Managing People in British Petroleum - Assignment Example

Managing People in British Petroleum Table of Contents Table of Contents 1 Weaknesses 5 Bibliography 13 Introduction One of the biggest disasters of the year 2010 was the oil spill of British Petroleum – ‘Deep Water Horizon’. The spill not only left the company with a wide range of issues and losses, but also left the Gulf area with a number of possible diseases and a damaged sea shore. This paper aims at discussing the environmental factors that can impact the company for its strategic decision making in an attempt to regain its position in the US. The paper also suggests a marketing plan that can be adopted by the company to help recover from the ‘marketing disaster’ as well as try to regain its position in the markets. First it is crucial to gain a complete overview of the disaster – ‘Deep Water Horizon’. Overview of Disaster One of the largest marine oil accidents was seen on 20th April 2010. The oil spill went on to flow for a total of three months in the Gulf of Mexico. The explosion claimed eleven lives and injured seventeen people. The oils spill started from the sea floor oil gusher. Methane gas was found to be released from the well with high pressures and this went up into the drill column (Cleveland, 2011). The methane gas expanded on the platform and led to the explosion. The fire was intense and was not doused which led to the Deep Water Horizon to sink after 36 hours. The Deep Water was built in 2001, and was managed by BP in the Gulf of Mexico. The spill as a whole has caused extensive damage to the wildlife, as well as marine habitats and also damaged hundreds of miles of sea shore as well. The spill led to the close down of several small businesses in the fishing and tourism industry since tar balls were found to be present in the nets (Cleveland, 2011). Even after several months in February 2011, the ill effects of the spill were still being found. Dead Baby dolphins were found washed up along Alabama and Mississippi. Experts have also found oil on the seafloor which has not degraded. The image below provides a clear idea of the amount of oil that was found to be spilled due to the explosion. This provides a date wise record of government and non government estimates. Estimates of Flow Rate of Oil in Spill (Cleveland, 2011) The overall impact of the spill has been intense, and the impact will be felt for years to come. Although in the current times, the main issue being faced is the spill on the sea shore and the dead marine and wildlife, this spill will have a major irreparable damage to the Gulf Stream and can cause global thermoregulation activities as well (Zangari, 2010). The damage has been caused to the environment as well as the company. BP has been faced with a major issue here as due to lack communication. A study concluded, “Better management of decision-making processes within BP and other companies, better communication within and between BP and its contractors and effective training of key engineering and rig personnel would have prevented the Macondo incident” (Belokas, 2011). Macro Environmental Factors Considering the major impact the spill has had on the company and the world as a whole, it is crucial to gain a detailed understanding of the environmental factors that can impact the strategic plans of the company. Here for the macro environmental factors, a SWOT and PESTLE analysis of the company has been developed. This helps gain a clearer idea of factors impacting the company and affecting the ability of the company to regain the position in the US of A markets. SWOT Analysis of BP Strengths: BP is one of the largest oil and Petroleum Company in the world The company has used a wide range of strategies pertaining the marketing of their refined products, trading gas, and also the liquefied natural gas and British Petroleum has grown to become a common household name. Wide spread operations and increasingly unified brands like Amoco and ARCO and Castrol Focuses on green living and has made a number of new steps and approaches towards the climate change and has also included a number of products that helps the company take larger steps towards addressing the issue of climate change (Longhurst, 1959). Also, BP has under its new banner taken up a number of huge steps towards the issue of climate change. British Petroleum is spread over almost six continents and the company has spread over 100 countries. The main head quarters of the company however is based out of London United Kingdom. The company is also very mindful about the current economic condition and the company has also been extremely careful with their operations. The company’s main secret for success has clearly been the strategies adopted for marketing, advertising and public relations. The company has shown immense motivation and focus on the customers. It is evident from the company’s website and the overall performance in terms of the advertisements as well as the public relations that the company undertakes, that the main focus of the company is on the development of the society along with the profit making. Weaknesses British Petroleum, is one of the most safety conscious companies, with high levels of safety protocols, has been faced with a number of issues and accidents. The company has had two main accidents, one in 2005 and the most recent one in 2010. The mistakes in terms of handling the fluids was the main cause for the disaster which claimed as much as fifteen lives and left over a hundred and eighty people injured (Goessl, 2010). Although the company has been extremely careful in terms of their oil refineries, the company yet has been faced with one major issue, i.e. lack of communication within the organization between the managers and the employees. It has been clear that due to the lack of communication within the organization, the company has been faced with major losses and has also had to pay major compensations. Although the company is very wide spread and well known throughout several countries, the lack of communication and well coordinated work among the people has led to the disastrous impact (Ries, 2010). A major question about the main