Impact of the merger between British Petroleum Southern Africa (BPSA) and Castrol South Africa on Blendcor (A joint venture between Shell Southern Africa (SSA) and British Petroleum South Africa).

Abstract

Blendcor (Pty) Limited is a joint venture lubricants blending and grease manufacturing plant and equally owned by its shareholders, British Petroleum Southern Africa and Shell South Africa. BP purchased Castrol worldwide in March 2000. The merger of BP and Castrol has created opportunities for consolidation of production at Blendcor. The inclusion of the Castrol lubes portfolio would increase current production at Blendcor to approximately 150 million liters per annum. The purpose of this research is to establish if the merger between BP and Castrol would have a positive or negative effect on Blendcor. We begin this research by seeking an understanding of the strategy framework and its role in assisting a company to achieve its objectives. The framework starts by explaining how strategy is formulated, the development of a vision, mission statement, the examination of the company's external environment, the company's internal environment, the impact of globalisation, the company's long-term goals, and finally organizational structure and leadership. Emphasis is placed on companies that employ Joint Ventures, Mergers and Alliances as grand strategies. The history of the Oil industry in South Africa, the history of Blendcor's partners, a brief history and background of Blendcor, followed by a discussion on the merger of BP and Castrol, and its impact on Blendcor, is examined. Blendcor is then evaluated by conducting a SWOT analysis. It's strengths; weaknesses, opportunities and threats are discussed briefly. The current strategy employed by Blendcor is subsequently evaluated against the suitability criteria. The plant is benchmarked against other plants worldwide in terms of cost and production. The strategy development process at Blendcor is then evaluated to determine the synergies of the leadership team. The merger is then profiled using the PIMS model to determine whether the merger was a good or bad decision. Finally, various recommendations are made to improve the plant and its processes. The replacement of Blendcor's Information system is discussed in length and the lack of a suitable measurement system is highlighted.