Business report on Bp Amoco.

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BP Amoco Business Report





By Mayowa Abiola


  1.          Introduction
  2.          Background information
  3.          Objectives
  4.          Organisational structure
  5.          Culture & communication methods
  6.          Quality control and assurance
  7.          Conclusion
  8.          References
  9.          Appendices
  10. Bibliography

Chapter 1.1


Aim or report

The aim of my report is to provide detailed analysis on BP. BP is the UK’s largest company, it is not possible to cover all the aspects of the organisation. I will be focusing on the objectives BP has set itself, the functional areas BP are using to run their business successfully, I will also be looking at the ownership BP are classified in.

As it is a business report, I will concentrate on financial and economic issues, but these cannot be viewed in isolation. Additionally I will be viewing the social, ethical, and political aspects of BP, evaluating the information critically. This involves independent assessment and not just information provided by BP, I cannot look into much detail at the past, present, or future of BP, but I can provide some aspects of the history, which help understand the present. I can also look at interesting current developments, which help give information about BP’s likely future.

Method of report

Most of my report will be drawn from secondary data. The report does contain some original research.

BP provides much of my secondary data. This is good because it is clear, abundant and up-to-date, but where it is biased, I will try to point this out. The report will be typed up text, using a variety of ICT skills. Different types of font etc. to make it clear and eye catching. It will also be helped by photography, diagrams, tables, and graphs to display the information in ways that make it easier to get the main points. I have learned a lot of theory about business at work, and I will apply this to lots of specific examples throughout the report.

Structure of report

The structure of the report follows the chapter headings.



A wealthy Englishman, William Knox D’Arcy, started up BP in 1901. D’Arcy believed that worthwhile deposits of oil could be found in Persia (Iran). He managed to get a concession from the Shah of Persia to explore for and exploit the oil resources of the country, so he employed an engineer who would be able to carry out the job, George Reynolds. The task of finding oil in Persia was very difficult, as there was severe weather, difficult terrain, shortage of skilled workers, and conflicting neighbouring tribes to deal with. Four years had passed and no commercial quantity of oil had been found, costs of running the expedition were still rising. D’Arcy had to find financial support, it came in the form of Burmah Oil Company. In 1905 the Burmah oil company decided to provide funds for the venture.

Success came in 1908, when Reynolds and his team struck oil in commercial quantities at Masjid-I Suleiman in southwest Persia. By 1909 the Anglo-Persian Oil Company (as BP was first known) was formed to develop the oilfield and work the concession. Shares in Anglo Persian were owned by the Burmah Oil Company, the rest lord Strathcona, the first chairman of Anglo Persian. After the discovery of oil, D’Arcy did not play any more major parts in the new company’s affairs, apart from the fact he was appointed a director and remained on the board until his death in 1917. Leadership was shifted unto Charles Greenway, who went on to become a founder director, then managing director, and finally chairman.

It was only a matter of time before the government cast their attention on Anglo Persian. After serious negotiations, Anglo Persian struck a deal with the government in 1914, in which they supplied the ships of the Royal Navy with fuel oil, a better alternative to the coal that was widely used at the time. The government invested £2 million into Anglo Persian, and in return got a majority shareholding, and the right to appoint two directors to the Anglo Persian board. Over the years the government’s shareholdings reduced, and ended in 1987.

Greenway retired as chairman 1927. he had achieved his main goal of establishing Anglo-Persian as one of the world’s largest oil companies, which, by agreement with the Iranian government, restarted the Iranian oil industry in 1954.

In 1951, due to failed negotiations, the Iranian government passed legislation nationalising the company’s assets in Iran, which was then Britain’s largest single overseas investment. The nationalisation caused a major crisis that brought Anglo-Iranian operations on Iran to a halt. Due to the nationalisation in Iran, Anglo-Iranian had to broaden its operation to make up for the loss of oil supplies from Iran. Crude oil production was greatly increased in countries like Kuwait and Iraq, and more refineries in Europe and Australia.

It was only after intensive negotiations, three years later that the crisis was resolved. It was by the formation of a consortium oil company, which by agreement with the Iranian government restarted the Iranian oil industry in 1954. The Anglo-Iranian Oil Company was then renamed The British Petroleum Company in 1954.

In the 1970s BP were struck by two great oil price shocks. One being in 1973, when a price explosion had a negative effect on demand, sending BP’s oil sales into a downward spiral. This was the first time BP’s oil sales dropped since 1952. by 1978 BP’s sales had received a reasonable amount, but an Iranian revolution, another dramatic rise in the price of oil, nationalisation of its assets in Nigeria, and supplies from Kuwait being cut back, ensured sales were down again by 1980. These two prices shocks had a very negative influence on the shocks, there were also successful achievements, as oilfield discoveries were made in the North Sea and Alaska in 1975.

