Bp Structure

P structurePrevious Structure:

From the mid-1970s, BP's strategy of diversification led to the inclusion of new business areas, such as minerals, coal and chemicals. Till 1992 BP had Business units consisting of hierarchical structure and the central functionaries.

Reasons for Change:

The early 1990s saw a lot of happenings in the economic, political and trade circles which considerably affected the market scenario. Petroleum industry was not spared of the sudden change of matters. BP accordingly revised its strategy in anticipation of global industry consolidation and a shift in consumer preferences. BP had a bureaucratic model. This resisted the growth efforts. Because overlapping responsibilities made it difficult to match executive’s accountability with their spans of control and performance was not monitored in sufficient detail to be actionable.

In considering structural changes to prepare for and prosper from market changes, BP recognized the following challenges:

Uncertain Accountability—If it goes for a more diverse and complex organizational structure, it would make the corporate center more difficult to ensure accountability of individual business units.

Less Transparent Corporate Capabilities— The corporate center’s ability to understand business unit needs and capabilities would be challenged by the decentralization and greater organizational complexity.

New structure:

A flatter structure was put in place which eliminated any elements that obscured accountability, gave business unit leaders narrowly defined responsibilities and direct reporting to top management. The number of management levels was reduced from 13 to 5. It includes the following structural elements:

1. Four business divisions that coordinate interactions of business units with senior management and which are also authorised to pursue cross-industry opportunities

2. Asset-centred business units that are transparent to their managers and whose performance...