Managing Change in the British Petroleum Company - Essay Example

Managing change in the British petroleum company Introduction British Petroleum Company is a multinational corporation operating in over 80 countries globally. It owns a wide range of business portfolio and relies on them for profitability. In this perspective, the multinational corporation’s management establishes that different business units require specific managerial approaches in order to make quick and precise decisions whenever need arises among the various departments. For instance, the company engages in extraction of crude oil to the fuel pump stations. Among these businesses, there are oil fields in different countries globally, wind power production plants, and natural gas processing plants. The corporation’s business fell under the threat of diminishing levels of performance following the Gulf of Mexico oil spill three years ago (Freudenburg & Gramling, 2011). The following discussion establishes the prevailing changes in concern to the factors of production, and the relationship with the company and the global society. Analytical discussion to the causes of oil spill change Following the 2010 oil spill, British Petroleum Company established that the situation affected the broad global society from the locals that depended on the seafood as a source of livelihood to the end consumer of BP’s petroleum products. The company lacked credibility from the society as the spill caused havoc to the environment and led to destruction of natural resources (Druskat and Wolff, 2001:45). For example, the spill led to deaths of over ten employees, and harbored fishing as it considerably led to the death of fish and other sea organisms that remained integral to the society’s benefits. The spill affected the ecosystem and postulated remorse from the diverse human society. Therefore, BP’s management established that the ideal resolution to the increased aggression of the society because of the company’s accident would be the implementation of policies that would reshape the organization’s image towards the general environment. Precisely, the corporation established the changes as achievable through rendering and delivering support from people within the system (Gido & Clements, 2012). British Petroleum Company established that the business programs were undergoing diminishing levels of performance thus denoting the need for strategic resolution to ensure growth to the desired extend. The valuable approaches that the management resolves to use and establish the corporation’s perceived current state of business (Fisher, Hunter and Macrosson, 1998:35). With the increased remorse and decreased customer loyalty, the corporation analytically established change as a precise role of targeting ascertainment of the objectives. Initially, the corporation had competitively preserved a profitable market share ahead of other competitors including Royal Dutch Company, Shell, and Exxon Company. However, through enlightening of the global society into adapting environmentally friendly matters, the company fell under a situation of diminishing performances as the loyalty for its business undertakings dwindled accordingly following the oil spill. Arguably, the company resolved to develop a precise plan that would steer acquisition of the set recovery measures. Further, changes were set to recuperate the damages following the loss of the $560 million oil rig that drained the company’s capital base after environmental concerns raised and the company resulted to inject billions of dollars to the cleaning exercise. The changes deferred the company’s profitability forecasts following the capital deviation to budget for the cleaning exercise of the ocean rather than production of the oil to reach the end consumer profitably. British Petroleum Company became a victim to the environmental measures and the abiding fines after they deceived the authorities that the situation was under control, but failed to accomplish the promise (World Bank, 2012). United States of America established that BP was liable to various cases pertaining destruction of the ecosystem and subsequently affecting the flora and fauna after failing to act upon the incident. Eventually, the company became liable and had to pay an amount of $4.5 billion to the authorities. However, the company further dedicated its programs into ascertaining a future prospectus of success in handling its situations that included a massive change in technological investment and knowledge equipment to the employees (Freudenburg & Gramling, 2011). Impacts of the oil spill on BP’s strategic position and competitiveness Following the oil spill, BP lost majority of its capital investments into handling the oil spill disaster, which could not accrue any profits but losses. Having lost the best reputation to in its mining, processing, and marketing programs, subsequently the company lost its profitable market share because of the reduced customer loyalty on its products. Further, BP lessened its supplier value by selling a lot of its asset base to contain the gulf oil spill tragedy and the urge to invest in technology in order to curb the disaster. Therefore, the company realized the importance of selling part of its asset base as significant to ascertaining the desired control over the short-term situation. Despite the fact that the asset sales aimed at yielding short-term profits, the company’s external stakeholders observed the practices of the corporation as implicit an unascertained future of the corporation’s business. Eventually, suppliers to the corporation deviated from its line of business because of the lack of credibility in servicing its debts following the inclined rate of debts and reduced rate of profits (Druskat and Wolff, 2001:91). Secondly, the oil spill affected the rate of financial investments from the stakeholders as the groups seek to invest in corporations that implicate guaranteed returns