Managing Business Organizations

Student ID 21172735 Group: G Module Code: BA50005E

Managing businessorganisation

1


Background of the business The BP history is full of discoveries starting in 1908 withoil found in rugged part of Persia after a long and difficultsearch since then. Discoveries large and small and sometimesjust nick of the time have fuelled or progress.

BP now operates over 80 countries around the world has morethan 21 000 retail stations around the world and more than1,300 locally. BP global headquarters is based in London, BPnow combined with their award winning wild bean café andmaster of retail M&S.

BP’s mission statement is “No harm or damage to people orenvironment” they are currently following it with theirspecialised labs. Their about release their bio fuel in 2014which made by sugar cane that reduce the environmental damage.

From the below image u can see the market size of petroleumindustry in UK

Source: Forecourt trader

2


As BP has higher market share in petroleum industry we need toknow who the competitors are and there market size.

Source: Forecourt trader

As you can see BP has the largest market share of 29.4% and aswell as market effectiveness. We can name Shell and Texaco asBP’s biggest competitors according to this list. As there isbig competition in this industry and most of the customers areprice sensitive BP need to give more attention on fuel priceas there leading the market? Price could be a worthy reason tolose the market share.

Possible external factors for BP could be global factors,environmental issues and competition. One of the main factorsBP face is environmental issue’s but even though they havebeen able to reduce environmental pollution with the correctprocedure and been ranked 7th on the top ten ethical companiesin the world. BP has invented their Ultimate fuel with lessenvironmental pollution and they about to invent more eco-friendly fuel and they have named it as bio fuel ethanol andbiuthonal.

3


Recently BP have been able to achieve massive sales in UKforecourt sales by merging with M&S. it is a big achievementfor BP because that is their primary income and you can seethe statistics in below image.

Transformation process of BPOperation management is concerned with managing processes. Alloperations produce goods and services by managing theseprocesses. Below image shows this general transformationprocess which generally describe the nature of operations. Butsimply operation processes take in a set of inputs resources

which are then used to transform something or are transformed

4


themselves into outputs of goods and services which satisfycustomer needs.

Source: www.open.edu

As shown in the above image now we can compare BP’stransformation process. Before that we need to categories BPin to two segments which is

1. BP fuel2. BP retail

These two section need two different transformationprocesses. The nature of their inputs both have staff andfacilities as inputs to the operation but they act upon verydifferent things.

Transformation Process of BP fuel

5

INPUTBP oilOil

refining equipment, Necessary staff, Oil refineries, Oil trucks,

Patrol Stations, Oil tanks, Transportation of oil to oil

refineries

TRANSFORMATIONPROCESS

Delivery of oil to petrol

stations and other companies, Staff, Providing information to the customer, Customer,

Offering special offers to

customers, BP loyalty cards

OUTPUT

Providing good

quality Oil to the

customer, Customer

satisfaction


Transformation Process of BP Retail

6

INPUTStores, Grocery

products, fast food items, snack items, staff,

Beverages, vehicles,

ware house,

TRANSFORMATION PROCESSDisplay of goods, sell goods, lay

out of goods in an

attractive manner,

promotions, advice on

good products, promote loyalty

cards, up selling of products,

refilling the store

OUTPUTProviding

good quality

product to the

customer, Customer

satisfaction

INPUTBP oilOil

refining equipment, Necessary staff, Oil refineries, Oil trucks,

Patrol Stations, Oil tanks, Transportation of oil to oil

refineries

TRANSFORMATIONPROCESS

Delivery of oil to petrol

stations and other companies, Staff, Providing information to the customer, Customer,

Offering special offers to

customers, BP loyalty cards

OUTPUT

Providing good

quality Oil to the

customer, Customer

satisfaction


ANALYZING THE FOUR V’SSince BP is a large organization I thought to analyse the BPretail in this part. Although all and every operations processare same. The way that they transform their input resourcesinto out is differ in many ways. But there are four importantways of doing it

1) Volume of their output2) Variety of their output3) Variation in the demand for their outputs4) Visibility which customers have on the product and

service

If we apply these four factors to BP’s operations process BPis the largest fuel company in the UK so have big number ofservice station and they have a high volume. Volume hasimportant implication to BP’s process. As they doing thesimilar task on everyday it creates repeatability so all thestaff get used to it. Each staff got he’s own work so itcreates systemization of work so by doing that the unit costof a product will be less so there overhead cost will spreadwith large number of units.

Variety of BP’s operations is low because itsservice doesn’t differ with the customer it is well definedand staff have been trained to a routine. All the work isstandardized so the cost will be very low due to lack ofchange.

Variation of BP’s operation is high because there is highcompetition in the industries they keep changing thepromotions by predicting the demand of the customers. Theyneed to plan ahead and work in a routine and predictablemanner. Otherwise the cost can be high. It going to cost forthe company for promotion, advertising.

Visibility of BP’s operation is low because theyorder all the readymade food and the operation of it is notvisible for customers. Simply visibility is process exposure

7


so that is lacking in BP’s operation because their productsare done by their suppliers.

