BP Plc Formerly Known As British Petroleum Commerce Essay

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BP plc formerly known as British Petroleum is one of the largest energy companies in the world. BP Plc is a product of the 1998 merger between BP and Amoco.

The main activities of BP are oil and gas exploration and production, refining, marketing and supply of petroleum products, manufacturing and marketing of Chemicals, Gas and Power generation and the manufacture of Photovoltaic (solar) cells. The Group operate in over 100 countries with businesses in Africa, Asia, Australasia, Europe and North and South America.

The Group intends to sustain growth of earnings by developing the company portfolio, improving productivity and expanding further globally.

MISSION STATEMENT

"In all our activities we seek to display some unchanging, fundamental qualities - integrity, honest dealing, treating everyone with respect and dignity, striving for mutual advantage and contributing to human progress".

To translate these into guides for practical action, we build on them in our group values. By bringing together intentions previously that articulated in a number of different policy statements, these make it clear that the group aims:

to have the best competitive corporate, operating and financial performance

to improve, and to be accessible, inclusive and diverse

to engage the creative talents of our employees, and develop and apply leading, cost-effective technology and intellectual creativity to enhance innovation and new ideas

to carry on its business in an environmentally responsible manner, and develop cleaner energy and renewable energy sources. The group is committed to the responsible treatment of the planet's resources and to the development of sources of lower-carbon energy.

PRODUCT & SERVICES

BP offers a wide variety of products and services for domestic, industrial and business purposes.

Gas and fuel cards

Gas and petrol stations

Motor oil and lubricants

Route & journey planner

Gas and petrol station locator

Liquified petroleum gas

Solar powered energy

Solar power for your business

Air BP

ARCO Aluminum

Aromatics & Acetyls

Asphalt and bitumen

BP Franchising

BP Shipping

Gas and power energy

Invoice tracking system

SWOT ANALYSIS OF BP

STRENGHTH

Dominant market position:

AS one of the world's leading Oil Company, BP Plc has a strong market position based on its market capitalization and proved reserves. It is the largest producer of hydrocarbons in the UK. BP Plc is also one of the largest producers of natural gas in the UK based on volume. BP Plc is a leading producer and marketer of NGL's in North America.

BP Plc also has a strong market share in aromatics and acetyls business. Particularly in Asia where it has a strong position in PTA and acetic acid industry.

Air BP is one of the world's largest supplier of fuels to the aviation industry, BP supplies fuels to many major commercial airlines, military and general aviation sectors. It supplies to customers in about 80 countries and has annual marketing sales of 27.4 billion litres.

Good brand Image:

BP Plc has a strong and highly respected brand name and image. With over 100 years of operating across the globe. Their brands, BP, am/pm, Aral, ARCO and Castrol are well recognized and trusted by customers all over the world.

Strong bargaining power:

BP Plc has a strong bargaining power in the global oil industry. This is because it controls close

Vertically integrated operations:

BP Plc is involved in upstream, midstream and downstream oil business. It operates through three business segments: exploration and production, refining and marketing, gas, power and renewables.

The company's vertically integrated operations give it a good advantage over its competitors because they have strong operational efficiencies. BP Plc also has control over its entire value chain, which gives a significant competitive advantage in the global oil market.

Wide geographical presence:

BP Plc has a presence strong presence in over 100 countries across all major markets like US, Middle East, China etc. This gives the company a large market area to explore.

Diverse revenue streams:

Over the years BP has developed diverse revenue streams, it is not overly dependent on any market. The company has a large consumer base and wide spread sources of revenue. This helps to reduce the impact of market volatility and provides economic stability.

WEAKNESS

Decline in production:

BP Plc's crude oil and natural gas production have declined over the years. Its crude oil production fell by 5.8% to 2,414 thousand barrels per day between 2005 and 2007. There has also been slight decrease in crude oil production from its geographic markets in the United Kingdom, America and the rest of Europe.

