Case Study Description of Bharat Petroleum's Upstream Strategy and Exploration Success
Bharat Petroleum Corporation Limited (BPCL) is an Indian public-sector oil company that features among the Fortune Global 500. The company has historically been in the business of refining and marketing petroleum products. For about 25 years, BPCL operated in a protected environment where it was assured 12 per cent post-tax returns by the Indian government. In 2002, the government stopped guaranteeing returns to its oil companies, and BPCL found that its sales were increasing but its profitability was declining. In response, BPCL ventured upstream into the exploration and production of hydrocarbons. The case is set in 2010, seven years after BPCL adopted a corporate strategy of vertical integration. BPCL's chairman and managing director assesses reasons for the company's spectacular success and considers what BPCL should do next. Author Noel Machado is affiliated with the School of Inspired Leadership (SOIL).
Authors :: Noel Machado, G. Krishnakumar, Sanjeev Pillai, P.V.S.L. Narasimham
Swot Analysis of "Bharat Petroleum's Upstream Strategy and Exploration Success" written by Noel Machado, G. Krishnakumar, Sanjeev Pillai, P.V.S.L. Narasimham includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Bpcl Bharat facing as an external strategic factors. Some of the topics covered in Bharat Petroleum's Upstream Strategy and Exploration Success case study are - Strategic Management Strategies, Strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Bharat Petroleum's Upstream Strategy and Exploration Success casestudy better are - – increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , there is backlash against globalization,
geopolitical disruptions, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Bharat Petroleum's Upstream Strategy and Exploration Success
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Bharat Petroleum's Upstream Strategy and Exploration Success case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bpcl Bharat, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bpcl Bharat 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 Bharat Petroleum's Upstream Strategy and Exploration Success can be done for the following purposes –
1. Strategic planning using facts provided in Bharat Petroleum's Upstream Strategy and Exploration Success case study
2. Improving business portfolio management of Bpcl Bharat
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 Bpcl Bharat
Strengths Bharat Petroleum's Upstream Strategy and Exploration Success | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Bpcl Bharat in Bharat Petroleum's Upstream Strategy and Exploration Success Harvard Business Review case study are -
High switching costs
– The high switching costs that Bpcl Bharat has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Ability to recruit top talent
– Bpcl Bharat is one of the leading recruiters in the industry. Managers in the Bharat Petroleum's Upstream Strategy and Exploration Success are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Bpcl Bharat in the sector have low bargaining power. Bharat Petroleum's Upstream Strategy and Exploration Success has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Bpcl Bharat to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Bharat Petroleum's Upstream Strategy and Exploration Success 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.
Training and development
– Bpcl Bharat has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Bharat Petroleum's Upstream Strategy and Exploration Success 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.
Organizational Resilience of Bpcl Bharat
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Bpcl Bharat does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Bpcl Bharat 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 Bharat Petroleum's Upstream Strategy and Exploration Success HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Strategy & Execution field
– Bpcl Bharat is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Bpcl Bharat in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Bpcl Bharat 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 Bharat Petroleum's Upstream Strategy and Exploration Success - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Bpcl Bharat is one of the most innovative firm in sector. Manager in Bharat Petroleum's Upstream Strategy and Exploration Success Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Bpcl Bharat is present in almost all the verticals within the industry. This has provided firm in Bharat Petroleum's Upstream Strategy and Exploration Success case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Successful track record of launching new products
– Bpcl Bharat has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Bpcl Bharat has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses Bharat Petroleum's Upstream Strategy and Exploration Success | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Bharat Petroleum's Upstream Strategy and Exploration Success are -
High cash cycle compare to competitors
Bpcl Bharat has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Workers concerns about automation
– As automation is fast increasing in the segment, Bpcl Bharat 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.
Products dominated business model
– Even though Bpcl Bharat has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Bharat Petroleum's Upstream Strategy and Exploration Success should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Bpcl Bharat has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Bpcl Bharat even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Bharat Petroleum's Upstream Strategy and Exploration Success, it seems that the employees of Bpcl Bharat 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.
Lack of clear differentiation of Bpcl Bharat products
– To increase the profitability and margins on the products, Bpcl Bharat needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, Noel Machado, G. Krishnakumar, Sanjeev Pillai, P.V.S.L. Narasimham suggests that, Bpcl Bharat 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Bharat Petroleum's Upstream Strategy and Exploration Success has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Bpcl Bharat 's lucrative customers.
No frontier risks strategy
– After analyzing the HBR case study Bharat Petroleum's Upstream Strategy and Exploration Success, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Low market penetration in new markets
– Outside its home market of Bpcl Bharat, firm in the HBR case study Bharat Petroleum's Upstream Strategy and Exploration Success needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Bharat Petroleum's Upstream Strategy and Exploration Success HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Bpcl Bharat has relatively successful track record of launching new products.
Opportunities Bharat Petroleum's Upstream Strategy and Exploration Success | 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 Bharat Petroleum's Upstream Strategy and Exploration Success are -
Developing new processes and practices
– Bpcl Bharat 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.
Learning at scale
– Online learning technologies has now opened space for Bpcl Bharat to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Bpcl Bharat is facing challenges because of the dominance of functional experts in the organization. Bharat Petroleum's Upstream Strategy and Exploration Success 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.
Manufacturing automation
– Bpcl Bharat 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.
Using analytics as competitive advantage
– Bpcl Bharat has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Bharat Petroleum's Upstream Strategy and Exploration Success - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Bpcl Bharat to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Bpcl Bharat has opened avenues for new revenue streams for the organization in the industry. This can help Bpcl Bharat to build a more holistic ecosystem as suggested in the Bharat Petroleum's Upstream Strategy and Exploration Success case study. Bpcl Bharat can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Bpcl Bharat 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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Bpcl Bharat in the consumer business. Now Bpcl Bharat can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Bpcl Bharat can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Bpcl Bharat 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, Bpcl Bharat can use these opportunities to build new business models that can help the communities that Bpcl Bharat operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Bpcl Bharat can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Bpcl Bharat can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Bpcl Bharat 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 Bpcl Bharat to hire the very best people irrespective of their geographical location.
Threats Bharat Petroleum's Upstream Strategy and Exploration Success External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Bharat Petroleum's Upstream Strategy and Exploration Success are -
Stagnating economy with rate increase
– Bpcl Bharat 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 wage structure of Bpcl Bharat
– 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 Bpcl Bharat.
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. Bpcl Bharat needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Bharat Petroleum's Upstream Strategy and Exploration Success, Bpcl Bharat may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Bpcl Bharat can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Bpcl Bharat 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 Bharat Petroleum's Upstream Strategy and Exploration Success .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Bpcl Bharat business can come under increasing regulations regarding data privacy, data security, etc.
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.
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 Bpcl Bharat.
Regulatory challenges
– Bpcl Bharat needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Consumer confidence and its impact on Bpcl Bharat demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology acceleration in Forth Industrial Revolution
– Bpcl Bharat has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Bpcl Bharat 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.
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.
Weighted SWOT Analysis of Bharat Petroleum's Upstream Strategy and Exploration Success 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 Bharat Petroleum's Upstream Strategy and Exploration Success 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 Bharat Petroleum's Upstream Strategy and Exploration Success 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 Bharat Petroleum's Upstream Strategy and Exploration Success 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 Bharat Petroleum's Upstream Strategy and Exploration Success 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 Bpcl Bharat needs to make to build a sustainable competitive advantage.