A Study of BP and its Stakeholders in Nigeria - Research Paper Example

? A Study of BP and its Stakeholders in Nigeria Part Week Four) A review of basic issues regarding the Background and Interests of Stakeholders ofBP Company in Nigeria Contents Contents 2 Introduction 3 A Brief Organizational and Historical Background 4 Literature Review 6 Introduction 6 Major Issue 6 BP Strategy 6 BP strategy prior to the accident 7 Conclusion 8 Stakeholders at BP 9 Conclusion 10 Reference 11 Chapter 1 Introduction About BP BP is regarded as one of the world’s leading international oil and gas organization which provides its customers with fuel which is needed in transportation, energy required for heat and light, retail services and also of petrochemicals products. The company tends to produce a diverse range of energy portfolio ranging from road, to home, business; BP produces natural resources on which the entire world depends upon. BP has got much different kind of brands under its product portfolio. Each of BP brand has got its own personality and heritage but have one common thing in them which is that all the brands symbolizes, embodies and also provides tremendous energy. Some of the most top ranked brands of BP includes, ARAL one of the trusted brand in Germany; ARCO which tends to bring in low cost fuels and cleaner in the west coast of US; Castrol which is the world’s top oil for motors and also a specialist lubricants oil; ampm which is a convenience shop brand and Wild Bean Cafe. BP work includes exploration of oil and gas, extraction, moving those extracted oil and gas, making products and fuels out of the gas and oil and finally sells the products and the fuels. BP in the process of its exploration and extraction generates low carbon energy. It has been investing in new ways to provide energy from wind businesses and innovative solar to advanced bio fuels to energy technologies. BP tends to work in ways which would benefit the society, communities and the habitats. The company strives to become the safety leader in its industry, corporate citizen, world class operator and at the same time great employer. BP is working to enhance the safety measures and risk management and earn back the trust and grow value (BP, 2012). Chapter 2 A Brief Organizational and Historical Background History BP history lies from way back in 1908 and since then B has been largely associated with discoveries whether large or small which have contributed into the progress of the company. From an Anglo Persian oil company BP has managed to become the global Oil and Gas Company. In the year 1917 the Anglo Persian Oil company bought BP which was a subsidiary of German company, in order to get its product to the customers across UK. Thus 1917 marked the brand name of BP. In 1920 BP got its official name and logo which was designed by AR Saunders from the purchasing department. 1932 was marked as an iconic year for B as it has entered the advertisement world and designed advertisement for BP Plus, BP Ethyl and BP Super. In 1961 after the post war, BP had won Academy Award for a short documentary. 1965 BP started giving service with a smurf. Few years later BP extended its product portfolio and included food for poultry, dogs and fish. It became the largest supplier of animal food in North America. In 1988, BP buys Bristol and it became the first ever company to acknowledge potential risk of global warming in the year 1997. Year 2009 marked 100 years for BP and today BP is applying the same dedication towards its work towards challenges and opportunities in the 21st century (BP-b, 2012). Business Review As per the BP Energy Outlook 2030, the world is in the form of transition into a lower carbon energy mix. Thus BP needs to supply oil and gas to meet the demands. In the year 2011, the company invested $1.6billion in the energy business and the total investment made since 2005 amounted to about $6.6 million. BP is trying to meet its commitment and is moving forward. 2012 is said to be a year of milestone with high financial expected in the financial year 2013 and 2014 (BP-a, 2011, p.9). Organization of BP BP businesses are organized in order to deliver the energy products as well as the services that the people around the globe require. BP business model aims to create value in the hydrocarbon value chain. This process starts with exploration and ends with supply of energy. The organization of BP consists of upstream, marketing and refining, alternative energy, people of BP and their values. The upstream usually finds, develops then produces and transports natural gas and oil to the market. BP operates in about 26 countries and it employs about 100000 people. The major markets are USA, Russia, UK, North Africa, Canada, Asia, Middle East and others. The marketing and refining team takes the responsibility of trading, supplying, transporting, refining and marketing the products. BP owns 17 refineries and markets the products in 100 countries the role of R&M plays an important part. BP constitute of approximately 83,400 people, contractors and suppliers in the organizational chart. BP value lies in safety of the people, respect for the world, excellence through disciplined management and systematic operations, courage to face difficulties and the team, where the employees trust each other (BP-c, 2012) Chapter 3 Literature Review Introduction Deepwater Horizon which was built in 2001 and it was fifth generation and dynamically positioned a semi submersible drilling unit. The unit had employed automated drilling system. The rig drilled wells up to 35,055 feet in the nine years under the ownership of Transocean under BP contract in the deep water Gulf of Mexico. In the year 2010 with a release of a gas and subsequent explosion had occurred in the Deepwater Horizon oil rig. About 11 people were dead in the incident and many other were injured. The fire which occurred burned for 36 hours before the rig sank and due to this hydrocarbon were leaked into the Gulf of Mexico as the well was not closed and sealed properly. This incident had a diverse impact on the environment and the livelihood of people residing in that area (BP-b, 2012). Major Issue The major issue with respect to the Gulf of Mexico oil spell was the environment and the normal living of the people residing in the areas of Gulf of Mexico. The oil spell in the deepwater Horizon has lead to the spread of hydrocarbons affecting the environment. Therefore the main task of BP is to regain a normal living and cleaning up of the incident and ensure a healthy and safety living. BP Strategy BP Strategy is to re-earn and keep the trust of the society by way of operating safely and responsibly and serve the purpose of creating sustainable value for