Free Case Study On British Petroleum Company- Case Study

British Petroleum (BP) is an energy company, ranked as the third largest in the world. It undertakes oil exploration, refining, and the sale of oil products. The energy industry exposes the company to numerous risks and uncertainties in the exploration, extraction, refining, and sale of products (Bamberg, 2000 p.34). BP has however managed to maintain its top position in having a 100% oil reserve replacement for 17 years. Despite the efforts to maintain safety precautions, unfavorable events have followed the company’s operations. One instance is the explosion in the Gulf of Mexico where the company was drilling in 2010 (James, 2012 p.120). During the explosion, workers lost their lives, and a major oil leak followed. The disaster ranked among the largest oil leaks and environmental pollution disasters in the US. This was however not the first environmental disasters that the company has caused, in 2005; it was involved in yet another accident.

Problems

In response to the environmental crisis, there emerge various problems evident in handling the situation. Communication is the major problem affecting the company’s operations and particularly its response to crisis. Communication challenges changed the speed at which the company responded to the disaster. During the oil spill in 2010, the company engaged an unreliable spokesperson who reduced the level of confidence the public had in the company (Peppas, 2011 p.97). During this time, BP lost its positive public image and tarnished its reputation by causing the oil spillage, loss of lives, and its response to the disaster (Black, 2011 p.42). Communication breakdown denied the public reliable information on the progress of crisis management and the efforts of the company in mitigating the negative effects. The lack of using available communication channels to their advantage such as the social media platform further accelerated the miscommunication and left room for speculations. This therefore translated into the loss of goodwill among the public and the company acquired a negative image that would take years to repair.
Disaster preparedness is an important aspect of an organization with previous experience in disasters. The energy industry is full of risks and BP already had this knowledge from previous incidents of environmental disasters. Having unfavorable experience required the company to have adequate measures for crisis management. This would require having a system to anticipate disaster, have a communication plan, train workers, and have a public spokesperson. In 2010, the company failed to demonstrate their preparedness to crisis despite their previous exposure to a similar event (Ferrier & Bamberg, 2000 p.57). This painted the company in a negative image since it meant that the management had not learned from previous experiences, and it demonstrated their lack of seriousness when dealing with disasters.

Justification of Problems Definition

Planning is the basic function of the management upon which other functions of organizing, controlling, and directing emerge. Management process must, therefore, start with proper planning for the future of the organization. In this case, BP needed to have a comprehensive plan to anticipate risks, deal with them, and mitigate their effects. Lack of a plan derailed its response to the disaster in which Eleven workers lost their lives. Crisis management is a necessity for a company operating in a highly unstable industry (Fink, 2000 p.101). This is due to the high probability of the occurrence of risks with a high magnitude of effects. Lack of a plan to deal with disaster was the cause for the delayed response to the event hence the chronic loss of confidence among the public.
The corporate image determines the performance of the business since it directly affects the level sales revenue and the attitude of various stakeholders. The lack of a proper crisis management plan and communication channels had a negative impact on the company’s image and reputation. The negative messages circulating on the social media platform had a lot of damage to the image, which would take years to rebuild. Image can be easy to destroy but very difficult to restore hence the company would require a comprehensive strategy to restore confidence among the public (Longhurst, 2001 p.47).
The natural environment protection should be a priority of every government and organization. BP relies on the natural resources to run its operations and environmental conservation should therefore take priority in their operations. The oil spillage had serious implications on the natural environment felt up to date due to long lasting effects on industries such as agriculture and fishing (Eargle & Esmail, 2012 p.71).
Any event with expected negative implications on the environment requires urgent attention to eliminate its occurrence or reduce its impact when it occurs. Some damage to the environment is irreversible hence; prevention becomes the strategy of choice to avoid permanent damage to the environment. Public relations gimmicks cannot turn away the focus from the actual damage resulting from the oil spillage, and the company should, therefore, take responsibility and ensure avoidance of such disasters.

