Bp Deepwater Horizon

Autor: Jannisthomas • January 10, 2018 • 3,273 Words (14 Pages) • 559 Views

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Issues, Players, and Reputation

BP’s organization dictates that it’s employees operate in highly dangerous and stressful situations. They have to balance safety and pressure from management. Regardless of the statements made by executives it seems that BP continues to fail on safety matters. In 2005, an explosion and spills at their Texas City facility killed 15 workers and injured hundreds. In March of 2008 BP won a bid to extract oil for ten years from the Macondo Prospect. Due to underestimating time available to drill BP’ operating manager failed to take safety into concern, pushing his team to complete the work in only 21 days. This rush left the entire facility vulnerable to safety issues because of the speed that the employees were having to work at to meet expectations.

When Hayward took over as CEO after Browne, those involved with the company thought that with his ideals of running the business from the bottom up would revolutionize safety, and in turn the image of BP. Hayward’s platform is safety and not living by the mantra “more for less”. According to OSHA database from July 19,2006 -July 19,2010, BP has a total of 532 total violations, though this isn’t drastically different because they were already known for their incidences, Hayward’s attempts at fixing the problem missed their mark in a way.

BP was involved with a few other organizations for their drilling operations. The power structure of BP did not mesh with that of its contractors. There was no confidence in reporting safety concerns that would require off rig participation. It seemed as though the contractors were hiding their safety issues to simply maintain the business of BP, or that they were ignoring them because BP wouldn’t consider the issues that important anyway.

RiskMetrics a consulting group that ranks various measures for oil companies pointed out that BP had the worst health, environment, and safety record of any oil company in 2009. To be fair though, BP’s annual report for that year stated that the company had made an improvement of 20% from 2008 in safety after the Texas City accident. The data report from RiskMetrics could directly impact any customer.

The problem with BP’s safety image is that there are companies that by and large have less meaningful accidents than BP. Customers, whether or not they are the target of BP’s business have the ability to use any other oil company just because of the implications of BP’s safety record.

The large problem that BP will face as a result of their continuing incident rate is their image and the trust of consumers and to an extent their own employees and shareholders. Their image will be tarnished because to consumers it will seem like they don’t care about the environment at all or the well being of the people that live off of the ecosystems that they’re ruining. To employees, will they be able to trust a company that spouts numbers at them about less and fatal and frequent accidents but allows for poor drilling operations to continue to drill. Shareholders will wonder whether investing in the organization was a profitable idea when BP makes money but then is constantly losing because of these incidents.

Alternatives and Recommendations

Diffuse blame- The responsibility for the disaster is based on the actions of BP, Transocean, and Haliburton. The goal should be to ensure that BP is not seen as the culprit in this situation. A campaign should be run in which the disaster is explained and the focus should be on pointing out that BP has the rights to drill, but the drilling was being done by Transocean. In addition to diffusing the blame, this will also shield BP from taking the brunt of the cost. The cost for the clean-up could be huge. This cost should be shared among the parties involved. This solution is focused on shielding our shareholders from long term liabilities.

To carry out this campaign, BP should only take responsibility for what it is directly responsible for. Any official for BP that is talking to the public should be sure to state that the disaster is due to a chain of events. It should be stressed that it is a perfect storm of small events that ultimately led to the explosion. The focus should be on diverting blame.

Cons of diffusing blame- One major issue with this approach is that the public may view this as BP putting profits over the public. While the reality is that BP is not the lone party at fault and there was no egregious actions that caused the spill, the public will see the environmental disaster and will want someone to blame. As the only entity that has brand recognition with the public and the only company that deals directly with customers, BP will be the face of the disaster. By diffusing blame, it may seem that BP is not willing to accept the consequences of its actions.

Defend its safety record- CEO Tony Hayward has focused on safety since taking office. The company bases executive compensation on safety and the company has continually seen the number of work place injuries drop over time. BP should use these facts to show that the explosion was not the result of any egregious actions by BP. It should be discussed that as companies are forced to extract oil from increasingly difficult places, the chances of something like this occurring is just a fact of business. There is nothing the BP did that specifically caused the explosion.

This would attempt to move BP from the culprit of the action to a bystander. The goal would be to convince the public not to hold BP responsible. That drilling for oil is a difficult business and these type of events will occur.

Cons of defending safety record- Ultimately the public will see the oil leaking and attribute it to the actions of one of the parties involved. While BP has a low number of workplace accidents, the public will want someone to blame and it will be the brand they recognize. Defending the safety record will seem defensive in a time when the public will want action.