Blue Ocean Strategy Team Project gb580: Strategic Management



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Blue Ocean Strategy Team Project

GB580: Strategic Management

Dr. Ray Kalinski

Team D:


Xavier Marsh, Jonnel McIntosh, Matthew Neitzel, Paul Power, Michelle Rabon, Basil Wilson

April 11, 2012


Table of Contents

Abstract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 3

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 4

As-Is Strategy Canvas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 4

Buyer Utility Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 6

Synopsis on Blocks to Customer Utility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 8

Removing Blocks to Utility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 10

Three-Tiers of Customer Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 11

Analysis of Six Paths to Creating Blue Ocean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 13

Addressing Customers Outside the Target Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 16

New Strategy Canvas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 18

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 20


Abstract

BP is an oil and gas company that uses sophisticated technologies to find oil and gas in the earth, which is processed into gasoline, motor oils, bitumen, adhesives, and cosmetics. The current strategy canvas for BP consists of oil exploration, oil field development, oil production, shareholder value, safety record, environmental performance, and society. When determining how to uses these strategies to help bring value to a customer a buyer utility map is created to analyze how the buyer uses BP's product. Blocks to customer utility consist of economic factors, safety, environmental protection, and alternative fuels. BP must look to remove such blocks in order to continue to grow. Another analysis is the three-tiers of noncustomer analysis that helps BP focus on how to convert noncustomers into customers. In order to go beyond the current strategies, BP must analyze the six paths of creating blue ocean strategies by looking at different areas within the business for opportunities to make the competition irrelevant. One way to accomplish this is through the creation of a plan to address customers that are outside the current target market. Once these are achieved a new strategy canvas can be constructed.



Introduction

BP is a gas and oil company which uses sophisticated technologies and tried-and-true techniques to find oil and gas under the earth's surface. The crude oil and gas is then processed into products like gasoline, motor oils, bitumen and the chemicals that make adhesives, cosmetics and other useful products (BP, 2012). The Anglo-Persian Oil Company, now known as BP, started out in 1901-1908 in Persia. William D'Arcy and his workers discovered oil and George Reynolds found natural gas in Persia. Within a year of the discoveries of Arcy and Reynolds, the Anglo-Persian Oil Company (BP), was in business. The press talked up the vastness of the new company's potential to the point that on the day Anglo-Persian stock opened for trading in London, the Glasgow people stood five deep in front of the cashiers at a Scottish bank, desperate to get in on the action (BP, 2012). The purpose of this paper is to analyze BP's current strategy and formulate a new strategy using tools to create a new blue ocean strategy in order to enhance its product offering. The tools that will be discussed are the strategy canvas, buyer utility map, utility blocks, and the three-tier customer analysis. The discussion will then conclude by analyzing BP's six paths to creating a blue ocean strategy, look over the plan for customers outside the target market, and create a new strategy canvas for future use.



As-Is Strategy Canvas

The main company focus for this strategy canvas is BP with an emphasis on its oil products and line of business. The two competing companies with BP are Exxon Mobil Corporation and Royal Dutch Shell. BP’s crude oil business is more than just finding, producing and delivering oil to customers around the world. As the 2010 Gulf of Mexico oil spill demonstrated, BP’s oil business influences the greater community and world as whole. With this is mind, the factors chosen to be examined include oil exploration, oil field development, oil production, shareholder value, safety record, environmental performance, and society (BP Global, 2012).

Oil exploration is the key to the discovery of potential oil fields that will eventually be developed, and will contribute to the future growth within the oil industry. Oil exploration is high risk. It requires expensive equipment and proven expertise. It is often conducted in remote areas of the world and companies must be confident in the level of probability before taking on exploration tasks. Once oil is discovered, oil field development can begin. This also takes expensive equipment, expertise, and high level of logistics support. Many times oil fields are located in environmentally sensitive or geo-politically complex regions of the world (Oilprimer, 2010).

