BP Group and Shell International
BP, an integrated oil, gas and petrochemicals major, is structured as outlined in the diagram below:
BP thus has four main 'operating divisions'. We can fairly easily imagine some of their features, we've seen them on the TV or from a passing car:
- in BP Exploration & Production, there are oil platforms and rigs, pipelines and geological survey teams
- in BP Oil, there are refineries, and lubricant bottling plants, petrol stations and aviation refuelling facilities
- in BP Chemicals, there are chemicals works, research laboratories and retail offices
- in BP Gas, Power & Renewables, there are power stations and photovoltaic factories
BP Exploration & Production is the biggest, and by far the most profitable, division. It accounts for 57% of BP's total capital investment. The second biggest area is BP Oil. Gas & power is the newest division, created in the 1990s, it has more recently absorbed the BP Solar enterprise, which accounts for less than 0.2% of total capital expenditure.
See: Financial and operational details on these divisions
BP Group is the most invisible yet MOST important division. It operates largely in just two cities - London and New York. Along with the board of directors and senior executive management, such as the Chief Executive Officer, Lord Browne, BP Group contains the top managers from each of the four operating divisions.
The structure outlined above is not unique to BP, Shell too is organised along similar lines - with Shell International performing a role equivalent to BP Group.
What is the function of BP Group, or Shell International?
Shell International plays a key strategic and co-ordinating role, guiding and directing the operating divisions, and the 'business units' within them. But it also provides three crucial services to the company as a whole globally:
- finance (raising capital, distributing it through the corporation, and accounting for expenditure, tax and profits)
- external affairs (public relations, advertising, sponsorship and brand-building, and relationships with other organisations such as governments, NGOs and cultural institutions)
- human resources (graduate recruitment, employee communications, training, contractual issues etc).
Effectively, just like the Exploration & Production division extracts oil & gas from resource fields around the world, so too the Shell International business units extract and manage resources, albeit intangible ones:
- the finance teams extract capital from the 'resource fields' of the City of London, New York and other financial centres
- the external affairs teams extract 'license to operate' from the resource fields of public opinion in western countries, political opinion in governments and parliaments, strategic support from NGOs
- the human resources teams extract graduate talent, intelligence and training from universities and colleges. They also extract the commitment, loyalty and hard work of company employees.
Read the Fable of the City