How should BP have handled an external environmental anaysis

How should BP have handled an external environmental anaysis and what environmental changes and trends (opportunities and threats) might the firm have discovered? Analyze BP using five forces of competition model to determine the industrys current attractiveness in terms of profitability potential?

Solution

External environment analysis must include : scanning, monitoring,forecasting and asessing.

As a opportunity they have other areas which are very less affected by drilling, Partnership opportunities with wedding business,other areas for drilling which have less natural pressure,and other areas which have less oil drilling regulations.

As a threat :: Possibilities of increased regulation of operations, increasing consciousness related to environment among societies, and increasing social responsibility vision in society..

Five forces of competition

1.Threat of new entrants: Not likely, given the investments and control of the controllers like BP, Exxon, and Shell—Good Profit Potential

2.Bargaining power of suppliers: BP’s disasters have opened opportunities for competition to be better suppliers—Poor Profit Potential

3.Bargaining power of buyers: BP’s disasters have created more concerns from society in their purchase behavior—Poor Profit Potential

4.Rivalry among competing firms: Revenue losses by BP give greater way to competition to compete—Poor Profit Potential

5.Threat of substitute products: BP continues to be involved in alternative energy sources and may have invested too much in the disaster than needed to be but they are still attempting to produce substitutes themselves—Good Profit Potential