BP Oil began In Persia in 1908 with their discovery of oil. This company is based out of the United Kingdom and spans across the globe worldwide. It would be beneficial to BP to take the vertical integration approach. Right now they outsource the development of the blowout prevention parts as well as the rig rentals. In the case of the BP oil spill in 2010, because these things were outsourced, BP had no control over the quality of work that was being provided. Transocean was the drilling rig owner and the other two suppliers were Haliburton Energy Services for providing the cement casing for the rig as well as Cameron International Corporation who sold the blowout prevention equipment to Transocean, which ultimately ended up failing and causing the enormous spill. This is not the first major spill that BP has had. They would stand to benefit from Vertical Integration. If they could manage to, over the next few years, get their own rigs as well as manufacture their own equipment for the rigs, they would be in control of the quality output and the kind of craftsmanship that is going into their business. It may be a few dollars up front but with the amount of payout that happened with the spills, it could save them the money on the back end.

BP's daily average production has steadily declined by 22.39% between 2009 and 2018 while Shell has managed to increase its capacity by 14.64%. If BP would make some strategic changes as to their ownership of the production equipment, I believe that their production capacity could be elevated to higher point than Shell's since they would be in charge of the quality of workmanship that goes into each rig and could make the changes to prove they could be capable of producing more than their competitors.

Reference:

Ketchen, D., Short, J., Try, D., & Edwards, J. (2014, September 12). Vertical Integration Strategies. Retrieved July 29, 2020, from https://opentextbc.ca/strategicmanagement/chapter/vertical-integration-strategies/

Vara, V. (2020, January 31). BP vs Shell - whose business is better and more efficient? Retrieved July 29, 2020, from https://www.offshore-technology.com/features/bp-vs-shell/

The new millennium - 2000-2012: Who we are: Home. (n.d.). Retrieved July 29, 2020, from https://www.bp.com/en/global/corporate/who-we-are/our-history/the-new-millennium.html

I agree with you. looking at past two major spills and accidents faced by GP it is only smart to not outsource the equipment's and instead from the expense of covering up such huge spills can they themselves produce their equipment and control the crafts man ship. Looking at the positive side of this plan if they are successful in producing thief own equipment and start their production they will in full control of their quality which will lead them forward and on top in market compared to its competitors. But a risk still exists about the degree of success in this case.

One can't be sure of whether another spill won't happen when they are producing on their own. Because given their past experience it has happened twice in many years which wasn't on purpose, but merely careless job done by their clients. There is no surety that won't happen on their own. And thus, given the fact they have already spent a lot on two spills right now maybe is not the right time to implement his strategy and thus an alternative can be looked for. They can go ahead to look for manufacturers in market with very less degree of spills and accidents. Which will not only make them not spent a lot many dollars but Will gain them new clients who will from start work hard not to repeat the past experience faced by the company. Strategy to look for new best manufactures to work for your outsourced process is a better strategy to implement as it won't either cause money problem neither will have a huge risk of another mistake.

I can agree with you that they did put out a lot of money after the spill so now may not be a good time to start the vertical integration but, I can tell you, my family was personally affected. Because of this, my father was part of the settlement and it was not only BP who had to pay the ones affected. Transocean had to pay also. This makes me wonder that while we are thinking that vertical integration makes sense, are they still contracting the other services out so they won't be solely liable if/when it happens again and instead would share some of the blame as they did previously. What do you think?

This makes me wonder that while we are thinking that vertical integration makes sense, are they still contracting the other services out so they won't be solely liable if/when it happens again and instead would share some of the blame as they did previously. What do you think?

What do you think about the last few sentences?

pur-new-sol

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