This paper is aimed at looking into business and society as interactive systems. Business operations are variously affected by the surroundings in which they operate, popularly termed the business environment; customers, competitors, suppliers, distributors, industry trends, substitutes, regulations, government activities, the economy, demographics, and social and cultural factors are forces included in any business environment (Kochan & Rubenstein, 2000). Others such as innovations and technological developments may also be classified as forces that influence the business environment.
Equally, on a broad understanding, many may connote a different set of the definition of the business environment as a physical space or place where the business is conducted. This definition, however, regards a business environment as, principally, an office where a business operates. While, truly, these definitions hold, the environment of the business may be better considered including the surroundings and factors impacting influence on a business (Kochan & Rubenstein, 2010). This broadly looks at the said environment both in terms of internal capabilities or weaknesses and external influences of opportunities and threats. ICFAI center for management research goes a step further to view the business environment in terms of global orientation. It observes the global business environment as the environment in different sovereign countries, with factors exogenous to the home environment of an organization.
British Petroleum (BP) is a public limited, oil and gas company, listed in the London Stock Exchange (LSE) in the same industry category of oil and gas, with origins as an Anglo-Persian Oil Company. BP product ranges is diverse and include petroleum, natural gas, motor gas, aviation fuels, and petrochemicals. In addition, it is noteworthy BP has a global presence and multinational operations (Campbell & Craig, 2011). BP studies its environment in order to identify its opportunities and threats in the marketplace. The challenge, however, the oil giant faces is the timely sources of accurate data and their use to beat competitor machinations, manage costs, improve on profits, find a footing with growth and scope and play within the rules of the game.
Dobson et al., (2004), identified a big range of the environmental influences on the external environment with a dichotomy of general macro-environment and competitive environment with stakeholders cutting across these two environments (Porter, 2009). Michael Porter, in discussing strategy emphasizes that a successful company must find the value of its economics and technology in its competitive strategy, adding that competition reflects the structure; while structure determines profit potential. The analysis is largely concerned with trends to reveal potential threats or opportunities. Company’s performance and profitability, are looked at against a scale that provides useful relative information versus the industry rivals. BP is the fifth largest oil company in the world measured by the 2012 revenues and the sixth largest producer of oil and gas in the world referring to 2012 production measures, an indicator of a strong global performance in the over 80 countries it operates (Kochan & Rubenstein, 2010). Their listings in the stock exchange indicate a market capitalization of £82 billion, the fourth largest of any company listed on the exchange.
BP profitability is driven through current industry structure which takes into consideration an overwhelming global presence and competitive landscape (Porter, 2009). BP’s strategy focuses on long-term goals rather than rely on the emotive and illusionary short term pricing. While the threat of new entrants may be high, the extensive global existence minimizes impact of new entrants and reduces the possibility of intense rivalry associated with, a new entry activity. The IRS suggests 3/10 for potentially negative impacts on profitability. The threat of substitutes (products or services) is high and remains a concern because BP provides a limited selection of products and services compared to numerous other retailers in the oil industry who may also enjoy the advantage of local operations. The IRS suggests 6/10 for potentially negative impacts on profitability (Campbell & Craig, 2011).
The bargaining power of suppliers is low, and an opportunity for pooled purchases. A decentralized purchase strategy can be followed to mitigate erratic global fluctuations. Potential strong positive impacts on profitability may be suggested by a ratio of 9/10. Bargaining power of buyers exists for BP in its primary markets, and is a threat emanating from customer choice platforms offered through direct competitors (Brayson, 2009). Conversely, a ratio of 10/10 suggests an IRS for very strong negative impact on the potential profitability. It would not be enough to assume an absolute safety for BP’s global business. Rivalry among direct and indirect competitors is high as competition maintains strong positioning in the industry due to localized presences, making IRS to suggest a 3/10 for potentially negative impacts on profitability. As a last dimension, oil and gas industry global barriers are high, and the threat of new entrant is low with a positive impact on BP’s profitability (Kochan & Rubenstein, 2010). Finally buyer power, rivalry and substitutes cumulatively occasion a negative effect on profitability rates.
