Interim British Petroleum is supported by its energy supply.

 

 

 

 

 Interim Stock Market
Report

Luke Warren (Student Number: 1702122)

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British Petroleum Plc

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contents
Table

 

Introduction to BP Plc……………………………………………………….3

 

Why I Chose to Invest in BP Plc…………………………………………….3

 

PEST Analysis………………………………………………………….    3-4

 

Porter’s Five Forces Model………………………………………………….4

 

Data and Significant Price Movements……………………………………5-6

 

Other Companies Considered………………………………………………..6

 

Competitors………………………………………………………………….6

 

Summary…………………………………………………………………….8

 

Reference List……………………………………………………………….9

 

 

 

 

 

 

 

 

 

Introduction to BP Plc

 

The task we have been
assigned is to invest £15,000 worth of shares into a FTSE 100 company of our
choice. The company chosen by me to invest into is BP Plc. This interim report
is going to cover topics such as why I chose to invest in BP Plc, a PEST
analysis of the company, main competitors of BP Plc, etc. BP Plc is one of the
largest vertically integrated oil and gas companies in the world. The company’s
operations primarily include the exploration and production of gas and crude
oil, as well as the marketing and trading of natural gas, power, and natural
gas liquids. BP operates in Europe, Asia Pacific, Africa, and the Americas. It
is headquartered in London, UK. (Marketline. 2017)

 

Why I Chose to Invest in BP Plc

 

I chose to invest my £15,000
into BP Plc because they are one of the largest oil and gas companies in the UK
and oil prices have a high potential to rise throughout 2018. This would cause
an increase in the price of their shares because if oil prices rise then
consumers will be forced to pay the higher rates without a cheaper alternative
because oil is a everyday necessity that society cannot live without. This
means that BP Plc’s consumer confidence will boost, and the share price will
also increase. (Stephens,
R. 2018.)

 

PEST Analysis

 

A PEST analysis is a way
to determine how four large factors influence a company’s performance. PEST is
an acronym for political factors, economic factors, social factors and
technological factors.

Political Factors: Political factors
of any company include trading policies, inter-countries relations, lobbying,
and many others. Energy markets in the world are getting quite unstable due to
changing oil requirements. The instability of the Chinese economy has created a
lot of unpredictability among several countries. Governments of other nations
are encouraged to choose more sustainable energy forms because of climate
destabilization from carbon dioxide emissions. (Haseeb, 2017)

Economic
Factors: The economy of many countries that depend on British Petroleum is
supported by its energy supply. There are many alternate sources of energy that
are increasing, which could bring along great threats to the BP, however the
growth of these alternatives could be slow and unaffordable for consumers.
(Haseeb, 2017)

Social
Factors: Sustainability has become very important in societies eyes therefore
this has had an impact on the oil and gas industry. In 1992 the Kyoto agreement
was created which caused the emission trading and carbon funds to turn into a
legal requirement. Many of the factors involving average society age, social
attitude, cultural issues, and population growth effect the company socially.
(Haseeb, 2017)

Technological
Factors: One of the many external and environmental factors that affect a
company’s procedures is technology. Technological issues are not a large
problem for BP Plc however they could affect the company in the future, for
example, new technology that could substitute/replace the product BP offers.
(Haseeb, 2017)

 

Porters Five Forces Model

 

Porters
five forces model was created by Harvard University professor Michael Porter to
evaluate a company’s profitability. The model is made up of five sections which
are industry rivalry, supplier power, buyer power, threat of new entry and
threat of substitution.

