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Bp's Culture

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The development of a company mainly relies on its resources. The company can acquire these products in two different ways: Internal development or external development. Either way requires the purchasing of contracts, the establishment of alliances or acquisitions. In their article published in 2010, Capron and Mitchell tried to answer this question: Does a company need to use an internal development or an external development to thrive? What does it imply when it comes to BP?

They came to the following conclusion: according to Capron and Mitchell, a company a joint venture (an alliance) should be created only if a company clearly identifies a resource gap. In this case, the company does not necessarily own these resources. The company does not need to have a close relation with the resource provider, nor does it need to come to an agreement about the resources’ value with the provider.
Therefore, when it comes to BP, Alfa Group and Access Renova Group, what did urge them into choosing the alliance option?

First of all, did BP choose the joint venture option because the company had identified an oil gap?

BP’s activity depended directly on the stock of oil and exploited oil and gas fields in UK, in Norway, in Trinidad and Tobago, in the Gulf of Mexico, in Alaska, in Azerbaijan, in Egypt, in Vietnam, in Angola, in Colombia and in Russia. It is one of the largest energy multinational in the world and has operations in over 80 countries.

But BP, as well as many other companies worldwide, was hit by the growing demand of oil from China and the Middle East countries. Not to mention that BP had to cope with growing difficulties production-wise and environment-wise because of several catastrophes, gas leaks and oil spills that occurred the past decade. Hence BP had to face this undeniable oil gap. Many figures and statistics support this statement. Before the alliance, the increase of total oil and gas reserves was quite negligible compared to the years that followed the establishment of the joint venture: There was a significant increase in terms of oil reserves after the alliance, which clearly boosted BP, which recovered from its production stagnation.

Could internal resources help BP solving this oil gap issue?
Is internal development a relevant way to fill this gap?

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