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The purpose of this study is to explore Bp strategic plan. The strategic plan would constitute of five sections namely; the description of Bp industry and its business model, an analysis of BP industry, analysis of the competitive position of BP industry, the financial forecast for 2010-2015 would be the main focus in section four while section five which is the last section, would entail recommendations to the CEO.
Strategic plan is an essential tool for decision making in each organization or business, and is indeed one of the managerial tasks that a manager should perform. Its role is to determine a point in which a business ought to be in the future, how it will get there and how it will realize whether it is where it intended to go or not. Strategic plan is quite different from business plan in that it focuses on the entire organization while the business plan focuses on products, program or service of an organization. The development of a strategic plan depends on things such as size of the organization, its culture, the nature of the leadership, expertise of planners and the environmental complexity of the organization (Grunig, Kuhn and Clark 45).
The description of BP industry
BP is a global company with its headquarters in London and United Kingdom. It is ranked fourth world wide. It is a chief producer of oil and gas a fact that has made it considered as the third-biggest energy company in the world. BP Company plays an active role in all areas of gas and oil industry. For instance, it concerns itself with activities such as exploration, distribution and marketing, refining, power generation, production, distribution and marketing, petrochemical and trading. The BP also produces renewable energies such as solar, biofuels, wind power and hydrogen. Being a global company, BP has its operations in over 90 countries worldwide (Plunkett 45).
In a day, BP Company produces about 3.8 barrels of oil. This Company has approximately 22,400 service stations in the world. BP America is the largest branch of BP Company with Its headquarters located in Houston United States. BP Company was founded in 1909 as the Anglo-Persian Oil Company. In 1954, it became a British petroleum Company until 1998 when it merged with Amoco. In its operations, it faced numerous safety incidents, said to have political influence. Since 1997, BP industry has done a lot in reducing emissions from the greenhouse gases. Initially this company got registered under the name BP p.l.c. which got replaced by BP in 2001. Bob Dudley is the present CEO of BP Company who took this position after the resignation of Tony Hayward on 1 October 2010. The company has fourteen members of the board who are responsible for day-to-day management. The company had employed up to 79,700 employees in 2010. The company operates by a set of strategies aimed at seeing to it that it produces the cheapest and quality products to its consumers’ worldwide. It targets all kinds of customers that include organizations and individual consumers (Read 61).
An analysis of BP industry
BP Company as earlier mentioned in the study is a global oil and gas Company. It is a chief produces of oil, gas and other renewable energies such as solar, wind power, biofuels and hydrogen. It produces about 3.8 million barrels of oil daily. As a result of this increase in the use of power driven machines in the 21st Century, the company has developed a strategic plan with an aim to meet high consumer demand. It is a five years plan running from 2010 to 2015. In this plan, BP Company intends to produce 4 million barrels of oil daily. The plan will involve the extension of medium-term gas and oil production overview (Plunkett 59).
The BP projects an increase in annual output by 2% every year. It will use 2008 as its base year to gauge its progress. BP Company is planning to cut down the cost of production by 3% percent of the base year. The planners aim at increasing pre-tax profit by reducing the cost of production. The BP Company is prospecting $137 billion profit per year though this will depend on how the planners would implement the project among other things. In its strategic planning, BP Company will establish a centralized development organization that will be responsible of managing all projects outlined in the portfolio. Exploration and productions are the key projects to be accomplished by BP Company’s strategic plan (Grant 78).
Analysis of the competitive position of BP Company
It is true that BP Company is among the six producers of oil, gas and renewable energy in the United States. In this regard, it faces competition from its competitors who want to dominate the market through production of similar products to that of BP Company. The strategic plan for the BP Company would enable it to maintain its position in the market through efficiency exploration and production. The strategy will focus on the impacts of BP Company on the environment. Therefore, it will invest much in the reduction of greenhouse gases that bring climate change in the world. This should be designed to develop a good image to the public with an aim to attract more customers in the future. Additionally, the company will invest over $1 billion annually in the development of energy sources that are renewable. The expected amount to be spent in 2010 t0 2015 period is approximately $937 billion. The main targeted renewable energy sources are solar. Wind power, hydrogen and biofuels (Orszulik 71).
Of these sources, the strategic plan for the BP Company will focus much on solar and wind power because they are cheap and readily available. However, the company will improve its distribution and marketing strategy by acquiring new technologies. Over the years, BP Company used vehicles to transport product to various market of organizations. The invention of underground pipes has enabled the company to reduce losses. The company has suffered a lot from fire tragedies on road transport. After establishing own pipeline company, BP Company has realized an increase in sales. Therefore, the strategic plan would aim at improving the pipeline system to ensure safe and easy transportation of oil.
Financial forecast for 2010-2015
Tony Hayward who is the active Chief executive officer for BP Company has indicated that, the company had already established a stable financial base to carry out its operations. Reduction of production and transport costs will enable the company to stand firm in financing 2010-2015 project. However, the company has signed a treaty with the World Bank. The treaty allows BP Company to get financial support through loans from the World Bank at a considerate interest rate. For the portfolio to work, the company will put much emphasis on areas such as refineries and marketing operations. BP Company is intending to spend $10 billion in refining, $13billion in marketing, and $456 billion in production of oil and gas. In the production of renewable energy sources, BP Company intends to invest $215. The company has set aside $245 billion for transport in which new roads and pipelines should be developed. In total, the company intends to spend $937 in the project (Grant 93).
BP Company’s project, is a significant step toward the growth of the company, but the Chief Executive officer should ensure that the established Centralized Developments organization enhance the integrity in the project implementation process. The strategy should also establish a body of expertise in greenhouse gases in order to reduce emissions that may hinder the attainment of the project goal. The other recommendation is that Tony Hayward should invest much on renewable energy sources like wind power, solar panel and biofuels because they present little or fewer risks on people health and environment. In the transport area, the CEO should ensure more investments in the pipeline because this would ensure safety on the environment. Road transport can cause danger to the people for instance if a transits explode. Another recommendation is that, though BP Company has assigned a treaty with the World Bank to allow it access funds through loans, the Company should not rely more on the loans because, its payment may contribute to the downfall of the company if misappropriated. There is also a need for the BP Company to consider reorganize its 4 P’s of marketing viz. product, price, promotion and placement so as to secure a competitive advantage over the other six competitors in the industry. With this regard, the company may employ competitive strategies like benchmarking against the competitors.
The study is interesting in that it explore the importance of strategic planning for the BP Company which is a global oil and gas Company in United States. The strategic plan for the BP Company focuses on key areas that include; refining, marketing, infrastructure and production. BP Company has developed a good public image through its attempts to reduce emissions from greenhouse gases, which may pose a threat to both the environment and human health.