Critical Evaluation of Business Level Strategy and Key Success Factors of BP in Petroleum Industry (Dissertation Sample)

Critical Evaluation of Business Level Strategy and Key Success Factors of BP in Petroleum Industry
Declaration
I……………………………………………………..hereby declare that this piece of work is my original work and has never been presented in any institution of learning institution.
Abstract
This study sought to explore financial and business performance of British Petroleum (BP) plc, its competitive advantage, business level strategy and key success factors of its successful growth and expansion over a period of time. Secondary data drawn from BP website and annual reports , media and various databases were used to extract qualitative and quantitative to address the research questions. Analysis of various key performance indicators reveal that the company has a positive and commendable business and financial performance, evident in various profitability measures, leverage measures and earnings as well s revenue per share. The only exception, where losses, poor leverage and earnings per share was reported was in , possibly due to the Gulf spillage which has huge administrative cost. The company’s competitive advantage is attributed to strong brand and good and stable financial and business performance. It is recommended that the company expands its market and tighten its risk assessment as well as disaster management strategies to minimize regulatory costs.
Key Words: ROE , ROA, ROCE, total asset to equity ratio, debt to equity ratio , earnings per share, of British Petroleum (BP) plc, key performance indicators
Dedication
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Acknowledgments
I would like to express my sincere gratitude and appreciation to a number of individuals without whom my dream to obtain a [level of the degree eg. Bachelors , masters ,doctoral] degree would have been extremely difficult.
I would like to acknowledge my awesome dissertation committee members, [Names] for their professionalism, advice, and support, particularly throughout the dissertation process.
Sincere thanks also to my wonderful and [Friends and relatives]
I am eternally grateful to you all and will never be able to repay you for all you have done to help me make my commitment a reality.
Table of Contents
TOC \o "1-3" \h \z \u Declaration PAGEREF _Toc397962049 \h ii
Abstract PAGEREF _Toc397962050 \h iii
Dedication PAGEREF _Toc397962051 \h iv
Acknowledgments PAGEREF _Toc397962052 \h v
Chapter 1: Introduction PAGEREF _Toc397962053 \h 1
1.1 Background PAGEREF _Toc397962054 \h 1
1.1.1 Academic Background PAGEREF _Toc397962055 \h 1
1.1.2 Organizational Background PAGEREF _Toc397962056 \h 2
1.2 Problem Statement PAGEREF _Toc397962057 \h 2
1.3 Aims and Objective PAGEREF _Toc397962058 \h 3
1.4 Significance of the Study PAGEREF _Toc397962059 \h 3
1.5 Definition of Key Terms PAGEREF _Toc397962060 \h 4
1.6 Overview of Chapters PAGEREF _Toc397962061 \h 4
Chapter 2-Literature Review: PAGEREF _Toc397962062 \h 4
Chapter 2: Literature Review PAGEREF _Toc397962063 \h 6
Conceptual Framework PAGEREF _Toc397962064 \h 6
Financial and business performance PAGEREF _Toc397962065 \h 6
Key Performance Indicators PAGEREF _Toc397962066 \h 7
Profitability Key Performance Indicators PAGEREF _Toc397962067 \h 7
Profit Margin Analysis PAGEREF _Toc397962068 \h 7
The Return on Asset (ROA), return on equity ratio (ROE) and return on capital employed (ROCE) PAGEREF _Toc397962069 \h 8
Other Measure of Financial Health PAGEREF _Toc397962070 \h 9
The Current Ratio: PAGEREF _Toc397962071 \h 9
The current ratio is calculated as flows: PAGEREF _Toc397962072 \h 9
Quick Ratio / Acid Test PAGEREF _Toc397962073 \h 10
Gearing/ Leverage / Debt to Equity Ratio PAGEREF _Toc397962074 \h 10
Equity to Asset Ratio PAGEREF _Toc397962075 \h 11
Competitive advantage PAGEREF _Toc397962076 \h 11
Business level strategy PAGEREF _Toc397962077 \h 12
Theoretical Framework and Models PAGEREF _Toc397962078 \h 13
TOWS Analysis PAGEREF _Toc397962079 \h 13
Factors Affecting Business Performance of Energy Sector and Oil Companies PAGEREF _Toc397962080 \h 14
Potential Regulatory Cost PAGEREF _Toc397962081 \h 14
Potential Disaster Cost PAGEREF _Toc397962082 \h 14
Regulatory Offset PAGEREF _Toc397962083 \h 15
Potential Supply/Demand PAGEREF _Toc397962084 \h 15
Chapter 3: Research Methodology PAGEREF _Toc397962085 \h 16
Research Questions PAGEREF _Toc397962086 \h 16
Research Philosophy PAGEREF _Toc397962087 \h 16
Research Design PAGEREF _Toc397962088 \h 17
Data, Data Sources and Data Collection Methods PAGEREF _Toc397962089 \h 18
Data Analysis PAGEREF _Toc397962090 \h 19
Ethical Considerations PAGEREF _Toc397962091 \h 19
Chapter 4: Findings, Analysis and Discussions PAGEREF _Toc397962092 \h 19
