The Restructuring of Bharat Petroleum Corporation Limited Essays

The Restructuring of Bharat Petroleum Corporation Limited Essays The Restructuring of Bharat Petroleum Corporation Limited Essay The Restructuring of Bharat Petroleum Corporation Limited Essay Application Exercise Strategic Management Bharat Petroleum Corporation Limited (BPCL), where I am employed, is engaged and exploration, refining, distribution and marketing of petroleum product across the country. In downstream product marketing BPCL, has bouquet of products on offer, ranging from Petrol, Diesel, to Aviation Fuel, to Cooking Gas to Auto Lubricants. It is a global major and ranked 225th in the Fortune Global 500 rankings of the worlds biggest corporations for the year 2012. The ChangeOpening up of the Indian economy in the nineties brought with it more competition and challenges to BPCL, kindled by the phased dismantling of the Administered Pricing Mechanism (APM) on petroleum products and emergence of additional capacities in the region in refining and marketing. Increasing globalisation, new products and services, and innovative marketing resulted in a very market savvy consumer. The production-based success philosophy of marketers was replaced by a customer-oriented philosophy.Bharat Petroleum took cognisance of this situation well in time and took radical steps to keep itself attuned to the changing times, realising that the future belongs to those who listen and adapt to their customers. Application of 7-S Framwork To assess the effectiveness of the implementation approach in BPCL in late 90s, I have applied below the 7-S Framework, which is based around seven key elements of any organisation, with the view that in order for it to operate successfu lly, all the elements in this model must align synergistically together.The factors are split into two groups: hard or soft. The hard elements are those that can physically be seen when in place, whereas the soft are more intangible and cannot readily be seen. Hard Elements| Soft Elements| Strategy| Shared Values| Structure| Skills| Systems| Staff| | Style| Shared Values Shared values are the pinnacle of the model and therefore in any organisation. They form the underpinning culture, strategy, effectiveness and performance, linking to every other element in this framework.They link all that is of the organisation: how people behave, the structure, its systems and so on. Getting this balance right means getting the culture right. In 1996, Bharat Petroleum went through a process of visioning, involving people at all levels, which evolved a shared vision and a set of shared values. Visioning exercise started with the board, facilitated by external consultants. The exercise was extended across the organization in a snowball approach flowing from top management to the junior management, facilitated by the external experts, specifically trained for this purpose.Thus emerged the core of the vision for BPCL which was owned by every management staff. The core of vision as articulated by the organisational members across the organization is given below – Be the Best| Make the workplace exciting| Improve boundary management| Fulfill social responsibilities, be ethical| Apply the best technology| Make systems strong and dynamic| Establish first-class brands and corp. image| Excellent customer care amp; service| Go for excellent performance and operational efficiency| Make people source of improvement|The visioning exercise the provided for articulation and aspirations of the people. The process brought the whole organization out of lethargy, increased the energy levels and expectations on individuals, teams and the organizations. Since, the vision was iterated thro ughout the organization, there was greater buyin for the change. Strategy Bharat Petroleum recognised that all strategic initiatives must conform to the overall vision of the Corporation and improve the economic value.Based on the assessment / visioning exercise carried out across the BPCL, following strategic gaps and opportunities emerged – 1. Collective dissatisfaction with status quo 2. Low customer focus and customer orientation 3. Huge gap between the vision and capabilities to achieve it a. Increase refining capacities to reduce the dependence on other oil PSUs for product support. Invest in refineries to cater to marketing aspirations in south, east amp; north India. b.Backward integration to invest in exploration and production to make up for the margins pressure in down stream activities. BPCL relentlessly worked towards fulfilling these gaps by taking following initiatives – Product Security Initiatives: To improve product security, BPCL acquired two standal one refineries – Kochi refinery (9. 5 MMTPA) in South and Numaligarh Refinery (3 MMTPA) in Assam. Investment in 9 MMTPA refinery in joint venture with Oman Refineries in Madhaya Pradesh to cater to Northern India, where BPCL was dependent on other PSUs for product support.Backend Integration Initiatives: Bharat PetroResources Ltd (BPRL) was incorporated as a wholly owned subsidiary company of BPCL with the objective of implementing BPCL’s plans in the upstream exploration and production sector. The exploration and production activities of BPRL and its subsidiary companies extend to 26 exploration blocks where they hold participating interests (PI). Of this, 11 blocks are in India and 15 are abroad. Besides India, BPRL has blocks in Australia, Brazil, East Timor, Indonesia, Mozambique and the United Kingdom.BPRL’s total acreage in all these blocks is around 68,000 sq. km, of which approx 89% is offshore acreage. These blocks are in various stages of exploration w ith definite finds. Brand Initiatives: In the highly competitive scenario, it has become imperative to own dominant brands. BPCL introduced new generation branded fuels Speed, Hi Speed Diesel and Speed 97, to introduce premium fuel brands in the Country, keeping pace with the technological advancements in the automobile industry leading to introduction of new generation vehicles.BPCL also recognized the customer need for pure quality and correct quantity of fuel for their vehicles