BP

9

Managementstructures

(British Petroleum) is one of the largest and most dominant oil andgas companies in the world by market capitalization and revenue. Itsbusiness in the energy industry included exploration of fossil fuels,production, and refining, petrochemicals, distribution and marketing.Although its primary dealings are in the fossil fuels sector, thecompany has recently developed interests in renewable sources ofenergy such as wind power and biofuels. The corporation, whoseheadquarters are located in London, is rated among the ‘supermajor’in the global energy sector (Hilyard 2012). was founded in theearly 20th century as the Anglo Persian Oil Company. It underwentseveral challenges in the first half of the century before it wasacquired by the United Kingdom government, which led to a change ofname to British Petroleum (). Today, it has a presence throughoutthe world. is mainly present in geographical locations wherefossil fuels exist as well as the strategic location for refining,transporting and marketing its products (Bamberg 2009).

Themost important resource in any organization is the human capital. Thesuccess of a business is dependent on the ability of the corporatestructures to bring people with shared values together to worktowards a common goal. The structure defines how the individuals arebuilt up into a working group. is a huge corporation with complexand diverse activities. The management structures are essential inensuring that the massive workforce, distributed throughout theworld, works towards a common objective. In the management structure,people are grouped into layers. Each stratum in the corporatehierarchy has a different level of roles and responsibilities(Albrechtsen &amp Besnard 2013).

Thecentral decision-making organ in operations is the board. According to the company website, the board has the responsibility ofproving direction as well as oversight over all activities of theorganization on behalf of the shareholders. The board represents theowners of the company and, therefore, is accountable to them. It iscomposed of thirteen members, which includes the chairman (CarlHenric Svanberg), two executive members, nine non-executive membersand one independent director. The executive, through the chiefoperating officer and the chief financial officer, reports directlyto the board. To achieve its mandate, it has established principlesand values that guide the organization. The foundation of theprinciples governing its operations is the importance of “clarityof roles and responsibilities, and the proper utilization of distinctskills and processes”. Through a governance report to theshareholders and other stakeholders, the board outlines theperformance of the organization as well as the management activities( 2016a).

Theexecutive management is composed of the chairman (Carl HenricSvanberg), two executive directors (chief executive officer and chieffinancial officer) and other executive officers responsible fordifferent divisions and operations in the company. The CEO of isBob Dubley while the chief financial officer is Dr. Brian Gilvary.The executive has the responsibility of managing the day to dayoperations of the corporation under the supervision of the board. Theowners, therefore, confer their authorities to the executive throughthe board ( 2016a).

Divisions

Thecorporate aim of is to provide a steady and reliable supply ofenergy products and services to its clients. To achieve thisobjective, the company has two major operating divisions, Upstreamand Downstream ( 2016a). The Upstream segment is responsible forfinding fossil fuels, extracts through drilling, and transportation.The Downstream unit is in charge of the manufacturing and blendingprocess as well as marketing the products. Due to the increaseddemand for renewable energy, has created a third division whichdeals with investments and development of new sources of energy suchas biofuels and wind farms (Ferrier and Fursenko 2016).

Upstreamdivision

Theupstream sector forms the foundations of operations. It primaryresponsibilities include exploration of oil and gas in differentparts of the world, development of the fields and production. It isalso responsible for processes such as transportation, and storage ofraw and associated products. According to the annual report 2015,the upstream segment of operations has five main operational andtechnical functions. They include exploration function, developmentreservoirs, as well as global wells, projects, and operationalorganization. These functions ensure that the resources base of thecompany is renewed, stewardship in the management of the portfolios,and safety and compliance of operations with internal and externalstandards ( 2016b).

Theactivities of the upstream segment of operations are concentratedin 12 regions around the world. They are optimized by a welldeveloped and specialized team of experts in the exploration geologyand petrochemical engineering, logistics, procurement and supplychain management as well as financial management. One of the mostphenomenon technology used in the exploration of gas and oil isseismic imaging which has played a significant role in supporting thestrategic plan of the upstream division ( 2016b). Despite theimmense capital and advanced technology that is involved in thissegment of operations, maintaining key portfolios in major fossilfuels basins is a daunting task. It has a direct impact on thecompetitiveness of the group. There are several ways through whichthe segment competes with other giants in the energy industry. Theoperations of the upstream division are dependent on its ability tocarry out successful exploration and execute projects efficiently,putting into consideration the safety and reliability of theprojects. Therefore, it competes with other companies in the sectorthrough operational dependability, safety performance, and access tonew oil and gas resources in the traditional and new regions (Ulph2011).

Downstreamdivision

Thedownstream segment of operations is responsible for manufacturingand blending processes as well as marketing of the company’sproduct. deals with three broad categories of product, whichinclude fuels, lubricants, and petrochemicals. The downstreamdivisions have the responsibility of ensuring that what is extractedfrom the fields is converted into one of the products marketed by .In the fuel subsector, downstream is responsible for refining of thecrude product into different forms of fuels, mainly jet fuel,gasoline, diesel and gas, and ensuring that they are available wherethe customer needs them (Bamberg 2013). Consequently, it is in chargeof the management of the supply chain, retail business, and tradingactivities in the organization. The lubricant subsector involvesvalue addition processes, branding, and marketing of lubricatingmaterials. Over the years, the downstream segment has establishedpartnerships with equipment manufacturers to provide customized andbranded lubricants in the market. Petrochemicals are products derivedfrom fossil fuels during the refining process for industrial use. The company has invested in advanced technologies that ensure thatthey can supply petrochemicals demanded by industrial consumers,mainly paints, plastics and textile industries. This is a criticalrole because all other aspects of business depend on whether ithas a market for its products ( 2016b).

