ASSOCIATION OF BUSINESS EXECUTIVE (UK)

FORTUNE SCHOOL OF TECHNOLOGY AND MANAGEMENT SINGAPORE

BP SOLAR
GROWING THROUGH CHALLENGES
(Reflection ON Strategic Business Management and Planning)

Submitted By: Amit Jain

ABE MEMBERSHIP NO: W09541

Executive Summary
BP is an energy corporation that focuses mainly on petroleum, with a small attention in an additional energy. However, due to current accidents in the petroleum segment, the BP name has been blemished. With the limited supply of crude oil, it is also becoming essential for an oil company to think other investments. Because it has been winning in getting better BPs status before, it may be strategic to move BP and place better importance on other energy expansion. Although oil remains gainful, rising public concerns of the unenthusiastic environmental impacts and of the reliance on oil have changed the energy market. The option energy market is not as gainful as the oil industry, but a growing require investing in different energy makes it a possible market in the future. Recognizing this, BP entered the solar market in 1973. BP, however, does not get an aggressive advantage from its capability in oil to help them do well in the solar industry. It is significant for BP, therefore, to think whether it would be in their best interest to exit the solar industry, or whether BP has any competitive advantage to stay. This plan will show that BP can become the leader of the solar industry. It needs to, however, exit other alternative energy markets, educate the public and aggressively advertise, lobby the government, and invest in improving the technology of solar cells.

CONTENTS
Introduction ............................................................................................................................................. 4 Literature review ..................................................................................................................................... 5 SWOT ANALYSIS: ........................................................................................................................... 5 PORTERS FIVE FORCES ................................................................................................................ 6 SWOT Analysis ...................................................................................................................................... 7 Strengths ............................................................................................................................................. 7 Weaknesses ......................................................................................................................................... 8 Opportunities....................................................................................................................................... 8 Threats ................................................................................................................................................ 9 Conclusion ............................................................................................................................................ 10 References ............................................................................................................................................. 11 APPENDIX 1:....................................................................................................................................... 12 APPENDIX 2:....................................................................................................................................... 14

Introduction
The Anglo-Persian Oil Company, produced in 1908, was renamed The British Petroleum Company, shorten to BP, in 1954. In 1998, British Petroleum merged with Amoco and drops the name British Petroleum to turn into known as simply BP. One of the worlds biggest integrated oil concern; BP implemented re-positioning strategy in 1997 when Lord John Browne, group chief executive, acknowledged that BP required addressing the threat of global warming. Characteristic itself as of other oil companies, BPs status benefited from this novel situation and had been able to carry on this differentiation ever since. Even though the oil industry is generally consider the bad guy, BP lead the list of Fortune magazines worldwide 100 companies on corporate responsibility with the tagline Beyond Petroleum, BP created the subsidiary BP Solar International that focused on solar energy. Due to the current achievement of BP Solar, in 2005 BP invested $1.8 billion in BP Alternative Energy, which focused on hydrogen, solar, and wind power generation. (Terry, 2009) BP is a worldwide oil and gas company head office in London, United Kingdom it is the third-biggest energy company and fourth-biggest company in the world calculated by revenues and one of the six oil and gas "super majors". It is energetic in all regions of the oil and gas industry, as well as exploration and production, refining, distribution and marketing petrochemicals power and trading. (Dudley Bob, 2010) BP, one of the worlds largest integrated energy organizations, is looking beyond traditional energy choices. To assist preserve the earths precious resources, were focusing on novel, cleaner technologies including solar. With own 30 years of experience and installations in o 160 countries, BP Solar is one of the worlds biggest solar companies, with manufacturing services in the United States, Spain, India and China. BP Solar aims to give the top quality products and services. Dependability and longevity are building into our world-class solar energy cells and modules, which experience exact internal tests and external certifications to ensure peak performance and safety. (Fezzani Reyad, 2010) BP's path record of corporate social responsibility has been mixed. The company has been concerned in a many number of major environmental and safety incidents and received analysis for its political influence. Its primary listing is on the London stock exchange and it is a constituent of the FTSE 100 index. It has a secondary listing on the New York Stock exchange. (Fezzani Reyad, 2010)
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Literature review
SWOT ANALYSIS:
Swot analysis is base on the weakness, on the opportunities and on the threats that the organization possesses. The short form SWOT derives from the over mentioned names. (Robert, 2000)

Internal analysis of the organization

STRENGTH WEAKNESS

External analysis of the organization

OPPORTUNITY THREAT (Robert, 2000)

For details refer appendix 1

(Source: http://www.google.com.sg/images?hl=en&q=swot+analysis&um=1&ie=UTF8&source=univ&ei=FXtVTf_BI8LprAfMojvBw&sa=X&oi=image_result_group&ct=title&r esnum=2&ved=0CDkQsAQwAQ&biw=1366&bih=667

