The Gulf Coast Oil Disaster
What aspects of BP’s ethical culture could have contributed to the Gulf Coast oil spill disaster?
Globalization has come with different challenges that accompany its strategic goals. The competitive nature of the world market has pushed some firms to engage in business malpractices that call for the intervention of various stakeholders in the society. Such entrepreneurial ills takes the form of irresponsibility and lack of accountability of the firms in regard to the negative externalities they create to the society, deteriorating integrity and manipulation of ethical codes of conduct. Many multinational corporations are now being compelled to help in the fight against the global environmental degradation and the increasing threat of global warming. In this respect the society is now holding the multinationals accountable to the various negative externalities they cost the society (Achenbach, 2012).
The international community has enacted various rules and regulations that spell out the ethical standards expected of the firms. In the recent past the oil firms have been in the international focus for their major role in the pollution of the environment as they produce and distribute their product and even as the products are consume. One of the major casualties for this problem is BP Oil Company that has been in wrong books with the international community for its growing unethical standards that emerged in the twenty-first century. To save its tainted reputation and restore its public image, BP management has been working on various strategic plans to improve the firm’s code of conduct. This came into light with the 2005 publication on code of conduct that was entitled “our commitment to integrity” (Achenbach, 2012). Due to the multinational status of the BP Company it has geographically dispersed operational regions across the world and this meant that they were to circulate this message homogeneously to all its employees across the globe.
The bottom line is its intense campaign in imparting positive ethical standards to its employees by seeking to unite them behind a uniform internationally accepted code of conduct. This has been facilitated by use of BP website and the social networking and media sites that equally sensitize the public on its efforts to support green energy initiative and environmental gradation. It is worth noting that coming up with an umbrella legislation that could cut across all the employees who hails from a great variety of social and cultural framework. This a common challenge in any international statute since the actions of various communities are highly influenced by their cultural beliefs. To take of this problem the firm has been carrying out awareness campaign to help its employees get the content clearly and put them into practical application. The critical issues of focus in this campaign include health, safety measures, security, environmental care, public relations, company assets management and financial integrity. The questionable code of conduct of this firm was exposed with its unprecedented environmental degradation scale and this also indicates the wide management gaps and strategic flaws in the top management of the multinational. BP has to pull up its socks concerning the amount of effort it has put in place to mix the legal and ethical policies in its daily operation that would ensure that both its employees and the society at large have their interest covered as priority.
The challenges that this firm faces has since grown more complex after the great oil spill in the Gulf of Mexico. The firm at first lost the confidence of the national community in its disaster management strategies and this went down to tear its public image and significantly affect its performance in the global trade. The affected areas still have more at stake that BP management have solve before they can complete get rid of the entire problem (Ferrell, Fraedrich, & Ferrell, 2012). The environmental assessment and the health related investigation carried out at the oil spill sites still indicate a lurking danger to the marine ecosystem and the human inhabitants bordering the shores. The situation was worsening by the economic cost this has on the dependants to the sea. There is the substantial reduction in the number of marine life and scientific establishment that this may get worse due to deposition of oil on the sea-bed. These are issues that hit BP hard and it has been engaged in tedious work to clear the mess in its effort to cleanse its public image. It is a bit hectic for the company to balance its profit goal and the heavy compensation scheme that the government of USA has sought legal redress over. In a nutshell BP has to consider immediate management restructuring and operation policies realignment.
Did BP engage in purposeful avoidance of risk management? Why or why not?
The debate over the position of BP on the issue of risks stands out as a much asked question by many people. It is understood that the oil production from the sea is a contractual co-operation between BP and Transocean as the driller. However, the risk need to be absorbed by both of the as the primary stakeholders (Konrad, & Shroder, 2011).
