KENSINGTON COLLEG OF BUSINESS AND UNIVERSITY OF WALES

BP Market Analyss an!

Strate"# Marketn"
Re#$%%en!at$ns
In t&e USA a'ter t&e G(l' $' Me)#$ Ol s*ll

Nahid Mohsen Pour
2/28/2011

Contains: 2962 words
Without charts, content, references, tables


In this essay, I am performing Macro environmental analysis of ! business in the "#$, after the gulf of
Me%ico oil spill, and also try to give #trategic Mar&eting recommendations to recover from the so called
'Mar&eting disaster in the "#$ mar&et(
)ahid Mohsen !our
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Table of Contents
Introduction ******************************************************************************************************************************************** +
$pproach ********************************************************************************************************************************************* +
Importance of Mar&eting ********************************************************************************************************************* +
!art I: Macro ,nvironmental $nalysis of ! business in the "#$ after the -ulf of Me%ico .il #pill ************ /
!olitical $nalysis ****************************************************************************************************************************** /
,conomical $nalysis ************************************************************************************************************************* /
#ocial $nalysis ********************************************************************************************************************************** 6
0echnological $nalysis ********************************************************************************************************************* 6
1egal $nalysis*********************************************************************************************************************************** 2
,nvironmental $nalysis ******************************************************************************************************************** 2
#W.0 $nalysis ************************************************************************************************************************************* 3
#trengths ***************************************************************************************************************************************** 3
Wea&ness **************************************************************************************************************************************** 9
.!!.40")I0I,# ******************************************************************************************************************************* 9
054,$0# ****************************************************************************************************************************************** 9
!art II: #trategic mar&eting recommendations to ! to recover from Mar&eting disaster after the -ulf of
Me%ico oil spill *************************************************************************************************************************************** 66
Industry $nalysis 7!orter8s 9ive 9orces: ********************************************************************************************** 66
Industry rivalry******************************************************************************************************************************* 62
argaining power of #uppliers ******************************************************************************************************* 6;
argaining power of buyers *********************************************************************************************************** 6;
0hreats of new ,ntrants ***************************************************************************************************************** 6;
0hreat of substitute products********************************************************************************************************* 6+
!orter<s -eneric Competitive #trategies 7ways of competing: ************************************************************ 6+
$nsoff8s Model ************************************************************************************************************************************** 6/
Mar&eting Mi% = Mc Carthy +!s ********************************************************************************************************* 66
!roduct ****************************************************************************************************************************************** 66
!rice ********************************************************************************************************************************************** 66
!romotion ************************************************************************************************************************************* 62
!lace ********************************************************************************************************************************************** 62
Conclusion ********************************************************************************************************************************************* 62
)ahid Mohsen !our
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ibliography ****************************************************************************************************************************************** 63
0able of 9igures ************************************************************************************************************************************* 69

)ahid Mohsen !our
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Introduction
In this essay, I am going to have a loo& at the -ulf of Me%ico oil spill and how it affected ! business in
the "#$* In order to have an academic approach, I have divided this report into two parts, where in part
I, I will perform business Macro ,nvironmental analysis and in !art II, I will give my recommendations,
based on business and management tools and models*

Approach
My approach to address this problem is to loo& at the THF0RY, give FXAHPlF3, and AtAlY3F the
issue* In THF0RY part, I e%plain the relevant theory or model I am applying, in the FXAHPlF3, I offer
e%amples from the case study that matches to the theory and finally in AtAlY3F, I try to address the
issue and analy>e the problem according to the relevant theory and model*

Importance of Marketing
7?otler !* , 2@@6: $rgues that mar&eting is the $chilles< heel of many formerly prosperous companies
such ad -M, ?oda&, #ears and many other companies* 5e adds that even giant companies such as
Microsoft, Intel or others, Aust can8t sit and rela%* Bac& Welch, -,8s former C,., always warned his
company to 'Change or die*C 7?otler !* , 2@@6:

