Evaluation of changes in BP Company during 2014-2016
Strategic management is a process which is used by companies to bring new changes in the organisation. It provides direction and helps in the implementation of policies and plans. It plays an important part in decision making in complex business and competitive scenarios. The present report highlights the business of BP Plc which was earlier known as British Petroleum (Shuen, Feiler and Teece, 2014). It is a British multinational oil company which operates in more than 70 countries. During 2014-2016, the prices of oil dropped to a record low level. It affected the business of many oil and gas companies. BP took many steps to stabilise the business and to deal with the challenges that the industry has been facing (British Petroleum returned to profit, 2017). Apart from this, some recommendations on how BP Company can improve their change management process are also included in the report.
The decline in oil prices in 2014-2016 has affected the business of many companies. Even large profit-making companies such as Exxon Mobil, Chevron and BP have suffered losses in this period. There has been an imbalance in global demand and supply (Sumbal, Tsui and See-to, 2017). Saudi Arabia and Iran have adopted a different strategy to increase their market share. They have increased the supply of oil irrespective of weak demand in many countries. As a result, both domestic and international companies have started negotiating with the producers. They have to reassess their strategic plans and policies for the future. It was reported that more than 200,000 people have lost their job in this crisis. It is not possible for oil and gas companies to continue their business without reducing their cost (Oil company earnings, 2016). Apart from this, BP Company has to find alternatives so as to reduce carbon emission. It is essential for them to plan and take advantage of this situation. It will not only help them to recover from the current state but it will allow them to create a dominant position in the market.
Cost Efficiency: BP Company has reduced their expenditure and they have maintained discipline in all their processes. It has helped them to reduce their losses. It is not easy for an organisation to resort to massive cost cutting. They have to make many changes but BP Company has been able to bring all these changes (2016 Oil and Gas trends, 2016). It has helped them to regain their position in the market. The management has also prepared plans to deal with oil price volatility in the future. They have provided training to their employees so that they can also understand this aspect of the business (Morschett, Schramm-Klein and Zentes, 2015).
Investment in technology and innovation: The Company has been investing their money in technology and innovation. For example, earlier BP Company was not able to explore new frontiers and regions. But due to changes in technology, they have started deep water exploration, subsea operations, automation, etc. (Hill, Jones and Schilling, 2014). Even though their profits have declined in the crisis but they have made sure that the organisation prepares itself for the future. They have plans to reduce the emission of carbon and fossil fuels. Apart from this, they have also included new methods to increase their productivity and efficiency (Frynas and Mellahi, 2015).
Role of leadership in change management
Disinvestment: BP Company has written down the value of their assets to cope up with the changes in the market. They have even sold their assets including the stakes in Texas refinery and Gulf of Mexico fields (Eden and Ackermann, 2013). They are looking to divest another $3 billion in 2016. All these decisions are taken up by the management to cover up the costs of the company.
Despite all the troubles, BP Company has been optimistic. They have been adjusting their costs but they have not compromised with the long-term perspective of the business. They have made sure that the company can to face similar challenges in the future as well. They have adopted many changes and it has been positive for them (Bettis and et.al., 2016). Their productivity and efficiency both have improved. The crisis of 2014-2016 has given an opportunity to the company so that they can reassess their business. They have found many problems in their existing policies and strategies. It has allowed BP Company to have clear plans and direction for the coming years. Furthermore, they have found many ways and methods to reduce their input costs. Bob Dudley, the chief executive of BP Company has shown his confidence in the company (Oil company earnings, 2016). He believes that the organisation is capable enough to face more challenges and uncertainties.
Leadership enables an organisation to achieve its objectives and goals by implementing the strategies and policies. It is important for all the members to understand their roles and responsibility. It will help in the change management process. BP Company has to undergo many changes in their business and strategies (Barney and Hesterly, 2015). It is important for them to use a change management model as it can help them to implement it defectively.
McKinsey 7-S Framework
McKinsey 7-S Framework is a change management model which included both internal and external factors of any organisation (Morschett, Schramm-Klein and Zentes, 2015). It ensures that all the elements are taken into m account by the management as all of them are interrelated to each other. It can be useful for evaluation of change management process of BP Company.
Strategy: The strategy of BP Company is to remain competitive in the market and operate their business profitability. They are not willing to comprise with the quality of the products. Furthermore, they want to reduce the cost of operations (Schmidt and Farkas, 2016). They are looking at the long-term perspective of the business. They have made significant changes in their methods and technology to ensure it.
Structure: BP Company follows hierarchical structure of business. Their business is complex and the employees have to take many technical decisions (Morden, 2016). So, the company operates with levels of management and all the people have clear roles and responsibility in the organisation. Apart from this, all the departments work separately and they have different team members for each of them.
System: The company has set up benchmarks to evaluate the work and performance of employees (British Petroleum returned to profit, 2017. All the staff members have to comply with the standards and policies of the company. It has been useful for them as does not allow deviations in the processes (Yusuf and et.al., 2014). It ensures that all the employees are working to achieve the goals and objectives of the organisation.
McKinsey 7-S Framework
Shared value: BP Company has been working to achieve sustainable development. They have allowed their staff mambers to work in teams and share their tasks. Management allows the workers to take part in the decisions and put forth their views (British Petroleum returned to profit, 2017). They are also given training so that they can learn from other employees and improve. It has enhanced the productivity and efficiency of the workers.
