Industry Analysis - Application to the Oil Industry Case Study

Industry Analysis - Application to the Oil Industry - Case Study Example Suppliers play an imperative role in the success of any business. As such, a supplier may affect the profitability of a company either positively, by boosting it or negatively, by reducing it. This is what forms the power of suppliers. A supplier has powers to determine the profitability of a company, and in the case of the oil industry, the suppliers of BP can either assist it to become more prosperous and productive or to lose their market and make losses. This stems from the fact that suppliers agree to supply their products to the company at a certain given market price. If they increase the price at which they sell their products to the company, this will reduce the profit margin of BP, and the lack of alternative suppliers, as well as the strong power of the suppliers will bring the profitability of the company down. On the other hand, these suppliers can equally boost the profitability of the company by supplying it with product at a low cost, thereby increasing the companyâ⠂¬â„¢s profit margin and hence boost its profit levels. As such, it is imperative for BP to make the right choices of suppliers in order to secure a significant profit margin. BP sells its products to a wide range of customers. These people bring profit to it by purchasing its petroleum products. Its major customers include airline companies, governments, as well as ordinary motorists and companies. The bargaining power of these buyers is not as strong enough as to influence the selling price as set by BP. BP has sales points in many regions across the world, bearing the fact that it is a global multinational, and it has control over its buyers in almost all of its markets. It is only in some minor occasions where the governments within the markets in which it operates step in to regulate the fuel prices in the country generally, thereby also setting the price limits for the petroleum products sold by BP. However, this only strengthens the bargaining power of these customers to a considerable level, not strong enough to affect the profitability of the company