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Business report on Bp Amoco Essay

The aim of my report is to provide detailed analysis on BP. BP is the UK’s largest company, it is not possible to cover all the aspects of the organisation. I will be focusing on the objectives BP has set itself, the functional areas BP are using to run their business successfully, I will also be looking at the ownership BP are classified in. As it is a business report, I will concentrate on financial and economic issues, but these cannot be viewed in isolation. Additionally I will be viewing the social, ethical, and political aspects of BP, evaluating the information critically.

This involves independent assessment and not just information provided by BP, I cannot look into much detail at the past, present, or future of BP, but I can provide some aspects of the history, which help understand the present. I can also look at interesting current developments, which help give information about BP’s likely future. Method of report Most of my report will be drawn from secondary data. The report does contain some original research. BP provides much of my secondary data. This is good because it is clear, abundant and up-to-date, but where it is biased, I will

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try to point this out.

The report will be typed up text, using a variety of ICT skills. Different types of font etc. to make it clear and eye catching. It will also be helped by photography, diagrams, tables, and graphs to display the information in ways that make it easier to get the main points. I have learned a lot of theory about business at work, and I will apply this to lots of specific examples throughout the report. A wealthy Englishman, William Knox D’Arcy, started up BP in 1901. D’Arcy believed that worthwhile deposits of oil could be found in Persia (Iran).

He managed to get a concession from the Shah of Persia to explore for and exploit the oil resources of the country, so he employed an engineer who would be able to carry out the job, George Reynolds. The task of finding oil in Persia was very difficult, as there was severe weather, difficult terrain, shortage of skilled workers, and conflicting neighbouring tribes to deal with. Four years had passed and no commercial quantity of oil had been found, costs of running the expedition were still rising. D’Arcy had to find financial support, it came in the form of Burmah Oil Company.

In 1905 the Burmah oil company decided to provide funds for the venture. Success came in 1908, when Reynolds and his team struck oil in commercial quantities at Masjid-I Suleiman in southwest Persia. By 1909 the Anglo-Persian Oil Company (as BP was first known) was formed to develop the oilfield and work the concession. Shares in Anglo Persian were owned by the Burmah Oil Company, the rest lord Strathcona, the first chairman of Anglo Persian. After the discovery of oil, D’Arcy did not play any more major parts in the new company’s affairs, apart from the fact he was appointed a director and remained on the board until his death in 1917.

Leadership was shifted unto Charles Greenway, who went on to become a founder director, then managing director, and finally chairman. It was only a matter of time before the government cast their attention on Anglo Persian. After serious negotiations, Anglo Persian struck a deal with the government in 1914, in which they supplied the ships of the Royal Navy with fuel oil, a better alternative to the coal that was widely used at the time. The government invested i?? 2 million into Anglo Persian, and in return got a majority shareholding, and the right to appoint two directors to the Anglo Persian board.

Over the years the government’s shareholdings reduced, and ended in 1987. Greenway retired as chairman 1927. he had achieved his main goal of establishing Anglo-Persian as one of the world’s largest oil companies, which, by agreement with the Iranian government, restarted the Iranian oil industry in 1954. In 1951, due to failed negotiations, the Iranian government passed legislation nationalising the company’s assets in Iran, which was then Britain’s largest single overseas investment. The nationalisation caused a major crisis that brought Anglo-Iranian operations on Iran to a halt.

Due to the nationalisation in Iran, Anglo-Iranian had to broaden its operation to make up for the loss of oil supplies from Iran. Crude oil production was greatly increased in countries like Kuwait and Iraq, and more refineries in Europe and Australia. It was only after intensive negotiations, three years later that the crisis was resolved. It was by the formation of a consortium oil company, which by agreement with the Iranian government restarted the Iranian oil industry in 1954. The Anglo-Iranian Oil Company was then renamed The British Petroleum Company in 1954. In the 1970s BP were struck by two great oil price shocks.

One being in 1973, when a price explosion had a negative effect on demand, sending BP’s oil sales into a downward spiral. This was the first time BP’s oil sales dropped since 1952. by 1978 BP’s sales had received a reasonable amount, but an Iranian revolution, another dramatic rise in the price of oil, nationalisation of its assets in Nigeria, and supplies from Kuwait being cut back, ensured sales were down again by 1980. These two prices shocks had a very negative influence on the shocks, there were also successful achievements, as oilfield discoveries were made in the North Sea and Alaska in 1975.

The 1980s were dominated by three historic events in BP’s development: BP acquired standard oil, and formed a new company, BP America. The merging of standard oil into BP gave the group access to the full potential of the world’s biggest market. The British government finally sold its remaining 31. 5% shareholding in BP. BP doubled its exploration acreage in the North Sea, and retained its position in the area as largest oil and gas producer by purchasing Britoil for 2. 8billion in 1988. In 1992 the role of chairman and group Chief Executive was split, to help the further running of BP.

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