BP Plc was formerly known as The British Petroleum Company. It is a multinational company operating in oil and gas sector. The company is headquartered in London, United Kingdom. BP is one of a leading company in this sector, as others are Exxon, Shell, Chevron, etc. It is vertically integrated company who operates in all the areas of oil and gas industry.
The company is involved in production and exploration, distribution and marketing, refining, power generation, trading, and petrochemicals. It also has interest in the operations of renewable energy like smart grid, biofuels, solar technology and wind power (BP, 2020).
VRIO framework is an analytical tool which is used by the companies in order to determine the resources and capabilities. This model helps the company in achieving competitive advantage for the long term and strengthening the position of the company among competitors. There are four components of the model: Value, Rarity, Imitability, and Organizing. Here is the detailed VRIO analysis of BP:
Value
The first component of the analysis is Value, which reflects on the valuable resources and capabilities. These resources help the company in exploiting the resources and add more value in the company. The valuable resources also help the company in achieving competitive advantage along with other components. BP is a big company in oil and gas sector, the corporate strategy is a valuable resource for the company.
BP has establishes the track of recording financial and operational delivery in order to create a strong foundation. This helps the company in successfully meeting the agenda of being net zero company by 2050. Moreover, the capability of the company being vertically integrated is also valuable as this helps the company in lowering its dependency on others (Bp, 2020).
Rarity
Rarity is the second component of the VRIO framework. The component deals in analyzing the rare resources of the company. The resources are rare if few companies possess it or not easily accessible. If the resources will not be rare, every company will be able to use it in their own advantage. BP is working in the oil and gas sector mainly in the non-renewable energies, but after analysing the changing pattern in the demand,
it also started to divert itself in operations of non-renewable energies. This is not that common. Bp has also aimed to become a net zero company, and for this it has to be advanced technologically. This is a rare objective and achieving this goal will be beneficial for the company in long run (Harrell, 2016).
Imitability
Imitability is the third component of the VRIO model. This make sure that company’s resources are needed to be difficult to imitate. Either the resources should be costly or difficult to find the alternate for. The company make sure to protect its resources as much as possible to gain the competitive advantage. The resources of the company are not that difficult to imitate for the competitors of oil and gas sector. But to replicate the operations of renewable energies will be costly and time taking. Moreover, Bp maintains effective distribution networks (Pedro, 2015).
Organization
Organizing is the last component of the VRIO model. This deals with analysing the resources being organized by the company to gain sustained competitive advantage for long run. If the resources will not be well managed or organized, it will be difficult for the company to achieve any main advantage which makes its position strong. Bp is a well-organized company working its best in motivating the employees.
The company provides a good working conditions to its employees and train them properly to avoid any safety hazards. The strategies of the company are well explained and everyone is aware of it (Harrell, 2016).
Conclusion
BP is one of a biggest and leading company in the industry. It has successfully achieved competitive advantage which helps it in strengthening its position over competitors. This also helps the company in availing more opportunities and increase its market share in the industry. It is a successful company who is achieving its goals and objectives very well.
| V | R | I | O | ||
| Supply Chain | ✓ | ✓ | ✓ | Competitive Parity | |
| Bargaining power | ✓ | ✓ | ✓ | Competitive Parity | |
| Inventory management | ✓ | ✓ | ✓ | ✓ | Sustainable advantage |
| Brand Equity | ✓ | ✓ | ✓ | ✓ | Sustainable competitive advantage |
| Portfolio | ✓ | ✓ | ✓ | ✓ | Sustainable advantage |
| Talented HR | ✓ | ✓ | ✓ | Competitive advantage |
References
- BP, 2020. What we do? [Online], Available at: https://www.bp.com/en/global/corporate/what-we-do.html, [Accessed on: 30th March, 2020].
- Bp, 2020. Corporate strategy. [Online], Available at: https://www.bp.com/en/global/corporate/what-we-do/our-strategy.html, [Accessed on: 30th March, 2020].
- Harrell, L. 2016. BRITISH PETROLEUM (BP): A CRITICAL ANALYSIS OF ITS CORPORATE AND INTERNATIONAL STRATEGIES. [Online], Available at: file:///C:/Users/CC/Dropbox/Business%20Law/16IMMarch-3321.pdf, [Accessed on: 30th March, 2020].
- Pedro, 2015. Strategic Management_Halliburton and BP relationship_Maio 2015. [Online], Available at: https://www.slideshare.net/PedroNga/strategic-managementhalliburton-and-bp-relationshipmaio-2015-53481123, [Accessed on: 30th March, 2020].