British Petroleum

Takeover refers to the purchase of one company by the other and technically deals with acquisition of a listed company by one or more companies which are at better financial and economic position than the company being acquired. BP is on verge of a takeover and the following paper presents analysis of the company. The company is British owned and it has branches in various countries around the globe.

The institution is found in energy industry and its one of the biggest and most valued energy supply and distribution institution in the world. Theoretically the history of the company is very complicated as it’s very rich, varied and unique status. The following paper gives complete analysis of problems facing the company especially the one involved before and after the drastic oil spill in the Gulf of Mexico and consists of references to various journals, business literature, and scholarly literature materials.

This paper describes the activities and discusses the conventional reasons for a takeover, their advantages and disadvantages, and strategic considerations that can be made to prevent a possible takeover. Introduction British petroleum (BP) company is an international energy production and supply company with its head quarters London, United Kingdom. By margin BP is the 3rd largest energy company and the 4th biggest company in the world (Datamonitor , 2009, p, 45).
The company has operated in the energy sector for many years and it has gained reputation of being trustworthy thus it has instilled consumer loyalty across the spectrum. This company has experienced rapid changes and advancements in science and technology and presents numerous challenges to the company in relation to personal safety and quality management and also it entails issues like production costs, intellectual ownership of properties and products, competition and monopolies.
The company is public held and its shares are traded in major stock exchanges globally including the London stock exchange, New York Stock Exchange and other stock exchanges in major cities all over the world with the trading symbol BP (Coffee, et al, 2000, p 98). The organizational original mission was to provide consumers with the right assortment of products, at the right quantities and price, and to provide excellent customer service through trained representatives.
The organization current mission is guided by key core values: excellent customer service, care for people, entrepreneurial spirit, respect for all, building strong relationships, doing the right thing, giving back to communities, and creating shareholder value (Weston,2000 ,p ,87). BP success is based on mutually beneficial partnerships with diverse and competitive suppliers, allowing the company to deliver a wide assortment of superior, yet low-cost products and services, combined with superb customer service, and focused towards increasing shareholder value.
The company employs over 210,000 employees and tends to serve more than a 300 million customers worldwide (Van & Schroeder, 1984, p 29). With the current problems facing British Petroleum in the Gulf of Mexico following the deepwater rig explosion which was caused by what has been described as the worst US ecological disaster ever, the Company’s share price has fallen steeply and according to some commentators this could trigger a takeover of the business by one of its big competitors such as EXXON MOBIL, SHELL or even PETROCHINA (FINANCIAL TIMES, 2010, p 34).
The catastrophe has plunged the company’s stock price as well as its reputation, and public image following the catastrophe have led to speculation regarding the company takeover due to the fact that the company is experiencing financial problems, huge losses as a result of oil spill and poor handling and management of the oil spill (Armstrong, 2003, p, 23). The above mentioned issues have been viewed by many to have been caused by poor leadership and decision making techniques in regard to the way the management handled the oil spill.
With the current troubles facing British Petroleum (BP) in the Gulf of Mexico, there is possibility of acquisition or takeover and hence a research paper which tries to come up with the relevant information in trying to establish some of the major factors that have been influencing the anticipated takeover (Ansell & Park, 2003, p 47), Identification of Industry and possible takeover Competitors The company is found in the energy industry and mainly concentrates in oil exploration, supply, and distribution.
The industry deals with all assortments of energy products including oil, wind, solar, hydro power and other related energy products and services. This industry is one of the most contended ones with many rivals who produce similar products and services . The top competitors of BP include EXXON MOBIL . SHELL and PETROCHINA; with SHELL being the strongest rival of BP (Maxwell , 2002, p, 29). The company has a global presence and has assets in most areas of Africa especially central and western Africa, China and South American states like Venezuela and Uruguay, but the United States and Russia are its largest market.
As mentioned earlier, BP is the third largest energy company in the world and the fourth largest company in the world (Kwon, 2008, p, 87). The possible competitor for the takeover has been indentified to be Exxon Mobil for the reason that the company is American owned and its operations and performance over the years have been above par compared to other rivals. Companies like Shell and Petro china though internationally recognized, their operations are not augmented like those of Exxon Mobil (Johnson, 2010, p 19). Description of the Organizational Problems
Different organizations experience different problems depending on the nature of the organization, the economic situations, the political interruptions, and the human interference. Once these problems occur within a corporation, it tends to affects the organization core responsibility to extent of being unable to provide adequate and quality services to its clients and individuals relying on it. The occurrence of these problems can be a very damaging issue if they are hard to evaluate and solve (Kesler, 2008, p 49).
