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The sale of Burmah Castrol to BP Amoco

Group 3:

Cao Thanh LanNguyen Doan Ngoc HienNguyen Thi Hoai Thuong

Contents Introduction Burmah Castrol in 1990s Burmah Castrol timeline Transformations in 1997 Recommendation to Tim Stevenson Recommendation the sale of Burmah Castrol Issue of BP since acquired of Burmah Castrol Strategy of BP Recommendation issue of BP

Introduction The company was

founded in 1886 The company is the

world’s leading supplier of automobile and motorcycle lubricants.

It has more than 150 subsidiaries operating in about 55 countries

Business bought included Castrol, signal oil and gas.

BP called the Anglo -Persian Oil Company, later became British Petroleum

In 2000, BP agreed to purchase Burmah Castrol

Burmah Castrol in 1990sStrengths Weaknesses • Very successful developing world

position, particularly in Asia Pacific.

• Acquisition ability• Chemicals became higher

performer through cost cutting

• Reduce in share price in Castrol• Lack of vision that affected

company internally.• Not being market responsive

Opportunities Threats • Expansion• Implications of conglomerate

creation• Ability to improve operating

efficiency.

• Over-expansion could have impact on management

• Substantial (75%) dependence of total profits on singular tier within the structure

Burmah Castrol timeline

Before 1997: Expansion and focus on acquisition to engage

into chemical sector, conglomerateAfter 1997:

Selling most of the companies that they bought before recession

Breaking off into two divisions Expanding chemical division by buying out new

companies

Transformation in 1997

Redesigned strategy Lack of decision marking process shareholders value as a driver force to the

company operations and profit generation Appearance of decentralized business to focus on

local customers with increased attention.

Recommendation to Tim Stevenson

Initially approach other major player. Fusion development

Recommendation the sale of Burmah Castrol

They should face of value provision to shareholders, big competitors and their ability to utilize economies of scale.

They should improve ability to strategically ally with major competitors.

Issue of BP since acquired of Burmah Castrol

The acquisition, which was finalized in mid-2000, gave BP Amoco the second largest market share in lubricants in Europe.

It allowed the company to reduce costs by eliminating redundant jobs

Strategy of BP

Over the first 3 years of the 21st century: To increase its gas marketing and trading business by 9 to 11 percent annually.

Expected its retail petroleum business to grow by only 3 to 4 percent annually.

In 2003: BP estimated gas to account for more than 40 percents of its daily hydrocarbon production.

Recommendation issue of BP

BP should invest much on renewable energy sources.

The strategy should also establish a body of expertise in greenhouse gases.

The CEO should ensure more investment in the pipeline.

The company should increase expenditures on infrastructure maintenance and employee safety.