Operating oil fields in deep water oceans, sand fields, or other unique environments requires special permits, licenses, systems, procedures, standards, and contractors. After the exploration is completed and oil fields are setup, oil production becomes the focus. It is time to start getting back the investments made and start producing or collecting the oil. Deep water ocean rigs and the complexity of operating these were brought to the headlines after the Gulf oil spill. Finding and setting up oil fields are expensive, producing oil is also expensive, which requires expertise, and must be done in safe and environmentally friendly manner. Licenses and government oversight are imperative for production. Violation of any of these mandated principles can deal an economic blow to the company and local community.



Oil company record profits always make the news when consumers are paying high gas prices. Record profits also mean that oil company’s investments in exploration, oil fields, and production operations are paying off with a return on investments for the shareholders. This is why oil companies are in business in the first place. Companies that make mistakes and have disasters, such as the Gulf oil spill, can quickly lose billions of dollars in investments that will need to be redirected to pay for damages and cleanup. This is why a company’s safety record, environmental performance, and impact on the local society must be factored into any strategy canvas. A company's safety record and environmental performance are important to the company's reputation with customers, contractors, the local community, and regulators. Sustainability efforts and long term planning in these areas are going to be the differentiating factors for oil companies in the future. Figure 1 shows the current BP strategy canvas.


#

Competitive Alternative

BP

XOM

RDS

1

Oil Exploration

8

10

8

2

Oil Field Development

8

10

6

3

Oil Production

8

10

6

4

Shareholder Value

6

8

10

5

Safety Record

2

5

8

6

Environmental Performance

3

5

8

7

Society

5

5

5

Figure 1 Strategy Canvas BP (British Petroleum)

Buyer Utility Map

A buyer utility map is a tool that companies can use to help focus on delivering exceptional value to its customers. The purpose is to realize the overall reasoning for society to purchase the company's product or service. By creating a buyer utility map a company is able to understand the lifecycle the product goes through with its customers. After analyzing the product's lifecycle, the company is able to find ways to enhance the products value in order to create a blue ocean and make its competition irrelevant. The product will then be seen by the company as a function of its utility to the buyer rather than only a function of the product's technical possibilities. The buyer utility map allows companies to outline all the areas buyers can experience with the product (Kim & Mauborgne, 2005).



The product lifecycle consists of six stages starting with purchasing the product, delivery of the product, using the product, other supplements required to use the product, maintenance, and finally disposal of the product (Kim & Mauborgne, 2005). One way for the majority of BP's customers to use its crude oil, the company will need to refine it and turn it into gasoline. Customers use gasoline to fuel their vehicles or tools that have motors and engines which require gasoline to function, such as lawn mowers, generators, chainsaws, etc. Figure 2 lays out the buyer utility map for gasoline customers.

Buyer Utility Map

 




Buyer Experience

 




Purchase

Delivery

Use

Supplements

Maintenance

Disposal

Utilities

Customer
Productivity

Gasoline helps customers fuel vehicles for faster travel and run other gas power equipment to make work more simple and quick.

Convenient filling stations allow for quicker and easier delivery of fuel for vehicles or other equipment.

The use of fuel takes minimum training to use, but requires safe handling when using it.

A gas powered motor or engine is required for fuel to work properly.

Gasoline requires little to no maintenance on the part of the customer, except storing fuel.

Outside of using the product, it is difficult to dispose of fuel in many locations.

Simplicity

Gasoline is simple for customers to purchase from gas stations.

Gas pumps allow for easy transfer of fuel to vehicles and equipment or other approved storage containers.

Gas can easily be used and stored in containers, but customers should be careful of spills.

Other items, such as containers or motors, can easily be acquired in order to use gasoline.

Because of the simplicity of the product, gasoline requires little to no maintenance besides storage.

Once a customer finds a disposal location, it is simple to dispose of excess fuel.

Convenience

Many gas stations in the U.S. make purchasing fuel convenient. The unstable and raising cost of gasoline makes it inconvenient for customers to purchase.

Gas stations allowing pay-at-the pump and easy to use pumps make deliver of fuel convenient for the customer.

