1  Analyse the five forces acting on BP. Which present the greatest threat to the company?

In 2009 BP was one of the world’s largest international oil and natural gas producers, having grown in the early 2000s through mergers and joint ventures. By its nature it is engaged in international business, with a strong interest in managing the political, economic and technological environments. Some criticise the oil industry for contributing to climate change – though the companies can point out that they are meeting the growing demand that people in all countries have for energy.
BP is a British registered company, but 40 per cent of its assets are in the US, and it is that country’s largest gas producer. It does 80 per cent of its business outside the UK, and is inevitably involved with political considerations.
With so much business in the US, the company is also sensitive to policy in that country – such as US policy on the Middle East.
The search for new supplies The company is what is termed an ‘integrated’ oil company, which earns revenue by extracting oil and by selling refined oil products to end-users. Both parts of the business are becoming more difficult. On the production side, the company faces access problems, as governments are less been to bring in foreign companies to develop their resources. Countries with large reserves (those with over 30 years’ supply) are all members of OPEC, the oil producing countries’ cartel. All accept investment by foreign oil companies such as BP, but impose strict conditions as a way of supporting their national energy companies.
The company has invested heavily in gaining access to oil reserves not only by exploration but also by acquisitions and joint ventures, such as TNK-BP. This was a strategically important deal as it opened the way to redevelop Russia’s large but ageing oil and gas fields.
It also fitted a wider political strategy of reducing the West’s dependence on Middle Eastern supplies. Securing more oil reserves continues to be the major strategic challenge facing the company.