1

1.0 British Petroleum

BP is one of the world's leading international oil and gas companies. Through our work we provide customers with fuel for transportation, energy for heat and light, lubricants to keep engines moving, and the petrochemicals products used to make everyday items as diverse as paints, clothes and packaging.

1.1 Mission and Vision Mission Statement:

Long term commitment to prosper as an integrated, international company with strong technology base and a focused marketing effort.

Vision Statement:

To improve our performance and have a steady disciplined growth. Strategic Culture:

BPs culture rest heavily on their employees. They are the key to BPs future growth. Technology is key to both up and downstream operations. HSE- raises health standards, no damage to environment or people. Better relationships with countries where operations already exist.

1.2 BPs Facts and figures

(as at, or for the year ended, 31 December 2012, updated for IFRS 11 and IAS19 where relevant)

Countries of operation :Over 80

Number of employees :85,900

Sales and other operating revenues :$375,765 million

Cash flow :$20.5 billion

Replacement cost profit :$11.4 billion

Proved reserves :17,000 million barrels of oil equivalent

Retail sites :20,700

Refineries (wholly or partly owned) :15

Refining throughputs :2,354 thousand barrels per day

1.3 BPs Four Core Values

BP specifies four core values to express the way the organization does business and help translate the mission into practical action:

Progressive: BP is always looking for new and better ways to conduct business. Innovative: Through the creative approaches of employees, and the development

and application of cutting-edge drilling technology, BP seeks breakthrough solutions for its customers.

Green: BP is committed to environmental leadershipthe proactive and responsible treatment of the planets natural resources and developing lower carbon emission energy sources.

2

Performance-driven: BP sets the global standards of performance on financial and environmental dimensions, as well as safety, growth, and customer and employee satisfaction.

1.4 List of Products

Each of BPs brands has its own heritage and personality, but they all have one thing in common - they all symbolize, embody or provide tremendous energy.

Quality automotive fuels

Global lubricants

specialist

Stores

Good food and quality coffee

Petrol/Gasoline

3

2.0 BPs SWOT Analysis SWOT analysis At a Glance:

Strengths Human Resources Technology Mutual Advantage Upgrading Refineries Infrastructure/Leadership Fuels in Europe Improving Operational Efficiencies

Opportunities Technological Advances Emerging Markets (Asia/Pacific) Oil remains main source of

energy Formation of European Union Introduction of euro

Weaknesses Recovering from large debt Weak market outside of Europe Less upstream investment to replace

production in long run Dependent on small no of gas fields Producing more than it needs for its

operations

Threats Environmental Regulations Substitute Products Power of OPEC Overcapacity in mature markets Supermarkets gaining market

share European Economic woes Commoditization no brand

equity in Europe Tight oligopoly, mature market,

cutthroat competition

3.0 PEST Analysis

Political Geopolitical Instability Governments encouraging more

sustainable forms of energy Growing oil requirements of

buoyant Chinese economy

Social Kyoto agreement (CO2 emissions) Awareness in people regarding

sustainability in the future.

Economic Economy is underpinned by its

energy supply Energy markets demands increasing Alternative energy sources

increasing

Technology Technological breakthrough Competitiveness in the alternative

energy industries.

4.0 Economic & Global OTs Economic Opportunity:

Oil prices increased this year. Benefit integrated oil companies overall. Specifically help Exploration & Production companies. Hurt Refining & Marketing companies.

Some signs of modest economic upturn in European Union: GDP increased 0.5% in 1st Qtr. 1996. Exports have grown larger than imports over the last five years.

4

European International Conference held this year; two main concerns: Expansion of EU to the east and south. Review of the Maastricht Treaty.

Economic Threats: Continued slow growth throughout EU

Growth rate down from 4% to 2.5% per year over last two decades GDP of 15 EU states down to 6.91 billion GDP/PPS (purchasing power standards) per head is only 18,446

Consistently high unemployment Average of 15 EU states is 10.8% Average of 11 euro-zone states is 11.5%

Country-specific inflation problems across Europe. Productivity growth is steadily declining. Difficulty financing new projects.