Using and storing gasoline can make refilling motors or engines convenient when needed.

Items that use gasoline can be easily acquired for fuel usage.

Little to no maintenance for fuel makes gasoline a convenient product.

Not having convenient locations for fuel disposal makes disposal more difficult to accomplish.

Risk

No risk in purchasing if no naked flame is present. No smoking at the pump!

Safety measures are taken in transport and delivery of liquefied petroleum gas (LPG)

Flammable. Warnings are posted visibly at all times.

 

Risk management and safety maintenance is at the top of BP’s list, especially since the oil spill in the gulf in 2010.

Specialist licensed contractors handle waste storage and disposal

Fun and
Image

Some people only purchase certain types of gas based on branding and what they see as quality

 

gas is needed to get to where you need to go.

customers with a certain type of car will only want to use a certain type of gas

 

 

Environmental
friendliness

Some gas stations have vents to help prevent fumes from entering the air.

Should be stored in a safe and approved container for transportation and prevention of spills

Pollution the bi-product creates

 

 

Proper disposal to avoid destroying the environment or polluting the air

Figure 2 Buyer Utility Map BP (British Petroleum)

Synopsis on Blocks to Customer Utility

Petroleum is a quintessential commodity in the industrial market place. It finds utility as an important precursor of many industrial and house hold products. Pour, N. (2011) indicates that British Petroleum (BP) is the third biggest producer of crude oil when compared with Chevron, Shell, Total and Conoco. Despite the size and economic clout of BP, the 2010 oil spill in the Gulf of Mexico has turned the spotlight on BP's drilling practices, their sensitivity to the environment both domestically and globally. It is from this scenario that blocks to utility arise.

The blocks to customer utility revolve about economic factors, safety, environmental protection, and the push in society for the development of alternate sources of fuel. The recent BP oil spill has attracted environmental activists, eco-scientists, legislators and the media. The economic factors stem from the impact of the spill on the economy of the region. Many lost their jobs, their businesses, and industries such as tourism suffered extensively. This has left a bitter taste in the mouth of those who live and do business along the Gulf coast. BP has had to spend much to stop the leak, clean up the spill, and compensate those affected. Yet the lingering effect of that disaster is a constant reminder that safer and more environmentally sensitive energy sources must be found.

The impact on the environment has brought about the most important attempt to block further exploration and drilling for oil. The toxic nature of treatment solvents and the impact on the eco-system is well documented. The nitrous oxide and sulfur dioxide produced in the industry combines with water in the atmosphere to contribute to the formation of acid rain. Oil spill occur under the radar. Release of oil from tankers, off-shore platforms, large ships, and oily refuse impact the ocean waters and life within the oceans. There is no way to measure the true impact. (Pour. N. 2011)

Volatile organic compounds such as gases or vapors emitted are toxic and foul the air. There are even cancer-causing substances such as benzene that can cause DNA damage. These findings are blocks to utility of crude oil and its energy products. The major block going forward will be the development of cleaner alternative energy sources. Governments are also being pressured into supporting the conservation or the phasing out of the use of petroleum. The most obvious block to utility of oil is the price of gas at the pumps. There is no security at the pumps and the more prices rise, the stronger the cry for relief in alternative sources of cleaner energy.

Removing Blocks to Utility

Looking at a Buyer Utility Map there are different layers and different elements, and just like all companies BP faces blocks to utility. "The greatest blocks to utility often represent the greatest and most pressing opportunities to unlock exceptional value" (Kim & Mauborgne, 2005). Accessing the blocks to utility allows them to be removed and the company to grow and thrive. Within companies like BP, Shell, and Exxon their main product being oil the companies often see a lot of environmental factors that become blocks to utility. Those environmental factors have caused blocks to utility. These companies need to focus on how to remove those blocks to utility in order for their businesses to continue to grow.



Environmental Blocks

The oil industry sees a lot of environmental blocks and in order for their businesses to grow and thrive they have to remove those blocks, such as toxicity, acid rain, climate change, risk of oil spills, volatile organic compounds. Companies like BP, Shell and Exxon cannot eliminate these blocks fully but they can do things in different ways in order to keep them from causing problems like the BP oil spill in the Gulf.



