Strategy and its importance for competitive advantage

A company's strategy is organization action plan which is jogging the business and conducting operations. Especially this can mention as managerial determination to attain their goals. Companies concentrate on on increasing sales and market show at the trouble of opponents and companies that happen to be in strong industry position are more reflect on the strategy what they use (Helfat, 2004).

Through the action Plan Company can type in its rivals and can make the goals and strategies to meet their market place. An organization should formulate a company strategy which contains cost authority or differentiation to attain a lasting competitive edge.

Michael Porter introduced two basic types of competitive advantages which can be cost gain and differentiation advantages. Cost edge exits when company can give same benefits as competition with lower cost. And differentiation advantages exits when the business can make different benefits or the value to the client off their products. For example BP is using mixture of Crude oil and natural energy such as solar power to give differentiation to their customers and it is a well successful strategy.

Source: http://www. bp. com/sectionbodycopy. do?categoryId=2&contentId=7065607 (Gain access to on 20th May 2011)

There are several technological tools which are used to examination situations in proper Management. STEEPLE is one than it shortening the exterior environment in a small business operates and worried about the political, economic, social factors influential industry change and really helps to gain an improved understanding for exterior conditions for progress in market. Companies or the decision makers can form effective strategies by using GE Matrix as well (Thomas, O'Neal, and Ghertman, 1997).

The porter's five forces investigation helps to diversity a competitive environment. For instance, BP analyzes the marketplace for Quality olive oil production. Five pushes analysis describe five key areas solely the risk of entry, the power of buyers, the energy of suppliers, the risk of substitutes, and competitive rivalry (Bettis, 2004)

Figure1. Porter's Universal Strategies

(source:http://www. google. co. uk/search?q=Porter+five+forces+analysis&hl=en&client=opera&)

Competitors for BP

Shell, Clear, Kyocera, Solar, and BP are the current major players in this industry. Price differences are not big among these businesses, solar energy is already expensive technology to produce, so its cost of creation is high, but it is environmental friendly. BP has mass development, so that it can face to price rivalry happen.

Business strategy in BP

BP enter of solar market in 1973 and produced BP solar in 2000, it was one of main technique to face current olive oil crisis and environment issues. BP solar becomes profitable but it isn't prominently distributed among the public, so government involvement is important to be popular of solar power.

Evaluating BP Exterior Environment

BP is one from the world leading Multinational Organization which produces Consumer energy, which is UK based organization. BP's SWOT examination can be stated the following.

Strengths

World third greatest energy company

Operation spreads worldwide

Strong Brand loyalty

Good brand image

Financial durability of the business.

It has vertical integration procedure system.

Weaknesses

Increase the petrol price in UK

Has to paid criminal charges anticipated to spread huge amount of engine oil in the Alaska Sea in 2006.

Reduce in gas and crude engine oil production.

Criticism and Controversies

Opportunities

Has high investment capacity

Research to investigate alternative fuel such as Hydrogen, Solar, Breeze and natural gas

Extension of acquisition of North sea area

Increase demand for natural gas in USA and European countries countries.

Implement more flexible price polices to handle their opponents.

Gas and Engine oil exploration

Treats

Unsound regulations related to Environment after oil and toxic spill in 2006.

Explosion of refinery tunnels in occasionally

Has big competitors such as Shell and Chevron

Sold corporate possessed stations.

Pipeline corrosion

Instability in a few oil and gas producing countries and regions

Table. 1. SWOT evaluation of BP

By implementing proper marketing regulations and methods company will make its market position. BP culture so distinctive because they concentrate on customer, and imagine BP is better than all the Energy produce companies.

Source: (http://www. bp. com/genericarticle. do?categoryId=2012968&contentId=7059787)

Effectiveness of Current Business Plans

BP business plan has benefit in the Research and inspection area. The crude oil plus the solar powered energy combinations was very successful strategy implemented in just lately. Products segmentation, explorations and productions, significantly company restructuring, improve cost efficiency, centralized company departments are their current ways of compete with rivalry and increase company income.

