The BP Oil Spill Crisis of 2010 - Case Study Example

Business and Government in Global Context xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Name xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Lecturer xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Date Business and Gоvеrnmеnt in Glоbаl Cоntехt The BP oil spill of April 20 2010 was caused by an outburst on the deepwater horizon offshore oil platform (Freudenburg & Gramling 2011). It was an oil spill that took place in the Gulf of Mexico which streamed unabated for three consequently months in 2010 which might be still continuing to leak. It was regarded as the largest accident marine oil spill in the petroleum industry throughout their history which killed 11 workers and 126 employees were securely evacuated. The spill was reported to have been stalked from a sea-floor oil gusher that its outcome was the explosion of deepwater horizon from 20 April 2010. The spill affected 16,000 miles of coastline such as coasts of Texas, Mississippi, Louisiana, Florida and Alabama. Over 8,000 animals as well as birds, turtles and mammals have been affected by the spill and reported dead six months after the disaster (Pruitt & Lawson 2011). Based on Susan Strange’s body of work as well as Luke’s, this essay discusses how power operated in that case BP oil spill, the stakeholders and their interest. It also shows the nature of the relationship between stakeholders, the power possessed by stakeholders, the connection between economics and human growth and how BP bore the costs of gulf of Mexico disaster and the real situation of business and government interaction. As a result of a corporate disaster like the BP oil spill, the firms that belong to the same industry were much affected due to the changes stock prices which results to evaluations of the probability by the investors. On the other hand, the government increased the regulatory costs which were extra costs to the company which were meant to prevent such disasters in future to happen. The U.S government as the stakeholder and as the regulator of the firms has great power which it exercised through making sure that the company is accountable for everything happened. In addition, the government ensured that all the affected industries such as tourism and seafood are helped to recover from the loss incurred. This is because as Steven Luke’s theory asserts in his theory of dimensions of power, that the influential body exercises power over the weak body when the strong body affects weak body or group in a way that is against weak body’s interest. A stakeholder is a person, a group or an organization with an interest in the business that are affected in one way or the other by the actions of the business as Savage et all (1991) says. There two types of stakeholders in an organization which are: primary stakeholders also known as internal stakeholders who includes the owners of BP firm, shareholders and employees in the organization. Secondary stakeholder’s also known as external stakeholders include the local community, suppliers, clients, distributers, unions, society and government. Primary stakeholders has individual interests which they pursue for instance manager in look for organizational development over returns while employees look for elevated wages and also maintain their job and the organization owners seeks the increase of their share’s value. Secondary stakeholders influences or are influenced by the organization. For instance, shareholders seeks the price of the shares to increase, clients seeks to get quality goods and services from the organization. The suppliers wish the organization to sell more goods and services as well as the expansion of the company. The community has interest in an organization by providing it with more as well as good employees and also by making it easy for the organization to make revenues. The government can devise, pass as well as enforce rules and regulations that can either accomplish the objectives of the organizational effort or call them off. In handling its stakeholders, an organization has to admit that it requires making options. This is because it is hard to find win results in major business decisions. It is true that BP Company cannot be in a position to meet the requirements of each stakeholder individual or group and therefore decisions might end up being win-lose. This is as result of support to one stakeholder which means that another misses out. Oftenly there are areas where the interest of stakeholders are aligned or agreed to such as common interest in the success as well as developing the firm and supplies goodwill of growth and prosperity of the company. This is where the decision is seen to be benefitting more than one group of stakeholder. On the other hand, there are clear conflicts of interest such as wage increase that can be at the cost of lower revenues as well as dividends and development of production activity which can make additional noise as well as disruption and environmental issues in local community. It is necessary for any organization to manage their relationship with diverse stakeholders group or individuals. This is vital for the sake of business performance as well as for normative purposes. The nature of the relationship of stakeholders in BP Oil Company is featured by mutual interdependence. The web of life observes the firms as fundamentally relational which relationship between stakeholders. This