British Petroleum
2. Introduction
BP is one of the largest multinational corporations in the world. According to CNN (2011), BP is the fourth largest multinational corporation in the world and employs over 80,000 people and making annual revenue of $392 Billion. BP has massive influence on the global economic climate and has the operation capacity to affect stakeholders. This essay will analyse BP’S current stance using Porters five forces. It will also establish who are the most important stakeholders and suggest strategies that can be used in future.
3. Porters Five Forces
This looks at he external factors that can affect which include new entrants, buyers, suppliers, substitutes and competition and can affect productivity of a business as seen in appendix A.
3.1 Threat of New Entrants
The threat of new entrants into the oil and gas industry is relatively low. This is a result of the high capital costs and technology, distribution channels, economies of scale, regulations and geopolitical barriers and the high levels of expertise required for exploration and extraction. (Mascarenhas, 1997) This makes it relatively easy for the oil and gas industry to fend of potential entrants; however the investment in relation to profit returns with suitable environmental and technical environment is relatively high.
3.2 Rivalry
Rivalry in the oil and gas industry is relatively high because of the resource based nature of the business. There is severe competition to locate and secure drilling licenses between the major players and the cost of expedition and production is relatively high. The main source of competitive advantage in his industry is to cut down the costs of production per unit produced.
3.3 Substitutes for Oil and Gas Products
The threats of substitutes for oil and gas products are low and come from wind, nuclear, hydroelectric and biomass. Wachsmith et al (2013) states that solar power, wind power and other substitutes for oil and gas products are not
BP is one of the largest multinational corporations in the world. According to CNN (2011), BP is the fourth largest multinational corporation in the world and employs over 80,000 people and making annual revenue of $392 Billion. BP has massive influence on the global economic climate and has the operation capacity to affect stakeholders. This essay will analyse BP’S current stance using Porters five forces. It will also establish who are the most important stakeholders and suggest strategies that can be used in future.
3. Porters Five Forces
This looks at he external factors that can affect which include new entrants, buyers, suppliers, substitutes and competition and can affect productivity of a business as seen in appendix A.
3.1 Threat of New Entrants
The threat of new entrants into the oil and gas industry is relatively low. This is a result of the high capital costs and technology, distribution channels, economies of scale, regulations and geopolitical barriers and the high levels of expertise required for exploration and extraction. (Mascarenhas, 1997) This makes it relatively easy for the oil and gas industry to fend of potential entrants; however the investment in relation to profit returns with suitable environmental and technical environment is relatively high.
3.2 Rivalry
Rivalry in the oil and gas industry is relatively high because of the resource based nature of the business. There is severe competition to locate and secure drilling licenses between the major players and the cost of expedition and production is relatively high. The main source of competitive advantage in his industry is to cut down the costs of production per unit produced.
3.3 Substitutes for Oil and Gas Products
The threats of substitutes for oil and gas products are low and come from wind, nuclear, hydroelectric and biomass. Wachsmith et al (2013) states that solar power, wind power and other substitutes for oil and gas products are not