Business Case Analysis of Tnk-Bp Essay

2482 Words Feb 8th, 2013 10 Pages
TNK-BP is a joint venture company owned by British Petroleum, more commonly known as BP,

and the Alfa, Access/Renova group, more commonly known as AAR. Both BP and AAR each own 50% of

TNK-BP. TNK-BP was created in 2003 after a merger between BP and TNK that settled the dispute

between the two companies over Sidanco and its subsidiary Chernogorneft’s ownership that had been on-

going for years. The partnership combined BP’s knowledge, equipment, and experience; and Russia’s new

supply of oil fields. The business relationship that seemed to begin as a win-win for both parties has seen

its share of issues over the years.

Being a profitable business has not seemed to be a problem that TNK-BP has faced. From 2002-

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BP however, wanted to stay in Russia because of the oil that was there so they seemed to just take the cards

that they were dealt and attempt to make something out of it.

Russia was a communist country known as the USSR until the fall of the Berlin Wall in 1989. A

communist government holds all businesses as a public entity: the government controls business. Although

Russia is no longer a communist government, they have not completely evolved into a democratic republic

either. They are still in transition and somewhere in between the two, and so are the people and its culture.

The culture of Russia during communism was clouded with fear and government control. One does not

simply wake-up the day after the fall of communism and become no longer afraid and free. Change takes

time, especially cultural and political changes.

A joint venture is a strategic alliance between two or more organizations that establishes a legally

autonomous organization in order to share resources and capabilities to compete in tentative markets. The

joint venture between AAR and BP brought together AAR’s resources of oil and contracts and BP’s

capabilities of tacit knowledge of the business. This would seem to be a match made in business heaven.

However it became more of a match made for divorce court. Constant disputes and arguing have plagued

this 50/50 joint venture from the beginning.

TNK-BP was created to settle the

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