on the invested capital. Consequently, the company resulted to selling most of the fuel stations in the U.S.A to yield enough capital that would enable it to combat the situation. With the knowledge instilled on the buyers pertaining environmental concerns, the US consumer deterred progress in the company’s desire to improve its sales’ forecasts and win the desired profits. Through the boycotts, the corporation resulted to sell its assets to combat the situation rather than lure the clientele groups. Perceptions are that BP faced inevitable loss in market share and competitiveness as all its programs deviated from the desired business ideologies of ensuring competence in the business practices while the substitute companies, for example, Royal Dutch, Shell and ExxonMobil corporations. BP corporation rests incompetent to new market entrants, the threat of substitution, and supplier and buyer power as the market variable perceive that the corporation as incompetent. Implications for British Petroleum Corporation following the oil spill The company ascertained that strategic decision making would be integral in ascertaining the company’s future prospects. Such a decision denoted on the continuous urge of the company to dominate its profitable market share. The oil spill affected the profitable market share since the company found selling of its subsidiaries and various business entities as inevitable to accomplishing the oil spill mission and servicing the chargeable fines by the American authorities following the environmental destruction. British Petroleum persevered such unprofitable business years following the 2010 oil spill and blast of the Deepwater Horizon rig. During the time when the corporation targeted to amass enough capital to recuperate from the extensive damages, the business entities resulted to deviating from the company’s business practices citing on the future inconsistencies. BP lost over 30% of its clientele group following the asset sales, a factor that implicated to the loss of profits in the market and achievement of the set long range goals and objectives. Through reduction of the market share, the company further realized that the shareholders chased to flock their shares in the capital markets with the perceptions that losses were inevitable in British Petroleum following the global oil spill disaster. Further, the oil spill deterred the corporation’s target to global competence since the set long-range plans remained unachievable as the corporation intensified on technological advancements to ensure that the entire spill was contained and that such a situation would be under control on a future date. BP realized the consequential effects of the spill as inevitable since the capital basis remained affected advertently by resulting factors of oil spill in the oil rig. The factors resulting from the oil spill pressed the company to aim towards the acquisition of the target variables that would be intrinsic in order to ascertain achievement of the target environmental changes. Arguably, the implications pertaining BP’s oil spill deter positive ascertainment of the set goals since the company shall deviate from the ideal business practices to the disaster management thus; all technological and other business endeavors shall serve as beneficial in ascertaining acquisition of the set goals and objectives in the short run (Thompson, 2013). Required changes to improve BP Since the company deals extensively mining, the company would yield the desired beneficial exchanges by ascertaining importance in the acquisition of the set goals. The company’s management should be ensure that safety measures are always put in place as a mode of ascertaining acquisition of the set goals and objectives as each employee performs tasks competently to acquire the set beneficial exchanges for the benefit of the organization (Rosh, Lynn, & Diest, 2012). The profitable advantage of ensuring adequacy of knowledge in application of technology ensures that the company shall be curbing future uncertainties. Establishment of operational risks management would resolve to effectively resolve future uncertainties and risks as the employees shall be in a position to establish anomalies with the technologies and call for immediate action. Therefore, operational and safety risks management shall serve to the importance of holding value and credibility of the company’s future as the company continually improves its level of competence. Shareholder and customer improvement approaches would be intrinsic in ascertaining proper future changes as the company shall possibly resume to its initial market segment (Medina, Munduate &Dorado, 2012). British Petroleum rests assured of future certainties after recovering from the oil spill following the massive investment in safety and recovery technological machines in order to ensure that it would be capable of combating the situation after company fell victim to future circumstance. The approaches further incline the company a different status as the oil spill resulted to the innovation of technologically improved machines to clean the environment after oil disasters (Huusko, 2007). Therefore, the oil spill challenge served as integral in improving BP’s technological status to acquire the set goals and objectives ahead of the competitors. The company set objectivity to acquire proper measures to ascertain implementation of change in the required places, which led to technological improvements that would be intrinsic in the company’s recovery from the oil spill tragedy. However, the technological advancement resulted to the improvement of BP’s extraction process in offshore projects as a knowledgeable approach to ascertaining acquisition of the desired changes (Beatty, & Scott, 2005:75). Therefore, BP rests assured of future competence despite the initial incompetence following massive investment in technology aimed at combating the 4.5million oil barrels spilt in