Strategy and its importance for competitive advantage

Strategy and its importance for competitive advantageA companys scheme is organization action plan which is running the line of credit and conducting operations. Especially this earth-closet mention as managerial commitment to achieve their goals. Companies target on gaining gross revenue and market share at the expense of competitors and companies which are in strong industry position are more reflect on the strategy what they workout (Helfat, 2004).Through the action Plan Company screw project its competitors and freighter make the goals and strategies to meet their market place. A company should formulate a parentage strategy which incorporates embody lead or differentiation to achieve a sustainable competitive advantage.Michael hall porter introduced two basic types of competitive advantages which are cost advantage and differentiation advantage. Cost advantage exits when company burn down give same benefits as competitor with lower cost. And differentiation advantage exits when the company cigarette make different benefits or the value to the customer from their products. As an Example BP is using combination of Crude oil color and natural energy such as solar federal agency to give differentiation to their customers and it is a well successful strategy.Source http//www.bp.com/sectionbodycopy.do?categoryId=2contentId=7065607 (Access on 20th May 2011)There are several skilful tools which are used to analysis situations in strategical Management. STEEPLE is one of it shortening the impertinent surroundings in a business operates and concerned with the political, economic, kind factors influential industry change and helps to gain a better understanding for external conditions for yield in a market. Companies or the decision makers can organize telling strategies by using GE Matrix as well (Thomas, ONeal, and Ghertman, 1997).The porters five forces investigation helps to diversity a competitive environment. For example, BP analyzes the market for Quality oil production. Five forces analysis describe five trace areas exclusively the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry (Bettis, 2004)Figure1. Porters Generic Strategies(sourcehttp//www.google.co.uk/search?q=Porter+five+forces+analysishl=enclient=opera)Competitors for BPShell, Sharp, Kyocera, Solar, and BP are the current major players in this industry. Price differences are not big among these companies, solar energy is already expensive technology to produce, so its cost of production is very high, tho it is environmental friendly. BP has mass production, so it can face to wrong rivalry happen.Business strategy in BPBP enter of solar market in 1973 and produced BP solar in 2000, it was one of main strategy to face current oil crisis and environment issues. BP solar becomes profitable but it is not prominently spread among the public, so government involvement is important to become popul ar of solar power.Evaluating BP External surroundBP is one from the world stellar(a) Multinational Corporation which produces Consumer energy, and it is UK based organization. bits per second plodding analysis can be mentioned as follows.StrengthsWorld third largest energy companyOperation spreads oecumenicStrong Brand loyaltyGood brand imagefiscal strength of the company.It has vertical integration operation system.Weaknesses addition the petrol price in UKHas to paid criminal charges due to spread huge amount of oil in the Alaska Sea in 2006. discredit in natural muff and gross oil production.Criticism and ControversiesOpportunitiesHas high investment capacityResearch to investigate alternative fuel such as Hydrogen, Solar, Wind and natural gas extension phone of acquisition of North sea areaIncrease demand for natural gas in USA and Europe countries.Implement more flexible price polices to face their competitors.Gas and Oil explorationTreatsUnsound policies related to Enviro nment after oil and toxic spill in 2006.Explosion of refinery tunnels in on occasionHas big rivals such as Shell and ChevronSold corporate owned stations.Pipeline corrosionInstability in some oil and gas producing countries and regionsTable.1. SWOT analysis of BPBy implementing proper marketing policies and practices company will make its market position. BP culture so distinctive because they focus on customer, and view BP is better than all other Energy produce companies.Source (http//www.bp.com/genericarticle.do?categoryId=2012968contentId=7059787)Effectiveness of Current Business PlansBP business plan has advantage in the Research and investigation area. The crude oil plus the solar power combinations was very successful strategy implemented in recently. Products segmentation, explorations and productions, significantly company restructuring, improve cost efficiency, centralize company departments are their current strategies to compete with rivalry and increase company profi ts.Task TwoStrategic OptionsStrategic Options is an important facet