Task Two

Strategic Options

Strategic Options is an important facet and it can help to build company's alternatives and provide safe and keep up the competitive situation. After situation examination company can create tactical options to devise organization's external atmosphere and can scrutinize the.

BP has a comprehensible strategy to invest to raise investigation and produce advantageously through an assortment of authority positions in the world's most successful hydrocarbon basins. BP creates value through the appliance of technology and potential to force performance and operating efficiency. The task and technology offers intensive opportunity for further growth and improvement.

The international requirements for energy for another 20 years are in a way that hydrocarbons remain going to have a leading part in appointment that energy demand. BP supports emissions trading mechanisms as a way of adding a value on carbon in order to make appropriate investment decisions.

BP spends on growing technology budget on probably most competitively profitable improvements both in open up and new vitality spaces. It really is both a tactical option and a chance for BP when comparing with the competitors as BP is strategically placed themselves in an extremely innovative R&D operations which is unmatchable by the competitors easily. While facing major issues of dilapidated resources and protection of resource in coal and oil, global warming and insist for 100 % pure energy in major markets, BP's ratio of expend on book technologies is growing. BP has a decentralized on the way for R&D units. It also drives the proper placement of BP in competition among competitors. Operational quality in acquiring right solutions from within and outer the organization and strategically as successful of chosen new solutions, BP is keeping its invention leadership on the market. With an aim of being "doubly good as next best competitor" BP's invention schema is very good above the bottom outline. Hence a low cost strategy is an excellent placement for BP while serving to a large market portion that prefers a standard product.

Corporate Mission of the BP

BP brought up that there goal for next couple of years to realize the latent impending with their advantage foundation by enhancing the efficiency and performance of everything they actually. They will dynamically drive cost and capital efficiency whilst at the same time maintaining the first main concern of safe and reliable businesses.

Objectives of the BP

BP has some goals for their development in 2015. And everything employees will work as a team to accomplish company goals.

Average 1-2% p. a. amount development to 2015

Underpinned by upwards resource base and quality through preference

Key sources of progress beyond 2015 should come from

Increasing deepwater

Leveraging expertise in gas

Managing world's enormous oilfields

Enabled by software of technology

Source-: http://www. bp. com/sectionbodycopy. do?categoryId=2&contentId=7065607

Values and ethics of the BP

BP is a compilation of resources and there people working collectively. To realize business things they concentrate on sustaining and pushing their leaders and staff. And they maintain recruitment stands and expanding people skills at every level. BP is a well distinguish organization and wishes to do some different on earth. BP is a performance motivated company which is competitively flourishing. Through all this they like high moral stand.

Directions and methods of Strategic Options

BP's way is clear which is the unrelenting pursuit of competitive leadership in respect of cash costs, capital efficiency and margin quality.

The 'Strategy Clock' is another appropriate way to analyze a company's damaging position compared to the contributions of rivals. The Ansoff Development matrix tool which is helps businesses to decide their product and market development strategy.

Figure 02. Ansoff Market mix

(Source-: http://tutor2u. net/business/strategy/ansoff_matrix. htm)

Steps to build up Strategic Options at BP

To develop strategic options company may use pursuing steps.

Access the exterior context

Priorities and gather

Develop proper options

Rate the options

Follow up

Evaluating strategies at BP

SOP Matrix is an instrument which may use to identify the business relevant strategies through external environmental factors. For example BP Opportunities and treats as below and by indentifying the exterior environmental factors can discover the relevant strategies options.

Opportunities

Opportunities

Strategic Option

A

Has high investment capacity

Invest in HR development and during that develop the skills of the workers. An same time spend money on market opportunities.

B

R&D to research alternative gasoline such as Hydrogen, Solar, Blowing wind and natural gas

By research will get the best alternative and company can give focus on that.

C

Extension of acquisition of North sea area

Can develop profound sea olive oil well.

D

Increasing demand for natural gas in USA and Europe.

Efficient and effective source of information allocation to increase profit.

Implement more flexible price polices to handle their opponents.

