MANAGEMENT

Economics Assessment

Economics Assessment

Introduction

British Petroleum (BP) is an integrated oil and gas company, providing customers with fuel, energy, lubricants and petrochemicals and also investing in renewable energy sources. British Petroleum is an international organization, which is operating in the oil and energy sector. There are sixteen refineries, which are partially or wholly owned by British Petroleum Company. BP has employed nearly 80,000 employees to perform its operations around the world. BP is operating in six continents, and its products and services are available in more than 80 countries around the globe. The products and services are available on the road, gas and fuel cards, gas and petrol stations, motor oil and lubricants. The company is headquartered in London (BP Annual Report, 2011, pp. 10).

This paper aims to analyze the external environment of BP Group. PESTLE Analysis will be used for analyzing BP's external environment. The PESTLE framework of analysis will ascertain a more comprehensive assessment on the potential impacts of the issues that have affected the performance of BP's business in the past, and are also expected to affect it in the future. In order to provide readers with the information of the company's business conduct, company overview is already provided in the first part of the paper. The paper will be concluded by summarizing the main point discussed in the assessment of the external environment throughout the paper.

Discussion

PESTLE

Pestle is an abbreviation for political, economic, social, technology, legal and ethical environmental factors, which can have an effect on the performance of an organization in any regard. The company exercises no influence or control over these factors; nevertheless, these factors are extensively critical to consider when a company plans a strategy, a new business or if an existing company moves towards product development. Following are the potential PESTLE factors which can affect the operations of BP's business,

Political factors

In contrast to more narrow economic analyses of oil, where the focus lies on the price formation and the conditions under which the “right” price for this non-renewable resource can be obtained, political economy of oil studies the conditions and consequences of the production, appropriation, distribution, and consumption of oil (and oil-related products) by taking into account social relations of power (at local, regional, and global scales), cultural codes of consumption, institutional structures of surplus extraction, and ecological impacts of human activity. In this sense, again in contrast to economics of oil, political economy of oil is decidedly interdisciplinary—moving beyond economics, it draws upon political science and international politics, sociology and cultural studies, geology and geography, and ecology. Any governmental action of any state or country will have the deepest impact on the company because there are numerous policies set by the government of every country for companies to operate in the country's environment (Russell, 2008, pp. 1-17).

Economic factors

These include interest rates, taxation changes, economic growth, inflation and exchange rates (Ferrier 2005, pp. 110). In what follows, the contours of a political economy approach (as distinct from the standard neoclassical approach) to oil ...