BP is particularly in this picture being the major shareholder in the risk management and safety regulations target in its business goals. It was evident from the vast oil spill tragedy that swept the larger part of the shore with insignificant efforts from the firms to reduce this environmental menace. The life of the workers was openly at risk and this shows the less concern or poor safety measures that are designed to cover the staff. Ethical standards of BP seem hollow or ineffective following the exposed backup control system that was conspicuously missing during the tragedy. This also shows reluctance in adherence to the law especially considering that specific safety thresholds were not met. It is sad to note that BP has greedily been focusing on minimizing costs and saving time to the disadvantage of humanity. This is the height of business malpractices and failed integrity test at the helm of this firm’s leadership.
The post oil spill investigations reveals that the disaster prevention measures put in place by BP and its drilling contractor Transocean was in scanty supply and therefore technically inadequate to take care of the situation. This is a great risk management loop hole that was responsible in the uncontrollable oil spill. Even after the oil spill it was noted that it took BP time to seek out the problem is clear evidence that bit was either complacent towards safety issue or technically incompetent to resolve such a serious a matter in the life of a firm, its employees and the general public.
What should BP do in the future to rebuild its reputation and manage the risks associated with offshore drilling activities?
In attempting to rebuild its reputation and moving away from the past disasters including the oil spillage, BP has embarked on a series of risks management initiatives aimed at reducing the effects of offshore drilling and exploitation activities. This is also in response with the call for corporate social responsibility and environmental cautiousness campaign. The company has also proposed socially responsible policies with the interest of the leading stakeholders at the heart. This includes reducing the impacts of negative externalities through cost-effective mechanisms. However, the major challenge for the firm is beyond immediate costs or benefits. Having participated in the oil disaster, BP suffered a major public reputation blow which cannot be rectified immediately but after some time (Achenbach, 2012).
On the positive note, after making changes to its management team, analysts believe the BP is in the right direction to rebuilding its image and reputation among the public. The appointment of Bob Dudley as a replacement of Tony Hayward marked the begging of company imaging and branding. Unlike his predecessor, Dudley admitted that the Gulf Coast Oil Spill was a “catastrophe”. The company should therefore show commitment in undertaking environmental cleanup process within the limited time possible. This was the company hiring the services of James Lee Witt (former Federal Emergency Management Agency chief) and other crisis management and public safety firms to take the lead in managing the incident and also propose feasible long-term recovery plan (Achenbach, 2012). Through the new operations team, the company has fought for the creation of a ‘safety organization’ which has been authorized to bring to a halt all the operations perceived to pose danger to the region.
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BP nominated a commission to perform both internal and external investigations into the Gulf Coast incident. Through thus commission, although BP admitted its role and faults in the disasters, the company shifted the blames to its contractors; Halliburton and Transocean, the finding which contradicted that of the national commission on energy. According to the national commission on oil and energy, the Gulf Coast disaster is partially blamed for lapses in the management oversight. According to the report compiled by the commission, the overreaction and sluggish response of the government are also to be blamed for the incident (Konrad, & Shroder, 2011). The findings tabled by the panel have prompted a call for comprehensive amendments of the regulations governing oil industry. A report by another investigation team led by chief engineers established that the large scale oil spill disaster was caused by faulty blowout preventer, which left enough spaces for the oil to leak out through. BP filed a lawsuit against Cameron International Corp., the manufacturer of the preventer for negligence as a way of rebuilding its image and reputation in the public (Konrad, & Shroder, 2011).
To rebuild its image and public reputation, BP has embarked on expensive corporate social responsibility practices which include a massive clean-up policy. The company has heavily invested in this environmental clean-up program as a way of reducing the effects of the aftermath of the Gulf Coast Oil Crisis. The company has also created a safety division with the organization, a department which is composed of technical and safety knowledgeable board. Through Dudley (the CEO), BP has shown commitment to environmental friendly methods of oil exploration and safety offshore energy operations. Although it will take long to ratify the damage, BP has shown commitment in rebuilding the lost image through reduces operation and production costs, and increased dividend allocation to corporate social responsibilities and environmental clean-ups (Ferrell, Fraedrich, & Ferrell, 2012). In addition, BP has developed embarked on the responsibility of providing training and leadership skills in sustainability and safety mechanisms. These environmental policies and corporate social responsibilities are the key to BP image branding and reputations.
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