BP Oil

BP started off its organization as the Anglo-Persian Oil Company but incurred many internal and external changes from 1909. BP executives decided the company needed to establish a network of retail marketing outlets in the United Sates. BP started a trend of mergers and acquisitions when it announced in 1998 a $53 billion merger with Amoco. Synopsis BP started off its organization as the Anglo-Persian Oil Company but incurred many internal and external changes from 1909. BP executives decided the company needed to establish a network of retail marketing outlets in the United Sates. BP started a trend of mergers and acquisitions when it announced in 1998 a $53 billion merger with Amoco. However, as industry trends changed over the year the question remained generically the same for Lord Browne at the end of the case. Lord Browne continued to contemplate BP’s alternatives for continued growth. There were four main categories: acquisitions, internal growth, divestiture, and business diversification. All paths seemed promising however; this was not an easy path to choose because there are costs associated to all. Planning the future is imperative for the success of this business. It is crucial that this business thinks about who is going to use their products and when, how is the changing nature of these products going to produce vale, increasing productivity, updating products, creating new products, the source for raw materials,political nature of the world and the changes, and the behavior of our competitors. The reasoning to create a merger for BP could be their weak retailing position in the United States. BP needed to enlarge its chemical business and it was underexposed in natural gas. BP’s production was relatively low to its competitors. The merger between these two alliances with complementary strategic and geographical strengths will immediately make up for their individual weaknesses. The threat of international competition was posed but the merger alliance will outweigh this threat. Amoco was the United State’s fifth largest oil company in 1997 with revenues of $36 billion. The company becomes a huge competitor to other firms. The merged company became the largest producer of petroleum and natural gas in the United States. BP Amoco had 16,350 U.S. gas stations and was the leading marketer in 20 of the 36 states in which it operated. However, one reason for this company’s success could me the time of the merger. At this point in time the oil and chemical prices were extremely low and the most accessible cost cutting measures had been taken.