Risk of oil spills - These companies have to focus on safer drilling and safer ways to use oil in order to prevent spills. BP is making monumental efforts to do just that "by bringing functional wells expertise into a single organization with common global standards, our global wells organization (GWO), we are working to standardize BP drilling and wells operations with the intent of delivering safe and compliant wells" (BP, 2012). Companies like Shell and Exxon need to focus on the same thing in order to prevent spills in the future. Safer drilling will prevent a careless mistake that will raise prices for consumers.

Toxicity - With the BP oil spill we have seen a lot of different ways they are treating these spills, some with toxic chemicals, which end up causing more trouble than the oil spill itself. All of these companies need to focus on cleaner ways to clean up these spills. BP is conducting studies that look at how habitats and animals are affected by these toxic chemicals. They need to be able to access and find ways to make it safer. "These studies are gathering data on natural resources across a wide range of potentially-impacted habitats, from deepwater to onshore habitat areas, and injured biological resources, including invertebrates, fish, marine mammals, sea turtles and birds." (BP, 2012)

Volatile Organic Compounds - Another block to utility within this industry is volatile organic compounds. These compounds are hazardous to health and can cause major problems as we described earlier. These companies need to focus on ways to look at alternate energy sources. Energy sources like wind and solar energy to meet their needs, these alternate sources will prevent the spread of volatile compounds in the air and the hazards that they pose. "When we launched our Alternative Energy business in 2005, we made a commitment to spend $8 billion over ten years on alternative energy. With $6.6 billion already invested (as at 31 December 2011), we are set to achieve this ahead of time" (BP, 2012). BP is one of these companies that are focused on looking at safe alternatives; Shell is also looking to do the same. Most oil companies after the BP spill are looking for safer and healthier energy alternatives, which will remove this utility block making prices cheaper for consumers.

Three-Tiers of Noncustomer Analysis

Companies have existing customers and noncustomers. In order for their noncustomers to become customers companies need to understand the demands of these noncustomers. The three-tiers of noncustomers are:



  • First Tier: "Soon-to-be" noncustomers who are on the edge of your market and ready to jump ship (De Kluyver & Pearce, 2011).

  • Second Tier: "Refusing" noncustomers who consciously choose against your market (De Kluyver & Pearce, 2011).

  • Third Tier: "Unexplored" noncustomers who are in markets distant from yours (De Kluyver & Pearce, 2011)

The first tier, "soon- to- be" noncustomers, of BP could be the small business owners who own gas stations that are operated by BP. Due to the oil spill in the Gulf region their customers are upset and refuse to buy BP gas. Therefore, these gas station owners are not making money and may not want to do business with BP any longer. The first tier noncustomers are those who minimally use the current market offerings to get by as they search for something better (Kim & Mauborgne, 2005).

The second tier, "Refusing" non customers, of BP are the people who think their gas and other product prices are too high and refuse to pay that amount of money. Another second tier of noncustomers of BP are people who were distraught over the oil spill in the Gulf region. Many people lost their businesses, homes, and jobs due to the spill and feel BP is to blame. The second tier noncustomers' needs are being met by other means or ignored (Kim & Mauborgne, 2005).

The third tier, "Unexplored" noncustomers of BP are people who have only purchased Shell, Exxon or another brand. The second noncustomer includes people who only take public transportation and do not have a car to purchase gas for. The third tier noncustomers are the farthest away from an industry's existing customers (Kim & Mauborgne, 2005).

The three tiers of non customers can be transformed into customers, they sit on the edge of the market, they are buyers who minimally purchase an industry's offerings out of necessity but are mentally noncustomers of the industry. Many companies develop strategies on how to keep existing customers, but they also need to focus on how to reach their noncustomers, expand their market, and create new demand.