and it helps to craft companys alternatives and bid true(p) and keep up the competitive situation. After situation analysis company can create strategic options to devise organizations external atmosphere and can scrutinize the potential.BP has a comprehensible strategy to invest to raise investigation and manufacture advantageously through a mixture of leadership positions in the worlds nigh productive hydrocarbon basins. BP creates value through the appliance of technology and potential to force performance and operating efficiency. The procedure and technology offers extensive chance for further elaboration and improvement.The international requirements for energy for the next 20 years are such that hydrocarbons are still going to have a leading part in meeting that energy demand. BP supports emissions trading mechanisms as a means of putting a value on carbon in order to make tolerate investment decisions.BP spends on growing technology budget on potentially most competitively profitable innovations both in open and new power spaces. It is both a strategic option and an opportunity for BP when comparing with the rivals as BP is strategically positioned themselves in a highly innovative RD emergencees which is unmatchable by the rivals easily. maculation facing major challenges of dilapidated supplies and defense of supply in oil and gas, global warming and insist for pure energy in major markets, bits per second percentage of expend on novel technologies is growing. BP has a decentralized en route for RD units. It also impels the strategic positioning of BP in competition among rivals. Operational honor in acquiring right technologies from within and outer the organization and strategically as a winner of chosen new technologies, BP is keeping its innovation leadership in the industry. With an aim of being twice as good as next best competitor BPs innovation schema is far precedin g(prenominal) the ground outline. Hence a low cost strategy is an ideal positioning for BP while serving to a large market segment that prefers a standard product.Corporate Mission of the BPBP mentioned that there goal for next few years to realize the latent impending of their advantage base by upward(a) the efficiency and effectiveness of everything they do. They will dynamically drive cost and capital efficiency whilst at the same time maintaining the first main concern of safe and reliable operations.Objectives of the BPBP has some quarrys for their increase in 2015. And all employees are working as a team to achieve company goals.Average 1-2% p.a. volume growth to 2015Underpinned by upward resource base and quality through preferenceKey sources of growth beyond 2015 will come fromIncreasing deepwaterLeveraging expertise in gasManaging worlds enormous oilfieldsEnabled by application of technologySource- http//www.bp.com/sectionbodycopy.do?categoryId=2contentId=7065607Values and ethics of the BPBP is a compilation of resources and there people working together. To attain business objects they focus on sustaining and encouraging their leaders and mental faculty. And they maintain recruitment stands and developing people skills at every level. BP is a well distinguish organization and wants to do some different in the world. BP is a performance driven company which is competitively booming. Through all this they prefer high ethical stand.Directions and methods of Strategic OptionsBPs direction is clear and it is the unrelenting pursuit of competitive leadership in respect of cash costs, capital efficiency and margin quality.The Strategy Clock is other suitable way to analyze a companys destructive position in comparison to the contributions of competitors. The Ansoff Growth matrix tool which is helps businesses to decide their product and market growth strategy.Figure 02.Ansoff Market mix(Source- http//tutor2u.net/business/strategy/ansoff_matrix.htm)Ste ps to develop Strategic Options at BPTo develop strategic options company can use quest steps.Access the external contextPriorities and gatherDevelop strategic optionsRate the optionsFollow upEvaluating strategies at BPSOP Matrix is a tool which can use to identify the company relevant strategies through external environmental factors. As an example BP Opportunities and treats as below and by indentifying the external environmental factors can recognize the relevant strategies options.OpportunitiesOpportunitiesStrategic OptionAHas high investment capacityInvest in HR development and through that develop the skills of the staff members. An same time invest in market opportunities.BRD to investigate alternative fuel such as Hydrogen, Solar, Wind and natural gasBy research can find the best alternative and company can give attention to that.CExtension of acquisition of North sea areaCan develop deep sea oil well.DIncreasing demand for natural gas in USA and European countries.Efficien t and effective resource allocation to maximize profit.Implement more flexible price polices to face their