British Petroleum (A1): Organizing for Performance at BPX SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of British Petroleum (A1): Organizing for Performance at BPX
In 1992-93, British Petroleum plc, Britain's fourth-largest of the great international integrated oil companies, faced a major crisis. The company was experiencing its first losses in its eighty-year history, while morale was battered by downsizing and organizational upheaval.
Swot Analysis of "British Petroleum (A1): Organizing for Performance at BPX" written by Joel Podolny, John Roberts includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Petroleum Bpx facing as an external strategic factors. Some of the topics covered in British Petroleum (A1): Organizing for Performance at BPX case study are - Strategic Management Strategies, Competition, Downsizing, International business and Strategy & Execution.
Some of the macro environment factors that can be used to understand the British Petroleum (A1): Organizing for Performance at BPX casestudy better are - – digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, increasing transportation and logistics costs, geopolitical disruptions, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels,
competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of British Petroleum (A1): Organizing for Performance at BPX
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in British Petroleum (A1): Organizing for Performance at BPX case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Petroleum Bpx, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Petroleum Bpx operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of British Petroleum (A1): Organizing for Performance at BPX can be done for the following purposes –
1. Strategic planning using facts provided in British Petroleum (A1): Organizing for Performance at BPX case study
2. Improving business portfolio management of Petroleum Bpx
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Petroleum Bpx
Strengths British Petroleum (A1): Organizing for Performance at BPX | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Petroleum Bpx in British Petroleum (A1): Organizing for Performance at BPX Harvard Business Review case study are -
Ability to recruit top talent
– Petroleum Bpx is one of the leading recruiters in the industry. Managers in the British Petroleum (A1): Organizing for Performance at BPX are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Petroleum Bpx has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in British Petroleum (A1): Organizing for Performance at BPX HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Petroleum Bpx has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study British Petroleum (A1): Organizing for Performance at BPX - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Petroleum Bpx are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Operational resilience
– The operational resilience strategy in the British Petroleum (A1): Organizing for Performance at BPX Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Sustainable margins compare to other players in Strategy & Execution industry
– British Petroleum (A1): Organizing for Performance at BPX firm has clearly differentiated products in the market place. This has enabled Petroleum Bpx to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Petroleum Bpx to invest into research and development (R&D) and innovation.
Organizational Resilience of Petroleum Bpx
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Petroleum Bpx does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Petroleum Bpx is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Joel Podolny, John Roberts can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Training and development
– Petroleum Bpx has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in British Petroleum (A1): Organizing for Performance at BPX Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Low bargaining power of suppliers
– Suppliers of Petroleum Bpx in the sector have low bargaining power. British Petroleum (A1): Organizing for Performance at BPX has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Petroleum Bpx to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Petroleum Bpx is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Petroleum Bpx digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Petroleum Bpx has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Weaknesses British Petroleum (A1): Organizing for Performance at BPX | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of British Petroleum (A1): Organizing for Performance at BPX are -
Need for greater diversity
– Petroleum Bpx has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study British Petroleum (A1): Organizing for Performance at BPX, it seems that the employees of Petroleum Bpx don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High bargaining power of channel partners
– Because of the regulatory requirements, Joel Podolny, John Roberts suggests that, Petroleum Bpx is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Capital Spending Reduction
– Even during the low interest decade, Petroleum Bpx has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Interest costs
– Compare to the competition, Petroleum Bpx has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Workers concerns about automation
– As automation is fast increasing in the segment, Petroleum Bpx needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to strategic competitive environment developments
– As British Petroleum (A1): Organizing for Performance at BPX HBR case study mentions - Petroleum Bpx takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Skills based hiring
– The stress on hiring functional specialists at Petroleum Bpx has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Lack of clear differentiation of Petroleum Bpx products
– To increase the profitability and margins on the products, Petroleum Bpx needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study British Petroleum (A1): Organizing for Performance at BPX, is just above the industry average. Petroleum Bpx needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Petroleum Bpx supply chain. Even after few cautionary changes mentioned in the HBR case study - British Petroleum (A1): Organizing for Performance at BPX, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Petroleum Bpx vulnerable to further global disruptions in South East Asia.
Opportunities British Petroleum (A1): Organizing for Performance at BPX | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study British Petroleum (A1): Organizing for Performance at BPX are -
Creating value in data economy
– The success of analytics program of Petroleum Bpx has opened avenues for new revenue streams for the organization in the industry. This can help Petroleum Bpx to build a more holistic ecosystem as suggested in the British Petroleum (A1): Organizing for Performance at BPX case study. Petroleum Bpx can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Petroleum Bpx to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Petroleum Bpx to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Petroleum Bpx to increase its market reach. Petroleum Bpx will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Petroleum Bpx is facing challenges because of the dominance of functional experts in the organization. British Petroleum (A1): Organizing for Performance at BPX case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Developing new processes and practices
– Petroleum Bpx can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Loyalty marketing
– Petroleum Bpx has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Petroleum Bpx can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Petroleum Bpx to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Petroleum Bpx in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Petroleum Bpx can use these opportunities to build new business models that can help the communities that Petroleum Bpx operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Manufacturing automation
– Petroleum Bpx can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Low interest rates
– Even though inflation is raising its head in most developed economies, Petroleum Bpx can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Petroleum Bpx can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats British Petroleum (A1): Organizing for Performance at BPX External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study British Petroleum (A1): Organizing for Performance at BPX are -
Shortening product life cycle
– it is one of the major threat that Petroleum Bpx is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Petroleum Bpx needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Petroleum Bpx.
Increasing wage structure of Petroleum Bpx
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Petroleum Bpx.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Petroleum Bpx in the Strategy & Execution sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Petroleum Bpx can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Petroleum Bpx can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study British Petroleum (A1): Organizing for Performance at BPX .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology acceleration in Forth Industrial Revolution
– Petroleum Bpx has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Petroleum Bpx needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High dependence on third party suppliers
– Petroleum Bpx high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Petroleum Bpx in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Petroleum Bpx will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Weighted SWOT Analysis of British Petroleum (A1): Organizing for Performance at BPX Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study British Petroleum (A1): Organizing for Performance at BPX needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study British Petroleum (A1): Organizing for Performance at BPX is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study British Petroleum (A1): Organizing for Performance at BPX is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of British Petroleum (A1): Organizing for Performance at BPX is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Petroleum Bpx needs to make to build a sustainable competitive advantage.