Analysis of Six Paths to Creating Blue Ocean

Kim and Mauborgne identify clear patterns for creating blue oceans. They describe six basic approaches to remaking market boundaries and call them the six paths framework (Kim & Mauborgne, 2005). Traditionally, BP's main line of business is producing various crude oils that are eventually refined into petroleum or other petrochemical products. Following the six paths framework BP can look across current assumptions of their strategy and market realities to open up blue oceans. In some respects, this is what BP has already been doing. Prior to the Gulf oil spill BP was attempting to rebrand its name to mean Beyond Petroleum. The effort was shelved as BP took a strong emphasis on sustainability, safety and the environment.



Look across alternative industries

"Alternatives include products or services that have different functions and forms but the same purpose." (Kim & Mauborgne, 2005) As applied to the BP, alternatives mean alternative energy. Alternative energy will not come from petroleum but other bio-fuels, wind power, or solar power. BP is investing in sugar-to-diesel technology, cellulosic, and corn based ethanol. BP owns and operates 13 wind farms in the U.S. generating enough electricity to power over 500,000 homes. BP operates BP Solar that has installed 1.6 gigawatts of products around the world. In all of these alternative energy areas BP is focusing where they can profitably grow their business (BP, 2012).



Look across strategic groups within industries

"The key to creating a blue ocean across existing strategic groups is to break out of its narrow tunnel vision by understanding which factors determine customers decisions to trade up or down from one group to another." (Kim & Mauborgne, 2005) Customers want clean, sustainable, and societal friendly energy sources and production. BP is working to provide this strategic group of energy resources. BP's AE venture looks for ways to produce alternative energy by investing in companies that provide cleantech and carbon offsets. BP's solar, wind, and low carbon energy projects continue to produce profits and results in the strategic group (BP, 2012).



Look across the chain of buyers

"In reality there is a chain of buyers who are directly or indirectly involved in the buying decisions" (Kim & Mauborgne, 2005) BP understands this and the Gulf oil spill disaster cannot have made it clearer for not just BP, but every oil and energy company in the world. The chain of buyers for oil and energy is the local community and society as a whole. BP understands they have far-reaching impacts on the local communities, societies, and economies where they operate and sell products. BP works to create jobs, support the community, and use local suppliers in the communities they operate in. Along with concentration on the socio-economic issues, BP is concerned with the environment and human rights of the local communities. Concentrating on local sustainability through local advisory councils keeps BP initiatives flowing across the chain of buyers with society at the forefront of everything they do (BP, 2012).



Look across complementary products and service offerings

"Untapped value is hidden in complimentary products and services" (Kim & Mauborgne, 2005) BP understands that their products are not used in a vacuum. Many of their dozens of products for the road, home, or businesses have complementary products or services. Their gasoline service stations accept BP gas cards for purchasing oil and gas on credit. Customers can pay their gas credit bill online along with other online services. BP provides route and travel planning along with BP store locater applications for the customer's smart phone or mobile devices. All of these products combine to get the customers to the BP gasoline station fast and easy. Once at the gas stations, customers can find not only fuel, but food and other goods for traveling. The customer products and services are only one part of BP complimentary products and services. BP provides complimentary services and products for the natural gas, aviation fuel, marine fuel, shipping, asphalt, and petrochemical industries (BP, 2012).



Look across functional or emotional appeal to buyers

"Other industries compete largely on feelings and their appeal is emotional" (Kim & Mauborgne, 2005) "Big Oil" is the term commonly brandished around when the conversation turns to oil companies. Visions of greedy Oil Barons polluting the environment while making themselves rich in the process comes to mind. BP knows this and is working hard to promote the company's long-term sustainability plans. BP promotes its safety record, environmental performance, employee conduct, and participation in the local communities. BP promotes its commitment to restoring the environment and economy of the Gulf after the oil spill. BP has to show results and transparency in its commitments to regain the trust and emotional appeal to its customers (BP, 2012).



