Dividend Policy Case Study Example | Topics and Well Written Essays - 1500 words

Dividend Policy - Case Study ExampleThe 1970s was the decade of the two great oil price shocks (1973 and 1979/80) that were to have serious effects on the worlds economies. It was also a decade when the major oil companies saw a decisive change in their old concessionary relationships. Like its major competitors, BP lost at once access to most of its supplies of OPEC oil as the OPEC countries took control of production and prices.The 1973 price explosion had a dramatic effect on demand. BPs oil sales started travel for the first time since 1952 (with the exception of 1957, the year of the Suez crisis). By 1978, sales had recovered somewhat but then came the Iranian revolution and another major modernize in the price of oil. In 1979, BP suffered further blows when its assets in Nigeria were nationalised and its supplies from Kuwait cut back. By 1980, its sales were down again.The entire oil industry was affected by the events of the 1970s. But thanks to BPs large investment program me in areas outside the Middle East, the company showed, as it had done in Iran in 1951 that it could survive. As noted, of divulge importance were the developments of its oilfield discoveries in the North Sea and Alaska. In the autumn of 1975, BP pumped ashore the first oil from the North Seas UK sector when it brought the Forties field on stream. This field development was financed by a bank loan of 370 billion, then the largest wholly-private bank advance ever arranged. At its peak, Forties produced half a million barrels a day, equivalent to one-quarter of the UKs daily oil requirement.Today, BPs other oil- and gas-producing countries include Abu Dhabi, Australia, Colombia, Norway and Papua New GuineaThe spirit of enterprise continues (mid-1970s - today)Diversification and a new organizeThe upheavals of the 1970s led BP to conclude that it should broaden its activities so that it could operate in the future with more balanced sources of income. Accordingly, from the mid-1970s there was increased emphasis on variegation into new areas of activity.BPs entry into the nutrition business originated in the 1950s, when the companys French researchers began to develop a process for converting oil into protein. Although the process was later discarded, BP developed other interests in nutrition. From the mid-1970s, it became involved in animal melt down, animal breeding and consumer foods and related products. As a result of the purchase in 1986 of the US company, Purina Mills, BP Nutrition became one of the worlds largest feed millers. In 1990, it also took responsibility for BPs household cleaning and personal care products -- successors of the old detergents business.Another industry which BP entered in the mid-1970s was minerals. BP expanded its minerals interests considerably in 1980, when, in what was then the London stock markets largest-ever takeover bid, it bought Selection Trust, the British-based mining finance house. In the following year, Standard O il