competitors.By price reducing can get more customers on their productsGas and Oil searchingWill help to increase their market values and can demand them among the competitorsTreatsTreatsStrategic OptionUnsound policies related to Environment after oil and toxic spill in 2006.Understand the policies and work with less effect to environmentExplosion of factory tunnels in occasionallyBy keeping the brand image without harm can face the problemHas big rivals such as Shell and ChevronTo make company as No1. And more promotional worksSold corporate owned stations.Buy the stationsPipeline decompositionShould check the pipeline back and do the needful changersInsecurity in some oil and gas producing countries and regionsShould find some more producers in case to use.BPs existing company strategies are,1) Safe, obedient and invariable operations2) Operational and financial force high dividends and cost diminution programTask Three shiny Objectives of BPBP Objectives are prepared according to SMART (Specific, Measurable, Achievable, Realistic, and Timed).That means it should be particular about what we are going to achieve and should calculate about the objectives.There are a several types of objectives like process objectives, outcome objectives, personal objective that all can be done in the SMART format.BPs five year plan objectives are,Increase lucrativeness by 20%Increase productionFinancial gain by serving to the change magnitude demandBuild brand value that was affected by the oil spillsFive year development plan for BPBusiness plan is a statement about companys future goals and plans to achieve those goals. This can be externally focus or internally focus.BPs Strategies in development can position as,Upstream growthDownstream turnaroundAlternative Energy alarum disciplined Corporate overviewIn the upstream will hub on cost and capital efficiency to d istribute profitable growth. In the downstream will drive additional efficiencies and a focus on quality and incorporation. They will maintain their disciplined approach to substitute energy and will carry on open corporate efficiency through a culture of uninterrupted enhancement.Five year development plan for BPObjectiveStrategyActionsPerformance IndicatorsTime hitch1Increase profitability by 20%Research and developmentHire most qualified researchersInnovative ways of doing thingsOne year2Increase productionAcquisition of north sea area.Negotiations with governments and agreeing for a joint profit sharing.Coming into an agreement with relevant governmentsTwo years3Financial gain by serving to the increasing demandSales and Marketing approaches to increase market shareRecruiting experienced sales and marketing people and objective trainingAcquiring new market opportunities, increase the market shareOne year4Build brand value that was affected by the oil spillsCommunication and pr omotion strategyUsing new media opportunities of social media to build brand name again, invest in CSR activities in Go Green.Reduce the black mark3 yearsEvaluating and implementing the planIn business strategy, Johnson, Scholes and Whittington shows a model in strategic options are evaluated next to three key success criteria such as Suitability, Feasibility, and Acceptability.Source- http//en.wikipedia.org/wiki/Strategic_managementObjectivesTime Line1 year2 year3 year4 year1Increase profitability by 20%X2Increase productionXX3Financial gain by serving to the increasing demandX4Build brand value that was affected by the oil spillsXXXTable.03. Five year BP strategic planConclusionWhen it is mention about the strategic management and the leadership strategic planning is a major part of it. Strategic planning can divide in to three stages as strategic Analysis, Strategic Options and Evaluation and Implementation. The British petroleum Corporation is a well established organization in petroleum industry and here it is mentioned about the strategy and competitive advantages of the BP and the technical tools which could they can use to analysis situations. The porters five forces investigation helps identify the competitive environment BP analysis their market for Quality production.There are so many competitors like Solar, sharp in the market and BP establish with mass production. By doing the SWOT analysis its helping company to identify the internal and external environment of the company. BP is focused on customers and they believe in their productions.They used the oil plus solar power combination and they used product segmentation, improve cost efficiency and some more strategies to increase their profits. They have created value through technology and this is a barrier for their competitors.Company can use strategy clock, Ansoff growth matrix tools to analysis their position in the market. To develop strategic options first it should identify the external co ntext and priorities and clusters. Then it should develop the strategic options. SOP matrix is best tool to identify the strategies of the company.