is a compound sequence of relationships among individuals and groups with diverse rights, goals, perspectives as well as roles. The stakeholders seek quality while the organization hopes to satisfy the as well as be loyal to its stakeholders through entering into relationships (Grunig et all 1992). The point of power depends on the quantity as well as the kind of resources and the influence the stakeholder can organize to support its place on the development. The stakeholders in BP company interest or salience is the main concern as well as significant since the stakeholder connect to the development area. These are the attributes that signal the ability the BP stakeholders have to either block or support change. They are also the attributes that indicates the stakeholders capacity to marshal others in forming a coalition of encouraging or opposing as well as lead the way or discussion of the reform. This also gives a detailed knowledge of the political, economic as well as social impacts of change in the organization, the ladder of influence and power amongst diverse groups as well as the real perspectives of the development among diverse groups which are all crucial for change that an organization should consider. Some of the stakeholders are stronger than others. In regards to this, the government always is viewed to have little influence on many as well as established companies and competitive business-business markets such as this. Nevertheless, their power over businesses is much stronger in the markets that are regulated or where public sector appears to have direct stake. In this case of BP Company in Gulf of Mexico, managers are observed to have more power or are more influential than the environmental activists. This is proved by the way the manager of the BP gulf Mexico tried to control the situation, despite the explosion having polluted the environment and resulted to a great damage to the coast of Mexico……. Bp Gulf of Mexico was accountable for the spill of oil on the coast of Louisiana as Griggs (2011) says. The company announced its regret on the impacts the explosion and spill of oil caused on the environment as well as the livelihoods of those affected in the communities. Bp gulf Mexico added that they are putting in place measures to assist and make sure that it does not happen again. The organization also acted on taking responsibility of cleaning up. The company also worked under the direction of the U.S federal government to answer quickly to pay damages to the individuals affected by the blow of the misfortune. In addition, they were also directed by the government to look after the well being, security as well as welfare of the large number of populace and individuals who assisted counter to the spill. The organization also took responsibility of supporting the economic resurgence of the gulf coast’s tourism as well as seafood companies’ affected by the spill. This was concluded through a research that the organization carried out in conjunction with federal as well as state natural resources trustees to discover as well as define the damage to natural resources in the Gulf of Mexico. To date, BP Company has used billions of money on the response actions. The response has been successful since the organization has been working closely with the government, the organization’s shareholders, the domestic inhabitants, the organizations workers as well as the media. Human development currently has been advanced as the crucial objective of human action in position of economic growth. Human development has been termed as an important tool for economic advancement. At the same time, the accomplishments of human development themselves can make a significant contribution to economic development. There are two causal chains in connection between economics and human development. One runs from economic growth (EG) to human development (HD), as the funds from state income are billed to actions contributing to HD. GNP add to HD mainly by household as well as government actions, civil society through organizations in the community as well as other nongovernmental organizations which plays a great responsibility. But the similar level of GNP can lead to very diverse performance on HD according to the allocation of GNP between as well as within the named institutions as well as variations in their character. Household’s inclination spends their after-tax income on things which contribute most straight to the support of HD in countries that are poor for example food, education, potable and health differs (Cunha & Heckman 2009). The other chain runs from human development HD to economic growth EG, this shows how, in addition to being an end in itself, HD assists increasing national revenue. The research shows that as individuals become healthier, better nourished as well as educated they play part more in economic development. Elevated stages of HD, in addition to being an end in themselves influence the economy by augmenting people’s abilities as well as accordingly their creativity and productivity as Nussbaum & Glover (1995) explains. Obviously, the populace’s health and education are among the key determinants of the masterpiece and development of production and export, and comprise a vital ingredient in a method’s capability to use foreign technology efficiently (Rivera 2011). Particularly, health primary and secondary education as well as nutrition augments the productivity of