)
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PORTERS FIVE FORCES

The Porter's 5 Forces implement is a simple but powerful means for understanding where power lies in a business position. This is helpful, because it helps you understand both the strength of your existing competitive situation, and the power of a situation you're considering touching into. (E, 1998)

THREAT OF NEW ENTRANTS BUYER POWER SUPPLIER POWER THREAT OF SUBSTITUTE THREAT FROM EXISTING COMPETITORS (E, 1998)

For details refer appendix 1

Source (http://www.google.com.sg/images?hl=en&biw=1366&bih=667&q=porter+five+forces+image&um= 1&ie=UTF8&source=univ&ei=ELpYTdXlHMTtrQeWhejDBw&sa=X&oi=image_result_group&ct=title&r esnum=1&ved=0CCIQsAQwAA)

SWOT Analysis
Strengths
BP main strengths is that it is a major corporation with a lot of financial resources to back up its alternative energy research. In 2005, BP had returns of $22.341 billion. BP, virtual to the little expert alternative energy firms, has a big gain as far away as financial backing. BP has the potential to invest a large deal in research to develop alternative energy technology. BP newly signed a strategic joint venture to way in Chinas increasing solar market and provides local built-up capacity. Since BP has been in the solar energy business for thirty years; it has the understanding and is acquiring the technology it requirements to be a main player in the solar energy business. In 2004, the BP Solar business first became profitable. (Beijing, 2007) BP, amid its Energy Max solar electric ground systems technology, which follows the pathway of the sun from east to west, maximize the performance of the cells, provides for a good solar technology opportunity to its customers. BP has provided a number of different firms and groups solar cells. In 2004, BP Solar provided the solar panels to an entire Foods Inc. store in Edgewater, NJ, which became the first main retailer in the Northeast to use solar energy as a power resource. BP provided the solar panels to the United States Marine Corps Air-Ground Combat centre. Some projects built-in the Lufthansa Terminal in the Munich, Germany airport and the Tennessee Valley Authority in Chattanooga. (Beijing, 2007) BP has produced a number of programs to boost public awareness of involve for solar energy. BP formed the BP Solar Neighbours Program, anywhere each time a celebrity has BP solar panels installed into their home, and BP will contribute a solar system to a low-income people living in South Central Los Angeles. BP has the opportunity to join with celebrities to encourage the use of solar cells. It also has the BP Solar Connection Program, which is intended to raise awareness in schools the huge reimbursement of clean alternative energy. During programs like these, BP is growing the awareness and as a result the demand of solar energy. BP Solar even donated panels to ABCs Emmy award-winning reality series Extreme-Makeover: Home Edition. (Fazzani Reyad, 2010)

Weaknesses
BP is at a difficulty by its unhelpful dirty oil image. In March of 2006, a main BP pipeline ruptures on the North Slope of Alaska spill thousands of litters of crude oil into the Arctic marine. Accidents like these are harmfully impacting the firms attempts to re-brand its reputation to a more environmentally friendly oil company. Environmentalists are calling BP out on the re-branding as now a method to green washgiving a helpful public reputation to unsafe environmental practicestheir public reputation. The BP brand is very well-built for oil, but not almost as much as it is for its other energy segment. The average person does not essentially know that BP has entered into the solar energy market. (Beijing, 2007) One more main weakness of BP Solar is that the photovoltaic company very little in general with the petroleum company. BP has perfected the capability to refine able to create chips, store energy in batteries and such. In entering the solar energy market, BP had no competitive benefit over other firms to be able to use its vast knowledge in petroleum. Thus, it is very hard for BP to make synergies between the oil side of the company and the solar side . (Joy,
2009)

Opportunities
With its income from oil, BP has an amount of opportunities to invest and gain more in the solar energy segment. BP has also begun to sell its photovoltaic cells and modules that provide power for homes at Home Depot. At present, BP Solar has teamed up with Home Depot in offering a BP Solar Home Solutions in California, New Jersey, and Long Island, New York. The BP Solar Home Solution offers free of charge in-home discussion, specialized installation, and free of charge six-month checkups. The solar systems purchased include a five year full service guarantee and a twenty five year inadequate guarantee on the panels, which helps to assure consumers on switching over to solar energy. BP can also sell to other home development stores such as Lowes and Ace. (Fazzani Reyad, 2010) BP has an amount of opportunities through the government to boost its income. One such thing includes passing legislature that provides tax breaks to those and corporations that opt for energy as a means of electricity. It can also encourage states like California, Arizona and Florida to pass a permission that homes built after an unsure year should be necessarily to have some solar energy tool. Though this would also be serving its rivals, it would still advantage BP Solar as well. (Terry, 2009)
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BP has a few opportunities to make synergies among the petroleum side of the business and the solar side. It can very well use solar energy to power its operations such as its business offices, plants, and even gas stations. If BP Solar improves the technology to create photovoltaic cells extra cost efficient, it can very well produce connections between the two sides of the company. (Terry, 2009)