With the British Petroleum (BP) company, there a number of issues and problems that has been constantly hounding it. Most of the organizations problems and causative agent for the possible takeover have possibly resulted from the oil spill in the Gulf of Mexico and lack of teamwork and capacity building in relation to the employees during the fixing of the oil cap to reduce massive leakage. Due to this, there have been reduced prices of the company’s stocks all over the world due to market fears of possible losses and public loss of confidence in the company.
The increased failed management in the corporation resulting from the management poor skills in handling crisis has sometimes been leading its operations to the wrong direction. The poor handling of the oil spill by the company executives is one good example of the management laxity and the probable cause of the proposed takeover . It must be agreed that BP has been faced with lack of skilled and effective managers offering effective managerial services thus leading it into poor leadership and decision making processes (Lochhead, 2009, p 67).
As we have noted, most of the problems faced in this organization have been caused by the oil spill and ongoing economic recession, and others are related to inability of workers to work together. Since there was poor handling of the oil spill, the company has been in bad relationship with the neighboring community and it has not been able to fulfill its social responsibility function due to constant bickering and interference from the American government (Snell & Dean, 1992, p 50).
In conclusion, the major issues contributing to the proposed takeover of BP is the matter of financial problems relating from the management of the oil spill, whereby the company has spent billions of shillings in controlling the spill and eventually the company has been forced to sell some of its assets in Russia to cover the costs, and this has not been going well with majority of shareholders due to fact Russia is one of its biggest market. Lack of trust from consumers and American government is another factor that has led the company to opt selling its assets to its competitors (Maxwell, 2002, p 98).
BP Proposed Takeover Definitively, takeover refers to purchase of one company by the other and technically deals with acquisition of listed company by one or more companies which are at better financial and economic position than the company being acquired. Takeover occurs in situations where a company wants to save itself from financial problems and also happens in situations where the company wants to secure limited market, channels of distribution, consumers and supplies.
In any kind of organization, takeover or acquisition are quite significant since they play a major role towards the overall achievement of the given business or organization. This has to be done in a delicate manner that ensures all areas and aspects of the organization have been greatly considered. When the issue of takeover is being discussed about in a given business or any other kind of organization, it is very important to think of the manner in which the operation will be coordinated and thus employ the necessary personnel and practices which shall promote the performance of the organization .
It is important to note that, without managing the human aspect and all other resources being utilized in the business, it may not be possible to achieve the goals and missions of the organization (Stern & Chew, 2003, p 90). One of the major reasons for British petroleum proposed takeover is as a result of the financial and social problems resulting from the oil spill in the gulf Mexico. From “NEWSWEEK Journal of 04. 06.
2010, the spill has costed the company sums of money to the tune of over 19 billion dollars covering both the cost of cleanup and compensation to individuals affected and penalties to the American government. The performance of the company has dwindled in the recent days and in the first quarter of the year; the company has made losses amounting to over 20 billion dollars. Since corporate takeover entails two key types that include hostile and friendly takeover, BP takeover assumes that of hostile nature for the reason that the company is unwilling to engage in any dialogue relating to acquisition of its major assets.
Hostile takeovers generally occur in situations where the board of directors is unwilling to relinquish its position and the company, while the company is performing way below par in terms of operations and financial management. This is the case with BP since the company CEO Tony Hayward has not viewed it has a possibility and has publicly stated that on a number of media outlets. A takeover in ensuring there is such form of safety can basically include a number of one or more different components within the totality of the institutionalized system.
Such safety provisions include change in an organization and necessary management, safety policies, organizational procedures, and other emergency procedures and responses which have been put in place (Liu, 2006, p, 65). Advantages of BP takeover 1. One major advantage of BP proposed takeover is that once realized, the firm which was poorly managed prior to the acquisition will undergo valuable management and performance rectification due to changes that will occur in its management structure .
The changes in corporate structure including modification and replacements of executives and senior staff will guarantee and repair the organization dented reputation. For the reason that the organization acquisition will involve a moderate debt to equity ratio, the company will also negotiate the acquisition deal since it poses a controlling stake in the global market (Van & Schroeder, 2008, p, 20).
The company goodwill in the world is very highly rated and possible acquisition of the company assets will entail the purchase of this valuable non- tangible asset hence provide opportunities for making more funds from the sale. 2. The company shareholders will also benefit from the returns emerging from the acquisition due to fact the company has a positive capital value attributed from large shareholder base ,assets and properties it owns in the world.
