A. External Environment (Macro environment) Analysis:
With respect to the specific organization (in this case, BP); things are changing at a rapid pace since the supply and demand of oil is becoming highly dependent upon socio political condition of different parts of the world, where its business is operating.For the external business environment analysis of global oil industry (with respect to BP) the selected analysis tool is PESTEL. This model presents a strategy framework built over variables like surrounding political, economic, social, technological, environmental, and legal aspects, which actually shape the initiatives and decisions of any organization in the global market. As far as global oil industry is concerned; it is more adequate to state that since 1980’s, the entire industry is facing an economic slump due to unsuccessful exploration results faced by all the major oil and gas companies. Furthermore, incidents and naturally occurring accidents (along with their respective costs of elimination) are causing extra damages to this industry which produces one of the biggest daily consumption commodities – oil. . This reflects the significance of product this industry is producing and providing globally. In this regard, The PESTEL analysis for this particular industry (with respect to BP) suggests that:
1. The global oil industry has become increasingly politicized in the recent years. More specifically, with the critical position of Middle East and other major oil producing regions, the global investments have increased into the areas of alternative energy sources, suggesting a close figure of USD 336.75b in the last financial year, and expected to rise up to USD 653.35b (Peri, 2009). BP has been moving with the trend, and also putting heavy investments in the area of alternative energy. Therefore, with the increase of volatile elements in the Middle East, oil giants including BP are looking for other alternatives to secure their respective businesses. 2. According to Manning (2010) and Arends (2010) the current financial year has shown an increase in oil demands, leading towards increase in petroleum prices. This increased demand and supply has profited the BP plc with £6.3b only in the first quarter of 2010. Further, the dependence of countries’ economies on oil imports is also found increasing (extracted from the fact that decrease in the price of dollar increased the global oil prices) which is an indication that economic factor for companies like BP is always promising, even amid the consequences like Deep Water Horizon (Amadeo, 2010). 3. The global oil industry is getting much more criticized (and as a result, regularized) due to increasing concerns of global warming and production of carbon dioxide in the environment. For this reason, oil industry giants including BP have shifted their focus on exploiting more and more natural resources in order to produce alternative energy from wind, water, sunlight, etc. This shifting is also a result from global media campaign against oil hazards and their other byproducts. As a result, the social aspect of global oil industry is much more worsened in the past few years. 4. With the decreasing resources of global oil and increasing demands from around the globe, BP along with other oil giants have been putting much more investments into productivity increasing techniques with the help of technology induction. Furthermore, the recent incident in the Gulf of Mexico has led the technology giant to spend times more in the technology driven safety and regulatory procedures. A reflection of this can be given by BP’s recent initiatives like Losal and BrightWater, which are both productivity increasing initiatives led by technology which ensures secure and environment friendly way of operations. 5. This particular aspect has been most challenging for oil producing companies (including BP), which are obliged to reduce their carbon emission rates by 80%...
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