Style: BP Company has allowed their workers to take part in decisions and they have been using particpative leadership style. But it has not been working well for them because the company is undergoing many changes (Grant, 2016). Employees are finding it diff cult to accept new processes and policies. They need coach or mentor who can guide them with all the things. It will be beneficial for the company to review this factor and make suitable changes in the organisation. It will help them to improve the satisfaction level of employees.
Staff: Staff members are very supportive and they respect the decisions of the company. BP Company also provides them support by encouraging employee engagement (Sumbal, Tsui and See-to, 2017). Furthermore, team work and shared values should be promoted in the workplace. But still many changes can be done in this perspective. It will be better for the employees if company involves them in strategic planning (Morschett, Schramm-Klein and Zentes, 2015).
Skills: Employees of BP Company are competent and they possess all the necessary skills for the job (Slack, 2015). Apart from this, the company also provides them with training and all the necessary resources so that they can become more productive and efficient. The recent crisis has forced the company to adapt to massive cost cutting. Their employees have also responded well and they have allowed the company to cut cost (Aven and Krohn, 2014). It has helped the BP Company to recover and plan for next business cycle.
Leadership plays a vital role in change management process. It makes sure that the employees work and perform as per the directions of the company. It will be better for BP Company to usea charismatic style of leadership (Morschett, Schramm-Klein and Zentes, 2015). It will bring new energy in the workplace and the employees will feel motivated. They will not become resistant to the changes that have been implemented in the business. A charismatic leader will help them to understand the benefits and importance of the change. He will guide them and make the entire process more useful. It is important that workers perform to best of their abilities. It cannot be possible without a mentor or a coach (Schmidt and Farkas, 2016). So, it will be better for BP Company to appoint a leader who makes sure that all the employees have the necessary skills and competency to perform their job. Those workers who are not able to perform at their full capacity should be given training so that they can develop and improve their productivity (Grant, 2016). It will help the company in the long run and they will have benefits from it. Leadership is crucial at the time of change management. Moreover, a leader makes sure that the needs and preferences of the employees have been taken into consideration. There should not be any disputes and miscommunication in the workplace. A leader maintains communication and also resolves the issue of the staff members.
External factors affect the business and its operation in many ways. It is important for BP Company to become proactive and adapt to the changing demands of the business environment. Changes are necessary for the survival of the business but employees are always resistant to it (Shuen, Feiler and Teece, 2014). It is essential for any company to make sure that the changes have been implemented in a proper manner. Some of the measures which can be adopted by the company are:
Review and assessment of business strategy: Change management process is incomplete if existing business plan is not reviewed. BP Company has to make sure that they carry out extensive research on their current strategy (British Petroleum returned to profit, 2017). It will help them to identify the loopholes and problems in the business. They have to remain agile and focus the areas where they can grow. For example, production and exploration are two different business models. Both require different skills and capital. BP Company has to ensure that they develop a niche in the market. It is not possible for them to capture on all the opportunities they see (Bettis and et.al. 2016). BP Company has done well in this area because they have been able to capture many inaccessible exploration areas. It has helped them to grow their business. It will be beneficial for them in long term perspective.
Constant improvement in technology: BP Company has been doing well regarding innovation and technology. They have adopted many new methods such as drones to inspect pipelines instead of physical inspection (Barney and Hesterly, 2015). But it will be better for them to focus on low energy and low cost methods of production.
Corporate learning: Long term profitability and sustainability are only possible if the company focuses on sharing, transfer of knowledge and training. BP Company should focus on coaching and development of employees (Oil company earnings, 2016). They should train their employee so that they understand all the processes and methods. Employees are an asset to the organisation and changes cannot be implemented without their support. They have to ensure that competent and skilful people are working in the company. It will improve the productivity and efficiency (Eden and Ackermann, 2013). Moreover, it will provide a competitive edge to the business across the globe.
Global Opportunities and strategies: It will be beneficial for BP Company to adopt a multi-domestic strategy in their organisation. They have given special focus on environmental factors but they should also consider global economy and other social performance (Frynas and Mellahi, 2015). They can consider expanding their business to America and Europe. Furthermore, operational risk management and safety norms are required in their policies and plans.
Employee participation and communication: BP Company should find better ways to communicate with the staff members. It is a multinational company and sometimes it becomes difficult for them to understand the needs and expectations of the employees (Bergh, Hinna, Leka and Jain, 2014). So, it will be better for the management to ensure that everything is getting communicated to the workers. It will help in the implementation of new changes and processes. Furthermore, they will also get support from the employees. It will also improve the satisfaction level of the staff members which will enhance their productivity. BP Company will have more experienced and loyal employees (Morschett, Schramm-Klein and Zentes, 2015). So, it will be beneficial for them to improve employee participation and engagement.
Conclusion
The above report concludes that strategic management is essential for the future of a company. BP Company has been facing many issues due to the crisis of 2014 but they have managed to recover from it. It has been possible for them because they have used effective change management process. Furthermore, they have allowed their employees to take initiatives and help the company to grow. It has been very positive for the organisation as their future looks good. BP Company has made strategic changes and they have adopted new technologies in their business. Despite low price of oil, they have cut down the cost of many operations and processes. So, it is important for them to keep innovating and bring new changes in the organisation. It will allow them to improve their productivity and efficiency. It will also give them a competitive edge in the industry which has been facing trouble. It will be better for the management to understand their existing strategy and review it. They can adopt McKinsey 7-S Framework to make it more supportive and to ensure its implementation. It will help the company in the long run.
References
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