Itis essential to note that fuel products in the market are notdifferentiated. However, the downstream segment in has invested inmodern advanced technologies which enable the company to remaincompetitive in the market. The company has branded and customizedproducts, mainly lubricants but can be substituted with products fromother firms. However, the principal product, fuel, is notdifferentiated. The top priorities in the downstream strategy are toadopt technologies that result in advantaged manufacturing, increasedefficiency and safe operations. The state of the art refiningtechnologies is the main competitive advantage enjoyed by (2016b). Also, the company uses its resources power to financemarketing and sales promotion activities throughout the world. As adirect impact of trademark publicity initiatives, is one of themost recognized brands in the global energy market. Additionally,downstream has a well-developed distribution infrastructure andlogistic system. They include modern pipeline systems, rail and roadtransport tankers and sophisticated storage facilities. The divisionrecognizes the significant role of the retail market in operations. Consequently, the marketing strategy involves partneringwith various retailers to sell its products in the highly competitivemarket (Herkenhoff 2014).

Contributionto the local community

upstream, downstream, and renewable facilities are located in atleast seventy countries around the world. Additionally, theirproducts are marketed through different channels in the energy,lubricant and petrochemical market, throughout the world (Bamberg,2009). Consequently, there are several issues in the companyoperations that have a direct impact on the local community andenvironment. While maximizing the return on investment to theshareholders and meeting the demands of its clients, the company hasstrived to be a responsible and the ideal corporate citizen. Beingone of the largest players in the fuel and petrochemical industry, has a huge responsibility in ensuring that the global society meetsthe increased demand for energy. However, there are numerous issuesrelated to the impacts of fossil fuels on the environment that haveeffects on its operations at all levels (Ulph2011).

Thelargest contributions of the businesses in the local communitiesare dependent on the commitments of the organization in promotingethical human resources management practices. Like other largecorporation, operations provide employment to the localcommunities. The locals are employed directly by or by itscontractors. The company has established a code of conduct thatguides the organization on how it relates to its employees. Thisincludes safety in the workplaces, and value for its people. According to the 2015 sustainability report, the performance of thecompany is dependent on “having a highly skilled, motivated andtalented workforce that reflects the diversity of the societies inwhich we operate” ( 2016c). The foremost goal of the humanresources department at is to build capacity in the workforcederived from the host communities. Consequently, the company aims atattracting and retaining the most experienced and talented people. Italso provides expanded opportunities for its workforce to buildcapacity as well as adequately rewarding performance. Otherinitiatives include promoting health and safety, inclusivity ofdiverse cultures and engagement of employees. These activities arebased on the fact that the company identified its massive humancapital as the most important community that contributes to itssuccess ( 2016c).

Inaddition to the provision of employment opportunities, there areother social and environmental activities that are undertaken by thecompany. Some of these activities, although an element of thecorporate social responsibility, they are part of marketingstrategies. This is because they have direct impacts on the brandname. In the recent past, the company has been faced with an uphilltask of dealing with the effects of the Deepwater HorizonOilSpill in the Gulf of Mexico, which has impacted negatively on thereputation and safety of its operations (Partlett and Weaver 2011).Through the operating management system (OMS), has developedmeasures that facilitate the management of social and environmentalimpacts of all its operations (Gannon 2012). The company has alsoreiterated its commitment to contributing to the low carbon future.Other environmental initiatives include preparedness for oil spillsand related accidents, collaboration in dealing with climate changeand greenhouse gasses emissions, water management and unethicalpractices such as hydraulic fracturing (Ferrier and Fursenko 2016).

Thecompany’s operations have both positive and negative impacts on thelocal communities. They create employment, generate local governmentrevenues and provide opportunities for other business organizations.On the other hand, the activities can result in adverse effects suchas destruction of natural environments and cultural heritage (Ulph2011).Consequently, the company has adopted community engagement strategiesthrough which the local communities can communicate their grievances.While employing the locals, the company invests in local developmentsprograms such as education, disaster relief, donations to charitythrough the Foundation, and working with local indigenous peopleto promote their culture. These initiatives play a critical role inpromoting the brand name, and this an important aspect ofmarketing strategy ( 2016b).

References

Albrechtsen,E. &amp Besnard, D. (2013). Oiland gas, technology and humans: assessing the human factors oftechnological change.Burlington, VT: Ashgate.

Bamberg,J. (2009). TheHistory of the British Petroleum Company.Cambridge: Cambridge University Press.

Bamberg,J. (2013). BritishPetroleum and global oil: 1950-1975: the challenge of nationalism.Cambridge: Cambridge Univ. Press.

(2016a). bp Global.http://www.bp.com/en/global/corporate/about-bp.html

(2016b). Strategic Report 2015,http://www.bp.com/content/dam/bp/pdf/investors/bp-strategic-report-2015.pdf

(2016c).SustainabilityReport 2015.https://www.bp.com/content/dam/bp/pdf/sustainability/group-reports/bp-sustainability-report-2015.pdf

Ferrier,R. W. and Fursenko, A. (2016). Oilin the World Economy.Routledge, ISBN 1317234960.

Gannon,M. (2012). Dissectinga Disaster: The Deepwater Horizon Oil Spill.Waco: Baylor University.

Herkenhoff,L. (2014). Aprofile of the oil and gas industry: resources, market forces,geopolitics, and technology.New York: Business Expert Press.

Hilyard,J.(2012). TheOil&amp GasIndustry:ANontechnicalGuide.Tulsa,Okla.: Penn Well.

Partlett,D. F., and Weaver, R. L. (2011). BPOil Spill: Compensation, Agency Costs, and Restitution.Washington and Lee Review, 1342-1355.

Ulph,C. (2011). PRAnalysis of British Petroleum.München GRIN Verlag GmbH.