BP Plc's natural gas production also declined by 3.3%, between 2005 and 2007. These reductions in the oil and gas production has had a big impact on the company's operating margin.

Fluctuating cash from operations:

There has been a fluctuation in the cash BP Plc's receives from its operations. Its cash from operations declined from $26,721 million in 2005 to $24,709 million in 2007. Though its cash flow from operations in 2006, it declined by 12.4% in 2007. The company therefore needs to manage its cash balances more effectively, because this can weaken its short term liquidity which will affect future expansion plans.

OPPORTUNITIES

Rise in oil price:

The price of crude oil has been increasing at a very high rate over the years. West Texas Intermediate (WTI) crude oil prices have increased continuously in 2008. This is caused by the supply uncertainties in several oil exporting regions coupled with increasing demands in emerging markets. This strong demand and tight supply condition is expected to continue and BP Plc can capitalize on this situation. Since Oil is BP's strong competency which it derives most of its revenue from, a rise in oil price could increase BP Plc's top line growth.

Increased demand for LNG:

The global consumption of natural gas is expected to increase by nearly 65% between 2008 and 2025. the company has strong positions in the North Sea and North Africa. It has significant gas sales through pipeline and LNG in Asia. BP Plc is also expanding its LNG business by accessing import terminals in Asia Pacific, North America and Europe. With BP Plc's strong market position and company focus on natural gas and LPG, it is well positioned to tap into opportunities in the growing LNG market globally.

Rising demand for refined products and petrochemicals in China:

The demand for refined petroleum products and petrochemicals in China is expected to increase continuously. Despite the fact that China has increased its refining capacity over the years, they are still expected to remain a net importer of refined petroleum products. This is because of their large population which their present refining capacity cannot satisfy. BP Plc already has a manufacturing base in China, and is well positioned to tap into the growing petrochemical market.

THREATS

Saturation of resources in the North Sea

BP Plc has extensive off shore operations in the North Sea, this region has been highly prospective in the past decades and therefore a lot of exploration has been done there. The region is slowly becoming saturated and successions of dry holes have been drilled in the last few years. This has been a major Challenge for BP Plc because new exploration activities in other parts of the world will require significantly high investments.

Instability in some oil producing regions:

BP Plc explores and produces crude oil in about 29 countries of the world. Many of these countries are prone to political instability. Even though BP Plc has been operating in these countries for a long time, the geo-political risks are outside their control. Failures to anticipate these events or the inability to mitigate risks in these regions could seriously hinder BP Plc's operations and disrupt the flow of output.

Environmental regulations:

With the increase in global warming, environmental regulations have become stricter in recent years. One of the most important developments in this area has been the introduction of the Kyoto Protocol for the reduction of green house gases. Industrialized countries have been asked to reduce their green house gas emissions by 5.2% on an annual average between 2008 and 2012. Various other policies have been introduced to reduce the green house emission. BP Plc already has a weak record in environmental matters and a further introduction of these strict regulations may impose new liabilities or increase operating expenses which could result in a decline in profitability.

BP BRANDS

The products and services offered by BP come under different brand names, each with its own unique identity and heritage.

These brands are:

BP: This is the main global brand of BP Plc, it appears on productiion platforms, refineries, ships solar products, research facilities, retail service stations and corporate offices. The logo was inspired by the image of a sunflower: a living organic form, reflecting BP's commitment to more environmental ways of producing energy.

ARAL: This is a super brand in Germany, with more than 2.5 million customers visiting their service stations daily, to buy petrol, use the car wash and to purchase a beverage or snack.

ARCO: This is the leading, gasoline brand in western United State of America (USA), with about 800,000 visiting an ARCO station daily to buy gas and make use of the on-site convenience store.

CASTROL: This a BP brand that produces lubricants for every possible engine or machinery on land, sea and air. These products are available in over 150 countries worldwide.