With immense global presence, the BP buyout will promote employees and shareholder interests as maintaining the company effectiveness, efficiency and loyalty (Fox, et al, 2008, p, 87). The company benefits from strong market share and sound economic position hence even after the buyout, the company products will still remain favorable in the global market due to the consumer confidence established before the oil spill. 3. The BP issue will only involve acquisition of the company shares and assets, and this will entail the concept referred to as strategic takeover.
This concept is advantageous to the company and the company acquiring it since the firm will select and buy assets that are favorable to them and they will be able to negotiate the right price for the products without full approval of the shareholder and other regulatory bodies. When it comes to the takeover process, the approach is mainly aimed in ensuring that any forms of weaknesses and strengths have been disclosed, and especially the ones which might have diverse impacts on the process and operations being carried out.
For the reason that the company has huge amount of liabilities and increased level of debt, takeover by its competitors will reduce its taxable income hence leading to reduced tax payments. The company taking over BP will acquire both its assets and liabilities, thus the company will be saved the burden of paying and compensating the victims of the accidents and penalties to the American government.
BP take over will promote efficiency gains since it will be able to eliminate corporate value destroying effects that emerge from excessive diversification hence it will be able to reduce the organization debt ratio and increase its equity portion (Dunning, J 2004, and p. 97). Disadvantages of the Takeover There are a number of problems which have to be noted with the BP proposed takeover. To begin with, the acquisition tests to be administered in establishing whether the company is profitable will be very inaccurate.
This might end up resulting in cases where a very strong company is bought using false benchmarks or current situations without the evaluating the overall organizational position and performance (Mok & Tillaart, 1990, 76). If implemented as proposed, the organization corporate restructuring will greatly affect employees and its shareholders. The company will be forced to downsize its operations and current workforce hence this will result to increased levels unemployment due to possibilities of employees being laid off.
Large number of unemployed individuals will impact on the overall community hence hindering its economic development and opulence (Liu, 2006, p 58). BP has a global presence and sudden acquisition of its assets in some African and Asian countries will not be taken well since majority of people have an intimate touch with its products and trademark hence transfer of its assets to other organizations will affect its social standard and responsibility to the community (Roger, 2008, p ,36). Another issue is that many companies won’t agree the bid for BP takeover due to the fear of huge liabilities owned by the company from the oil spill.
Most of BP shareholders are large multinational institutions in Britain like insurance and pension funds and the takeover of the company will critically affect the United Kingdom economy thus affecting lives of many Britons and other shareholders all over the world. Proposed bid from its rivals especially Exxon which is an American company will cause diplomatic problems between the US and Britain. Coming from bitter criticism from president obama, the cold ties will eventually increase if there is a takeover of BP by an American company (Peter & Paulson, 2009, p ,56).
Another problem that is likely to happen if the event of the takeover the UK political establishment will lose public confidence for the reason that it does not support operations of the company and form this their would be a likelihood of political problems in Britain, this is because majority of Britons are shareholders . With controversial handling of the case by American leadership, possible takeover of the company by an American company will be seen as a planned agenda since in many occasions the politicians have said the company could have performed better if it was owned by Americans.
Many critics of the proposed takeover argue that transactions between BP and its competitors will harm and dent the long term competitiveness of the company (Kwon, 2008, p, 56). British Petroleum (BP): Strategic Plans BP as one of the most reputable companies in the world ,though affected with the oil spill ,it has been conducting a number of business as well as marketing strategies which come up with strategic plans aimed at future performances so that they can prevent future events from happening (Ransom, 2000,p ,76).
With the recent oil spill crisis, the organization strategic plans involves restructuring of the management ,employment of competent staff and instilling of concepts of teamwork and working together to both employees and the management. The company productivity and performance have been drastically affected and the institution sales have reduced significantly leading to a drop in its share prices by more than 40 % (NEWSWEEK, 2010, p, 23) . The crisis has reduced its current customer base and at the same time it has reduced the company sales by more 35% .
With this issue of underperformance in mind, the company so far is aimed at increasing the its social reputation and sales and at the very time being in a position of formulating major marketing strategies which are applicable and can help it reach all the customers around the world in which the corporation has been delivering its services (Sapienza & Grimm, 1997. p 87). The marketing strategy for the corporation that entails use of economies of scale and wide distribution networks, and the company is anticipating offering some of the lowest prices in the industry.
Moreover, the company is promising to offer a low-price guarantee which will ultimately beat any competitor’s price or match their retail value (Dennet, 2009, p, 154). BP is trying to enlarge their customer base through various marketing venues that include Television advertisements which are aimed to increase brand awareness. Radio advertisements, Digital media (for example e-mail subscriptions and the Internet) which will provide efficient ways to disseminate information, coupons, and free expert advice and product demonstrations
Within the business, the strategic plan will be done by incorporating all stakeholders and engaging in appropriate decisions which will promote performance (Johnnson, 2010, p, 46). This proposed strategic marketing plan will entail analysis of the company’s strengths, their weaknesses, and measure the amounts of resources at disposal, and then come up with adequate strategic missions which ensure better performance (Madura, 2008, p, 45).