intention of the company however has always been raised, since, the strategy of utilizing the solar power and being environmental friendly is good and strong however the main concern has been in the economic viability. As has clearly been explained by Ries (2010), “The fact that BP is still an oil company isn’t what hurts the brand. What hurts the brand is that BP is an oil company with a terrible reputation for safety. Known for cutting costs on safety and maintenance to increase profits, the company has suffered several disasters over the past few years. (The spill in the Gulf was just the latest and the largest)” (Ries, 2010). Opportunities: It is evident that the company is looking at developing marketing strategies that will help portray it for is environmental friendliness BP can work on expanding the frontier areas and use these for the reserves in the future Can work on expanding the oil mining in other areas like North Sea, and Indian Ocean Can work on developing a wide range of products at cheaper prices than the competitors Threats: The ongoing issues and unsound policies and corrections of oils spills and leaks Number of oil spills and accidents has increased and the number of accidents and deaths has also seen an increase. This can have a major impact on the business and in a number of ways contradicts the company’s aims of green living. The Deep Water Horizon was among the biggest ever accidents and this will leave an ever lasting impact on the community and will also leave a scar on the business and the brand image. Better performance and safety measures of the competition Increasing number of lawsuits for the company due to the number of irresponsible mistakes and errors on part of the management PEST Analysis of BP British Petroleum’s strategic plans can be impacted by the external factors. Here a PEST analysis has been conducted to provide a detailed analysis of each factor that can impact the strategic plan of the company. Political factors: Here these mainly refer to the government policies that impact the firm. In the recent years there have been a number of policies and regulations that have been developed in terms of the safety measures and regulation in terms of oils mining. BP’s strategic plans clearly need to be based on these regulations taking into account the several accidents and issues that the company has faced in the past years (Ries, 2010). Economical Factors: The current accident has cost the company a lot of money. Keeping the current economic condition in mind, it is important that BP takes the right decisions and also focuses on its financial condition as errors in the decision making now can lead the company into bankruptcy. Social Factors also play a major role in the overall effectiveness of the strategic plans of the company. Here it is crucial that BP takes into account the increasing focus of people on green living and environmental friendliness. BP is currently in the spot light for the current accident and any decision that the company makes in the current time will be scrutinized to a great extent (Ries, 2010). The society is focused on ensuring that the climate changes and the environmental hazards are reduced to the maximum. Hence here with the major accident, the company’s decisions will be judged very strongly. Technological Factors: Finally, the company needs to consider the various new technological factors that also impact the decisions. Here BP needs to consider several aspects of technology while making the decision. The aim here should be to focus on using technology to the best possible extent to gain as much benefits as possible. Marketing Plan The main aim of this section is to develop a plan for the company to help regain its position in the markets. Here several areas have been covered and recommendations have been developed to ensure that the company can market itself effectively and also recover from the ‘marketing disaster’. It is clear that the main issue that British Petroleum has been facing is clearly the lack of safety and numerous environmental violations. As very concisely explained by Ries, a brand expert, “In 2005, an explosion at BP’s Texas City refinery killed 15 workers and injured 170 others. In 2006, 267,000 gallons of crude oil leaked from an Alaskan pipeline maintained by PB. Later that year, another BP Alaskan pipeline suffered a catastrophic split which led to a temporary closure of Alaska’s entire oil supply. “Severe corrosion” caused by cost-cutting and lack of maintenance on BP’s part was blamed for the split. Numerous safety and environmental violations from these events and others forced BP to pay $485 million in fines in the United States alone in the past five years” (Ries, 2010). Based on all the above discussions, a few recommendations can be set down for British Petroleum to help rebuild their brand image and to also win back the trust of the customers and general public across the world. However before moving into this it is important to state here, “Consider Exxon-Mobil, the world’s largest private oil company. Its methods of operations are today considered the gold standard in the production of oil (Kotler, Kotler on Marketing: How to Create, Win, and Dominate Markets , 1999). Yet, Exxon still remain cursed by the images of oily seabirds from the Exxon-Valdez disaster 21 years ago. Strong brands with a reputation for quality, safety and honesty are able to survive even the worst tragedies and negative PR stories. Toyota, Tylenol and Goldman Sachs have faced some dark days recently, but for them the future is still bright because the brands are strong” (Ries, 2010). It is essential for the company to firstly realize that a strong brand is not simply a well designed logo and an excellent set of missions and visions. The stakeholder’s views on the brand are the secret of the success or failure of the brand. Here in the case of British Petroleum, the company’s stakeholders includes a wide range of people from across the world, and the image that the company has been able to develop is one of carelessness, irresponsibility and completely harmful to the nature. Here it is crucial to note that British Petroleum will need to make