Business Operations and Systems - Literature review Example

?BUSINESS OPERATIONS AND SYSTEMS of Introduction According to Paul (2007; p. 123), the term business operating system (BOS) is a typical, project-wide assortment of various processes of business applied in most expanded industrial firms. This definition comprise of a universal structure, rules and policies essential to operate the company. On the other hand, a business process is an assortment of connected, well thought out tasks that result into particular product for customers. The activity might also serve a specific objective. This essay will discuss the structure of operating systems for British Petroleum Company ways in which it correlates with the environment. Recommendations will be outlined on the best policies or programs that will be implemented to bring about change in the business operation. Business Operation System for BP According to Bamberg (2000; p.17), BP is a multinational oil and gas firm whose headquarters are in London in the United Kingdom. In comparison with the 2011 revenue reports, the firm ranked third in the energy sector and the fourth largest in terms of revenues realized. Besides, the firm is vertically incorporated conducting its activities in all segments of oil and gas industry. The various processes comprise of trading, production, generation of power, refining, marketing, distribution and petrochemicals. What’s more, the firm has recyclable energy operations and wind power generation. Meyer and Brysac (2008; p.53) contend that BP conducts its activities in more than 80 nations. The average daily production of barrels of oil approximates 3.4 million in about 21800 service stations globally. Among these service stations, the largest is BP America located in Houston of the United States and is second largest oil and gas producer in the US. Measured by both reserves and production of crude oil, BP has an ownership stake of 50% in TNK-BP, which is a firm ranked third in Russia’s oil production. BP had an outstanding commercial reserve of about 17.75 billion barrels of oil equivalent by December 2011. Conversely, BP has constantly been at the centre of focus in numerous primary ecological and phenomenon. Among them include; the Deepwater Horizon oil spill, against receiving an astounding score of criticism for its political manipulation. It was one of the first chief oil firms to openly declare the necessity to protect the environment through minimization of greenhouse gases emission. BP has main listing on the London Stock Exchange and is a component of FTE 100 index. As of December 2011, the market capitalization stood at ? 87.1 billion making it rank fourth largest of any firm quoted on the London Stock Exchange (BP, 2012; p. 2). New York Stock Exchange has the secondary listings of the firm. The success of the firm is instrumentally motivated by the kind of operational strategies used by the management of BP. Power and capabilities have been effective in the firm in the development of world market for its products among other oil firms. As mentioned earlier, the firm operates in all the six continents globally within 100 States. The primary objective of the firm has been to drill and locate oil in various parts of the world. Other main functions have been to explore and produce crude oil and natural gas, refining of crude oil, market distribution and hauling and manufacture of petrochemicals. The firm has also considered producing solar power. Therefore, the tactical management of operations can be seen as instrumental in the success of the firm. As one of the greatest petrochemical and oil production company the firm has considered to specialize in exploration and production of gas, supply of the petroleum products and production and distribution of various chemicals. Currently, the firm has rapid modification of its outside market as the firm has highly regarded itself as contemporal learning organization, which is obliged to be reactive and adaptive to the high technology in the market. The firm’s management is cautious of the competitive environment and strength of the firm in terms of their technical ability, political influence and functional knowledge considering the fact the oil is found in a very turbid environment, which can be easily taken over by solar, and hydrogen as the immediate substitutes. By use of operational management to align to the change, the company has managed to succeed in the competitive environment. Through their potential, the firm is able to find out the tactics used by their immediate rivals and therefore react fast before their competitors in exploiting the resources and the market more vividly than the competitors (Popper, 2000; p.183) exploit. The company is making efforts to use its business techniques in having an effective entry into the world market, which grant it total operation in the foreign markets. The firm is also making efforts to improve on its business operation management to increase its creativity in the powerfully important products and objective market. Therefore, the firm has divided its market in three classes, which enables it to comprehend the needs and desires of its customers. The diagram below shows the various operations for BP. The Operation Business Management Processes for BP Business Operation Process for British Petroleum Firm As noted before, BP is among the largest and definitely most established oil firms in the world. Its market share is considered in billions globally. However, due to economic crisis that has been in existence for quite a long time the firm has experienced some challenges in its operation and general performance. In line with its standardization mechanism, the company presents its services and products in three classes. The major operations by the firm are exploration and