When effected, such strategies will have long term effects and will make the company realize its goals within the stipulated time period. Effective leadership and decision making skills, and communication have also been emphasized as a key element towards realization from the oil spill catastrophe. Basically to avoid the proposed idea of takeover, it should be noted that, it is through proper coordination and employment of such long term strategic plans that the corporation will be able to emerge on top of its business operations (Armstrong, 2003, p 29).
Recommended alternatives to avoid possible takeover The current oil spill crisis calls for innovative product and development especially in light of the growing negative publicity that is associated with environmental pollution and loss of jobs (Robbins, 2008, p, 76). Therefore, the option that should be pursued by BP is for them to implement and initiate strategic development and management strategies that will make them remain viable in the energy market.
As BP proceeds into the future, they must be vigilant to avoid poor decision making processes which will hinder them in handling major crisis since catastrophes are some times inevitable (Laura & Torrington, 2005, p ,98). BP’s biggest risk exposure includes: unpredictable economic and political conditions, increased prices in fuel and other supplies, customer retention, and relations with foreign countries. In order to be prepared and least effected, BP must develop strategies that will allow them to remain profitable in an unsteady market.
Suggestions would be for BP to remain current on the risks of oil spill and aware of the current and future relations with foreign countries. Another suggestion would be for BP to try and negotiate compensations and government penalties. (Brodie, 2010, p 78). BP has been one of today’s most respected corporations in the history of the world because it has the highest degree of business culture as well as ethics. Generally, this organization has been able to create highly rated performance when it comes to organizational effectiveness.
The creation of more and more new management groups can be a good approach which can enable handling of the key problems which have been faced within the company and its eventual operations (Sorrow, 2009, p, 89). Also, there should be the presence of a dynamic and diverse workforce which can effectively ensure that this company is able to perform better within all its key operations because different ideas shall end up being brought together from people with development experience backgrounds thus improving its performance drastically.
Another important thing that can lead to a great deal effectiveness at the BP shall be in the use of newer forms of technology thus being able to come up with better and intelligent products and services which can enhance all means product and social development thus increasing the customer base for the company (Robbins, 2008. p 56). If they are able to do so, they will be able to avoid risks resulting from takeovers.
BP must devise strategies to offset problems resulting from ineffective management and lack of teamwork in part of employees to avoid occurrence of similar problems which have been recorded to be detrimental in its history of existence (Jeffrey & Bratton, 2001, p, 59). The rapid advancement of technology along with the growth of robotics provides many opportunities for BP.
If the company continues to focus on and improve their performance management, they have every bit of potential to gain a competitive edge in the industry . Social trends are moving towards a holistic and humble approach in all areas of life, BP does not want to get caught playing catch-up to its competitors. By following this strategy, BP will have the opportunity to gain revenue and increase market share regardless of the recent crisis (Auerbach & Alan, 1991, p 36). Conclusion
Takeover is a very important approach which has to be keenly considered by BP so as to improve their performance by engaging all the individuals in the organization in acting and working in a manner which shall guarantee better performance with the organization This process is what holds the key towards the future performance of the business or organization and making it possible for it to achieve its goals within the stated time period. In that case, while adopting these patterns, managers should be aware of the functions and the tasks which have to done and achieved during the management process (Fox & Marcus.
2008, p, 34). Generally after takeover, there are no winners or losers. In this kind environment, people normally appreciate and accept as true that thinking and decisions making are better when done cooperatively and individuals are able to show professionalism and discipline in workplaces ,and provide essential considerations that can help the work environment run efficiently. Also if a problem emerge or arise in the workplaces, employees should not hesitate to talk up on the issue. Individuals and organizations should understand what takeover means so that they can be guided by it and function diligently.
Similarly workers and employers should be turned on by the strategy so that they can tap resources and establish a successful business entity. In conclusion we can say that takeover is a very important concept in business and it encourages competition in the global market and promote common respect for each market leaders opinions and capabilities, Promoting takeovers in a firm is creating a good work culture that values collaboration (Brodie, 2010, p ,98). Bibliography Auerbach, Alan J. 1991. Corporate Takeovers: Causes and Consequences. Chicago: University of Chicago Press. Ansell, S. , & Park, J. 2003. ‘BP Tech Trends.
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