The external environment in any industry is characterized by competition that results from threats from new products, bargaining power of both the suppliers and buyers and entry of new participants. BP operates its business in an environment characterized by competition from huge companies such as Total, Chevron and Conoco Philips, and other underlying threats such as environmental (Hokroh, 2014). BP’s Industry structure has shown in the five aggressive strengths suggested by Porter to accomplish competition and achieve profitability. With a particular end goal to uncover the foundations of an industry’s present profitability and project future patterns, an organization needs to comprehend the basic reasons for Porter’s five forces and key success factors.
Porter’s Five Forces
The benefits of analysis BP’s Porter’s Five forces is to determine its competitiveness in oil and gas sector.
Oil and gas industry is a vast market, and BP faces a stiff rivalry from big oil companies such as Conoco Philips, Total, and Royal Dutch Shell. The rivalry extends from mining, refining and selling with every competitor trying to be active in every field. The key players in oil and gas industry are moderately equivalent in size, capabilities, and power. It accordingly builds the power of contention which can show itself in a value war if a contender tries to impact product prices. It results in sluggish production (Hokroh, 2014)….