Look across time

BP sees a 40% growth for global energy needs over the next century. Meeting the energy challenge while supporting lower carbon energy sources, is the challenge over time. BP is taking this opportunity to be a leader in the trends and open up a blue ocean strategy. They are moving to a diverse portfolio of energy products. Solar, wind, biofuel, and lower carbon mixes are only a few of these. BP is moving to operating more responsibly by managing risk and setting principles all in effort to avoid a repeat of the Gulf oil spill. BP is taking a lifecycle approach to projects and operations to better manage the environmental impact and impact on local communities. All of these actions will help change the trends in the oil industry and provide unprecedented customer utility (BP, 2012).



Addressing Customers Outside the Target Market

There are three groups of customers that BP does not target presently. Here we will discuss plans to capture these non-customers, and by so doing create a much larger blue ocean. The targeted market is no different from the untargeted market except that one group faithfully purchases BP's products and the other does not. The identified groups of non-customers are categorized into three tier groups. The first tier "soon-to-be" non-customers are the small business owners who operate gas stations which are serviced by BP. The second tier "refusing" non-customers are those who refuse to purchase gas at BP stations because of the high gas prices, and those who have become distraught and angry at BP as a result of the recent oil spill disaster in the Gulf of Mexico. The third tier "unexplored" on-customers is made up of individuals who normally do not ever purchase BP's products and those who do not own a motor vehicle and rely on public transit system for transportation.

The plans to develop a blue ocean strategy will target these three tier groups of non-customers. Portions of the plan may be specific to a particular tier while other sections may be applied across all three tiers. In order to capture the different non-customers, we must examine more closely the commonalities and not the differences. Kim & Mauborgne, (2005) states it repeatedly in this way, "To reach beyond the existing demand, think non-customers before customers, commonalities before differences, and desegmentation before pursuing finer segmentation."

The first tier "soon to-be" non customers are the small business owners who operate gas stations which are serviced by BP. In order to appeal these soon-to-be non-customers BP has developed a $60 million response package. These local distributors will receive 1 to 2 cents back per gallon of gas purchased in June, July and August. BP is also offering credit card fee reductions and will increase advertising emphasizing that these businesses are locally owned and operated (Greenberg, 2010).

The second tier "refusing" non-customers are those who refuse to purchase gas at BP stations because of the high gas prices, and those who have become distraught and angry at BP as a result of the recent oil spill disaster in the Gulf of Mexico. In order to appeal these refusing non customers BP started and completed a shoreline clean up and committed to pay all legitimate claims. In addition, BP must approach them with a genuine apology for the loss they suffered secondary to the oil spill in the Gulf.

Tier three "unexplored" non-customers are those who have no means of transportation except public transit must be recognized as potential users of BP oil products because many of these people will one day own their own transportation. Supporting education for safe driving, and establishing opportunities for student drivers to learn are other methods that could endear third tier non-customers to BP. Partnering with local communities fund raising occasions to sponsor gift items are definite relationship building approaches. A true magnet to non-customers and customers alike would be BP oil intervention in helping to lower the gas price at the pump.

Finally the safety of the environment affects all tiers. BP must reveal its commitment to reducing toxins used in cleanup processes, they must produce fuels that drastically reduce harmful emissions into the atmosphere, and eliminate carcinogenic bi-products. They should be transparent in acknowledging when an error is made and solicit immediately the help need to correct the problem. In so doing any further ecological, financial, and environmental disasters will be avoided.

Through this offered plan to address customers outside the target market of BP, it is evident that relationship building is the focus of the plan. Until BP attracts the attention of its non-customers, the chance to enlarge the blue ocean will be lost. Again an organization that delights its customers will add value to all stakeholders.



New Strategy Canvas

The Strategy canvas focuses on a central diagnostic that builds the blue ocean strategy. The strategy canvas has two purposes to capture the current state of the market space. This gives us an idea where the competition is currently investing and what makes them compete. Also it puts the company into action by changing your focus (Blue Ocean Strategy, 2005). When you look at the value curve is a basic component of the strategy canvas. It shows the company's performance across industry standards of competition. (Kim & Mauborgne, 2005) The new strategy canvas allows for companies like BP to be able to take a look at where they stand or rank amongst similar companies. These different strategies are the key indicators in this industry of how a company is doing. Figure 1 shows the revised strategy canvas.



