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BP, formally known as British Petroleum, is one of the largest energy companies of the world. The company's operation consists of, providing fuel for transportation, energy for heat and light, as well as providing retail services, and petrochemicals products. BP has operations of some sorts in at least 30 countries, employing well over 80,000 people. Along with its 16 refineries, some fully owned and some partially owned, BP has over 22,400 service stations and a variety of brands.
Outside of its main BP brand, there is also Aral, fuel and station stores throughout Germany, Arco, fuel and stations throughout the west coast of the US, Am/Pm convenient stores also throughout the west coast of the US, Castrol oil, one of the world's top motor oils and specialist lubricants brands, and Wild Bean Café which is a café that offers affordable fresh coffee, foods and meals.
The company's history began in 1908, when William Knox D'Arcy's seven year search for oil proved successful, in the rugged, arid southwest region of Persia (now known as Iran). It was then that the Anglo-Persian Oil Company became known and made claim to the greatest oil find of its time. The British government quickly became the company's major stakeholder while on the eve of World War I. Winston Churchill, then chief of the British navy, saw the wells in Persia as a bottomless source of fuel for Britain's modernizing fleet. Later own in the 1920's-30s, the company would see great profits with the recent emerge of petroleum-burning automobiles and petroleum-burning power plants.
The company now, renamed as Anglo-Iranian Oil Company (AIOC) operated what was then the world's largest refinery near the city of Abadan. The refinery also played huge parts for the Allied during World War II which continuously fed the Allied's war machines. In an attempt to move beyond its image as a quasi-colonial enterprise, in 1954 the company rebranded itself the British Petroleum Company. Understanding the need to reach larger areas, the company began to build up a network of new holdings. When the British government began to sell off its stake in the company, BP began buying up companies such as Standard Oil of Ohio, ARCO and Amoco, making its presence in the American market through the 1980s and 90s.
BP would go on to become involved in one of the largest infrastructure projects ever attempted in North America and prided themselves on the environmental sensitivity of its planning, which included raised platforms in certain stretches so as to not impede the natural migrations of caribou. However, its recent record in North America will likely be remembered more for its mishaps than its achievements. In 2005, an explosion in a BP refinery killed 15 workers in Texas. Over 250,000 gallons of oil spilled through corroded sections of the BP pipeline in Alaska in 2006, leading to a partial shutdown of the company's Prudhoe Bay field and a costly cleanup. In both instances, it was suspected that cost-cutting measures established by BP executives had led to poor maintenance. And the most recent which is said to be the worst in history is the explosion on the Deepwater Horizon oil rig in 2010 which killed 11 people and caused the biggest oil slick in US history.
From what I could find, BP's mission statement goes as followed: "BP wants to be recognized as a great company, competitively successful and a force for progress. We have a fundamental belief that we can make a difference in the world. We help the world meet its growing need for heat, light and mobility. We strive to do that by producing energy that is affordable, secure, and doesn't damage the environment. BP is progressive, responsible, innovative and performance driven."Progressive - We believe in the principle of mutual advantage and build productive relationships with each other, our partners and our customers." "Responsible - We are committed to the safety and development of our people and the communities and societies in which we operate. We aim for no accidents, no harm to people and no damage to the environment." "Innovative - We push boundaries today and create tomorrowÂ´s breakthroughs through our people and technology." "Performance Driven - We deliver on our promises through continuous improvement and safe, reliable operations.""
After BP's last incident in the Gulf Coast, there are certain parts of this mission statement that will surely be under scrutiny. Statements such as, "we are committed to the safety and development of our people and the communities and societies in which we operate" and "We aim for no accidents, no harm to people and no damage to the environment" now causes serious disbelief from the public. BP is now faced with not only the economical woes that were created from the oil spill, but also its effect on the environment, the public, and the image of BP as a company. BP's scope of operations extends through six continents, and their products and services are available in more than 100 countries; all who will be affected in many ways if BP cannot bounce back from this tragedy.
BP is the third largest oil company in the world, following ExxonMobil and Royal Dutch Shell. Being that it is one of only six in its field, its economic environment seems to be that of an homogeneous oligopoly. An oligopoly can be defined as a market condition that exists when there are few sellers, as a result of which they can greatly influence price and other market factors. In a homogeneous oligopoly, the major firms produce identical products, and its prices tend to be uniform. Another reason I feel that BP and the oil industry is an oligopoly is its barriers to entry. One of the key things a new competitor would need in order to enter into the oil industry is access to key resources; which in this case, the resources are natural resources which is hard to obtain and requires special knowledge to become competitors. New firms cannot enter the industry without access to those resources. These characteristics fit BP and the oil industry perfectly.
BP, along with its five other main competitors, Exxon mobile, Royal Dutch Shell, Chevron Corp, Conoco Phillips, and Total S.A., consists of the six "supermajors" companies of the oil and gas industry. As of recently, BP is ranked third in the industry based on sales and earnings, following Exxon mobile and Royal Dutch Shell. However, BP has dropped tremendously due to its recent events. Just last week, BP reported its Q3 net profit fell 66.5% to $1.79B after paying another $7.7B in charges related to its tragic oil spill. Many of its key financial areas such as its return on equity and assets have dropped into negative figures following way behind even the smallest and less productive of its competitors. For example, its return on equity dropped to a -5.26% while its industry leader Exxon Mobile stands at 21.61%, ranking BP at #31 out of the 46 in its industry. Its current ratio stands at 1.01, which is lower than its competitors but above its industry standard of 0.72. Their total debt to equity is fairly high at 44.69 almost doubling their industry standard of 24.01 and nearly tripling Exxon Mobil at 12.61. However, as mentioned earlier, even after reporting a loss of $17 billion in the last quarter, they still managed to report a $1.8 billion profit in the third quarter. This means that even after paying off $7.7 billion due to the Gulf of Mexico spill, they still managed to perform efficiently and effectively enough to create a profit.
What do you perceive to be the most immediate challenge that should be a priority for BP? I believe that Bp has done exactly the things that they have needed to do thus far. The first thing that needs to happen is to try and find a way to right there wrong. Now I know there is no way erase what happen, or replace the lives that were lost but, they must show that they are trying to do whatever they can within their power. For example, they need to assure the public that they are addressing the issue and putting the proper procedures, equipment, and qualified people in place to prevent any future reoccurrences in their control. Next, they must try to repair, rebuild, and amend and all damages that occurred because of the spill. The key thing and what I believe to be is priority, is to acknowledge the situation, address the situation, and show what they are doing to not only correct it but prevent it from happening again.
What are the secondary issues that are emerging and must also be addressed?
The secondary issue that is emerging for BP is probably all of the legal aspects of the oil spill.