History of the British Petroleum Company - Case Study Example

Social Performance of Organizations: British Petroleum (BP) Social Performance of Organizations: British Petroleum (BP) Introduction British Petroleum (BP) was founded by William D’Arcy and was registered in 1909 under the name Anglo-Persian Oil. During its early years, the company main focus lay in the Middle East. Shortly before the start of the WWI, the British government was able to acquire a controlling stake in the company as a result of the company promising that it would be able to secure enough oil supplies for the government. Between the two wars, the company was able to expand into Africa, Papua, America, Canada, South American and Europe. It was eventually renamed as the Anglo-Iranian Oil Company in 1935 (Ferrier & Bamberg, 1982). When Iran nationalized the company’s assets in 1951, the company ventured into conducting explorations in other Middle Eastern countries such as Iraq, Libya and Kuwait and in 1954, it was eventually renamed as the British Petroleum Company. In 1987, the British government sold its last shares in the company at a time when BP’s lackluster performance had caused it to start languishing at the bottom of its sector. However, by 1996, the company had been able to effect a turn around that saw it start performing within the oil and gas top quartile. Currently, BP is considered to be the world’s number 3 public traded integrated oil concern (Juhasz, 2011). It explores for gas and oil in over 30 countries and has an proven reserves that are estimated to stand at 17 billion of barrels of oil. Within the United States, it is regarded as the largest gas and oil producer and a top refiner with its 15 plants that are continuously processing an estimated more than 2 million barrels of crude oil per day. Some of the external factors that can possibly affect the success of the company include political and economic factors. Political factors such as government policy such as the overall degree of intervention in the economy can affect the performance of BP. This might include trading policies and lobbying actives that can serve to either improve the company performance or make it difficult for it to trade within a given country. Economic factors can affect the performance of BP include the national economies of the environment in which company is running its business operations. When a country’s economy is not doing too well, the buying power of its citizens is reduced and this will have the effect of reducing the total sales of BP’s products in the country. Conversely, the company performance in countries with good economies is relatively good due to the fact that the company is able to achieve high levels of sales. BP’s primary stakeholders are identified as being those people or groups whose direct actions can prove to be extremely beneficial or harmful to the company. Some of the company’s primary stakeholders include: Employees: This group of stakeholders includes all the people that are currently employed and working within BP (Rappaport, 1999). BP’s employees, give both their effort and time to the company with the objective of trying to make the business successful. The key objectives of the company’s employees can be deemed to be improved job satisfaction, job security as well as obtaining satisfactory levels of payment for their efforts. Customers: Customers are the individuals that purchase BP’s products. They engage with company in the hope of attaining a number of objectives including obtaining safe and reliable products, good value for their money as well as proper after sales service. Shareholders: shareholders are the individuals who have capital invested in the business and seek to obtain profits while growing the business (Rappaport, 1999). Over the years, the influence that stakeholders have on organizational business activities and its financial performance has been on the increase. Understanding the impact on that BP’s primary stakeholders have on the company’s financial performance is important in the management of the company. Stakeholders can impact BP’s financial performance in a number of ways including: Employees can be able to influence the overall success of BP by the level of efficiency and productivity that they are able to put into their job, tasks and everyday duties. The more productive and efficient that BP’s employees become, the better the company’s financial performance. However, low levels of productivity and efficiency can have the effect of causing the company to experience a poor financial performance. According to Zu (2009), customers can be able to influence BP’s financial performance by deciding whether or not to continue purchasing its products. The more that customers continue to purchase from the company, the better its financial performance. If these customers choose to take their business elsewhere, BP will suffer from what will be a poor financial performance. The government can influence BP’s financial performance by introducing new laws that can critically affect the company’s operations based on whether these laws are favorable to its operations or not. Laws that serve to increase the minimum wage or raise taxes will have the effect of reducing the company’s profitability. BP’s managers can affect the financial performance of the company based on the decisions that they make (Rezaee, 2008). Managers are responsible for the formulation and implementation of policies that have a direct effect on the company’s profit making ability. BP’s stakeholders and owners determine how the company conducts its business. An example of this is that the stakeholders can opt to decide to prioritize higher sales volume over profits. Measures such as these can have an