Profile of BP’s operation

Performance ObjectivesThere are five types of performances objectivities apply tovarious type of operation; there are

1. Quality 2. Speed 3. Dependability4. Flexibility5. Cost

If we further describes these five performance objectives.Quality stands for good error free customer service. Whichmeans all fit for customer needs and not making mistakes. Bydoing this it will gives u Quality advantage to the company.If you look at how authors have describe Speed Main thing isavailability of goods and minimizing the time of handing overthe product to the customer. Authors have describeDependability as keep doing things on time. Dispatch goods ontime as u informed customers. By following this it will givethe dependability advantage to the company.

Flexibility means you need to adopt thesituation and change for customer requirements in eachcircumstance or give individual treatments to the customers.And need to be changed quickly to meet customer requirements

8


so that it gives you flexibility advantage to the company. Thefinal objective is Cost which is most important among theseyou need to reduce unit cost so that the pricing of theproduct will be easy for both and the customers if companymanaged to do these it will gives you Cost advantage

We can apply these objectives to BP retail because it dealswith these five objectives more than BP fuel.

Quality

Overall BP products are in a good condition. The stores arealways clean and tidy they follow various methods for stockrotation and have managed to train their staff to give afriendly and helpful service towards customers. And theyrunning mystery shoppers in every month so that they can makesure that the staff won’t make any mistakes.

Speed

Mainly they need to minimize the time of the transaction so BPhave their staff to follow 2F’s method which means Fast andFriendly. They always make sure to reduce the cue’s near thetill point.

Dependability

Most of the BP shops are open 24 hours and customers haveaccess in to the shop and it is very convenient to thecustomers. To keep the out of stock to minimum they fill theshops in every 8 hours and now they reduce the expiring itemson the day or day before it expires. BP have spacious carparking in their forecourts.

Flexibility

BP changes it promotions in every two weeks and they have aninternational isle so that all ethnics group can do theirshopping under one roof and they receive their stock deliveryevery night so the out of stock items can be kept to aminimum.

Cost

9


BP have creates territories for deliveries so that they canreduce cost on goods delivery and always keep appropriatenumber of staff and Trying to cut down overhead expenses andgaining the maximum output with a minimum input and been morecost effective.

Floor plan of BP

Evaluation of floor design

10

STORE ROOM

OFFICE


BP use functional layout to confirm to the needs andconvenience of the functions performed by the transformingresources which constitutes the process. Similar processes arelocated together because of utilization of transformingresources. When information, services and customer flowthrough operation, they will take a route from activity toactivity according their needs. BP has placed promotion shelfin front of the entrance so that the customers can see thepromotions and all the discounted products are situated in infront of the tills so the customers eye goes to them whilethey are in cue.

There are several advantages in the functional layout that,they allow variety of routes that may be chosen by customeraccording to their needs, which is accomplished by the BP atthe movement.

If we had a look of the objectives of this layout. Especiallythis is a supermarket so the objectives would be maximize therevenue and contribution per square meter as well asminimizing the costs of operating the store in terms ofmaterial handling and checkout productivity and customerconvenience and comfort as well. As you can see they havefixed large shelves because they can put wide range ofproducts so that the customers can look at them and increasetheir purchases.

CONTROL AND FEEDBACK MECHANISAMS Feedback is essential for BP’S operation. It can derived from internal (staff, well-wisher, stake holder) and external (Customer) sources. Feedback information is used to control the operation system by adjusting the inputs and transformation process that are used to achieve desired output.

Control is the process of ensuring that operation proceeds according to plan. Control mechanism being practised in the BPsuch as regularly testing the system, providing staff with additional trainings and monitoring the staff is essential to ensuring that operations proceed according to plan. Control isan effect of avoid the dissatisfaction.

11


.

APPENDIXBP’s operating management system.

Source BP.co.uk

BP retail operating management system

12


Source BP site, Cromwell Road. W6 9TQ

Major UK Petrol Retailers by Number of Branded Sites (number and %), Years Ending 31st December 2008 and 2011

2008 2011 % Change2008-2011

Oil Companies

BP 1,200 1,178 -1.8

Esso 872 890 2.1

Shell 932 845 -9.3

Texaco 1,061 † 840 -20.8

13


Total 835 ‡ 782 -6.3

Murco 338 449 32.8

Jet 408 326 -20.1

Total oil companies 5,646 5,310 -6.0

Source : key note

Table 8.1: Financial Results for BP PLC ($m), Years Ending 31st December 2009-2011

2009 2010 2011

Turnover 239,272 297,107 375,517

Pre-tax profit 25,124 -4,825 38,834

Source: Key Note

BIBLIOGRAPHYKey Note. (2013). Forecourt retailing [Online]. Available at: www.keynote.co.uk (Accessed 5 NOV 2013).

BP (2013). [Online]. Available at: www.BP.co.uk/

BP USA (2013). [Online]. Available at: www.BP.com/

Slack n, Stuart C and Robert J (2004) Operation Management 4th ed. prentice hall

Forecourt Trader (2013). [Online]. Available at: http://www.forecourttrader.co.uk/ (Accessed 1 NOV 2013)

Open learn. [Online]. Available at : http://www.open.edu/openlearn/money-management/management/leadership

14

http://www.open.edu/openlearn/money-management/management/leadership-and-management/understanding-operations-management/content-section-3.4

http://www.forecourttrader.co.uk/

http://www.keynote.co.uk/


-and-management/understanding-operations-management/content-section-3.4 (Accessed 1 NOV 2013)

15



Managing Business Organizations

Documents

Transcript of Managing Business Organizations