The 1980s were dominated by three historic events in BP’s development:

BP acquired standard oil, and formed a new company, BP America. The merging of standard oil into BP gave the group access to the full potential of the world’s biggest market.

The British government finally sold its remaining 31.5% shareholding in BP.

BP doubled its exploration acreage in the North Sea, and retained its position in the area as largest oil and gas producer by purchasing Britoil for 2.8billion in 1988.

In 1992 the role of chairman and group Chief Executive was split, to help the further running of BP.



BP is one of Britain’s biggest companies and one of the world’s largest oil and petrochemicals groups. It is currently worth $176 billion. BP today is a diverse enterprise of a 107,000 people working together in more than 100 countries around the world to provide the energy and choices a growing global population needs to develop, and prosper in the 21st century.


No. of Employees

BP has been in business since 1909, and once was part of the public sector. They have since then grown into one of the world’s largest multinational organisations, with a daily production of 1.9 million barrels of crude oil, and 5.7 million cubic feet of natural gas.

BP recently formed a merger with a group called Amoco to create BP Amoco, one of the worlds leading energy and petrochemicals group.

BP has up to fourteen non-executive directors, seven executive directors (including the GCE) and the chairman. The chairman of BP is peter Sutherland, and the group chief executive is Sir John Brown.

BP is involved in oil and gas exploration in 29 countries. It owns 19 oil refineries, five in the US, and 14 spanning the rest of the world.

BP is made up of many smaller companies, all which deal with their own separate commodity or service. Air BP supply aviation fuels at over 1,400 locations in nearly 90 different countries. BP marine supplies aviation supply fuels, lubricants and technical services to the marine industry at 800 ports around the world.

On whole BP serve more than 10 million customers a day. Ranging from private motorists buying fuels, lubricants, and non-oil products, to airlines buying aviation fuels, Figures for BP in the year 2000 shows that 3407 thousand barrels of oil was sold per day gasoline (petrol) making the majority of the sales at 1505 thousand barrels being sold a day.

Product Sales

BP being the seventh largest company in the world will have influence on a lot of things, some being positive, and some being negative. So they will obviously pick up some criticism from different entities.

BP’s new recent advertising campaign with the theme of “Beyond Petroleum” was under heavy criticism by Corpwatch an American watchdog company.

Beyond petroleum which is meant to illustrate BP being a global leader in producing the cleanest burning fossil fuel, natural gas, was snubbed by Corpwatch also state that BP’s claim to be the largest producer of solar energy in the world was way too easily achieved. $45million was spent to buy solarex, which is only a very small fraction of what BP really has.



As well as critics, BP also has their main competitors, whom they have to try and outperform. The competitors include Shell, Esso, and Texaco. Supermarkets such as Tesco and Sainsbury’s have also opened their own petrol service stations, which may have an adverse affect on BP. Petrol prices and other related product prices must be monitored BP.

Chapter 3.1

Ownership OF BP

BP is a very large company that is classified under, public limited company, which is in the private sector. This means it is not owned by the government for public use, it is owned by shareholders. The types of businesses that are in the public sector and are owned by the government for the public are:


The army,

Hospitals, etc.

The business aims for a company in the public sector to act in the public interest. To add the letters plc after its name, a company must be registered under the 1980 companies act and have shares worth at least £50,000. A public Limited Company is smaller to a Private Limited Company, but it tends to be much larger. Private limited Companies (ltd), and Public Limited Companies (plc), are the only types of companies, sole traders, Partnerships, Co-Operatives, charities but they are smaller than the Plc and Ltds. They are also not under the limited liability act, an area which will be touched as we move further on. A Public Limited Company is entitled to sell its shares on the stock Exchange whilst it is against the law for private limited companies to sell it’s shares publicly. The Stock Exchange is a large market in which people can buy and sekk shares.

Sole traders are small companies, either a family business, or run solely by one person. A sole trader is a company with unlimited liability, and the objectives of these types of companies are usually relatively simple. A partnership is exactly the same as a sole trader, apart from the fact that it is run by a number of 2 to 20 people, in partnership with each other. Even though a partnership can grow to numbers up to 20, it pales in comparison to a Public Limited Company.

Plc’s are also owned and managed by different groups of people. Boards of Directors run Public Limited Companies. They comprise of professional managers who are paid salaries and probably do not own shares in the company. Public limited companies are owned by shareholders who have little say in the running of the company.

All other types of businesses in most cases are owned and managed by the owners.

Chapter 3.2

BP is a very large company, and it needs a lot of money to keep up with its daily demands. There are several sources from which BP get money.

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BP have been around for a long time, they specialise in the sale of petroleum to the public, but also have a wide range of several other goods and services, as they have diversified, to gain a larger market share. This is where most of BP’s income comes from.

As a PLC BP can sell their shares publicly on the stock exchange BP can raise extra funds relatively easily, since they have a lot of potential buyers of their shares.

BP can also borrow large sums of money in the form of loans, form banks. A bank ...

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