Local Distributor Incentives - Most companies offer incentives in this industry from credit cards that reward your loyalty, other loyalty cards, discounts, and many places offer free refreshments with purchases. Being a business in this industry that rewards loyalty puts you at the top of the curve. You want to stand out from the rest and be at the top of that curve, making your customers feel rewarded by sticking with you.

Going beyond cleanup of a disaster - As a company in the oil and gas industry, BP is faced with the very real possibility that spills will happen or large disasters like the Gulf oil spill. As a company, they need to go beyond simply cleaning up the mess, like we have seen with BP they have made a great effort to go beyond the clean up to make things better and ensuring that these problems don't happen again.

Building relationship of trust in communities - As a company that finds itself looking at situations of disaster, the company needs to build a relationship of trust with the community. The company must be able to show them that mistakes happen, but that the company is doing all you can to fix it and show them the company is going beyond what it has to do to gain their trust. We saw a lot of this with the gulf oil spill and BP having to gain back the trust of those who lived in the Gulf.


#

Competitive Alternative

BP

XOM

RDS

1

Oil Exploration

8

10

8

2

Oil Field Development

8

10

6

3

Oil Production

8

10

6

4

Shareholder Value

6

8

10

5

Safety Record

2

5

8

6

Environmental Performance

3

5

8

7

Society

5

5

5

8

Local Distributor Initiatives

10

 

 

9

Going beyond cleanup of a disaster

10

 

 

10

Building relationship of trust in communities

10

 

 

Figure 1 New Strategy Canvas BP (British Petroleum)

Conclusion

BP oil is among the leading producers of crude and its bi-products. However when competing with the other giants of the industry, BP can become mired in red ocean strategies, and run the risk of missing the opportunities to create a market that will launch it into an ocean that submerges the competition. This "Blue Ocean" can be achieved by addressing the three tiers of non-customers as identified in this paper. The analysis of the six-path strategy must be a dynamic process enabling flexibility, speed and adaptability in order to seize opportunities within the ever changing marketplace. BP must be aware that creating blue oceans, making the competition irrelevant, cannot come at the expense of environmental irresponsibility. They must operate within the confines of governmental regulations, be sensitive to the safety issues that can plague the industry, and above all they must be eco-friendly and support the communities in which they operate and be transparent in their operations, thus building genuine human relationships which will translate into consumer loyalty, and adds value across the horizon of their blue ocean.


References

BP Global. (2012). Building a sustainable BP. Retrieved from http://www.bp.com/bodycopyarticle.do?categoryId=1&contentId=7052055.

BP. (2012). First oil history of BP. Retrieved from http://www.bp.com/sectiongenericarticle.do?categoryId=9014440&contentId=7027520.

BP. (2012). Making fuels and products. Retrieved from http://www.bp.com/sectiongenericarticle.do?categoryId=9021492&contentId=7040008.

BP. (2012). Safer Drilling. Retrieved from http://www.bp.com/sectiongenericarticle800.do?categoryId=9040044&contentId=7073469.

Greenberg, E. (2010). Some Memphis area BP stations being hurt by oil spill backlash. Retrieved from http://www.commercialappeal.com/news/2010/jul/03/collateral-damage/.

De Kluyver, C. A. & Pearce, J. A. (2011). Strategy: A view from the top (4th ed.). Upper Saddle River, NJ: Pearson Education, Inc.

Kim, W.C. & Mauborgne, R. (2005). Blue ocean strategy: How to create uncontested market space and make the competition irrelevant. Boston, MA: Harvard Business School Publishing.



Oilprimer. (2010). 2010 company production ranking. Retrieved from http://www.oilprimer.com/2010-company-production-ranking.html.

Pour, N. M. (2011). BP market analysis and strategic marketing recommendations. Cardiff, UK: Kensington College of Business and University of Wales.

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