Crisis Management and the BP Term Paper

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In a context in which alternative sources of energy are better developed and an infrastructure is accessible to the populations across the globe in an efficient manner, fossil using companies would be better punished for their mistakes. Today however, as these organizations remain strong and virtually without any real competition, dramatic impacts are not observable.

In spite of this situation however, BP did encounter some negative impacts as a result of its poor management of the spill of April 2010. A first of these impacts is obvious at the level of the American population. The spill occurred in the Gulf of Mexico, near the populated coast of Louisiana, creating a sense of danger and discomfort for the population in the area. Also, at a national level, tension occurred as the American people came to blame the English company for the environmental disaster. In other words, the reputation of the BP Group was severely affected.

Then, another impact felt by the company is revealed in its relationship with the business partners, the more relevant of them being Transocean, Cameron and Halliburton cementer. These three parties had perceived themselves as partners of the BP Group, but have come to realize that in a case of a crisis situation, BP would not hesitate to find them guilty of any issues in order to salvage themselves. This specifically means that the reputation of BP as a valuable and trustworthy business partner has also been negatively affected.

Another impact is revealed at the level of the people who lost their lives as well as those who were injured. In this line of thoughts, the company has agreed that it would pay financial compensations where these are due. Additionally, it is possible that other entities would also forward financial claims and it is unknown how much the BP Group would have to spend in order to settle all claims. In other words, there is a direct strain on the company's financial stability.

At the level of the financial demands, CEO Tony Hayward has made another mistake in that he publicly stated the firm would cover the expenses, whereas in private, he denied this. For the time being, the BP Group could spend as much as $75 million in damages connected to the oil spill, but democratic efforts are being made to eliminate this cap and ensure that the company is asked to compensate for the full damage it created.

"There already are questions about how much BP will pay in damages. Despite Hayward's media statements about taking care of legitimate claims, Hayward privately rejected committing to paying all economic damage claims, Sen. Bill Nelson (D-Fla.) disclosed after the two met in April.

There currently is a $75 million cap for economic damages connected to an oil spill, but two Democratic senators are pushing legislation that would eliminate that limit" (Mulkern, 2010).

Overall, the company's reputation plunged to appoint at which the firm had lost complete trust from the many stakeholder categories. So low was the trust of people and investors in the company, that the very interest for the BP shares decreased to an 18-year low minimum (Wardell, 2010). Still, as the company launched a multimedia marketing campaign to restore its image and credibility, the stock also commenced to rise in market value.

5. Conclusions

The BP oil spill of April 2010 is often compared to the oil spill of Exxon in 1989. Nevertheless, in the two decades passed from one incident to the other, the world evolvable and the stakeholders became more and more demanding. Also, the BP oil spill was highly documented and scrutinized on the internet and on other media channels less common in 1989. This instance explains the high levels of inquiry and criticism with which the BP oil spill was analyzed.

Aside from the external forces however, the BP oil spill was scrutinized also as it represents one of the largest environmental catastrophes in the world, and also because it was managed in such a poor manner. The company had virtually not instated a crisis management plan and had implemented inconsistent actions, which often created more damage than good. The general stand adopted was that of shifting any blame.

The improper management of the oil spill crisis has resulted in a series of negative impacts for the firm, among which the damage of its reputation, the loss of stakeholder trust, the devaluation of the stock as well as the increase in the financial pressures. Today, the company undergoes a massive process of rebuilding its reputation, but it has yet to reconsolidate its pre-spill image.


Biello, D.., 2011, One year after BP oil spill, at least 1.1 million barrels still missing, Scientific American, last accessed on August 2, 2011

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Kennedy, S., 2011, BP settles with Mitsui arm over Macondo spill, Market Watch, last accessed on August 2, 2011

Kinver, M., 2011, BP oil spill: the environmental impact one year on, BBC News, last accessed on August 2, 2011

Mulkern, A.C., 2010, BP's PR blunders mirror Exxon's, appear distinct for record book, The New York Times, last accessed on August 2, 2011

Owen, J., 2010, BP oil spill crisis management: how not to do it, BNet, last accessed on August 2, 2011

Wardell, J., 2010, BP's stock plunger to 18-year low as company's survival could hang in the balance, The Huffington Post, last accessed on August 2, 2011

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