Strategic Operation Management Case Study, ASB, Malaysia The company that would become BP was founded in 1909 as the Anglo-Persian Oil Company shortly after Englishman William

The company that would become BP was founded in 1909 as the Anglo-Persian Oil Company shortly after Englishman William Knox D’Arcy struck oil in Iran after an eight-year search. In its early years, profitability proved elusive for APOC and, in 1914, Winston Churchill, who was head of the British Navy and believed Britain needed a dedicated oil supply, convinced the British government to buy a 51% stake in the nearly bankrupt company.

The British government’s majority ownership of BP lasted until the late 1970s when the government, under Prime Margaret Thatcher, a proponent of privatization, began selling off its shares in an attempt to increase productivity in the company. When the government sold its final 31% share in 1987, BP’s performance was floundering. The company’s performance continued to decline as a new private company; in 1992, BP posted a loss of $811 million. Nearing bankruptcy, the company was forced to take dramatic cost-cutting measures.

Things started to improve measurably in the mid-1990s. With a streamlined workforce and portfolio of activities, BP’s new CEO began implementing an aggressive growth strategy, highlighted by mergers with rivals Amoco in 1998, and ARCO (the former Atlantic Richfield) in 2000. Along with focusing on growth, BP began repositioning itself. In 2001, the company launched the new tagline “Beyond Petroleum” and officially changed its name to “BP.” The associated green branding campaign indicated that BP wanted to be known as an environmentally-friendly oil company.

Over the next decade, the company launched an Alternative Energy division and was, for a time, the world’s largest manufacturer of solar cells and Britain’s largest producer of wind energy. BP invested $4 billion in alternative energy between 2005 and 2009. BP’s total company investment over the same time period was $982 billion.

In May 2007, Tony Hayward, who had been chief executive of Exploration and Production (BPX), replaced John Browne as CEO. Hayward marked his appointment with a speech pledging to “focus like a laser on safety issues, put the brakes on growth, and slash production targets.” Hayward was able to improve corporate performance, in part, by dramatically shrinking the Alternative Energy division and further reducing headcount at both managerial and lower staff levels.

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