The performance and operations of British Petroleum Free Essay Example

In order to compile this report information was obtained from different sources but the primary source was the Internet as well as one visit to a BP outlet where a short meeting with assistant manager was held. The outlet was located in Finchley Road, London. The whole process of obtaining information took place over a 12-week period while carefully classified to meet the demands of assessment requirement and whether it is suitable for the topics covered.

During the visit made to the outlet, an annual report for the company for the year 2000 was handed in and they instructed to visit regularly website of the company, as most up to date information can be obtained from it.

BP as the company in whole is very large business that operates worldwide and participates in different markets. In two occasions the company was contacted to obtain information, but they instructed that the most useful source of obtaining information for educational purposes is from their corporate website as well as from a special educational website run by the BP for these specific purposes.

In one occasion the company was requested to arrange a interview with a manager in a corporate office, but due to the high work load they were not able to find a time slot therefore the interview was not possible. Although, after the visit to the outlet and a brief meeting with assistant manager of that outlet and regular visits to the websites of the BP enough information was obtained in order to compile this report.

During the visit to the outlet, which in fact is a petrol station, basic information was obtained on how the company is structured, what are it’s aims and what are the functional areas.

But more detailed information was lacking so this gap was filled from materials downloaded from the BP’s educational and corporate websites. Also materials from competitors and marketing resources were collected in order to compare and judge about the meeting of objectives. BP’s origins go back to May 1901, when a wealthy Englishman, William Knox D’Arcy Reynolds, obtained a concession from the Shah of Persia to explore for and exploit the oil resources of the country.

Difficult terrain, the absence of a developed infrastructure, the shortage of skilled local labour and the problems of dealing with neighbouring tribes in the absence of a strong central government – all conspired to make Reynolds’ pioneering task an exceptionally arduous one. Exploration in Persia continued without success, until eventually, in May 1908, Reynolds and his helpers struck oil in commercial quantities at Masjid-i-Suleiman in southwest Persia. It was the first commercial oil discovery in the Middle east, signalling the emergence of that region as an oil producing area.

After the discovery had been made, the Anglo-Persian Oil Company (as BP was first known) was formed in 1909 to develop the oilfield and work the concession. At the time of Anglo-Persian’s formation, the Burmah Oil Company owned 97% of its ordinary shares. Lord Stretching owned the rest, and he was the company’s first chairman. Further expansion followed in the decade after World War I. New marketing methods were introduced, with curbside pumps replacing two-gallon tins for the distribution of motor spirit (or, gasoline).

Anglo-Persian also marketed its products in Iran and Iraq; it established an international chain of marine bunkering stations, and in 1926 began to market aviation spirit. In 1935, the company was renamed the Anglo-Iranian Oil Company. During the post-war reconstruction of Europe, the high demand for oil enabled Anglo-Iranian to expand its business greatly. The company’s sales, profits, capital expenditure and employment all rose to record levels in the late 1940s. The nationalisation in Iran precipitated a major international crisis in which the British and US governments became deeply involved.

The company’s operations in Iran were brought to a halt. Only after three years of intensive negotiations was the crisis resolved by the formation of a consortium of oil companies. Anglo-Iranian was afterwards renamed The British Petroleum Company in 1954 and held a 40% share in the consortium of oil companies. In mean time during late 1990’s the company underwent a major change by merging with Amoco on 1st of January 1999, and thus changing it’s name to BP Amoco Group.

But BP’s main functions and structures remained intact and company still conducts the usual business as before but as part of BP Amoco group. Toady BP can be found listed as Public Limited Company. It’s head office is in Finsbury Circus, London EC2. As BP is a Public Limited Company, which means that there are many owners who own the shares of the BP. Many years before company used to be owned 97% by a single person, Knox D’Arcy but eventually to meet the demands for investment, company today is transformed and structured to exist as Public Company.

This means that it has a limited liability status and they have shareholder who invest capital into the business. Laws exist to regulate what limited companies both private and public can do. These rules are sanctioned on the Memorandum of Association and Articles of Association. These must be approved by the Registrar of Companies, who checks whether these are conforming to statutory laws and then issues a ‘Certificate of Incorporation’. These are principles of limited companies and show the constraints that it has in comparison with sole traders or partnerships.

This means that here are involved many shareholders while the sole trader runs business as a single person and takes himself all of profit generated. Partnerships, even though they do not have a sole owner, by law they must not have more than 20 partners. At the end of year 2001, at the BP there were 365,905 holders of BP ordinary shares and a further 704,899 holders of American depositary shares. One American depository share is equivalent to six ordinary shares and can be bought and sold on North American stock markets and this represents that BP’s shared are traded in many stock markets all over the world.

About 80% of the American Depositary shares are owned by American depositary institutions such as pension funds and insurance companies. Each year, Annual General Meeting is held with shareholders, usually in United Kingdom, but some times this is held in other locations. Here Chief Executive and director take opportunity to discuss and evaluate the performance and accounts of the company. BP has encouraged employees for more that 20 years, to purchase shares in the company on favourable terms, giving them an extra stake in the company’s success.

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