I thin& !, although a huge company in oil industry is not an e%ception* I can say that, constant revision
of mar&eting strategies is essential for a firm to live, while in case of !, after the tragedy of -ulf of
Me%ico, which has lead to financial and nonDfinancial losses to !, it is compulsory to review and update
the mar&eting strategies*
)ahid Mohsen !our
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Part I: Macro Environmental Analysis of BP business in the !A after the
"ulf of Me#ico $il !pill

$ccording to 7?otler !* , 2@@6:, Macro environmental analysis is find out the e%ternal forces that affect a
company to produce and sell, which are consisted of !olitical, ,conomical, #ocial, 0echnological, 1egal
and ,nvironmental factors that affect e%ternally a business*

Political Analysis
THF0RY
$ccording to 7.%ford"niversity !ress, 2@@2: political factors refer to government policy such as the
degree of intervention in the economy* 0his might include trading policies, lobbying, interDcountries
relations, and E that can affect the business*
FXAHPlF3
0he "# !resident arac& .bama has established the )ational Commission on the ! Feepwater 5ori>on
.il #pill and .ffshore Frilling .n May 22, 2@6@, this can shows the very high intervention of politicians in
the business* 7.il #pill Comission:
,vidence in our case is the increase of royalty rate to fund stronger government oversight of the
offshore drilling, proposed by arac& .bama* 7$*Flouhy, 2@66:
Due to the importance of the oil spill, Mr Obama toured the oil-hit areas several times and assured
he would triple the manpower to contain and clean up the spill. (BBC,2010)
AtAlY3F
I can argue in here that in maAor businesses such as oil, which has a very high financial turn over, or
there are many health and safety measures or environmental precautions, the political intervention will
be higher*
Economical Analysis
THF0RY
,conomical factors that might affect a business can be world economy or national economy of the
environment where the business is running*
FXAHPlF3
#ome e%perts believe that this incident could be the trigger of the $merican economic collapse*
,conomy is supported fundamentally by its energy industry mar&ets producers 7I,$, 2@@+:*,nergy
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industry mar&ets will face to increasing demand s about 6@ percent, with the higher rate in fossil fuels,
nuclear and replacement energy industry mar&ets having restricted comparative contribution 7I,$,
2@@+:* Fiscovering new substitute energy is growing and is replacing a percentage of total energy
production* 9rom 2 percent in 2@@2 towards 6 percent in 2@;@*

AtAlY3F
Critically reviewing the economical environment where ! is active in the "#$, we can see that the 2@@3
credit crunch has not affected the oil industry, especially crude oil production at all, the reason is that
the demand in the mar&et is too high* I also can conclude that the crude oil is not only used as a source
of energy but as a raw material for petrochemical industries such as plastic and other products*
!ocial Analysis
THF0RY
#ocial factor may include the population growth rate, society attitude, average society age and cultural
issues*
FXAHPlF3
$fter the deep water hori>on disaster, and due to huge political and legal pressure by the "#
government and local authorities especially in 1ouisiana, ! set up its G2@bn -ulf spill claims fund to
compensate those who have been affected, without court intervention, however, many lawyers and
Audges in the "#, have rolled out that this fund is not acting neutral* 7-uardian*co*u&, 2@6@:* 0his not
only did not recover the bad image of !, but I believe it made ! image worse*
0he amount of environmental damages destroyed !8s brand image, thus maybe the consumers
avoid ! products in the "# mar&et* Furing this decades refer to the statistic shows !eople<s
consuming patterns completely are changed especially in the energy industry mar&et which is notable
to a concern over the sustainability of the future*7bp*comHstatistic:
AtAlY3F
I can conclude the oil spill had negative impact on !8s reputation in the "#, especially in the areas that
people8s lives have been directly and indirectly affected* $fter the oil spill, many people lost their Aobs,
or their business declined including tourism, fishing and other industries*
Technological Analysis
THF0RY
)ahid Mohsen !our
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0echnology is another environmental and e%ternal force that affects a business* In case of !, as we can
see on many sources of information, such as websites and newspapers, we can find out ! has the
advantage of having advanced technology in deep water e%ploration of the oil*
FXAHPlF3
! has advanced technology in deep water e%plorationI they are concentrating on energy efficiency,
investing in low carbon future and production of more efficient energies*

