This is the simplest case, where the gains and losses have been studied extensively.
Internal gains
• Lower transaction costs
• Synchronization of supply and demand along the chain of products
• Lower uncertainty and higher investment
• Ability to monopolize market throughout the chain by market foreclosure
• Strategic independence (especially if important inputs are rare or highly volatile in price, such as REM)
Internal losses
• Higher coordination costs
• Higher monetary and organizational costs of switching to other suppliers/buyers
• Weaker motivation for good performance at the start of the supply chain since sales are guaranteed and poor quality may be blended into other inputs at later manufacturing stages
Benefits to society
• Better opportunities for investment growth through reduced uncertainty
• Local companies are better positioned against foreign competition
Losses to society
• Monopolization of markets
• Rigid organizational structure, having much the same shortcomings as the socialist economy
BP employs nearly 86,000 people, including 14,700 service station staff in Europe and Asia (as at 31 December 2012). The majority of employees are located in the US and Europe. The qualities and abilities of employees have a powerful effect on ability to compete and meet commitments to investors and the wider world. BP provides a range of professional development programmes and training to help employees develop their skills and capabilities. BP has two main business segments: Upstream and Downstream.
The structure of the company
The structure of the company BP has 3 business units, 22 functional divisions and 4 regional divisions.
Business units of the company:
Exploration and production of oil and gas (BP Exploration and Production, including exploration, development and extraction of oil and natural gas production, preparation and transportation of raw materials via pipelines;
Processing and marketing (BP Refining and Marketing), under which the supplies and sales of oil, as well as the production and sale of oil products, including aromatics and ацетилы;
Gas, electricity and renewable energy sources (BP Gas, Power and Renewables), including the marketing and sale of natural gas, liquid condensate and liquefied natural gas (LNG)transportation of LNG and регазификацию and Alternative Energy (BP Alternative Energy).
Functional units provide the work of the three business units and are designed to give coherence of the BP, effective risk management and achieve savings through consolidation of business. Engineering and research works carried out within the group, technological support to all business units. The head of each regional division is responsible for the coherence of business units and functional divisions of the group and BP in its region.
Direct management of the business units is performed by the higher management of the company. The company works with a number of companies not included in the group BP, joint ventures (JV), the majority of those - unincorporated. Other joint venture TNK-BP, are separate companies with their own boards of Directors and management processes, and BP is their shareholder.
Strategy of the company
The company works on the basis of five-year and annual plans of strategic development, pursue 3 main objectives:
Stimulate growth by achieving concrete results, especially in the part of profit by investing in volumes provided long-term growth.
Increase in the dividend per share as part of our policy.
Return to shareholders free cash remaining after reinvestment in the business and payment of dividends.
Product and geographical borders of BP.
Africa
The main activity of the company for production and exploration resources are concentrated in Algeria, Angola and Egypt. In this area the company is represented mainly in the form of joint ventures with local companies.
In other African countries, the company carries out sales of oil, gas and lubricants, as well as recycling of oil products.
Asia
Extraction and exploration in this region is concentrated in China, Indonesia, Vietnam and Pakistan. Significant capacities of chemical production are China, the Philippines, South Korea and Malaysia. The company holds leading positions of liquefied natural gas in China through a number of joint ventures.
In India, the plant is a subsidiary of the company BP Solar» producing solar panels.
In this area the company is actively developing sales of oils and petroleum products. Basic sales are made by China and India.
Australia
Mining and exploration company focused in Australia. A production subsidiary of BP Solar.» Marketing activities of the company focused on Australia and New Zealand.
Europe
The center of all the shopping, legal, financial and a number of other core functions of the company is located in London, in the UK, where the headquarters of BP. In the UK, there were three main research departments of the company.
The activities of exploration and production in Europe is carried out by the company in the North sea (as in the UK and Norway, and the Netherlands.
The company owns a 50% joint venture TNK-BP, which is one of the leading Russian oil company and is among the ten largest private oil companies in the world in terms of oil production.
BP is involved in several projects for the exploration and production of oil in Azerbaijan, and also plays a leading role in the project pipeline «Baku-Tbilisi-Ceyhan. 12 October 2005 in Gardabani in the East of Georgia, held a solemn opening of the export oil pipeline Baku -- Tbilisi-Ceyhan oil pipeline. The total length of the pipeline is 1 770 thousand km, and capacity of the pipeline is 50 million tons of oil per year.
The company's refining and sales distributed throughout Europe, and BP owns or has a participation in the capital of 9 refining plants in the region. Endpoints of the company's sales are presented in a number of European countries. In Germany, BP operates under the brand name «Aral». The company sells oil, lubricants and other products refining oil inEurope, both consumers and organizations.
In the region is one of the production facilities of the subsidiary BP Solar (Spain), and is located several petrochemical plants.
North America
Group of companies BP is the biggest producer of oil and gas and one of the largest distributors of gas in the US. BP is the largest non-U.S. company whose shares are traded on the new York stock exchange. Division of BP Alternative Energy has a center in Houston and the production of solar panels in the United States.
In Canada, the company focuses on the production of natural gas and derived compounds. At present the possibility of creating a joint venture for realization of the project of the North American gas pipeline. Exploration and production are also the main activity of the company in Trinidad and Tobago, where the company is the largest local producer.
South America
The main activity of BP in Colombia and Venezuela is the exploration and production. In Brazil, the company has a joint venture in the field of chemistry and a number of projects on the use of solar energy. In other countries in South America the activity of the company is focused on the sale of oil, grease and oil products.
Manufacturing and sales geography of the BP.
The company's interests in exploration and production of hydrocarbons are presented in 25 countries of the world.
Capacity recycling in 2005 were 2400 thousand barrels per day. The company has leading positions in fast-growing industries as production of aromatic compounds and acetyls. BP is actively strengthening its marketing and manufacturing positions on the markets of Asia.
One of the characteristic features is the active use by the company capacities recycling on the territory of the country of sale.
Below shows the location of the company's production capacities in the world.
