Bp Oil Spill Essay

1151 words - 5 pages

Disaster in the Gulf: One Year Later
Business Policy & Strategy (MAN 4764-1)
Everest University
Presented to: Professor Melissa Sweeney
Presented by: Burl Hicks
April 18, 2014

Disaster in the Gulf: One Year Later
1. What external environment (general, industry, and competitive) segments do you think BP considered or didn’t consider prior to their drilling of the Gulf Coast? What should the wedding business owners now consider in their external environment?
BP decided to drill in the Gulf Coast mostly because of the oil availability and competition. Opportunity was definitely considered by BP. The North Sea was saturated with other oil companies and BP saw an opportunity in ...view middle of the document...

The Gulf oil spill was just icing on the cake. The oil industry is heavily regulated by the US government, and competition is fierce. BP skipped certain safety measures for concern of increasing cost of operations, and this led to the spill in the Gulf of Mexico. The company should have invested more in maintaining the oil rig and making sure there would be no mechanical or technical failure. They failed to do so and prevent the spill, so that damaged BP’s reputation and strained their resources even further.
3. Analyze BP using the five forces of competition model to determine the industry’s current attractiveness in terms of profit potential.
There are five forces of competition: threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products, and rivalry among competing firms (Hitt, Ireland, & Hoskisson, 2013, p. 51). BP is an oil company, so it has a huge advantage over most of these forces. Oil companies have history dating back to the early 20th century, so there is really no threat of new entrants. Any business that wishes to enter the industry needs the resources and capital that only long standing companies can afford. Product differentiation also plays a huge role, as customers come to believe products from certain manufacturers are good, and it’s difficult to break through this (Hitt, Ireland, & Hoskisson, 2013, p. 53). The company’s access to distribution channels also gives it a huge advantage over new entrants. BP practices vertical integration, as it finds, extracts, refines and sells oil by itself, so it does not concern about suppliers holding power over its business operations. The company also has little to no concern about the bargaining power of buyers and threat of substitute products. Demand for oil is higher than ever in history, and other substitute sources of power are nowhere as potent to be considered a threat. The company has a well-established chain of supplies and retailers across the globe, so buyers in many places really don’t stand a chance against BP. The only force that keeps the company in check is its rivals. Royal Dutch Shell, Exxon Mobil, Sinopec, Chevron, etc. are fierce competitors whose resources are the biggest threat to BP. These companies fight for control over huge markets like North America, Europe or potential market like China, and help keep prices in check.
4. Who might be in BP’s strategic group and why?
Companies that might be in BP’s...

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