production of natural gas and crude oil. Respectively, the system of operation management is the foundation of the firm in acquiring their reliability in every location they operate their business. The firm has been in a position to provide a tremendous revolution in the way they treat employees and other stakeholders and make efforts to conserve the environment. The daily production of oil by the firm stands at 3.4 million barrels. The firm’s production runs throughout the year with no specific off peak and peak seasons. Besides, the products are mainly in form of crude oil and impure natural gas, which is then refined to produce various products. The refining process uses the principle of fractional distillation in which the products are extracted based on their distinct boiling points. The firm employs over 79,700 employees worldwide. The exploration and production segment has over 20,000 employees in the 30 countries they conduct the processes, which includes; discovery, production and distribution to the market (BP, 2012; p.3). The refining process comprise of the process of extraction and transport of final products to respective target market. All these processes are made possible through a reputable management, which comprise of Mr. Carl-Henric Svanberg as the chairperson of the board and Robert Dudley who has been the CEO since first of October 2010. The chief executive of refining and marketing is Lain Conn while Brian Gilvery is the chief financial officer. Byron Grote is the leader of corporate affairs who also acts as the executive vice president. Together the rest of board members, the team are experienced in their areas of jurisdiction to bring about change within the organization. The operating profit margin has been varying annually based on the changing financial environment. However, the firm has been able to record tremendous sales in its operations making its ranking among the top six oil-producing firms to go high. In addition, the organizational performance to the ecological compliance, regulation and policies as well as safety standards has been very instrumental in driving the firm to great heights of success. The firm faces various risks in the areas of operation, which range from country risks to business risks. Some of the business risks experienced include; fluctuations in the world oil prices per barrel, foreign exchange risks, interest rate risks, credit risks and market risks. Moreover, the firm faces country risks such as possible restrictions on the repatriation of profits and instability in counties of operations especially in some of the Middle East nations. The firm’s plant location is ideal for the production of crude oil. For example, the American BP is mainly located in the Tulsa Oklahoma. The drilling and production of crude oil takes place offshore coast in the Gulf of Mexico. By 2011, the company’s total assets amounted to US$ 290.92 billion while its total equity equaled to US$ 111.46 billion (BP, 2012; p.2). The net income for the firm was US$ 25.70 billion. This is an indication of visionary management whose intentions are to drive the company to the greatest heights against all odds. The company is doing its best to achieve top organizational performance by ensuring customer satisfaction at the same time conforming to the governmental regulations in the countries of operation. The management has intentions to achieve top performance through risk reduction and combined group’s efforts using leadership programs, satisfying the legal procedures, proper management of its assets and generation of organizational logistics. Besides, through proper pricing mechanism the company will ensure its logistic strategies are up the standards to avoid passing the burden of cost to its clients (BP, 2012; p.1). This also reflects to their suppliers and distributors who have to meet particular standards when distributing the products to the final consumer. They have to conform to the set standards to protect consumers from exploitation. Report on the Technological Change of BP Technology is very vital in the firm if the company has to uphold its competitive leadership in the turbid industry. Therefore, the firm has to step up its operation management systems to upgrade on its world market by embracing e-commerce. The instruments of technological change involve invention of proper mechanism to enhance marketing and distribution of products to the final consumer. The most significant factor of success in the petrochemical industry involves building a solid connection within the value chain including all the stakeholders and the overall management. Establishment and sustenance of loyal customers is the key of achieving successful business operations through use of the right technology. Various techniques and procedures can be used in organizing effective operational strategies in the delivery of services to the clients. This is not easy, unless a composite approach is used which comprise of harmonizing the market preferences, internal abilities and organizational structure (McLeod, Miller & Oh, 2001; p.158). Managerial skills, configuration of the firm and the effective environmental management are key elements in attaining efficient internal capabilities. Notably, proficient and long-lasting procedures call for a united effort from the design of the product to be sold to the stakeholders such as the customers and distributors. The operational management strategy used must put in mind the quality factor essential in creating customer loyalty. This is internally designed in the managerial system to ensure continuity (Goodale, Hornsby and Kuratko, 2001; p. 221). For example, the use of Just in Time (JIT) systems of operations notwithstanding the outdated normal method of Material Requirement Planning (MRP) enables improvement of the quality