the Gulf of Mexico oil Rig. Other changes that resulted from the oil spill The oil spill exposed BP to political and legal embargoes as the authorities charged the multinational corporation with fines on different accounts of violations, mainly on the issue of environmental pollution and negligence to uphold the stipulated measures. The profit margins of the company dwindled and the company failed to offer dividends to the shareholders in 2011. However, the profits increased and BP recorded $3.27 billion profits at the first quarter of financial reporting, despite its previous record of $4.65 billion. Such implications establish speculations that the company’s profits are being redirected to yielding profitability ahead of the competitors. Perceptions are that the company shall eventually acquire its set objectives after the investment yield the desired goals and objectives (Gibson and Vermeulen, 2003). BP’s profitability forecasts remain tricky since the company fails to establish privately owned business entities after selling a reasonable market share of the TNK-BP to Rosneft thus; the oil extraction and processing company of BP shall reflect lesser profits despite the agreement that the company shall be expecting booking on Rosneft’s business entity. Other considerable changes that prevailed in the corporation following the oil spill reflected on the diversification of investment offload upon which the company sold the a $38 billion investment at the North Sea and the Gulf of Mexico in order to service the gulf disaster debt (Gosden, 2013). The company failed in the appeals to exempt some of the stipulated claims and the external stakeholders could ascertain that company was liable to the oil spill and environmental disaster. Consequently, the company’s social community reflected on the oil spill as a disaster and the resultant management’s contest against the lawsuit implemented a controversy of the importance it held on the general environment (Daft, & Marcic, 2013:46). The approach led to negative perceptions and loss of American clientele as they were the most affected population. The company’s rate of investment dwindled continuously and lately, the PSVM of Angola and Skarv of Norwegian North Sea denote the latest investments contrary to the multibillion dollar sales of its business entities to various global competitors. BP undertakes strict managerial approaches to ensure that all employees maintain the desired performance to acquire the stipulated goals and objectives. The ideology is that the company’s line of business programs rests as a risky affair and the company results to the application of theory X approaches, whereby Herzberg argues out on the importance of coercion as a form of motivation to ensure proper acquisition of the set organizational plans (Armstrong, 2008:89). The motivational approach ensures that the company acquires the set goals as the employees undertake technologically improved performances with the desired carefulness to ensure that failures are curbed eternally. Observable patterns of change from the last three decades The company used to ascertain that it owned enough resources for use in meeting the prevailing demand at a global platform. However, lack of risk and operational risks management approaches served to solemnly deter progress possibly after the Gulf of Mexico oil spilling. British Petroleum Corporation dominated the industry’s global market share and profitability margins as it offered a wide range of products and service units to nurture loyalty and competence upon the global clientele (Griffin, 2012). The process led to market leadership and diversification of investments in over 80 countries globally. BP continuously competed against Royal Dutch, ExxonMobil, and Shell Petroleum Corporation among other petroleum giants. The company lacked precise technological progress despite their continued diversification of investment. These included operational and safety risks, which would guarantee the employees of an alternative incase dangers occurred during the processing to the delivery state of petroleum to the clients. The company lacked precise risk management equipment and knowledge despite the prevailing global stipulations that safety precautions should be availed for use in case of mess-ups in undertaking daily performances (Fisher, Hunter and Macrosson, 1998:142). Further, the changes occurring currently with the BP Corporation that did not exist initially comprise of upstream restructuring, values and behaviors, and technological advancements in rescue equipment. The company has further being chasing joint venture business whereby it would share extraction and production risks with the partners. Lastly, the company’s motivational approaches have led to the implementation of plans that would serve as beneficial in recovery of the beneficial approaches that halted following the Gulf of Mexico inferno. Following the ordeal, BP engaged on technological advancements and the employees served as integral in establishing new technological thoughts would ascertain future (Gosden, 2013). Through such an approach, BP applied the theory Y approach by letting employees enjoy the freedom and exercising their different skills and accomplishing set missions in technological advancements. Lastly, BP’s changes in risks management and technological improvements ascertain positive future projections and profitability. Bibliography Armstrong, M. 2008. How to be an even better manager: a complete A-Z of proven techniques & essential skills. London, Kogan Page. Beatty, C. A., & Scott, B. A. B. 2005. Building smart teams: roadmap to high performance. Thousand Oaks, CA, Sage. Daft, R. L., & Marcic, D. 2013. Understanding management. Australia, South-Western Cengage Learning. Druskat, V., and Wolff, S. 2001. Building the Emotional Intelligence of Groups: by Harvard Business School Publishing Corporation. 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