Pest analysis Essay Example | Topics and Well Written Essays - 1500 words

Pest analysis - Essay Example BP’s industry areas are vast; spanning to include Oil and gas exploration and production, refining, marketing and supply of petroleum products, manufacturing and marketing of Chemicals, Gas & Power generation and the manufacture of Photovoltaic (solar) cells (Corporate Watch 2008). Like any other international business, BP has its own strengths and weaknesses and can trace its achievements and failures to certain political, economic, social and technological factors. This report seeks to delve into the PEST analysis of the company; based on which a reflection of where the company is coming and its direction for the future shall be outlined. Method for growth and Reasons for choosing the method Seen as â€Å"one of the barometer companies of the British economy† (Corporate Watch 2008), facts and figures available from the company’s website indicates that as at the close of 2009, the company’s sales and other operating revenues excluding customs, duties and sales taxes stood at $239 billion. With a total of 16 refineries across the world, the company employed 80,300 as at 31 December 2009. With this, the replacement cost profit for the company over the same period 2009 was $14.0 billion (BP, 2010). BP’s key method that has seen the company through its rapid growth rate is the concentration on its present capital territories rather than starting new ventures and investments. For instance having 62% working interest in the Tiber prospect in the Gulf of Mexico, the company keeps â€Å"investing extensively in deepwater exploration and development, and through an aggressive entry into onshore natural gas† (Fox, 2010) of which its greatest concentration is the Tiber prospect is. The reason why the company has chosen this method can be justified by the global economic meltdown that was experienced the world-around. With the economic crunch, it was almost unwise to start anything new when one had old ventured to grow. PEST Analy sis Current position of the company BP’s current position in the today’s economic climate is best illustrated by its annual reporting for the year ending 31 December 2010. The report touches on all three business segments of BP which are â€Å"Exploration and Production, Refining and Marketing and Gas, Power and Renewable.† (Aruvian’s Research, 2008). According to the report, the company’s total asset for year ending 2010 was $272,262m as compared too $235,968m for year ending 2009. With liabilities, the company’s total liability for year ending 2010 was $176,371m as against $133,855m for year ending 1999. This brings the net asset as of 31 December 2010 to $95,891m as against $102,113m for 2009 (BP Summary Review, 2010, p. 21). With regards to group cash flow, the cash and cash equivalent for end of year 2010 was $18,556m as against $8339m for the same period 2009. Generally, the company did not perform impressively well in 2010, which is a good yardstick of the company’s present state as against 2009. With regards to replacement cost for instance, the company recorded a loss of 26.17 per ordinary share (BP Summary Review, 2010, p. 17). Reasons for this performance can be traced from the PEST analysis of the company below. Political BP’s three business spectrums are Exploration and Production, Refining and Marketing and Gas, Power and Renewable. Coincidentally, these are aspects of petrochemical trade that is undertaken by