effect on BP’s profitability. One of the most controversial issues to have ever affected BP was the Deep Water Horizon oil spill. This oil spill is widely recognized as having been the worst oil spill to have ever occurred in U.S. history. When an explosion sunk BP’s the Deepwater Horizon oil rig that had been located in the Gulf of Mexico, underwater cameras were able to reveal that BP pipes were leaking gas and oil onto the ocean floor. After a considerable degree of effort, the well was eventually capped 87 days later. However, an estimated 4.9 billion barrels of oil had already been leaked into the gulf and 11 people had been killed (Cavnar, 2010). In an effort to contain the environmental pollution that had been caused by the spill, BP used a number of clean-up methods such as using physical barriers and dispersants. An estimated over 1,000 miles of Gulf of Mexico shoreline spanning from Florida to Mexico was impacted by the Deepwater Horizon blowout. Although much of this area has already been cleaned, eroded shorelines and marine life populations are expected to take longer to recover. The company is currently engaged in a number of lawsuits with some of the local communities that were affected by the oil spill (Cavnar, 2010). In forming a stakeholder’s coalition aimed at forcing BP to address the negative ramifications surrounding the Deepwater Horizon oil spill, the first step would be to identify the most important potential coalition members. In general, the broader the coalition’s membership is the better. However, the representation of certain groups of people in the coalition is of absolute importance if the coalition is to eventually achieve its objectives (Weiss, 2009). In this instance, I would first identify the individuals that were most affected by the issue. It would be unfair to make decisions affecting these individuals without having their direct involvement. Other potential members of the coalition would include the clergy, business and civic leaders as these are highly credible individuals within the communities affected by the oil spill and in their capacity, they will be able to influence a large number of people. After identifying the coalition’s potential members, I would advance recruiting these members before proceeding to putting together a core group whose combined resources will allow for the coalition group to have more contact and knowledge on the oil spill and its effects than a single member would have. The expanded resources, diverse knowledge base as well as adequate representation of all key stakeholders affected by the issue that will greatly improve the probability of the coalition achieving its objectives. I would then plan and hold a first meeting that would begin with all round introductions. It would then start by defining the issue that has necessitated the formation of the coalition. The meeting would also discuss the coalition’s structure before discussing a possible procedure that would be used in the formation of an action plan to resolve the problem. Task would then be distributed between the members and follow-up meetings would continue to work towards the resolution of the problem (Weiss, 2009). To foster cooperation between the members, I would encourage open communication between the members in addition to encouraging all the coalition members to voice their concerns, actively contribute to the creation of an action plan as well as work towards the attainment of the coalition’s objectives. Some of the potential challenges that I might face when encouraging stakeholders to form a coalition include: Funding: Coming up with necessary funding required to run the group’s operations can prove to be a daunting task; it will be important for the coalition to constantly be on the alert for funding new funding possibilities, the coalition will also have to be particularly vigilant about the funding it applies for and accepts as some sources of funding might potentially have vested interests that would seek to influence the coalition’s objectives in their favor (Weiss, 2009). Leadership Issues: Coalitions demand active collaborative leadership. If this form of leadership is found to be lacking during the coalition’s formation, the existence of the coalition might potentially be at risk and it would be difficult to encourage stakeholders to form the coalition. To resolve this issue, it might prove necessary to bring in an outside facilitator to aid in salvaging the situation or offer the necessary training to the potential coalition leadership team. Domination by Elite or “Professionals: The presence of numerous elite or professionals might deter the average people from joining the coalition. It will be important to ensure that a participatory environment is created during the formation of the coalition so as to adequately reign in those that might happen to believe that they have all the answers. References Cavnar, B. (2010). Disaster on the horizon: high stakes, high risks, and the story behind the deepwater well blowout. Chelsea Green Publishing. Ferrier, R. W., & Bamberg, J. (1982). The History of the British Petroleum Company. Cambridge: Cambridge University Press. Juhasz, A. (2011). Black tide: The devastating impact of the Gulf oil spill. Hoboken, NJ: John Wiley & Sons, Inc. Rappaport, A. (1999). Creating shareholder value: a guide for managers and investors. Simon and Schuster. Rezaee, Z. (2008). Corporate governance and ethics. Hoboken, N.J: Wiley. Weiss, J. W. (2009). Business ethics: A stakeholders and issues management approach. Australia: South-Western Cengage Learning. Zu, L. (2009). Corporate social responsibility, corporate restructuring and firms performance: Empirical evidence from Chinese enterprises. Berlin: Springer. Read More