Domestic barriers to entry are low, and the threat of new entrants is high negatively impacting potential profitability. Supplier power may present opportunities of costs reduction and uniformity with a consequent improvement in profitability for the better. In essence, a corporation relies on the coordination of both the primary and support business activities to enhance profitability. BP oil and gas have a concentration on the impact of their business on the environment, the societies and the economies where they operate, globally giving a strong focus on Corporate Social Responsibility. This, however, at a deeper glance may appear deceitful to a number of stakeholders who may be making reference to the oil spill in the Gulf of Mexico in the year 2010. It is noteworthy that BP, to date, fights the war on winning back trust towards its promise of a safer environment since the Mexico oil spill saga (Campbell & Craig, 2011). A lot of people have not taken the company so seriously on the specific promise of environmental care in the areas where the company operates. The sustainability objective still remains controversial forcing BP to declare its own intentions to win back trust from the people who in one way or another were interested in this debacle. This is a definite tussle as more energy, hard work, and costs are required to go into appeasing a disgraced population, let alone winning their confidence.
The leadership of a stakeholder group must work overdrive to force BP to comply with its promise of a safer environment. A person, external or internal to an organization, regarded as junior or senior in level, depending on structure, but whose influence affects or who is affected by an organization, strategy or a project is a stakeholder. Simply put, a stakeholder impacts a project or organization in some way. For instance, a small group of people may have the power to respond to, negotiate with and change the long-term future of the organization. Widely taken, an inclusive definition of stakeholders should encompass all affected by change in light of democratic ideas and stakeholder management in the realm of social justice (Bronson, 2009). For 40 years, stakeholder as a terminology has been used several times, borrowing from the pioneering work at the Stanford Research Institute. Inherent in this principle from the SRI concept, organisation managers needed to understand the concerns of stakeholders who included shareholders, employees, customers, suppliers, lenders and society. This was truly thought to go a long way in helping organisations develop objectives that would earn the support of stakeholders, enhance relationships with the stakeholders and help develop long-term business strategies.
In the BP case the consequences of the oil spill of 2010 in the gulf of Mexico, had the impact of reverse activity and portrayed the company as obviously lacking efficiency, or effectiveness and even the withdrawal of the possible commitment to the environment, altogether prompting a scenario where, stakeholder identification must include those who may at first appear to be powerless (Bryson, 2009).
In summary, stakeholder management strategy is only going to reward a system that has considered a lot in the way of identifying an organization’s stakeholder. In fulfilling its mandate, a company, may utilize stakeholders to help it in its mission, vision and the promises to the public. In spite of the extensive use of the word stakeholder in the research literature and the foregoing notwithstanding, little is known about how to systematically identify and analyze stakeholders. Stakeholder analysis and identification is still fraught with bias and inconsistent desires and counter intentions from managers.
Stakeholder interest should consider, importantly, elements of corporate planning which principally entail the dual components of envisioning a future and adaptation to the said future. Although one may view stakeholder involvement as an impediment to certain limits of firm activity, neglecting stakeholders may be totally counterproductive to business or project’s interest. Therefore, as an example, BP may be compelled by a stakeholder interest to capture its promise of environmental safety in its corporate formal strategy for purposes of accountability (Campbell & Craig, 2011). A stakeholder mapping, for identification purposes, is thus very important and should be initiated in a cautious and all-inclusive process of identifying stakeholders through procedures of brainstorming and mind mapping. Besides, stakeholder lists, previous projects, organization charts, directories and OGC categories can be gleaned to provide insights into stakeholder groups. In brainstorming all stakeholders are written down; or dramatically mind-mapped or a generic stakeholder list prepared. Previous projects, historically, remain a great source of stakeholder lists with perhaps a starting location being the organization chart and the directories at BP oil and gas. Finally, OGC categories like company product users, governance bodies, influencers and providers like suppliers, will be lobbied in getting stakeholders to help get the BP oils and gas plc. promises actualized.
It must not be lost, however, that these stakeholder analysis procedures are not in themselves fully adequate. They are rudimentary and inadequate and dependent on both the internal management systems and the external influences on a firm. Theories are still, therefore, divided on account of the nature of moral claims to society, by a company, more specifically to its stakeholders (Kochan & Rubenstein, 2010).
References
Brayson, C. (2009). Strengthening Planning for Public and Non-Profit Organisations. London: Cengage Learning.
Campbell, D., & Craig, T. (2011). Organisations and the Business Environment. London: Aspen Publishers .
Kochan, T., & Rubenstein. (2010). Organizational Science. New York: Cengage Learning.
Kochan, T., & Rubenstein, K. (2010). Organizational Science. London: Cambridge University Press.
Porter, M. E. (2009). Competitive Startegy: Techniques for Analysing industries and Competitors. NewYork: Cengage Learning .