Global Opportunity:

North American SUVs becoming more popular. Once restructuring and deregulation happen in Japan greater competition will occur

stimulating more consumption Relaxation of control over markets in China and Asia will boost demand for oil.

Global Threats:

North American economy becoming more efficient, moving from manufacturing to services.

Russian economy in shambles, many people jobless, energy consumption falling (energy inefficient).

Africas & Mid East political turmoil blocking economic growth. Both resource rich. Potential threat of conflicts with oil-rich countries.

5.0 International Business Strategy of BP

5.1 Global Competitive Environment of BP

In analyzing the competitive environment of the BP, as earlier stated, a very useful tool to consider is the five forces model of competition which was developed by Professor Michael Porter of the Harvard Business School in 1980, this model shows the organizations competitiveness in the industry and also how attractive the industry in question is. The five forces identified by porter include:

Threat of entrants from organizations currently outside the industry Power of suppliers i.e. providers of inputs or materials for production Power of buyers i.e. recipients of products/services Threat of substitutes i.e. things customers might buy instead Competitors/rivalry competition within the industry

THREAT OF NEW ENTRANCE: The threat of entrance into the oil and gas industry is Low due to the fact that there is high barrier of entrance into the industry. Investment requirements; Some of the companies that constitutes the oil and gas industry like BP uses heavy and very expensive equipments at well sites and also the availability of human resources in terms of scarcity of subsurface reservoir engineer and geologist all this contribute to the high barrier of entrance into the industry.

5

POWER OF THE SUPPLIER: The bargaining power of suppliers is Medium and this is because there is the suppliers according to oil and gas statistics (www.oilandgassuppliers.com) show that there are quite a number of suppliers and also the buyers as well such as Bp and some other companies that constitute the industry are quite a number as well. POWER OF BUYERS: The balance of power shifts toward buyers. Oil is a commodity and one company's oil is not that much different from another companys and this leads buyers to go in favor of lower prices and or better contract terms. The power of the buyer will be regarded has being Medium because buyers are many and can switch from the consumption of Bp products to another oil and gas companys product and at the same time an individual buyers decision does not necessarily have an impact on the company and the industry is the key supplying group to the many buyers. THREAT OF SUBSTITUTES: Threat of substitutes is Low and the Substitutes for the oil and gas industry includes alternative fuels such as coal, gas, solar power, wind power, hydroelectricity and nuclear energy which is still in the developing phase as in the case of Bp (Bp.com) and also involves high cost of production. COMPETITIVE RIVALRY: The level of competitive rivalry is high; the industry is characterized by big companies which produce low differentiated products and there is low threat of substitute and also low threat of new entrance into the oil and gas industry. Using both frameworks, porters five forces and porters strategic groups, we can observe that the industrys major players are the giant companies in the industry, and the level of rivalry is high and the industry is somewhat attractive to an extent although the powers of both the suppliers and buyers is medium but the threat of new entrance and substitute is low which means that profitability is not reduced by substitute and the industry is attractive. Longer-term Objectives

Maintain momentum on safety and risk reduction. Develop and apply new technologies that access new hydrocarbons or extract

and process them more efficiently Upstream

Generate strong returns within a disciplined nancial framework. Deliver growth through increased reinvestment in higher return opportunities. Maintain our strong incumbent positions and a diversied portfolio of deep water, giant

elds and gas value chains. Build material new positions for the long term

Downstream

Grow free cash ow Reduce our exposure to rening when not part of an integrated value chain. Re-orientate the geographic mix of our downstream footprint to growth markets.