level through proper waste management. Moreover, JIT is relevant for BP Company in an effort to upgrade on its flexibility in the process of satisfying the needs of its clients. The suppliers equip the agents of the firm supplying inputs or outputs with the necessary skills for in-bound logistics, design of product and efficient management tactics to be used in the market. Flexibility of the firm can take different shapes (Goodale, Hornsby and Kuratko, 2001; p. 220). For example, the products flexibility conforms to the ability of the firm to tackle challenges, undefined orders in meeting customer’s particular requirements to manufacture products that have different characteristics such as those created by the BP’s three product groups. Flexibility in the methods and procedures such as product mix flexibility conforms to the company’s ability to make small quantities of goods that are cost effective that is simple to adapt. Perpendicular to these forms of flexibility, flexibility in volume also conforms to the ability of the firm to effectively adapt to capacity in accelerating production in reaction to variations in the demand by the stakeholders. Lambertus and Hommes (2004; p. 37) conducted several studies in establishing the scope of products in comparison to the width of the company’s line of products. In the studies, product flexibility explicitly matches well to the extent of the product provided and the flexibility in the method overlaps with the product degree. It can be noted that the stakeholders come at the focal point on the quality approach and it is linked to various instruments and media on quality. This group commands a large sphere beginning with creation of information concerning the stakeholder to investigating the firm’s performance and creation of resolution for complaints. In implementing technological change, the key element is a possessing an efficient operational business management system through understanding of the market place and customers at large. This entails paying attention to stakeholders’ complaints and satisfaction data to enhance satisfaction of their needs and demands. All the companies, which are proficient in these procedures, have proper mechanisms to convey and receive communication from the clients. This ensures efficient service delivery through triumphant operational products. The most important operational tool, which must be considered by BP, is technology. There are extreme implications where embracement of changes in technology has been taken up to task. This involves ways and methods in which managers handle delivery of services and operation of products. In particular, e-commerce; which involves extending the products’ value through unique online operational business management methods is very instrumental in both internal and external affairs of the firm. The business can make use of this in their interior operations that can be applied to consignees, distributors and stakeholders. The process of payment or status of the cargo or consignment can be easily received thus providing an efficient channel for replenishment of stock at the right time. This technology can be used to assist the firm in minimizing the risks associated with the inventory management and maximization of sales through reduction of life cycles of the products. Furthermore, competitive advantage can easily be achieved considering the fact that there is an easy order-entry procedure and reduced paper work. Even though there are apparent benefits for companies and development of these operational management systems, there are still some observable challenges. Therefore, the firm’s management must be in a position to guarantee the obstacles can be handled with care to avoid loopholes in the system. What’s more, it is observable that the status of economy can trigger British Petroleum to consider using all their arsenals in delivering products and services to various segments of the global market. The application of operational business management approach can help make more efficient the business assortment of the firm. With the changes in market demand for the products BP has the ability to effectively conduct research on the available market investments that would help cover up for the possible change in the level of income (Howard & Peter, 2004; p. 73). As noted in the discussion, there are different players in the industry, besides; the changing technology has a role to play in creating perfect substitutes that might hamper the level of market or sales. Therefore, strategic alignment with the changing technology through diversification is essential for the better performance of the firm. Bibliography Bamberg, J., H 2000, The History of the British Petroleum Company: British Petroleum and Global Oil, 1950–1975: The Challenge of Nationalism, Vol. III. Cambridge, MA: Cambridge University Press.  British Petroleum BP 2012, Available [www.bp.com]. Accessed on 3rd July, 2012. Goodale, J., Hornsby, J. & Kuratko, D 2001, Quality Practices for a Competitive Advantage in Smaller Firms. Journal of Small Business Management, Vol. 39. Howard S., and Peter F 2003, Business Process Management. The Third Wave, MK Press Lambertus J., Hommes and B., Hommes 2004, The Evaluation of Business Process Modeling Techniques. Doctoral thesis, Technische Universiteit Delft Meyer, Karl E; Brysac, S 2008, Kingmakers: The Invention of the Modern Middle East. New York: W.W. Norton. McLeod, H., Miller, N. & Oh, K.Y 2001, Managing Family Businesses in Small Communities Journal of Small Business Management, Vol. 39. Popper, M 2000, Organizational learning: mechanisms, culture, and feasibility. Management Learning, 31(2), 181-197. Paul H 2007, Business Process Change: 2nd Ed, a Guide for Business Managers and BPM and Six Sigma Professionals. Morgan Kaufmann. Read More