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Poters 5 Force Analysis of Bp

Essay by   •  March 17, 2011  •  Essay  •  274 Words (2 Pages)  •  1,723 Views

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Because of the industrialisation in the developing countries and the desire for economic growth, demand for energy will increase. At the same time environmental issues are becoming of more and more importance, opinion exists that climate change should be fought; therefore BP should emphasize more on working with and providing green energy sources.

Next to that, if looking at the economic analysis it can be seen that with regard to this industry the UK applies a high tax policy, the real disposable income will decline and that it is expected that inflation will rise, an opportunity for BP might be to invest in technology that will provide energy which is cheaper for their customers. Even though the prices are predominantly set by the OPEC countries, there is still an opportunity for BP to do this by reducing costs, and in this way increase their profit margin. Then the price set by the OPEC countries could be seen as a minimum price, which is affordable to the customers of BP, and which will keep a sufficient profit margin for BP.

The political environment plays an important part in the business of BP as well. The current issue of BP possibly closing a gas field over Iran sanctions is an example of the political issues. Wars in one of the major resource supply areas for BP, the Middle East can cause an instable business for BP. However according to the former Group Chief Executive of BP the three wars in the Middle East in the past 15 years have barely disrupted supplies (Browne, 2004). Nevertheless BP should secure safe and consistent access to its resources.

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