6

6.0 Primary Activities

Inbound Logistics includes warehousing, materials handling, inventory control, etc. Operations are the activities that transform inputs into finished products. Outbound Logistics includes the activities that store and distribute products to buyers

Marketing and Sales are the activities that provide the means for the buyer to purchase Service includes activities which enhance or maintain the value such as installation,

repair, parts supply, etc.). BPs primary activities include research and development in terms of technological innovations, production creation of fuels and other products, marketing and sales in terms of distribution via service stations and lastly services to the customers and the supportive activities include the company infrastructure like buildings and equipment, information system, human resources (skill employers) and finance in terms of cash. 7.0 BPs Global Marketing

Multinational corporations operating in complex and diverse political, economic, social and cultural environments have to improve, adjust and develop their marketing strategies on a regular basis. Changing environmental factors create new conditions for their operating, which often require considerable and serious changes in strategic decision-making and positioning of companies. Inflexible and rigid firms will cease to be competitive in the market every time changes occur. The aim of the present report is to identify the past and present changes in marketing strategy of BP, which have occurred under the pressure of environmental factors.

7.1 BPs 4P

BP has some unique characteristics that influence how we follow the 4Ps of marketing product, price, place and promotion. 1. Product: Fuel is a commodity product offered by all the oil companies in all over the

world. It is difficult to offer customers a point of difference with fuels. However, BP does so by selling petrol and diesel that is better for the environment. BP is the only oil company in world to sell superior fuels that are kinder to the environment. BPs Products Line is:

Fuels & stations Motor Oils& Lubricants Convenience Shop

2. Price: With common products in the oil industry, prices between competitors are easily

matched, which means its difficult to differentiate our product based on price. If BPs competitors undercut us on price, BP see significant losses in volumes sold. A one cent per liter price reduction requires retailers to achieve a 25% increase in volume to break even on site. Pricing Strategy is:

Competition Based Profit Oriented for Extremely Inelastic demand Invigorate

3. Place: BPs network of service stations is a vital strength in marketing strategy we have

some of the best locations for the service they provide. And research shows customers mainly choose fuel retailers based on their location. They have a significant investment in ensuring right number and quality of locations for our customers. Strategy is:

Direct and Indirect Marketing

7

Worldwide Retail Network Distribution Channel

4. Promotion: Research shows that customers respond well to our promotion campaigns,

such as the AA Rewards programme. Our loyalty programmes are a valuable point of differentiation; we use them to drive sales volumes and counter our competitors activity. BPs main promotional focus is on:

Commercials Out of Home advertizing Pumps reward program CSR Activity

7.2 Market Segments

This consists of a group of customers who share a common need or want. The task was to identity the different segments in the target market in order to target them. With segment marketing, the company offers a better design, price, delivers the product better and is able to fine-tune the marketing program. The segment marketing was divided into geographic segmentation and demographic segmentation.

Geographic segmentation Population Density Territory Weather

Demographics segmentation

Income Occupation Age

Behavioral and Psychographic Segmentation

Green Revolution and environment consciousness Luxury of Travel

7.3 Market Promotion

BPs strategy was a promotional campaign to transform BPs retail brand image at its locations in the United States. Buying gasoline is a low involvement purchase and consumers have low expectations regarding their purchase experiences. Armed with that consumer insight, BP created and executed the $45 million Helios Power advertising and brand-building campaign, which is an extension of BPs Beyond Petroleum corporate campaign that began in the early 2000s. The Helios Power campaign consisted of the following marketing tactics:

A little better tagline. BP customers can expect to receive a little better experience at its service stations and other retail outlets compared to those of its competitors. Hand elaborates, In this market, a little better means a lot. People see refueling as a necessary and unpleasant chore. However, BP can be cleaner and friendlier, and thats why people will choose us rather than our competitors. And this choice will be made on an emotional basis because customers like what we stand for.

Animated TV ads. These feature a family of characters (the Lighthouse family, the Babies, and the Beeps) and a catchy tune designed to reinforce the emotional appeal of the BP brand. The TV ads aired during some of the top U.S. TV shows (American

8

Idol, Ugly Betty) and also had exposure on YouTube. The purposes of the ads were to generate awareness of and an emotional connection to the BP brand and its offerings.

In-store give-aways. At the launch in April 2007, environmentally friendly paper bags, T-shirts with a fun new look from the campaign, kids activity books and trading cards featuring the campaign characters, and sunflower seed packets were handed out to customers throughout the entire network of BP stations.

Unique Web site. The www.alittlebettergasstation.com Web site features the Gas Mania interactive game, selected animations, ringtones, screensavers, a sweepstakes, and the TV ads.