AtAlY3F
$s ! has advanced technology and is also wor&ing to develop its technical &now hows, I can argue that
in this regard, ! has competitive advantage over its rivals* 4eferring to the oil spill in -ulf of Me%ico, we
can observe that !, finally could manage the largest oil disaster in human history*
%egal Analysis
THF0RY
1egal factors are those legislations that affect a business, such as employment law, anti trust law and
etc*
FXAHPlF3
In our case, the ! oil spill, we can observe the new legislations, forced ! to be more accountable for
health and safety rules and paying compensation to those who have been affected* 7-uardian )ews and
Media 1imited, 2@6@:
$nother applicable rule that has affected ! is the so called oil pollution act that Budge Carl arbier, of
the federal court of 1ouisiana has used to force ! in fulfilling its legal obligations* 7-uardian*co*u&,
2@6@:
AtAlY3F
-ulf of Me%ico oil spill has already leaded to many legal limitation of oil industry in the "# trying to ma&e
! accountable for the damages caused to the environment and society* 7-uardian*co*u&, 2@6@: We can
see that the amount of accountability has increased significantly*
Environmental Analysis
THF0RY
,nvironment is very important and environmental activists are playing more important roles in the
business* #ometimes the environmental activist can put pressure to the government and ma&e new
legislations*
FXAHPlF3
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,nvironmental activists warned that the ! spill, which covers an area about the si>e of Cornwall, could
turn out to be as catastrophic as the impact of the ,%%on Jalde> tan&er spill off $las&a was 26 years ago*
7-uardian*co*u&, 2@6@:
AtAlY3F
0he oil spill disaster on the "# has caused many environmental activists to oppose e%ploration of oil
under the sea, which might seriously affect some legislation as its conseKuences*
)ew laws "#$ government, ," !ollution standards, International ,nvironment .rgani>ations, Change in
consumer patterns, consumer behavior, global demands to alternative energy and discovering new
energy sources could be considered as macro environmental forces on ! mar&et*


!&$T Analysis
THF0RY
#W.0 analysis can help managers to understand the organi>ation and its mar&et or environment, by
contrasting its '#trengths( and 'Wea&nesses( with the '.pportunities( and '0hreats( in the mar&et*
7WI11I$M#, 2@@9:
FXAHPlF3
!trengths
ritish !etroleum is third largest energy company in the world because of its international mar&ets
activities is considered as a multinational .il company 5eadKuartered in 1ondon and as a largest
producer of oil and gas in the )orth of $merica* 7!: 0he company has huge mar&et impact, which gives
it notable trading performance in the global energy industry* 7!:
.ne of the other strengths of ! is -ood performance in International energy industry by the networ& of
its subsidiaries and retail brands such as: !, $M.C., $4C., $4$1, C$#04.1, ! ,L!4,##, ! C.)),C0,
! 04$J,1, $M!M, "4M$5 C$#04.1* 7!:

AtAlY3F
I can argue in here, ! can build its competitive advantage on its strengths which has already proven in
the oil industry*
5aving established different brands, and a very wide distribution networ&, is one of the ?#9
6
s of !*
Creating a high level loyalty by ! $M.C. as a strong oil brand*

6
D ?ey #uccess 9actor
)ahid Mohsen !our
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$dding two comments to !Ms statement: ')o harm to people( and( )o damage to the
environment(
$ notable increasing profit due to oil and gas energy prices*
$ strong mar&eting performance more than 3o countries such as ,urope, the "#, Middle ,ast
and China, etc* therefore p has a significant geographic mar&eting activities*
&eakness
.il spill in deep hori>on water in Me%ican -ulf, in $pril 2@6@, has made a huge financial loss to !, and
has ruined the company8s reputation* I can argue that one of the very important wea&nesses of ! is
improper management and safety issues*
I can recommend to !, trying convert this wea&ness into strength, by better management practice*
0here has been several incidents for !, including 2@@/ 0e%as refinery e%plosion, causing 6@@ inAuries
and 62 death, 2@@@ gallons of Methanol ran out in the oil field 7!rudhoe ay:, distribution of 22@@@@
-allons of crude oil In the $las&a tundra and many other similar incidents*