Industry
Rivalry: The main competitors/rival companies for BP Plc are Shell, Total &
Texaco. There is high competition within this industry/market. (Adamkasi. 2017)

Supplier
Power: As BP Plc is such a large company they are able to negotiate with their
suppliers for lower prices as the suppliers will not be willing to lose their
business with BP Plc. (Adamkasi. 2017)

Buyer
Power: In the oil industry the buyers have high levels of power because it wont
affect buyers to change from using BP Plc’s oil to using another company. There
is no product differentiation between oil companies because they all supply the
same product consumers want, which is oil, therefore it will not affect buyers
to use different oil companies and it doesn’t matter if they are not loyal to
one company. (Adamkasi. 2017)

Threat
of New Entry: In the oil and gas industry there isn’t much threat of new
entrants to the industry because the barriers to entering this industry are
extremely high. (Adamkasi. 2017)

Threat
of Substitution: There is some threat of substitution in BP Plc’s industry.
Some examples of these substitutes are; electric cars, biofuel & other
renewable energy sources. However, the threat isn’t very high because these
substitutes are still in development and not available yet. (Adamkasi. 2017)

 

Data and Significant
Price Movements

The first
significant share price movement was between the dates of 09.11.2017 and
16.11.2017 where the share price value sharply decreased by 23.45 pence from
514.60 to 491.15.  This may have been
caused by several unknown/random factors however one of the things that will
have affected this movement is the fact that the FTSE 100 share price also
decreased throughout the same time period as BP Plc’s share price decreased.
This means that the average share price for every company within the FTSE 100
has decreased which doesn’t necessarily mean that all one hundred company’s
share prices would have dropped, however it is more likely to be cause by a
majority of companies with falling share prices compared to only a small number
of companies with decreasing share prices. For example, if ten out of the one
hundred companies share prices decreased it will most likely not effect the
average FTSE 100 share price.

The second
significant share price movement was between the dates of 07.12.2017 and
21.12.2017 where the share price value steadily increased by 27.75 pence from
491.75 to 519.5. This was probably caused by a large increase in consumer
confidence due to the fact that BP Plc have a “solid balance sheet and asset
base” (Stephens, R. 2018.). BP Plc also has a dividend yield of 6% which can
allow the share prices to increase without causing them to become overvalued. (Stephens,
R. 2018.)

 

 Other Companies Considered

 

BP Plc
was not my only choice of company to complete this report on. The main other
company I considered instead of BP Plc was NatWest, however I realized that
they do not fit the tasks requirements as they are not a FTSE 100 company.

 

Competitors

 

The main competitors for
BP Plc are Royal Dutch Shell Plc & TOTAL. The competitor being focused on
for this report is Shell. The Graph and data below shows how the share price of
BP Plc compares to the share price of Royal Dutch Shell Plc. What is shown by
the graph is that they follow a very similar pattern in a way that as one of
the prices decreases, so does the share price of the other company. For
example, from the 26.10.2017 to 02.11.2017 both of the company’s share price
increased by roughly the same amount however, Royal Dutch Shell Plc has a
higher average share price than BP Plc.

Summary

 

In conclusion I found
that BP Plc’s share price is doing well now and according to my research it is
going to carry on that way throughout 2018. This means that I will hopefully be
able to make a profit from the original £15,000 that was invested.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reference
List

 

https://advantage.marketline.com/,
(2017). BP Plc. Available at: https://advantage.marketline.com/Product?ptype=Companies&pid=7CFAFA91-568A-46F3-BF37-0340DB98E741 Date
Accessed: 25th November 2017

http://marketingdawn.com/, (2017).
PESTLE Analysis of British Petroleum.

Available at: http://marketingdawn.com/pestle-analysis-of-british-petroleum/
Date Accessed: 25th November 2017

Adamkasi. (2017). Porters five forces model of BP Plc.
Available at: http://www.porteranalysis.com/porters-five-forces-model-analysis-of-british-petroleum-bp/
Date Accessed 9th January 2018

Stephens, R. (2018). 5 FTSE 100 shares with
growth appeal. Available at: https://investomania.co.uk/2018/01/5-ftse-100-shares-growth-appeal-hsbc-holdings-plc-bp-plc-unilever-plc-rio-tinto-plc-legal-general-group-plc/ Date Accessed: 11th January 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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