NEW CHALLENGES FOR OPERATIONS MANAGEMENT

The 'New Economy' Creates New Challenges for Operations Management

The 'New Economy' Creates New Challenges for Operations Management

Summary

In the early 1980's BP Chemicals faces challenges that called for some fundamental changes in its business strategy. The rapid expansion through acquisition in the past five decades has created a company with different cultures. Strong emphasis was on the production of inferior again to seek new sources of competitive advantage, such as an extension of customer service.

Sales managers were dissatisfied with a lower level of support they could offer customers - mainly due to weak integration (both technical and business) from commercial activities. In 1985, BP Chemicals has started an ambitious project, Project Management System (CSP), to integrate all aspects of its international business.

The information system was to be the basis for this project and will enable the organizational changes necessary for such integration. It was believed that as a result of commercial integration will also facilitate the integration of other business processes BP Chemicals and contribute to a unique corporate culture. Complexity and global scale CSP was undervalued, and this caused the project to be significantly delayed, and take over expenditure is several times the original budget. After going through a painful phase of the project, BP Chemicals is now the task to begin a major change in its organizational structure and business process reengineering. These changes, while difficult, will allow BP Chemicals, in order to fully use the benefits of the project.

Company Overview

The British Petroleum Company PLC, large multinational, was established in 1909 to develop its recently discovered holdings in the Middle East. Since then it has expanded its activities in more than 70 countries with more than 130,000 employees - increased due to the strong belief in the importance of diversification. As of 1989 BP managed portfolio of 36 subsidiaries and affiliated companies in broad areas such as oil and gas exploration, production chemicals, and raising breeding livestock.

As a leader in the petrochemical industry, it has a reputation for quality products, commitment to technology innovation, and deep and abiding concern for the environment. In 1984, after four years of the fall in world demand for energy group BP was able to post an operating profit of $ 1.6 billion from the sale of $ 49 billion. That was enough to BP fifth largest industrial corporations in the world (after Exxon, Shell, General Motors, and Mobil) and the second largest outside the U.S... Instrumental in achieving these impressive results was the chairman of BP, Sir Peter Walters. Walters, who became managing director in 1973, vice-chairman in 1980, and Chairman of the Board in late 1981, he was responsible for introducing what is now called the famous "spirit of change." In accordance with this change, particular attention has been focused not on expansion of production; instead, the organization had more profit-oriented thinking. The resulting strategy emphasized diversification through the acquisition and rationalization of existing businesses (Ahmad, 1987, p. ...