AM/PM: This is a convenient store brand in western America, located in all ARCO service stations. It is open 24 hours, providing a variety of snacks and drinks to its customers.

WILD BEAN CAFÉ: This brand provides freshly baked products and coffee. It is located in BP connect stations in Europe, Australia and South Africa.

These brands are more than a symbol they represent the perception and reputation of BP, they have the same fundamental attributes, which are:

Green

BP is committed to the proactive and responsible treatment of the planet's natural resources and to developing sources of lower carbon energy. An example is the commissioning of a carbon dioxide capture and storage plant in Algeria that stores carbon dioxide in geological forms below the earth's surface.

Performance driven

All BP brands are committed to a global standard of corporate and financial performance, which enables BP to deliver on all its promises. These include environmental performance, safety, growth, and customer and employee satisfaction.

Innovative

In the area of technological development, strategic planning and strategic marketing, BP combines the creativity of its employees in seeking new ways to deliver breakthrough solutions. An example is the new oilfield drilling technology that extends the working life of mature oil and gas fields, allowing us to reach otherwise inaccessible reserves.

Progressive

By looking new ways and desiring better approaches, BP is a force in societal progress. These includes driving economic growth, helping communities progress and providing opportunities for personal progress by advancing people on merit, building an inclusive culture and enabling people to fulfil their potential.

BRAND PHILOSOPHY

Beyond petroleum

"Beyond petroleum is a summation of what our brand stands for. It is our way of expressing it to the world in the most succinct and focused way possible. It is both our philosophical ideal and a practical description of our work".

In line with fundamental beliefs and brand philosophy of BP, we came up with a product, which reflects their commitment to environmentally friendly products.

BP discovered the opportunities in the light bulb industry, which is primary out of the scope of operations of the company but falls under the fundamental beliefs of the company. By diversifying into these new product line, we hope to implore the right mix of BP's strength into this new and attractive industry.

The Motion Sensor Eco Light Bulb.

This bulb is an energy saving light bulb that responds to motion. It comes on only when it senses movement in the area it covers. Thereby saving energy consumption and cost.

Survey shows that it is not just energy saving light bulbs that can reduce energy consumption. Simple acts like, switching off the lights when we leave a room or area saves a lot of energy. We know that consumers do not readily do this.

With BP Helios you don't have to switch on and off, it knows when you are in the room and when you leave it goes off after 10 seconds!!!

BP HELIOS

PRODUCT DEVELOPMENT PROCESS

IDEA GENERATION

In line with fundamental beliefs and brand philosophy of BP, we came up with a product, which reflects their commitment to environmentally friendly products.

United Kingdom's government policy of reducing the emissions of the greenhouse gases that is responsible for heating up the atmosphere by 12.5% over the next few years.

The green house effect is the effect of the absorption of the earths radiated heat rays by the green house gases in the atmosphere causing unfavourable climatic condition. One of the major green house gases is carbon dioxide, which is created from the falling and burning of trees, combustion of car fuels and high-energy bulbs

The Government has enlisted the support of major retailers, energy supplies and the lighting industry in the drive to phase out traditional high energy bulbs. This initiative is estimated will save five million tonnes of carbon dioxide each year and takes UK closer to achieving its target of reducing green house gas emission by 60% by 2050.

IDEA SCREENING

This process involves screening the ideas generated above and determining the feasibility and workability of the idea generated within the resources available to BP.

The objective was to eliminate any indifference in the concept development of the product through a series of developmental and testing process.

This idea where screened by determining:

How beneficial is the product to the customer in the target market

The size and growth forecast of the target market

The competitive pressures from rival companies

Future market trends

The technicality involved in the production process

How profitable is the product

CONCEPT DEVELOPMENT AND TESTING

The concept development is very essential because the consumers do not buy the product idea but the product concept. In developing the product concept, the following factors were considered:

The unique features of the product

Customers' reaction to the product

The gap level the product is expected to fill because the wider the gap the more customers are interested in the product.