the shareholders. Major stakeholders for an organization are the shareholders, the government and the social community (Daft, Murphy & Willmott, 2010, p.23-24). In 2011 the company has put forwards a ten point plan which defines what the things that BP is going to undertake and what the stakeholders will be able to measure in 2014. The strategy of BP is designed in a way to make it a stronger, simpler company and take the advantages of its strengths. The goal of the company is to grow the operating cash flows in order to enable itself to invest and increase the distribution to the shareholders. The upstream strategic focuses on what the organization regards as important drivers in the operation. These include managing risk, increasing investment, managing the portfolio activities, and growing operating cash and focusing on some of the major growth engine such as the oil spills and others (BP-d, 2011). Today BP looks like a safer and a much more efficient company than the one which was responsible for the spill oil incident and the pipeline burst in 2006. BP became one of the most profitable companies but it failed to fix problem that continues to get BP into trouble. The problem lies in the organizational culture which emphasis on cutting the cost and also on efficiency and neglecting the maintenance needed to overcome situations like oil spills and other incidents. BP has regarded the incident of Gulf as a tragedy that should have never happened (Korosec, 2010). BP strategy prior to the accident BP has been determined to become much safer, aware of the risk and believes to earn back the trust prior to the accident. BP has taken up the responsibility of cleaning up under the direction of the federal government and to respond quickly in order to compensate the people who are affected by the incident. BP spent about $14billion against the accident and throughout the process had worked in collaboration with the government, the resident, employees, shareholders, industry and along with the media. BP was committed to understand the cause, the impacts and the implication of the accident and act responsibly (BP-e, 2012). In response to the accident, BP has taken up number of solutions with regards to the health and safety of the people, compensating the people who were affected by the incident, had involved themselves into the cleaning process of offshore and onshore. The company plans to rebuild value for the shareholders by re establishing the competitive advantage of the company. It engages into Corporate Responsibility and aims to serve the environment and reduce the impact of the accident on the environment and the ecosystem. The company’s long term strategy aims to build a portfolio which will be based on mutual advantage, development of technology in the value chain. The company is diversifying its business into a more valuable and strategic dimension for its stakeholders. The outcome of such strategy will be to divest US based businesses (BP-a, 2011, p.3). Conclusion BP has been taking all the necessary initiative to take care of the incident that took place in the Gulf and for the employees who were suffered. Thus it is necessary for the company to ensure that they are able to regain the trust of the stakeholders which is important for organization to survive in the foreign country and with its competitors like Shell it becomes increasingly important to focus primarily on the issue governing the stakeholders in the Gulf of Mexico. The company has implemented CSR activities in the Gulf and helped the country to clean up the oil spills and incur a healthy living. But BP has been facing position with regards to is strategy of stalling the lawsuits of the oil spill claimants by forcing it to apply a compensation fund of $20billion. Transocean the owner of Deepwater Horizon rig has said to set u a depository with about two lakh pages (Financial Times, 2010). Chapter 4 Stakeholders at BP BP being a global brand and a huge organization, it becomes the responsibility of the company to let know about all the desired information to the stakeholders of BP. Stakeholders forms an important part of BP business and its strategy. The stakeholders who are identified for further research are divided into three categories, one for the CEO of BP, next for the local BP employees and finally for investors. The important stakeholders for BP include the shareholders, the government and the social community. The CEO of BP stakeholders would include the government and regulations because BP engages itself with the government in many issues such as consulting on issues with regards to the environment, tax liabilities, initiatives by the entrepreneurs and other such factors. The CEO is responsible for all the happenings and talks with the government and specially while operating in foreign country. Stakeholder for the local employees would be the customers. The customers are an important part of any business and since the local employees are well equipped with the local customers, it would provide a better understanding between the employees and their customers. Investors are also important because it is the investors who help in the profit of the company and in earning revenue. Thus the stakeholders for the investors would be the industry itself. Chapter 5 Conclusion Thus it can be concluded that BP in response to the incident has done every possible activities needed to perform. With the progress made and the efforts put in by the company, BP is surely to recover from the ongoing consequences of the Deepwater Horizon accident in the Gulf of Mexico. The company has initiated a wide range of programs which was designed to enhance the safety as well s risk management within the group, earn the trust and restore the value. Thus BP has always maintained a healthy and good relationship with its stakeholders and continuous to maintain it in the near future. Reference BP, 2012, About BP. [Online]. Available at: [Accessed March 28, 2012]. BP-a, 2011. Summary Review 2011. [Pdf]. Available at: [Accessed March 28, 2012]. BP-b, 2012. History. [Online]. Available at: [Accessed March 28, 2012]. BP-c, 2012. BP Overview. [Online]. Available at: [Accessed March 28, 2012]. BP-d, 2011. Annual Report and form 20-F. [Pdf]. Available at: [Accessed March 28, 2012]. BP-e, 2012. Deepwater Horizon Accident. [Online]. Available at: [Accessed March 30, 2012]. Daft, R.L. Murphy, J and Willmott, H., 2010. Organization theory and design 10th ed. Cengage Learning EMEA. Financial Times, 2010. Opposition grows to BP’s legal strategy. Available at: [Accessed March 30, 2012]. Korosec, K., 2010. BP's History of Oil Spills and Accidents: Same Strategy, Different Day. [Online]. Available at: [Accessed March 28, 2012]. Read More