immense efforts to help build a positive brand image. However a major point to be noted here is that the company has already lost its trust among the people and hence to rebuild the brand image, the company will need to work twice as hard. The example of Exxon can be taken as a benchmark here (Jobber, 2009). The impact of the Exxon operations almost over twenty years ago and the image of oil soaked sea gulls have still not been forgotten. However Exxon has been able to put in high levels of efforts and has rebuilt it brand after a single mistake (Thompson, 2010). Here in the case of British Petroleum, although the stakeholders have been found to be the tragic victims, there is little or no emphasis on the environment and the issues that have been caused. Owing this, it is recommended that the company focuses on the working hard and actually taking steps to help with the environment. It is suggested for British Petroleum to own up to their responsibilities like Exxon and to actually improve their safety measures. This will only help in two main manners. Firstly, this will help in earning the trust of the people who have felt most impacted by the spill (Kotler & Lee, Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause, 2004). Secondly, it will open up the options for the company to actually do something innovative for the world. By owing up to the mistakes, the company can open up the gates to the ingenuity and also to innovative ides which can include better use of the solar energy as well as use of more natural resources in an effective manner to actually make it a brighter future for the world. As very well stated by Calle Peyron, the founder of Mind Your Brand consultancy, “From British Petroleum to Beyond Petroleum is a typical way of moving the brand in a positive direction as it shows that you are thinking proactively” She also moved on to explain, “It is visionary and inspiring and indicates you want to contribute to a better world. It creates purpose and adds value” (Trulsson, 2010). The only way that the company can continue to keep up the public image and also ensure that the brand name is rebuilt is by making continuous efforts to restore the Gulf Coast to what it was before the spill occurred. It is important that the company uses the current new top management that it has to be more ethical and also make genuine efforts in saving and improving the world by contributing to the society. The company needs to clearly realize that the core of any successful brand or brand rebuild effort is the ethical attempt made by the company. Only honest attempts to improve the world will prove to be beneficial here. In the current information driven world, a brand cannot simply survive by spending millions on the advertising, and public relations, without actually keeping up to their promises or even their commitments. The company clearly needs to realize that customers across the world are well informed, well read, and are also conscious about their surroundings and environment. Hence any steps that the company takes will be very critically analyzed and judged in order to ensure that the company is actually making genuine efforts to help and contribute to the world. Hence it can be recommended that the company takes serious steps to ensure that the mess made at the Gulf coast is cleared up and the coast is restored back to what it was before the spill. Also, make numerous other attempts to contribute to the society to actually improve the world. The company earns very high levels of profits and hence it is important to realize that doing business in the current markets is not simply about making profits but is also based on being able to make a difference and contribute to the world, surroundings and environment in a positive manner, thereby making the world a better place. Bibliography Belokas, A. (2011, January 10). Lessons from the Deep Water Horizon Incident. Retrieved February 26, 2011, from Safety 4 Sea: http://www.safety4sea.com/bloggers.php?id=1&article_id=17 British Petroleum. (2010). Environment and society. Retrieved February 24, 2011, from http://www.bp.com/sectionbodycopy.do?categoryId=2311&contentId=7060022 Eggleston, M. (2010). Don't Go Near The Water: British Petroleum and Alaska Worker's Compensation Division Practices Exposed . Publication Consultants. Cleveland, C. (2011, February 10). Deepwater Horizon oil spill. Retrieved February 26, 2011, from The Encyclopedia Of Earth: http://www.eoearth.org/article/Deepwater_Horizon_oil_spill?topic=50364 Goessl, L. (2010). A look at how BP can recover from damage to their brand. Retrieved February 26, 2010, from http://www.helium.com/items/1908649-a-look-at-how-bp-can-recover-from-damage-to-their-brand Jobber, D. (2009). Principles and Practice of Marketing. McGraw Hill Higher Education. Kotler, P. (1999). Kotler on Marketing: How to Create, Win, and Dominate Markets . Free Press. Kotler, P., & Lee, N. (2004). Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. Wiley Publishers. Longhurst, H. (1959). Adventure in oil;: The story of British Petroleum. Sidgwick and Jackson. Mintzberg, H., Lampel, J., Quinn, J. B., & Ghoshal, S. (2002). The Strategy Process: Concepts, Contexts and Cases. Financial Times Management: Prentice Hall. Ries, L. (2010, May 06). BP has a Brand Problem. Retrieved February 23, 2011, from http://ries.typepad.com/ries_blog/2010/05/bp-has-a-brand-problem.html Thompson, K. (2010, August 19). As gulf cleanup continues, BP will also struggle to clean up its brand. Retrieved February 24, 2011, from Washington Post: http://www.washingtonpost.com/wp-dyn/content/article/2010/08/18/AR2010081803063.html Trulsson, J. (2010). The Future of BP’s Brand. Retrieved February 21, 2011, from Recruiting Trends: http://www.recruitingtrends.com/the-future-of-bp-brand Woodgate, L. B. (2010). A look at how BP can recover from damage to their brand. Retrieved February 24, 2011, from http://www.helium.com/items/1915143-renewing-the-tarnished-image-of-bp Zangari, G. (2011, June 12). Risk Of Global Climate Change by BP Oil Spill. Retrieved February 26, 2011, from Institute of Atmospheric Sciences and Climate: http://preventdisease.com/news/pdf/OilSpill-CNR.pdf Read More