British Petroleum case study- Leadership

Essay by alanfayaUniversity, Master's March 2006

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Question 1:

Describe British Petroleum's overall strategy with respect to organisational and management processes since Horton's appointment as CEO.

Before Horton's arrival as CEO in 1990, British Petroleum had begun to diversify into related and unrelated businesses which were gathered under the firm's umbrella of "international businesses". This strategy translated the firm's desire to decentralize its current organization which was too centralized up until then.

However, the results were not those that were hoped for. Instead of continuing in this direction, when Horton arrived, vision began to focus on short term strategies, thus resulting in a very centralized organization. Indeed, the stragey became focused on daily operations in each major business of each country that the firm was operating in. This problem could be due to the fact that Horton was applying American management methods, which were based on short term in order to be more responsive to the different markets.

Nevertheless, this strategy was quite detrimental to the firm, which was a British firm and was not receptive to this type of management. Furthermore, the very hierarchical structure of the firm did not allow informtion and communication to flow easily within British Petroleum.

In 1992, with the arrival of another CEO, David Simon, British Petroleum's strategy and structure started to change in a direction which was much needed. Indeed, Simon tried to reduce the layers of hierarchy within the company, but he also implemented a long term stategy for the firm called the "1-2-5" strategy. This strategy was based on cutting costs, reducing the middle management staff considerably and downsizing the rest of the workforce as well. Several changes surfaced in British Petroleum's core interests such as narrowing down and regrouping its business in three, well determined divisions: exploration, oil, and chemicals.

Later, in 1996, British Petroleum...