BUSINESS AND Financial analysis OF BRITISH PETROLEUM WITH COMPARISON TO SHELL PLC
Business and Financial Analysis of BP with comparison to Shell PLC 2011 1 Dissertation Topic BUSINESS AND Financial analysis OF BRITISH PETROLEUM WITH COMPARISON TO SHELL PLC Supervisor: - Mr. John Waites Submitted By AAMIR YAQOOB University ID: - 1092187255350 Year: 2011 Submitted in accordance with the requirements for The degree of MASTER OF BUSINESS ADMINISTRATION At the UNIVERSITY OF WALES Business and Financial Analysis of BP with comparison to Shell PLC 2011 2 ACKNOWLEDGEMENT: In the name of Allah (God) the most Beneficent the Merciful All praise to Allah, the Almighty, on whom ultimately we depend for sustenance and guidance. First and special I offer sincerest thanks to my research supervisor MR. John Waites, who really supported me in my research work and guide me with patience and devotion to complete it to his best level, I found him not only a good research supervisor but also a good friend who really guide me in friendly way, Secondly Dr. Ana-Maria Pascal who also guide me to complete my all thesis and approve it for final submission. I also convey special thanks to my elder brothers Mr.Sohail Yaqoob and Mr.Javed Yaqoob for their indispensable help dealing with funds, special care and politeness. I realise that without their efforts, it could have not been possible for me to do MBA from UK. I would like to special thanks to my cousins Mr.Zafar Iqbal and Mr.Nasir iqbal who really help me with special care and pay my attention towards my degree, I also thanks to my friend like Mr.Naveed Zahid who support me during my work and guide me to choose right topic for my dissertation. Special thanks for my classmates and group members Mr.Abdul Hameed, Mr.Paramjit Singh and Mr.Ali Warraich who really make it possible to arrange group study and show their interest in group work, meetings and presentation. Business and Financial Analysis of BP with comparison to Shell PLC 2011 3 Finally, I am thankful to academic and administrative staff at LCB and University of Wales who gave me an opportunity to complete my degree from one of the best intuition in UK. Who designed and managed such an interesting MBA program which helps me in my career development. I offer my Special thanks to Dr.Ana-Maria Pascal (Principal and MBA Director of LCB) and all Professors and Lecturers. Your efforts and hard work will always be remembered. Dedications: This thesis is dedicated to My Father and Mother who has supported me all the way since the beginning of my life. I won‟t forget their sacrifice, love, motivation and inspiration in building up my character and personality. I would also like to dedicate my research work to my brothers and sisters who always pray for me and for my success as well. Business and Financial Analysis of BP with comparison to Shell PLC 2011 4 EXECUTIVE SUMMARY This report is about the financial and business analysis of British Petroleum with compare to the similar type of company Shell PLC, which are the world‟s 2 nd and third largest Oil Companies around the globe. Both the companies are the giant of the petroleum industry. The British petroleum in the recent past few years affected by the large oil Spill of the history named as Deep water oil Spill or BP Oil Spill. The losses from this are not only to the BP itself it has affected the environment and marine life also. The environment and the marine life have recovered from this loss but the BP is still impacted from this painful event in the past. The Shell PLC in comparison is doing the business at its high performance and is in level of British Petroleum in providing the services to the petroleum industry. Business and Financial Analysis of BP with comparison to Shell PLC 2011 5 List of Abbreviations Used PLC Private Limited Corporation BP British Petroleum APOC Anglo-Persian Oil Company AIOC Anglo-Iranian Oil Company ROA Return on Assets BA Business Analyst BUC Business Use Case Business and Financial Analysis of BP with comparison to Shell PLC 2011 6 List of Contents Chapter 1 Introduction 10 1.1 Introduction 11 1.1.1 Definition – Financial Analysis 12 1.1.2 Background 13 1.2 The Significance 14 1.2.1 Financial Analysis 14 1.2.2 The Scope – Oil spilt in the Gulf 15 1.2.3 Issues – brief overview of Topic 15 1.2.4 Limitation of this research–a clear statement of the dissertation 16 1.3 Research Questions 16 1.4 Research Objectives – reasons for the investigation and Purpose of the study 17 Chapter 2 Review of Literature 18 2.0 Company‟s Overview 19 2.1 British Petroleum 19 2.2 Shell PLC 20 2.2.1 Efficiency 25 2.2.2 Financial Ratio 25 2.2.3 Profitability Ratio 25 2.2.4 ROA 26 Business and Financial Analysis of BP with comparison to Shell PLC 2011 7 2.4.5 Accounts Receivable Turnover (Credit Risk) 26 2.4.6 Steps for Financial Analysis 26 2.3 Business Analysis 30 2.4.1 Business Analysis (BA) 30 2.4.2 Methods for analysing business responses for an event 31 2.4.3 Organizing the Analysis 32 2.4.4 Learning from the experiences 32 2.5 Modelling 33 2.6 Summary – overview to the subsequent section 34 Chapter 3 Research Methodology 35 3.1 Introduction 36 3.2 Choice of Sector 36 3.3 The Choice of the Organization 36 3.3.1 Financial Sector 37 3.4 Information Congregation 37 3.5 Method of Research 39 3.6 Data Collection 39 3.6.1 Primary Data Collection 39 3.6.2 Designing of Questionnaire 40 3.6.3 Surveys/Questionnaires 41 3.6.4 Collection of Secondary Data 43 3.7 Method of Data Analysis 43 3.7.1 Reliability of Data Collected 43 3.7.2 Validity of the data 43 Business and Financial Analysis of BP with comparison to Shell PLC 2011 8 3.8 Population Study 44 3.9 The Introduction of the Chapter That Follows 44 Chapter 4 Data and Analysis 45 4.1 Introduction – Data Analysis 46 4.2 Collection of Data Methods 46 4.2.1 Wide-ranging interviewing 46 4.2.2 Surveys 46 4.2.3 Company Yearly Reports 46 4.3 Financial analysis of the British