BP in Russia: Settling the Joint Venture Dispute SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of BP in Russia: Settling the Joint Venture Dispute
In September 2003, British Petroleum (BP) formed a 50/50 international joint venture (JV) company, TNK-BP, with a group of Russian investors: Alfa Group, Access Industries and Renova (AAR). This JV was established as a result of the merger of Russian oil companies TNK and Sidanko, owned by AAR, with the majority of BP's Russian oil assets. On May 26, 2008, TNK-BP's chief executive officer, Robert Dudley, told Vedomosti, Russia's leading business daily, about a conflict between British and Russian shareholders. During this dispute, AAR declared that BP treated TNK-BP as its subsidiary and not as a JV. Also, the Russian shareholders criticized the JV's leadership of the company's expansion strategy and climate. As the conflict escalated, BP's leadership needed to decide whether to walk away or continue its participation in the JV.
Swot Analysis of "BP in Russia: Settling the Joint Venture Dispute" written by Gevork Papiryan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tnk Bp facing as an external strategic factors. Some of the topics covered in BP in Russia: Settling the Joint Venture Dispute case study are - Strategic Management Strategies, Globalization, Joint ventures and Global Business.
Some of the macro environment factors that can be used to understand the BP in Russia: Settling the Joint Venture Dispute casestudy better are - – central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings,
wage bills are increasing, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of BP in Russia: Settling the Joint Venture Dispute
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in BP in Russia: Settling the Joint Venture Dispute case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tnk Bp, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tnk Bp 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 BP in Russia: Settling the Joint Venture Dispute can be done for the following purposes –
1. Strategic planning using facts provided in BP in Russia: Settling the Joint Venture Dispute case study
2. Improving business portfolio management of Tnk Bp
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Tnk Bp
Strengths BP in Russia: Settling the Joint Venture Dispute | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tnk Bp in BP in Russia: Settling the Joint Venture Dispute Harvard Business Review case study are -
Learning organization
- Tnk Bp is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Tnk Bp is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in BP in Russia: Settling the Joint Venture Dispute Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the BP in Russia: Settling the Joint Venture Dispute 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.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Tnk Bp digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Tnk Bp 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.
Analytics focus
– Tnk Bp 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 Gevork Papiryan 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.
Diverse revenue streams
– Tnk Bp is present in almost all the verticals within the industry. This has provided firm in BP in Russia: Settling the Joint Venture Dispute 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.
Innovation driven organization
– Tnk Bp is one of the most innovative firm in sector. Manager in BP in Russia: Settling the Joint Venture Dispute Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Tnk Bp 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 BP in Russia: Settling the Joint Venture Dispute HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Tnk Bp is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Tnk Bp
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Tnk Bp does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Tnk Bp in the sector have low bargaining power. BP in Russia: Settling the Joint Venture Dispute has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Tnk Bp to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Global Business industry
– BP in Russia: Settling the Joint Venture Dispute firm has clearly differentiated products in the market place. This has enabled Tnk Bp to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Tnk Bp to invest into research and development (R&D) and innovation.
High brand equity
– Tnk Bp has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tnk Bp to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses BP in Russia: Settling the Joint Venture Dispute | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of BP in Russia: Settling the Joint Venture Dispute are -
Capital Spending Reduction
– Even during the low interest decade, Tnk Bp 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.
Need for greater diversity
– Tnk Bp 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.
Low market penetration in new markets
– Outside its home market of Tnk Bp, firm in the HBR case study BP in Russia: Settling the Joint Venture Dispute needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study BP in Russia: Settling the Joint Venture Dispute, it seems that the employees of Tnk Bp 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 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 Tnk Bp supply chain. Even after few cautionary changes mentioned in the HBR case study - BP in Russia: Settling the Joint Venture Dispute, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Tnk Bp vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Tnk Bp 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 BP in Russia: Settling the Joint Venture Dispute HBR case study mentions - Tnk Bp 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.
Slow decision making process
– As mentioned earlier in the report, Tnk Bp 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. Tnk Bp 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.
High operating costs
– Compare to the competitors, firm in the HBR case study BP in Russia: Settling the Joint Venture Dispute 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 Tnk Bp 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the BP in Russia: Settling the Joint Venture Dispute 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 Tnk Bp has relatively successful track record of launching new products.
High cash cycle compare to competitors
Tnk Bp 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.
Opportunities BP in Russia: Settling the Joint Venture Dispute | 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 BP in Russia: Settling the Joint Venture Dispute are -
Building a culture of innovation
– managers at Tnk Bp 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 Global Business segment.
Loyalty marketing
– Tnk Bp 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 Tnk Bp can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Tnk Bp can develop new processes and procedures in Global Business 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Tnk Bp 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. Tnk Bp 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.
Manufacturing automation
– Tnk Bp can use the latest technology developments to improve its manufacturing and designing process in Global Business 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.
Creating value in data economy
– The success of analytics program of Tnk Bp has opened avenues for new revenue streams for the organization in the industry. This can help Tnk Bp to build a more holistic ecosystem as suggested in the BP in Russia: Settling the Joint Venture Dispute case study. Tnk Bp can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Learning at scale
– Online learning technologies has now opened space for Tnk Bp 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.
Better consumer reach
– The expansion of the 5G network will help Tnk Bp to increase its market reach. Tnk Bp 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.
Using analytics as competitive advantage
– Tnk Bp 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 BP in Russia: Settling the Joint Venture Dispute - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Tnk Bp to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Tnk Bp 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.
Leveraging digital technologies
– Tnk Bp can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Tnk Bp can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, BP in Russia: Settling the Joint Venture Dispute, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats BP in Russia: Settling the Joint Venture Dispute External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study BP in Russia: Settling the Joint Venture Dispute are -
Shortening product life cycle
– it is one of the major threat that Tnk Bp is facing in Global Business 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. Tnk Bp needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
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 Tnk Bp business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Tnk Bp 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, Tnk Bp 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 BP in Russia: Settling the Joint Venture Dispute .
Regulatory challenges
– Tnk Bp 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 Global Business industry regulations.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study BP in Russia: Settling the Joint Venture Dispute, Tnk Bp may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
Increasing wage structure of Tnk Bp
– 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 Tnk Bp.
Stagnating economy with rate increase
– Tnk Bp 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.
Consumer confidence and its impact on Tnk Bp 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.
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 Tnk Bp.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Tnk Bp in the Global Business industry. The Global Business 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. Tnk Bp 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 BP in Russia: Settling the Joint Venture Dispute 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 BP in Russia: Settling the Joint Venture Dispute 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 BP in Russia: Settling the Joint Venture Dispute 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 BP in Russia: Settling the Joint Venture Dispute 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 BP in Russia: Settling the Joint Venture Dispute 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 Tnk Bp needs to make to build a sustainable competitive advantage.