Threats
A lot of people realize the requirement for energy sources in the futures, there are a number of firms specialize in exact energy, including particularly photovoltaic solar cells. BP, however, is very expand and has its resources in a number of dissimilar products, with the obvious being oil, but in other another energies as well. The extreme diversification could perhaps pose trouble to BP in the future. Shell, another doing well oil company has entered into the solar energy market, and it is at present one of the four major solar energy leaders along with BP Solar, Sharp, and Kyocera. (Beijing, 2007) Solar market will be more competitive with BP because of their comparable attachments to petroleum. Any act that BP will take to create synergy between solar and petroleum can be copied by solar market. KSI and Sharp Solar will be more aggressive with every one because both have electrical division close. KSI and Sharp Solar have an additional benefit over solar market and BP due to their electronics division. If customers desire to install solar systems from Sharp, they would also be confident to buy electronics from Sharp in order to get the fully integrated discount. In addition, if a family were already using Sharp electronics, it would be cheaper to get a solar system from Sharp Solar than from any other farms. Getting a entire set from one firm is all time cheaper than getting the individual components from different firms. (Anon., 2009) For the porters analysis refer appendix 2

Conclusion
With flagging profits and an increasingly negative reputation, it would be a strategic move for BP to reposition itself in the alternative energy industry that is focus on solar and exit other alternative industries. With the possible returns and with previous experience in the solar market, BP can surely become the leader of the industry. Some key strategies that BP can take which includes advertising, increasing funding and investment in solar energy technology, educating the public, expanding into other geographical markets, and lobbying the governments. If BP wants to sustain its market share in the solar industry, it will require devoting more of its investments and resources to BP Solar. Strategy is to sustain in the long run.

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References
Anon., 2009. An internal and external analysis of BP Solar and competitors. [Online] Available at: http://www.ivoryresearch.com/sample1.php. Anon., 2010. swot analysis diagram. [Online] Available at: http://www.google.com.sg/images?hl=en&q=swot+analysis&um=1&ie=UTF8&source=univ&ei=FXtVTf_BI8LprAfMojvBw&sa=X&oi=image_result_group&ct=title&resnum=2&ved=0CDkQsAQwAQ&biw=1366&bih =667. Beijing, H., 2007. BP: Going Beyond Petroleum. [Online] Available at: http://www.mcafee.cc/Classes/BEM106/Papers/2007/BP.pdf. Drazga, B.M., 2007. Commercial Market Potential for Solar Power Technologies. Dudley Bob, 2010. The BP story, from first oil to tomorrows energies. [Online] Available at: http://www.bp.com/multipleimagesection.do?categoryId=2010123&contentId=7059226. E, P.M., 1998. In Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free Press. Fazzani Reyad, 2010. how To Buy. [Online] Available at: http://www.bp.com/sectiongenericarticle.do?categoryId=9074&contentId=7038333. Fezzani Reyad, 2010. Solar power is the answer if youre concerned about using cleaner energy that helps you save money. [Online] Available at: http://www.bp.com/sectiongenericarticle.do?categoryId=9071&contentId=7038231. Joy, S., 2009. BP Position in alternative energy business. Robert, B.W., 2000. swot. In Simplified Strategic Planning. Chandler House Press. Terry, M., 2009. A Different Era for the Alternative Energy Business. New York Times.

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APPENDIX 1:
Models Porters five forces Threat of new entrants Details
Of it. Power is also artificial by the capacity of people to go in your market. If it costs small in time or money to go into market and fight well, if readily available are a small number of economies of scale in place, or if you have small protection for your key technologies, then novel competitors can fast enter your market and weak your situation. If you have well-built and tough barriers to entrance, then you can maintain a good situation and take fair benefit Low price is driven by the number of buyers, the significance of every individual buyer to your commerce, the cost to them of switching from goods and services to persons of someone else, and so on. If deal with only some, influential buyers, then they are often able to say terms to you. High price is driven by the number of suppliers of each type contribution, the individuality of their product or service, their force and control, the cost of switching from one to one more, and so on. The less the supplier choices we have, and the more. Require suppliers' help. capacity of customers to discover a different method of doing what you do for example, if you provide a exclusive IT product that automates an vital process, people may substitute by doing the procedure yourself or by outsourcing it. If substitution is simple and substitution is feasible, then this weakens of your influence. Many competitors, and they proffer evenly attractive products and services, then you'll mainly expected have small power in the circumstance, because suppliers and buyers will go somewhere else if they don't get a finest contract. other hand, if no-one else can do what you do, after that you can frequently
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Buyer power