petroleum with comparison to the Shell PLC(From Annual Financial reports of the Respective companies) 47 4.3.1 Assets 47 4.3.2 Liabilities 47 4.3.3 Liquidity 48 4.3.4 Equity Share Capital 49 4.3.5 Fixed Interest bearing Funds 50 4.3.6 Capital Gearing Ratio 50 4.3.7 Deep-water Oil spill Effect (BP Oil Spill) 51 4.4 Presentation of Data (From Questionnaires) 54 4.4.1 Working Environment 55 4.4.2 Financial Analysis 56 4.4.3 Business Analysis 68 4.5 Strategic Policy of the Companies 69 Chapter 5 Conclusions 70 5.1 Investigation and argument of outcomes with position to Purpose of the study 71 5.2 Issues from the literature review 71 5.2 Recommendations 74 5.3 Suggestions 74 5.3.1 Through joint ventures, BP can enter the oil sands Business and Financial Analysis of BP with comparison to Shell PLC 2011 9 Production markets 74 5.3.2 Business Strategy 75 5.3.3 BP can Restructures its Alternative Energy Operations 75 5.3.4 Take Charge of its Cash 75 5.3.5 Manage inventory 75 5.3.6 Areas for the Further Research 75 References 77 Appendix 80 Appendix 2: Questionnaire 80 Business and Financial Analysis of BP with comparison to Shell PLC 2011 10 Introduction „‟In the introductory chapter we will give overview of the research topic, its problems, aims and objectives along with hypothesis.‟‟ [...]... better understanding of the financial analysis and business analysis the researcher has made a comparison of the British Petroleum with the Shell PLC which is also very large Petroleum Company and having the same business and financial structure as that of the British Petroleum The financial analysis is usually referred as the viability, stability and profitability of a business and business analysis usually... Business and Financial Analysis of BP with comparison to Shell PLC 2011 A CLEAR STATEMENT OF THE DISSERTATION: The main purpose and the objective of the study are to study the financial and business analysis of the British Petroleum with comparison to the Shell PLC And also the various financial transactions and their effects on the company On the basis of the analyzed factors and stimulating effects to the... 3rd Layer Financial Analysis: The above figure depicts the following scorecards analysis of ratios breakeven analysis and various trends 24 Business and Financial Analysis of BP with comparison to Shell PLC 2011 The overall financial ratio analysis is done for the purpose of the income statement analysis and balance sheet analysis and with the supporting element of the financial scorecard tool to provide... chapter of the research‟‟ 18 Business and Financial Analysis of BP with comparison to Shell PLC 2011 COMPANY’S OVERVIEW 2.0 Both of the companies are doing petroleum business and are wide in their performance and capabilities of doing business They are considered as giants of the petroleum business as they are providing the Petroleum products at very vast range British Petroleum and the Shell PLC are... rudiments and icons of the business and financial analysis, there effects and significance in the pertinent field 17 Business and Financial Analysis of BP with comparison to Shell PLC 2011 R evi ew o f L i t er a t u r e „‟ This part of the research will intricate the different terms employed by the BP and Shell PLC in terms of Business and Financial Analysis Moreover their strategic positioning and the... quantitative research for both of the Petroleum companies is also discussed in terms of Business and Financial Analysis. ‟‟ 35 Business and Financial Analysis of BP with comparison to Shell PLC 2011 1.1 RESEARCH METHODS- INTRODUCTION Topic Assortment The selected topic Business and the Financial Analysis is very much perceptible in the arena of commercial and pecuniary sector for most of the administrations... the British Petroleum one of the largest Petroleum Company around the world and has taken the Shell PLC as in comparison with the similar type of company as British Petroleum in terms of its services and product manufacturing The reason for selecting the larger Petroleum companies is to get the clear understanding of the financial and business matters of the company and the in comparison the Shell PLC. .. experiment and the subsequent measurement Erwin Schrodinger 11 Business and Financial Analysis of BP with comparison to Shell PLC 2011 FINANCIAL ANALYSIS: The deep-seated idea behind the financial reporting is to endow with the weight of judgment to the informed reader The financial analysis which the majority of the companies do is to test out the profitability of the company in short and long term... analysis usually referred to as a fulfilling needs and requirements of a business by identifying the various business solutions during the ongoing performance of the company 13 Business and Financial Analysis of BP with comparison to Shell PLC 2011 BREIF HISTORY The British Petroleum is very historical and large and historical company and was established ion way back in 1901 in name of Anglo Persion Oil... research on the British petroleum in terms of financial and Business analysis in comparison with the Shell PLC the researcher has the following questions on which researcher wants to work and analysis the data gathered to present a comparison of these two big Oil /Petroleum companies The questions for the research are What is financial analysis? Explain the financial arrangements of BP and SHELL? How . Business and Financial Analysis of BP with comparison to Shell PLC 2011 1 Dissertation Topic BUSINESS AND Financial analysis OF BRITISH PETROLEUM WITH COMPARISON TO SHELL. the objective of the study are to study the financial and business analysis of the British Petroleum with comparison to the Shell PLC. And also the various financial transactions and their effects. rudiments and icons of the business and financial analysis, there effects and significance in the pertinent field. Business and Financial Analysis of BP with comparison to Shell PLC 2011