$PP$'T(ITIE!
When we tal& about opportunities, we are in fact considering e%ternal environment, that affect a
business, such as 7demographicDeconomic, natural and other macro environmental factors:* eing
among the top / oils companies in the world, ! has several e%ternal opportunities, including by
acKuisition in the )orth #ea area, !8s future profit by acting in the suitable boundaries area in the
4ussia region, Implement plan to achieve alternative energy methods insist of 5ydrogen, natural gas,
wind and solar by 3b*"#G investment* 7!:

T)'EAT!
#ame as opportunities, threats are also e%ternal elements, such as environment, legal and political
issues* My research shows that one of the most e%ternal threats to ! is the pressure of environmental
activist and legal pressure that will increase the cost of operation for !*
"nfortunately, there are many e%ternal threats that affect !, many of them is originated from careless
attention of !, that has caused damages to the environment*

AtAlY3F
It is very important to find out !8s Wea&nesses 7internal analysis: and transform them into #trengths*
.n the other hand, we need to find out !8s 0hreats and try to transform them into opportunities
7,%ternal analysis:* I can argue in here that one of the threats for ! has been so far, is less attention to
the environment, I can recommend to ! to try to have some sort of emphasis on green products* $lso
as ! has been successful in controlling the oil spill, now it can be considered as strength for !, and
they can have new division for environmental protection*
)ahid Mohsen !our
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Figure 1 SWOT

5ow toN
Wea&ness
#trengths
0hreats .pportuniti
es
)ahid Mohsen !our
66

Part II: !trategic marketing recommendations to BP to recover from
Marketing disaster after the "ulf of Me#ico oil spill

In this section, I am reviewing the possible ways where ! can develop its mar&et, according to common
business and management framewor&s*

Industry Analysis *Porter+s ,ive ,orces-
THF0RY
!orter8s five forces, is a framewor& for analysing an industry, as shown on the following diagram*

Figure 2 Porter's Five Forces
0he aim of !orter8s five forces analysis is to find out how a business can compete is a specific sector*
FXAHPlF3
)ahid Mohsen !our
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Industry rivalry
.il industry is very vast, starting from e%ploration to refining and distribution, and there are many
companies active in oil industry* 5owever, the number of main oil companies who can e%plore and mine
oil fields is very limited*
$s shown on the following diagram, the maAor oil companies are:

Figure 3Major oi !o"#anies
!
Chevron
Conoco !hilips
4oyal Futch #hell
! is in third place as a producer of crude oil in compare with Chevron, #hell, 0otal, Conoco*
It seems Me%ican golf disaster had not effective impact on ! to refinery Crude oil*
)ahid Mohsen !our
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Figure $ Major %as co"#anies

I can argue in here that unli&e many other industries, the rivalry in the oil industry and specifically in the
oil e%ploration is too low*
Bargaining po.er of !uppliers
0he suppliers for ! are countries that have oil reservoirs and oil fields* 0hey usually have a bid for their
oil field e%plorations* I can argue that here the bargaining power of suppliers is too high and they can
choose the contractor*
Bargaining po.er of buyers
0he buyers or the crude oil, usually purchase in the oil mar&ets, and the mar&et price is determined by
the demand*
Threats of ne. Entrants
$s the capital for oil companies is too high, and the level of technical &nowledge is too high and
advanced, this has created a very high barrier for the new entrants* 0hus I can conclude there is almost
no new entrants8 threat in oil industry and also for !*
)ahid Mohsen !our
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Threat of substitute products
Crude oil can8t be substituted by any other product, as it is not only the fuel but also the raw material for
petrochemical industries* .ther sources of energy are bio fuel, nuclear energy, solar energy andE which
at the moment aren8t cost effective*


Porter/s "eneric Competitive !trategies *.ays of competing-
THF0RY
!orter8s generic #trategies, try to define where the firm can compete* $s shown on the following
diagram, a firm can compete on either cost or product differentiation*


Figure & Porter's %eneric Strategies Source' htt#'//((()socia"edia"ar*etingu*)co"/2008/11