employees, both in rural and urban areas as Herrin & Pernia (2003) points out. Secondary education which includes vocational, make easy the achievement of skills as well as managerial capability. Tertiary education promotes the growth of basic science, the suitable selection of technology imports, local adaption as well as growth of technologies. Secondary and tertiary education also signify vital components in the growth of major institutions, of government, the financial organizations, law and others all which are necessary for economic growth. Experimental proof at both micro as well as macro levels lends promotes to the significance of these relationships. Most of the research shows that at a micro-level, increases in earnings are connected with extra years of education, whereby the rate of return differ with the level of education. From a micro- perspective, the new development theories aspire to indigenize technical progress through incorporating some of these similar effects. It emphasize on education and learning as well as research and growth. The research indicates that the higher the level of education of workforce, the elevated the generally productivity of capital because the more educated are more probable to innovate, and therefore affect each one’s productivity. Bp Company bore the costs of the oil spill on the coasts of Mexico. The company took the entire responsibility that starts from cleaning up the ecosystem to compensating the individuals who were on one way or the other affected by the spill. The organization also has a responsibility of ensuring the recovery of tourism around the cast as well as the seafood industries. In a free market economic organization, limited resources are allocated through the price system where the favorites as well as expenditure decisions of clients as well as supply resolutions of businesses come as one to determine steadiness prices. For instance, the European aviation market was until 1990 greatly regulated as well as dominated by national flag carriers like British airways and Air France. In Europe air travel was managed by bilateral agreements between the state members. A sequence of change led to minimized state support for the current airlines. By 1993, every airline that held a functioning license from any EU member state was permitted to work in any route in the EU, and fare the discussion of fare was no more bilateral. The deregulations led to augmented competition as well as vital innovation, specifically through the entry of low-cost airlines like Ryanair and EasyJet. This increased competition benefited the clients in two ways which includes; lower prices, the nominal non-sale fare cut down 66 percent between the year 1992 and 2002. Flight frequency, the European flight frequency between the year 1992 to 2002 augmented by 78 percent. In addition, the augmented competition has also brought substantial regional development whereby the low cost airlines supports smaller, regional airports as contrasted to the main ones. On the other hand, the augmented frequency of flights has not resulted to a deterioration of security, instead the figure of reportable mishaps per income hour fell by 50 %(Government of UK, 2009). In conclusion Gulf of Mexico disaster was the largest in the history of petroleum industry as well as in the history of United States. The disaster left a number of BP workers dead and several injured. The company accepted the responsibility and accepted to clean up the coasts affected and compensate the affected people. In addition they accepted to support the tourism industry as well as seafood to recover from the incurred loss. This was through the federal government’s intervention on the case through its rules and regulation who are also the stakeholders in the organization. Some stakeholders in the organization were found to be influential than others. The organization also has been found good in managing its relationship with its stakeholders. It was found that the governments regulating businesses results to revenue increasing as in the case with the European flight. References Savage, G, Nix, W, Whitehead, C, & Blair, J 1991, Strategies for assessing and managing organizational stakeholders, The executive, 5(2), 61-75. Grunig, L, A., Grunig, J, & Ehling, W,1992, What is an effective organization, Excellence in public relations and communication management, 65-90. Cunha, F, & Heckman, J, 2009, The economics and psychology of inequality and human development, Journal of the European Economic Association, 7(2‐3), 320-364. Nussbaum, M, & Glover, J, (Eds.) 1995, Women, Culture, and Development: A Study of Human Capabilities: A Study of Human Capabilities: Oxford University Press. Herrin, A, & Pernia, E, 2003, Population, human resources, and employment, The Philippine economy: development, policies and challenges, 283-310. Freudenburg, R, & Gramling, R, 2011, Blowout in the gulf: the BP oil spill disaster and the future of energy in America. MIT Press. Pruitt, B, & Lawson, R, 2011, The health impact of oil spills: Lessons learned. Nursing2013, 41(4), 55-60. Griggs, J, W,2011, BP GULF OF MEXICO OIL SPILL, Energy Law Journal, 32(1). Government of UK 2009, Government in Markets, London: Crown copyright. Rivera, M, 2011, The Synergies Between Tourism Expansion and Development: An Analysis of Economic Growth, Poverty and Human Development in Ecuador (Doctoral dissertation, University of Central Florida Orlando, Florida). Read More