Street teams. BP and Ford teamed up to promote the use of BPs Ultimate gasoline in Fords new Edge automobile. Videos featuring groups of college-aged students were created to showcase the BP brand in Florida and the ARCO brand in California.

7.4 Branding

Branding is all about creating alignment of companys business processes with its corporate culture. BP (BP) provides a case in point of a brand that got way out front of its business process and culture to produce tremendous exposure to risk. Back in 2000, BP announced a major change in posture from "BP" to "Beyond Petroleum" and spent hundreds of millions of dollars promoting their new position. Only BP is the only global energy company moving to new sources of energy that includes solar power. BP Three Branding Themes:

BP Progressive and Profitable (appeals to Investors Archetype) Moving to new and profitable sources of energy for the future.

BP Business Alternative Energy Sources (appeals to Business Archetype) Developing

more efficient and alternative forms of energy to move you ahead.

BP Beyond Petroleum (appeals to Public Perception Archetype) Investing for a Greener future

BP Brand attributes supporting being only:

BP Green BP is the only energy company investing in and pursuing alternative energy sources; namely solar power

BP Progressive BP is striving to find more efficient ways to produce energy with

proven leadership in solar power

BP Quality BP focuses on safety and operational excellence BPs Brand Archetypes:

BP Investors Archetype: Investors are looking for profitable companies with less investment risk. BP is the only company vs. its direct competition coming up with unique and profitable alternative energy sources.

BP Business Archetype: BP helps businesses be more energy efficient and green

through partnering. BP provides multiple energy alternatives.

9

BP Public Perception Archetype: The lesser evil of oil companies, BP is the greenest energy company with demonstrated leadership in solar power.

8.0 Conclusion

BP is back in business in the deep waters of the Gulf of Mexico, having recently received its first permit to drill since the explosion on their Deepwater Horizon rig last year that killed 11 people and ruptured the Macondo well hemorrhaging millions of barrels of oil into the Gulf the largest offshore oil spill in U.S. history. That explosion destroyed ten years of green marketing for BP which adopted Beyond Petroleum tagline and cheery green and yellow sunburst logo in 2000 as the ensuing environmental disaster plunged the brand into a nightmare as deep as the waters it drills. The meet our people and storytelling strategy is one small step in BPs post-Gulf branding, focused on its human resources rather than product or promises. It may be concluded that the main strategic changes undertaken by BP in response to the turbulent and dynamic environment are contracts with the governments to avoid political risks, moving to more stable countries such as India from the northern Africa, acquisition of the solar panel manufacturers, investment in wind and solar projects, moving manufacturing facilities to China, investment in energy efficiency, reduction of carbon content in fuels, participation in 'green' activities an 'green washing'. The company had to transform its generic strategy from cost leadership to differentiation since cost reducing practices had led to oil spills and leaks. It may be summarized that the identified changes were necessary. Nevertheless, the company could have been more honest and open in its CSR projects.

10

Bibliography http://www.bp.com/en/global/ http://www.google.com US Department of Labour (2011) 'BP History Fact Sheet', [online] Available at: http://www.osha.gov/dep/bp/bphistory.html Aulds, T. (2010) 'BP: 500,000 pounds of emissions released', The Daily News, [online] Available at: http://galvestondailynews.com/story/157738/. Bamberg, J. (2009) The History of the British Petroleum Company, Cambridge: Cambridge University Press. BP (2001) 'Technology and business - a progress report', [online] Available at: http://www.bp.com/genericarticle.do?categoryId=98&contentId=2000347 BP (2012) 'Annual Report', [online] available at: http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/I/BP_Annual_Report_and_Form_20F.pdf BP (2011) 'Strategy', [online] Available at: http://www.bp.com/genericsection.do?categoryId=135&contentId=7038549 Jens Trulsson (2010) Universum Quarterly: The future of BPs brand, Universum US Department of Labour (2011) 'BP History Fact Sheet', [online] Available at: http://www.osha.gov/dep/bp/bphistory.html