How reasonable is the desired price of the product.

The concept was tested by presenting the product concept to the target customers and getting a feedback.

MARKETING STRATEGY AND DEVELOPMENT

According to Baker (2007), marketing strategy is the selection of activities that satisfies specific customer needs. It is based on the customer needs and accessibility to a variety of product and services. The marketing strategy will be to develop brand equity, increase customer awareness of BP Helios, and build the customer base. The strategy will use several different methods to achieve these goals. The BP Helios is a new product in an existing market has other energy saving bulbs exist in the market.

Target market

The target market of the BP Helios is the entire population of the United Kingdom. Because everybody uses the traditional light bulbs for visibility in their homes, offices, warehouses, restaurants, shops and every building. The BP Helios been energy saving will serve as a good replacement for traditional bulbs due to its cost effectiveness and eco friendly nature.

Segment marketing

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 offer a better design, price, deliver 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

This is the process of dividing the market into divided into different geographical units within the United Kingdom.

The immediate geographic target is the city of London.

The total targeted population is just over 7 million people.

Demographics segmentation

This is the process of dividing the market into groups based on the variables of homes, offices, warehouses and all buildings in the United Kingdom.

Homes: of the total electricity bills in a household lighting incurs about 25%. This will essential interest household, which means there are substantial savings to be made so with the cost of generating and distributing electricity becoming more expensive.

Offices: Business always desire to maximize profit and this can be achieved by reducing their overhead cost of operations. Reducing utility bills like electricity bill is an effective way of attaining cost effectiveness.

Warehouses and other buildings: these are very large building and that will require a different specification to the BP Helios bulbs needed in homes and offices.

MARKETING OBJECTIVES

The marketing objectives include:

To achieve brand equity targeted at 75% of the United Kingdom population

To achieve a market share of about 35% in the United Kingdom by 2011

Market niche

The market niche in which BP intend to explore w

ONLINE PRESENCE

The BP Helios is a good innovation, which we know will be of great use and help to the consumers. However, the success of BP Helios depends on how we reach effectively reach our target market.

E-Commerce has revolutionalised the way we market our products and reach our target market. The success of BP Helios requires an online presence for it to be able to reach a wider range of consumers.

A large amount of the UK population will rather purchase products from the comfort of their homes or find out about products on the internet rather than go to exhibitions or the local stores.

The internet will be a good way to communicate our product to people both in and outside the UK.

We hope to achieve brand equity and increase sales geometrically through this medium.

BP Plc is already a well-known and trusted name in the UK and other parts of the world.

We intend to make the online presence of BP Helios as user friendly as possible; this will make it easy for anyone of any age range to use.

There will be a quick link, from the main BP website to the eco-friendly page.

The Eco page will have the same colour scheme as the main BP sites, which is GREEN; it would also have pictures of Eco- Friendly homes and plants, which is aimed at conveying our message of a GREENER environment.

We intend to have 4 easy steps to ordering, which are

Main page

Product Selection

Checkout

Payment

For customers who have more time to spare, they can get in depth information regarding energy saving and the features of our products.

We will have links such as

Energy saving calculator

Online chat room with other consumers

The website will encourage consumers to subscribe and give their preferred form of contact so we can provide up to date energy saving information and tips.

The website will also help us to monitor the buying trend of our customers based on

Age

Location

Sex etc

We will use famous celebrity families couples like Jamie and Jools Oliver, The Redknapps etc to create brand awareness. There will be pictures of them on the internet and a demo of various advertisements by them.

We will also sign up for prime search result positions on popular search engines like Google, Yahoo, Ask, yell etc… This means we will be the first to pop up when anyone tries to search for energy saving bulbs. This is aimed at attracting customers who are not looking for BP Helios specifically but will need it.

We also aim to create customer loyalty by having promotions for regular buyers.

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