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The sale of Burmah Castrol to BP Amoco
Group 3:
Cao Thanh LanNguyen Doan Ngoc HienNguyen Thi Hoai Thuong
Contents Introduction Burmah Castrol in 1990s Burmah Castrol timeline Transformations in 1997 Recommendation to Tim Stevenson Recommendation the sale of Burmah Castrol Issue of BP since acquired of Burmah Castrol Strategy of BP Recommendation issue of BP
Introduction The company was
founded in 1886 The company is the
world’s leading supplier of automobile and motorcycle lubricants.
It has more than 150 subsidiaries operating in about 55 countries
Business bought included Castrol, signal oil and gas.
BP called the Anglo -Persian Oil Company, later became British Petroleum
In 2000, BP agreed to purchase Burmah Castrol
Burmah Castrol in 1990sStrengths Weaknesses • Very successful developing world
position, particularly in Asia Pacific.
• Acquisition ability• Chemicals became higher
performer through cost cutting
• Reduce in share price in Castrol• Lack of vision that affected
company internally.• Not being market responsive
Opportunities Threats • Expansion• Implications of conglomerate
creation• Ability to improve operating
efficiency.
• Over-expansion could have impact on management
• Substantial (75%) dependence of total profits on singular tier within the structure
Burmah Castrol timeline
Before 1997: Expansion and focus on acquisition to engage
into chemical sector, conglomerateAfter 1997:
Selling most of the companies that they bought before recession
Breaking off into two divisions Expanding chemical division by buying out new
companies
Transformation in 1997
Redesigned strategy Lack of decision marking process shareholders value as a driver force to the
company operations and profit generation Appearance of decentralized business to focus on
local customers with increased attention.
Recommendation to Tim Stevenson
Initially approach other major player. Fusion development
Recommendation the sale of Burmah Castrol
They should face of value provision to shareholders, big competitors and their ability to utilize economies of scale.
They should improve ability to strategically ally with major competitors.
Issue of BP since acquired of Burmah Castrol
The acquisition, which was finalized in mid-2000, gave BP Amoco the second largest market share in lubricants in Europe.
It allowed the company to reduce costs by eliminating redundant jobs
Strategy of BP
Over the first 3 years of the 21st century: To increase its gas marketing and trading business by 9 to 11 percent annually.
Expected its retail petroleum business to grow by only 3 to 4 percent annually.
In 2003: BP estimated gas to account for more than 40 percents of its daily hydrocarbon production.
Recommendation issue of BP
BP should invest much on renewable energy sources.
The strategy should also establish a body of expertise in greenhouse gases.
The CEO should ensure more investment in the pipeline.
The company should increase expenditures on infrastructure maintenance and employee safety.