Potential Solutions

Technology level emerged as a point of concern during the oil spillage evaluation with experts attributing the disaster to reliance on old fossil-based technologies. The use of this technology in ambitious oil extraction procedures caused the oil spillage. Solution to this problem, therefore, involves the adoption of sophisticated technology to monitor the oil drilling to eliminate the possibility of spillage. Workers should attend training sessions to understand the operation of the technology and its use in the management of various situations. The technology can also detect leakages in time for corrective measures to prevent large-scale disasters (United States, 2011 p.11). It can adequately support the complex operations involved in oil extraction and facilitate planning for the drilling operations.
Setting up a public relations department within the organization can help manage the communication to the public. The department can act as a link between the organization and various stakeholders; consumers, investors, creditors, and the public. Communication has the potential to make or break the company in terms of its image and reputation (United States, 2012 p.27). Having a responsible party to relay information to the public on a timely basis can help in reducing uncertainty and speculations.
Management of the social media platform is a crucial element in modern organizations since this is the platform where people from all corners of the globe hold discussions on trending events. Engaging the public on social media and offering them updates on crisis management can help in saving the company’s image. Internal communication channels are also important when dealing with a crisis since it influences the speed of response to the situation. Efficiency in communication eliminates time wastage by offering timely and correct information to relevant persons. This can involve having emergency numbers that the workers and the public can use to report suspicion of oil spillage, among other problems. This can speed up the response to these problems and prevent a crisis.
The management team should design a crisis management plan that enables the company deal with the crisis. The plan should indicate ways in which the workers can prepare for a crisis and detect areas that might involve major risks (Regester & Larkin, 2008 p.69). Identifying risky areas and operations facilitates preparedness for unfavorable events such as a leakage. The plan should also indicate the required approach to communication in case of crisis to inform necessary parties of an emergency. Communication channels should also address informing the public of the crisis and deal with queries and concerns raised by relevant parties. This can help in managing the information available to the public concerning the situation and instill confidence that the company is handling the situation. The plan should indicate how to recover from crisis so that the company can reclaim its reputation. It should, therefore, cover actions before the crisis, during the crisis, and after the crisis.

Key Elements of the Case

The case covers disaster preparedness and crisis management of the British Petroleum company (Havrilesky, 2010 p.66). It highlights the problems emerging from lack of a comprehensive plan to deal with disasters and the consequences of these shortcomings. Poor planning had negative implications on the operations and has long lasting effects on the organization’s reputation. Negative image takes a long time to fix, and the organization should therefore find ways to prevent loss of goodwill.
Communication seems like the major challenge facing the organization in the management of crisis and response to disasters. It lacks both internal and external communication channels to enable the efficient dissemination of information. Establishment of a crisis management plan, however, requires finances to execute, both implicit and explicit costs. The organization requires funds to purchase security equipment, train workers, and upgrade technology, among other necessities. This will implicate on the profitability by reducing its profit margin in the short run while realizing various benefits in the end.

Recommendation

Evidently, it is at the company’s interest to maintain a positive image in the face of the public. Corporate image is a fragile element that requires careful handling and protection from harm. Modernizing the communication within the organization and with the public is the solution to maintaining a positive public image. Shifting focus from traditional communication channels to the use of social media and websites in communicating with the world will guarantee image protection (Mcquail, 2001 p.22).
Planning is also crucial for the organization due to its operation in a risky industry where some unfavorable events are likely to occur. Crisis management is, therefore, essential to mitigate the effects of unfavorable events and facilitate fast response to disasters. Curbing losses and preventing extensive damage by disasters are the reasons for adopting a crisis management plan. The management should devise a detailed plan that covers the financial, economic, legal, and social element of crisis.
It should indicate the anticipated risks in running the business and the probability of the occurrence of each risk. It should then determine the courses of action in an attempt to prevent the occurrence of the risks or minimize the effects of the inevitable risks. There should also be procedures to deal with crisis at the event of their occurrence and dealing with the aftermath of a crisis (Alvintzi & Eder, 2010 p.118). Sophisticated technology will help the organization in implementing both recommendations by improving communication internally and externally, as well as planning for the occurrence of a crisis. Adopting an advanced level of technology, improving communication, and designing a crisis management plan are the key elements for the British Petroleum Company to prevent a future crisis.

References

Alvintzi, P. &Eder H. (2010). Crisis Management. New York: Nova Science Publishers.
Bamberg, J. H. (2000). British Petroleum and Global Oil, 1950-1975: The Challenge Of Nationalism. New York: Cambridge University Press.
Black, E. (2011). British Petroleum and the Redline Agreement. Washington D. C.: Dialog Press.
Eargle, L. A. & Esmail A. (2012). Black Beaches and Bayous: The BP Deepwater Horizon Oil Spill Disaster. Lanham: University Press of America.
Ferrier, R. W. &Bamberg J. H. (2000). The History of the British Petroleum Company. New York: Cambridge University Press.
Fink, S. (2000). Crisis Management: Planning For the Inevitable. Ney York: American Management Association.
Havrilesky, H. (2010). Disaster Preparedness. New York: Riverhead Books.
James, K. (2012). BP Case Study: After the Deepwater Oil Spill. New York: Films Media Group.
Longhurst, H. (2001). Adventure in Oil; The Story Of British Petroleum. London: Sidgwick And Jackson.
Mcquail, D. (2001). Communication. New York: Longman.
Peppas, L. (2011). Gulf Oil Spill. New York: Crabtree Publishing Company.
Regester, M. & Larkin J. (2008). Risk Issues and Crisis Management in Public Relations: A Casebook of Best Practice. London: Kogan Page.
United States (2011). Response/ Clean-Up Technology Research & Development and the BP Deepwater Horizon Water Spill. Washington D. C.: National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling.
United States (2012). The Use of Surface and Subsea Dispersants during the BP Deepwater Horizon Oil Spill. Washington D. C.: National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling.

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