Profitability Key Performance Indicators PAGEREF _Toc397962093 \h 20
Profit Margin Analysis PAGEREF _Toc397962094 \h 20
Analysis of Profitability Returns PAGEREF _Toc397962095 \h 23
The Return on Asset (ROA) PAGEREF _Toc397962096 \h 23
Return on equity ratio (ROE) PAGEREF _Toc397962097 \h 25
Return on capital employed (ROCE) PAGEREF _Toc397962098 \h 26
Other Measure of Financial Health PAGEREF _Toc397962099 \h 28
Earnings per Share PAGEREF _Toc397962100 \h 30
Equity to Total Assets PAGEREF _Toc397962101 \h 32
Key Factors that have Influenced BP’s Performance PAGEREF _Toc397962102 \h 34
Potential Regulatory Cost PAGEREF _Toc397962103 \h 34
Potential Disaster Cost PAGEREF _Toc397962104 \h 35
Regulatory Offset PAGEREF _Toc397962105 \h 36
Competitive Advantage and TOWS Analysis PAGEREF _Toc397962106 \h 37
Business strategies and impacts of strategies on performance PAGEREF _Toc397962107 \h 38
Chapter Summary PAGEREF _Toc397962108 \h 38
Chapter 5: Conclusions and Recommendations PAGEREF _Toc397962109 \h 39
Limitations and Implications for Future studies PAGEREF _Toc397962110 \h 40
References PAGEREF _Toc397962111 \h 41
Chapter 1: Introduction
The present study investigates financial and business performance of British Petroleum (BP), its competitive advantage, business level strategy and key success factors of its successful growth and expansion over a period of time. The choice of BP and not one of the other major players in the oil industry is purposeful. As will be illustrated in the discussions below, BP is one oil company that has undergone extensively publicised and unprecedented strategic and operational challenges in the past that would have ordinarily led to its collapse. Despite various financial difficulties, heavy losses from legal risks, challenges of operating in diverse cultural environments, among other challenges, the company has managed to attain sustainable growth and impressive market performance as well as market leadership in the energy sector. This chapter, however, seeks to provide background to the study .It presents a brief academic and factual background to the study, states the problem for the study, defines the aims and objectives of the study and also highlights the justification for the study and the structure and composition of the present work.
1.1 Background
A brief academic and organizational background is crucial to understanding the problem for the study as well as its contribution to literatures and practice.
1.1.1 Academic Background
With the endless cycle of economic austerity, competitive market environment as well as challenging socio-political and legal environment that has characterised the market in the recent past, attainment of sustainable growth and development has been a major challenge for many companies (Meyer et al., 2011; Murray, et al., 2012; Sullivan et al., 2013). Yet, a few companies have managed to absorb these pressures and continued to grow in their economic and financial performance as well as other organizational health metrics. It has been shown that success in the market is a question of strategy and resource utility optimization: successful organizations are those which effectively set their strategies, based on the analysis and evaluation of its best available resources and sound determination of how to use such a resource (Foss, 2011; Foss & Knudsen, 2013). This help the organizations accumulate these resources and effectively utilize them in order to develop their competitive advantage in business and enhancing their financial position through gaining profitability (Clulow, Gerstman & Barry, 2003). The concept of competitive advantage is extensively used in the context of trade, marketing and strategy to refer to a circumstance or a condition that puts an organization in a superior or favourable business position (Clulow et al., 2003; Warf & Stutz, 2007). Such superiority enables a company to perform better than its competitors, in regards to key performance indicators, particularly in sales, margin and customer retention. This concept is discussed further in chapter 2, under conceptual framework.
While there seems to be a general consensus that strategy, market evaluation and resource utilization are some of the key factors to organizational success, there are no hard and fast rules on how specifically these aspects are to be carried out (Foss & Knudsen, 2013). Even more, there are many other success factors such as investment in resource and development, entrepreneurship, innovation among others and it is not always easy to ascertain the ones at play in realization of success of an organization (Teece, 2010).
1.1.2 Organizational Background
BP plc, formerly British Petroleum is among the globally larg...