Supplier power

Threat of substitutes

Threat from existing competitor

have great authority

Swot Strength
Describes the possessions and the skills that our corporation has acquired Strengths are the merits that facilitate us to get done the organizations mission. These are the base on which continued achievement can be made and sustained regularly. Strengths can be either touchable or insubstantial. Describes the factors in which we have adverse situation with view to the capability. In order to generate the inside examination. Than to be measured the study of possessions, of activities and risks. Describe the potential markets, business niches that can be seen by everybody, but if they are not accepted on time that would mean the defeat of the competitive benefit. Explain the factors that cab put in risk the sustained continuation of the organization, if they are accepted on time they can move or they can turn out to be opportunity. In order to create the inner scrutiny we have to take into account the examination of the surroundings, of the interested groups.

Weakness

Opportunity

Threat

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APPENDIX 2:
ANALYSIS Through porters five forces Entry
At the present the solar cell industry position is very different across geological market sectors. The U.S. Market- The solar industry has not been promoting greatly in the United States due to the short of enthusiasm of the national government. Hard work for solar panel installations, such as giving tax credits and property tax exemptions, are intense at the state level in certain states such as California and Arizona. Overall, the U.S. market is spread so it is not easy to get a successful national business. There are a lot of small and selfgoverning companies, but a small number of major domestic players. As a result, the U.S. does not have a big market share in solar energy. Presently the market is unbeneficial and does not support many new entrants. Even overseas companies that have experienced victory in Japan and Germany are uncertain to crack into the U.S. market; lack of familiar in U.S. operations and uncertainty in demands put off them from devote money for the high shipping costs and tariffs. However, BP already has a familiar base in the U.S. owing to its increasing petroleum market; it has the possible to enter and build up a localized monopoly over the solar industry In addition, the Bush government has just recently accepted the require to dedicate research and development into renewable energy; this provides expect that U.S. will be more interested to solar energy in the future. Market in Germany is more energetic and quickly growing. The solar energy business is a novel and rising industry and is one that has the possible to support entrants willingly. German government is completely support of this technology, especially with the Renewable Energy Act (EEG). As the place for the biggest trade fair for Europes solar technology, Germany can be confident to keep up with the innovations. As an effect, there are a set of opportunities for entrants to approach in with better innovation and succeed above the market. The potential for product separation is
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great because the technology has many farreaching consequences: the products can mark a variety of consumers, from manipulative large-scale solar panel systems used to create electric energy for firms focus on the each day consumer that can buy little solar appliances to use for the home. The main players in the market are just opening to emerge, other than no one has yet a big adequate corporation and manufacture capacity to drive out minor competitions by economies of scale. BP Solar has its base in the European market and can use its situation as a big business to prevent entry. Japanese market is close to its infiltration point and that discourages entrants to the market. The requirement for the product has rising every year, through installations of solar panels in residential homes becoming more prevalent; so a lot of companies have been involved by the profitability. Main players have developed in this market, mostly Sharp and Kyocera Solar, with sharp controlling the market share. A more common difficulty to way in all three market sectors is the shortage of silicon. There is a worldwide shortage of ultrapure polysilicon (the raw material for silicon wafers), which is a main element in the creation of solar energy The major substitute for solar energy business right now is the standard electricity created by coal and natural gas. The risk from this substitute is great because it has been the main source of energy for household devices. The standard electricity is still lower in cost than the solar & wind energy so there is very small incentive for customers to switch to solar technology. However, with improvement and research, companies are wounding the cost per watt of the solar energy by 5% a year and can regularly to get better the cost to watt ratio significantly until it is equivalent to that of standard electricity. Since natural gas and coal are limited in supply, their prices will finally increase, causing demands for energy sources such as solar energy to increase. However, solar energy technologies are not the only alternative source for generating electricity. According to Energy Information Administration, solar only accounts for 0.2% of the renewable electricity produced in the United States. The largest sector in the
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Substitutes

renewable energy area belongs to hydropower (75.2%). Hydropower plants, although more prevalent and not expensive, have its shortcomings, including decreased water quality and negative effects upon natural wildlife habitats. Solar energy technology can play upon that weakness as one of the cleanest renewable energies currently known. The present main players in solar energy industry are Sharp, Kyocera Solar, Shell Solar and BP. cost rivalry is not significant amongst the companies, because solar energy is already a costly technology to produce. It will damage the industry to undercut prices, as the technology is not inexpensive and well understood sufficient that an increasing but little consumer demand will not compensate a reduction in cost. In addition, the main players in the industry have separate geographical markets and not much overseas establishments. The high price and the segregated consumer base reduce competition. Only with massproduction and increased popularity can price rivalry happen.

Rivalry

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