I can argue in here that, there is not too much room in to compete on the price in the oil industry in two
senses:
Cost
Fifferentiation
)ahid Mohsen !our
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Crude oil price is determined in oil mar&ets, and this product can8t be differentiated*
9ocus
5owever, I can recommend to ! to try to focus on a specific service in the "#* $s, ! is the best
company in deep water e%ploration, I would argue to ! to try to focus on deep water e%ploration*



Ansoff+s Model


Figure + ,nso--.s Mar*et /eveo#"ent Mode
0he $nsoff -rowth matri% is a tool that helps businesses decides their product and mar&et growth
strategy*
$nsoff8s productHmar&et growth matri% suggests that a business8 attempts to grow depend on whether
it mar&ets ne( or e0isting products in ne( or e0isting "ar*ets)

)ahid Mohsen !our
66

0he output from the $nsoff productHmar&et matri% is a series of suggested growth strategies that set
the direction for the business strategy* 0hese are described below:
Mar*et #enetration
Mar&et penetration means where the business focuses on selling e%isting products into e%isting mar&ets*
In our case, it means trying to continue deep water e%ploration in the "#* ased on my analysis on
previous sections, I would recommend to ! to use this as mar&eting strategy*
Mar*et deveo#"ent
Mar&et development means the business see&s to sell its e%isting products into new mar&ets* 0his would
be trying to enter other countries mar&et* 0his, I can argue can wor& very well for !, as its competitive
advantage in deep water e%ploration*
Product deveo#"ent
!roduct development means introducing new products into e%isting mar&ets* 0his for ! means
introducing bio fuel and other products to the "# mar&et*
/iversi-ication
Fiversification is the name given to the growth strategy where a business mar&ets new products in new
mar&ets*
0his is an inherently more ris& strategy because the business is moving into mar&ets in which it has little
or no e%perience*
9or a business to adopt a diversification strategy, therefore, it must have a clear idea about what it
e%pects to gain from the strategy and an honest assessment of the ris&s*
7$nsoff, ansoff<s product H mar&et matri%:

Marketing Mi# 0 Mc Carthy 1Ps

Product
$lthough oil industry has vast sets of products, but the main product is the crude oil, which can8t be
differentiated* In this regard, ! hasn8t any choice, e%cept planning to develop substitute products such
as bio fuel* 5owever, if we consider crude oil e%ploration, I can argue there is no substitute product*
Price
0he price of crude oil, as the primary product of ! and the maAor oil companies, is determined by
international mar&ets and .!,C, and ! can8t play with the price*
)ahid Mohsen !our
62

Promotion
5aving discussed several environmental disasters caused by !, I can argue the image of ! in the
society has already changed to a company that is not environmental friendly* 5owever, as we can see on
!8s website, recently they are trying to show their support toward environmental awareness*
I would recommend to ! to try to have advertising campaign toward a better support of environment,
and environmental awareness*
Place
I can argue that in terms of place, there are some limitations for oil companies, as the oil fields are
limited around the world* !, and other oil companies can8t determine where to go for e%ploration, as it
is a natural resource and is only available in limited number of places*
Conclusion
ased on the analysis I gave on !art II, I can formulate the mar&eting #trategies for ! in the "#$, as:
6D 9ocus of deep waters oil e%ploration79ocusing #trategy:
2D 0ry to have green advertising campaign 7!romotion:
;D 0ry to penetrate more into the "#$ mar&et
+D 0ry to create better image 7#ocial factor:, by better approach to compensate those who have
been affected*
/D Continue lobbying 7!olitical factors:, or do it more efficiently*
6D Care for the environment 7,nvironmental factor:


)ahid Mohsen !our
63

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Table of ,igures
9igure 6 #W.0 *************************************************************************************************************************************** 6@
9igure 2 !orter<s 9ive 9orces ****************************************************************************************************************** 66
9igure ;MaAor oil Companies ***************************************************************************************************************** 62
9igure + MaAor -as companies *************************************************************************************************************** 6;
9igure / !orter<s -eneric #trategies #ource: http:HHwww*socialmediamar&etingu&*comH2@@3H66 ********** 6+
9igure 6 $nsoff8s Mar&et Fevelopment Model ************************************************************************************** 6/