel and the same price is being provided to both government as well as private players, it remains to be seen as to what the consequences will be in case there are large fluctuations in the prices of oil internationally. Selling channels and Supply chain – Private organizations have long existed in competitive markets and understand the nuances of promotion and marketing. Government organizations such as BPCL have existed in a highly regulated environment where little if any promotions and marketing were carried out. It would probably take some time before BPCL develops its capabilities before it can fully compete with private players. Therefore it yet has to be seen if the adopted measures are sufficient in order to survive in the highly competitive and market driven industry after it has been privatized. BPCL: Why redesign became a necessity

* Privatization: The privatization of the public sector organization made the government that all public sector organizations should have a business orientation irrespective of the social obligations. But the impeding competition as well as the uncertainty of existence in the present for created anxiety in the organization across all levels. It was seen as a...
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