and launched the flagship initiative of Pure For Sure (PFS) offering the guarantee of pure quality and correct quantity of fuel to our customers. The petrol pumps displaying a prominent Pure For Sure signage became landmark destinations. Automotive Lubricants Initiatives: Bharat Petroleum launched the full range of Automotive Engine Oils, Gear Oils, Transmission oils, Specialty Oils and Greases under the umbrella brand MAK, offering range of benefits to the users of present day modern vehicles.Structure Th e older structure was functionally organized. There were mainly four functions – Refineries, Marketing, Finance, and Personnel – each headed by a Functional Director. Other support departments like corporate affairs, legal, audit, vigilance, coordination and company secretary were directly under Camp;MD. Whole of India was divided into four regions and further in 22 divisions. Each region was headed by Regional Manager who was incharge of all activities within the region. Across the marketing function, every individual and role was focused on multiple customer segments.Hence, there was low customer awareness in terms if unique needs of different customer segments and marketing strategy was formulated by people who were far from the customer and had low understanding of customers they were targeting. Thus the old structure had created a bottleneck between strategy formulators and implementers in terms of regional structure and between the field staff and the corporate o ffices and the refinery. The early traumatic experience of huge loss in market share amp; profitability in auto lubricants, after it’s deregulation in 1990, forced the strategists for due reflection.BPCL then embarked upon the journey of restructuring. Bharat Petroleum realised that, in the long run, success can only come with a total reorientation and change in approach with the customer as the focal point. In a proactive move to adapt to the emerging competitive scenario and support the emerging strategy (discussed earlier), function-based structure was carefully dismantled and replaced with a process-based one. This made the company more responsive to its customer needs. BPCL therefore was restructured into a Corporate Centre, Strategic Business Units (SBUs) and Shared Services and Entities.The organisational design comprising of five customers facing SBUs, viz. Aviation, Industrial and Commercial, LPG, Lubricants and Retail and one asset based SBU, viz. Refinery, is based on the philosophy of greater customer focus based on the specific needs of each customer segments. Systems Bharat Petroleum has always been on the forefront of harnessing technology initiatives for BPCL has been on forefront in harnessing technology, maximising efficiency and achieving greater customer satisfaction.Bharat Petroleum became the first PSU to implement Enterprisewide Resource Planning (ERP) solutions SAP. The challenge of SAP implementation was to ensure that all the integrated elements work seamlessly across the length and breadth of the country, including the remote locations. Bharat Petroleum reaped huge benefits of the integrated system in many areas of its operations like, tracking customer-receivables, monitoring credit-management, inventory management, besides easing the operations in a large number of areas. SkillsAs a Strategic Business Partner, HR supports skill-upgradation and multi-skilling of staff by identifying target segment and requirements from each SBU, evaluation of on the job performance post deployment in the job requiring those skills sets. BPCL designed Structured Standard programs’ which is implemented across the organization on BPCL Core Values amp; Culture / Identification and Development of Talent / Coaching Skills / Understanding of PMS Process and its timeliness / Understanding of New Manager Assimilation Process for Senior Managers having experience of handling a team.Impact of training is assessed and evaluated through proper framework. HR designed integrated Talent Management process with 360 degree assessment of all management staff on competencies, engagement and aspiration. Based on these inputs, individual development plans are designed. The purpose of the exercise is to ensure that talent is retained, encouraged and groomed to take over leadership position in near future. Staff Various HR initiatives were also taken by BPCL. Some of them are listed below –Engaging Employees: BPCL realizes tha t event based engagement is not sufficient instead employees needs continuous engagements so that their grievances are addressed, they are hand held, if needed, feel secured and appreciated and get committed to their work and corporation. Performance Planning amp; Appraisal System: PMS system in BPCL facilitates achievement of the Vision and Business Plans of the Corporation and foster development of every management staff, thereby gaining competitive advantage in the industry.The objectives of PMS in BPCL is to create awareness of Corporate and SBU/ Entity goals, translate such goals into tangible objectives and measures at the individual level through discussions between Appraiser and Appraisee, identify managerial attributes/ competencies for each role necessary to achieve the goals, establish a formal process of continuous feedback on performance and identify developmental plans to enhance performance.Manpower Planning: Based on inputs from SBUs / Entities, HR either relocate th e already employed resource from other facility, based on the strength of the employee and the job requirement or initiate the process of recruitment. Career Planning: To bring HR closer to work place, BPCL has embedded HR with each SBU / Entity, who hand hold these set-up in HR matters in consultation with central HR set-up.Every year, embedded HR, alongwith corporate HR to discuss the talent development, career planning of individual staff to decide on inter-functional movement and short to long term career path. Conclusion The Quantitative impact of re-structuring, which placed BPCL ahead of its time among Oil PSUs, has been amazing over the period of time and helped it embark on path of successive progress.