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INTRODUCTION TO GLOBAL CORPORATE STRATEGY

Global Corporate Strategy refers to the strategies relating to global, multinational and international. The report will focus on studying the various issues related to the oil and gas industry in present era. For the study of report British Petroleum (BP) Public Limited Company has been chosen. BP is a giant in their sector, but due to the present condition in oil and gas industry, companies are facing various challenges (Fisher, 2004). In the first part report will focus on the challenges regarding corporate governance and corporate social responsibility by companies like BP and Shell Petroleum one of the other giant of this industry and BP’s competitor. In second part report will focus on statement which indicates the uncertainty and risk involved in the oil and gas industry after having threat of new entrants. In the last part repot will focus on various management and leadership styles that can be adopted by the chairman of BP in order to improve their future functioning.

TASK 1: Corporate Governance and Competitiveness

1.1

Petroleum sector governance includes indulging and making decisions regarding the utilization of nation’s oil and gas resources. It includes hierarchal and structural organization of the industry, its communication and decision making process, policies framing and objectives governing activities and rules and regulation of those activities (Carmeli and Tishler, 2006). Corporate governance refers to a system of rights; structure, duties and obligation through corporation are directed and managed. Moreover, governance structure assists in specifying the delegation of rights and responsibilities between various participants in the firm such as various stakeholders like owners, managers, customers, employees and regulators (Sirico, 2012).

BP and shell are the two major giants operating in oil, gas and petrochemical industry. They are the leading organizations which are involved in supplying of oil and gases around the world. In the recent time global oil and gas prices have recorded highs which has affected economies several countries (Rashid, Sambasivan and Rahman, 2010). Demand for oil and gas can be seen in both developing and developed countries like China and India. Energy companies such as BP and shell are making several efforts in diversifying their product mix as non-traditional fuel sources to become more price competitive in such oil and gas sector. Due to such changes companies have to face challenge regarding corporate governance, because while dealing with such changes BP and Shell companies have to indulge themselves with the changes in government policies, structure and function according to the rules and regulations (Lakatos, 2008).

BP prepares governance risk and compliances strategy in order to face corporate governance issue and with the help of this strategy several measures were taken are as follows:

  • By clearly defining the risk and opportunity BP tries to improve their strategic business decisions.
  • Indulging in adopting proactive and efficient monitoring in order to minimize uncertainty of risks and unexpected incidents.
  • Dealing properly with factors of corporate governance BP can increase their efficiency in performing business operations.
  • In order to make effective and efficient functioning roles and responsibilities of the employees should be clearly communicated.
  • Should also concentrate on the governance and regulatory requirements such as combined code, industry regulations like FSA and specific legislation such as UK Bribery Act.
  • Shell Petroleum Development Company also addresses challenges of corporate governance through:
  • As company made sound risk management frameworks.
  • Through effective Risk management frameworks firm clearly delegates the roles and responsibilities.
  • Escalation system involved in order to resolve the cases related to breach of provisions and standards.
  • Shell needs to encourage transparency, proper disclosure, control and accountability in the system.
  • Several measures taken in order to improve internal control system so that rules and regulation made by government can be followed effectively and efficiently.

Corporate Social Responsibilities:

CSR refers to corporate initiative in order to assess and take responsibilities regarding company’s negative and positive effects on environment and social welfare. Corporate social responsibilities plays important role in the competitiveness of enterprises (Aristotelous, 2010). Oil and gas industry have highly competitive market which means the companies operating in such market needs to have better CSR because it can benefits in terms of risk management, cost savings, access to capital, customer relationship, human resource management and innovation capacity. Both the companies indulge in making several strategic plans for indulging CSR in the business operations so that they achieve the above mentioned benefits (Sisson and et. al., 2000).

Both the companies’ focuses on four different responsibilities in order to meet out the corporate social responsibilities, these are as follows: Economic, legal, ethical and philanthropic responsibilities.

Economical Responsibilities – economic responsibilities of the BP and Shell is to be profitable and through having corporate social responsibilities they can achieve by satisfying the needs and wants of shareholders.

Legal Responsibilities – Both the companies have to perform their task and operations according to the rules and regulations. By doing so companies can perform effectively and efficiently and also have positive impact on society.

Ethical Responsibilities – Ethical responsibilities will assist them follow ethical path in performing any activity regarding business operations (Hermosillo, 2008). Values and philosophies of both the company suggest that they operate in an ethical manner and create awareness amongst society.

Philanthropic Responsibilities – BP and Shell petroleum are focusing on maintaining good working environment which will provide them to build good corporate citizens and they can spread positive message to the society.

1.2

Improving performance and operational effectiveness, both BP and Shell should focus on improving their efficiency regarding the business operations. Organizations should focus on the areas of finance and supply chain because these are the major areas which can affect business operations from externally (Mohamed and Lashine, 2003). For improving performance companies should focus on making changes internally.

  • Should indulge more and more people who are qualified and are able to perform efficiently
  • Technological aspect of the firms should be changed as the change in working environment
  • As BP and Shell deals in such a sensitive sector of oil and gas they should provide better working environment to the employee with securities regarding any accidents or incidents
  • Both the firm should focus on having optimum utilization of available resources so that targets can be made accordingly (Koll, 2003). Short term targets should be prepared by the companies so that employees can focus on performing more effectively and efficiently
  • Standardize at all the level of business operations, so that quality should be maintained
  • Automation used should be enhanced periodically
  • Encourage transparency
  • Identify and evaluate the optimum operational goals
  • By involving all the stakeholders in making decisions regarding business operations, it will motivate employees top perform more effectively in order to improve the operational performance.

1.3

Oil and gas companies have huge workforces with skills and ability to perform any task. On the other hand recruiting employees and relocating them and their families to those developing countries where working conditions are challenging creates more complexity in retaining workforce with such skills, abilities and experience (Hermosillo, 2008).

Recruitment refers to the process of attracting, selecting and appointing appropriate candidate for the specific job or task. Through recruitment process skilled and qualified personnel’s are identified and selected in order to perform business operations (Mohamed and Lashine, 2003). Recruitment can be done either internally or externally. BP and Shell have skilled workforce as per their working is concerned. For retaining skilled workforce companies have to offer more perks and policies such as:

Better working environment – Every employee working in an organization wants to work in better condition in which their physical as well as mental state can groom. BP and Shell being the giants of their industry should provide better working environment so that employees can be retained (Sun and Anderson, 2012).

Involvement in managerial activities – For making employee work more effectively and in order to retain them for longer period of time top level management of both BP and Shell should involve employees in providing their views and regarding the functioning they are the one who actually deals with the conditions and have to several issues (Aristotelous, 2010).

Health and welfare benefits – Performing such challenging task or duty employees of both companies should be facilitate with health care benefits so that without any fear they can perform their task or job, so that they can be retained for the longer period of duration to serve the company (Landy and Conte, 2010).

Rewards – On the basis of performance of an employee he or she should be rewarded, because doing so will motivate employees to work more effectively and efficiently and to remain in the company for longer period of time (Sisson and et. a