By price minimizing can get more customers on their products

Gas and Petrol searching

Will help to increase their market ideals and can demand them on the list of competitors

Treats

Treats

Strategic Option

Unsound regulations related to Environment after oil and dangerous spill in 2006.

Understand the plans and use less impact to environment

Explosion of stock tunnels in occasionally

By keeping the brand image without injury can face the problem

Has big competitors such as Shell and Chevron

To make company as No1. And more promotional works

Sold corporate possessed stations.

Buy the stations

Pipeline decomposition

Should check the pipeline back again and do the needful changers

Insecurity in a few oil and gas producing countries and regions

Should find some more producers in the event to utilize.

BP's existing company strategies are,

1) Safe, obedient and consistent operations

2) Operational and financial push - high dividends and cost diminution program

Task Three

SMART Objectives of BP

BP Objectives are ready regarding to SMART (Specific, Measurable, Achievable, Realistic, and Timed). That means it ought to be particular about what we will achieve and really should assess about the aims.

There are a several types of aims like process objectives, outcome goals, personal objective that can be carried out in the SMART format.

BP's five time plan targets are,

Increase profitability by 20%

Increase production

Financial gain by portion to the increasing demand

Build brand value that was damaged by the oil spills

Five time development plan for BP

Business plan is a declaration about company's future goals and plans to attain those goals. This can be externally focus or internally concentrate.

BP's Strategies in development can position as,

Upstream growth

Downstream turnaround

Alternative Energy: alert disciplined Corporate and business overview

In the upstream will hub on cost and capital efficiency to disperse profitable growth. Inside the downstream will drive additional efficiencies and a concentrate on quality and incorporation. They'll maintain their disciplined method of substitute energy and will keep on unlock corporate and business efficiency by having a culture of uninterrupted enhancement.

Five time development plan for BP

#

Objective

Strategy

Actions

Performance Indicators

Time Period

1

Increase profitability by 20%

Research and development

Hire most trained researchers

Innovative means of doing things

One year

2

Increase production

Acquisition of north sea area.

Negotiations with government authorities and agreeing for a joint earnings sharing.

Coming into an agreement with relevant governments

Two years

3

Financial gain by providing to the increasing demand

Sales and Marketing methods to increase market share

Recruiting experienced sales and marketing people and objective training

Acquiring new market opportunities, boost the market share

One year

4

Build brand value that was afflicted by the olive oil spills

Communication and campaign strategy

Using new press opportunities of sociable media to generate brand again, spend money on CSR activities in LIVE GREEN.

Reduce the dark mark

3 years

Evaluating and putting into action the plan

In business strategy, Johnson, Scholes and Whittington shows a model in tactical options are examined next to three key success conditions such as Suitability, Feasibility, and Acceptability.

Source-: http://en. wikipedia. org/wiki/Strategic_management

#

Objectives

Time Line

1 year

2 year

3 year

4 year

1

Increase success by 20%

X

2

Increase production

X

X

3

Financial gain by offering to the increasing demand

X

4

Build brand value that was affected by the olive oil spills

X

X

X

Table. 03. Five 12 months BP tactical plan

Conclusion

When it is point out about the proper management and the leadership strategic planning is a significant part of computer. Tactical planning can separate directly into three periods as strategic Examination, Strategic Options and Evaluation and Implementation. The English petroleum Firm is a more developed firm in petroleum industry and here it is mentioned about the strategy and competitive advantages of the BP and the technological tools which could they may use to research situations. The porter's five makes inspection helps identify the competitive environment BP analysis their market for Quality development.

There are so many competition like Solar, well-defined on the market and BP establish with mass development. By doing the SWOT analysis it's aiding company to recognize the inner and exterior environment of the business. BP is focused on customers plus they have confidence in their productions.

They used the essential oil plus solar power combination plus they used product segmentation, improve cost efficiency and some more ways of increase their income. They have got created value through technology and this is a barrier for their competitors.

Company can use strategy clock, Ansoff progress matrix tools to analysis their position on the market. To develop strategic options first it should identify the exterior context and priorities and clusters. Then it should develop the strategic options. SOP matrix is best tool to recognize the strategies of the company.

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