Strategy in complex environments shaped by globalization and technological change

¶ … BP and how it can impact on the performanve of the firm

In the recent times, a number of people have opposed the strategies that have been developed by BP. The major strategies that have been opposed by individuals is that of stoping the case regarding oil spill in the gulf of mexico.Operational strategy and effectiveness are vital for superior performance which is usually the main aim of all enterprises and organizations. A firm may perform better than its rivals only if the organization is capable of establishing a difference it is capable of preserving. The firms have to deliver higher values to its customers. Besides, the organizations should be capable of creating comparable values at very low costs. Delivering higher values enables companies to charge higher unit prices. Similarly, very great efficiency and effectiveness will result into very low unit costs. Operational effectiveness (OE) implies performing same activities more than the rivals are performing these activities. Operational effectiveness entails efficiency. However, it is not limited to efficiency. It may be used to refer to the practices allowing companies to utilize better its inputs through the reduction of defects in their products and services or coming up with improved products quickly. Variances in the effectiveness of organizations in organizations are pervasive. A number of firms are capable of getting more from their inputs as compared to other firms since they minimize or in some cases avoid wasted efforts, apply advanced technology, employees are motivated, or the firms may have higher insight into administering specific activities. Such variances in operational efficiency are a significant source of variances in the profitability among competing organizations since they have direct effects on comparative cost positions and differentiation levels. The strategy of BP will influence its customers. This is because it has been opposed by a number of people including its customers. The organization should look into ways of ensuring that the amicable ways are used in the provision of solutions to the problem. Only then will the organization be in a position to retain its customers. Effective and efficient strategy entails taking into consideration how the organization may experience improved performance. BP is not capable of experiencing improved and enhanced performance from the strategy that has been opposed by a number of stakeholders. The improvement of operational effectiveness and efficiency is a vital management process.

The Deepwater Horizon oil spill and the subsequent BP strategies

The Deepwater Horizon oil drilling rig that caused an environmental disaster on the 20th of April 2010 resulted in both economic as well as environmental damages to several states of the U.S. that lie along the Gulf Coast. BP received several criticisms from the public as a result of its role in the oil spill disaster. This prompted BP to come up with quick strategies aimed a repairing its damaged image and reputation. The strategies employed by BP were centered on the description of whatever they were doing as corrective measures as well as the moves for compensating the victims. Their strategies however never included the shifting of blame to the partner company or the admittance of blame to the responsibility of the oil spill. In this study we employ the work of Benoit in Image Repair to analyze the contents sourced from press releases by BP just after the Deepwater Horizon spill. The difficulty in applying this theoretical model in capturing of the level of nuances of the responses is also indicated. The initial attempts by BP to do repairs cannot be said to be successful. The initial pressure from the public and state resulted in the establishment of a repair fund worth $20 billion. The outcome of this did not mean that a suitable strategy was already in place. Harlow et al. (2010) pointed out that a lot of time is needed so as to determine the total impact of the BP oil incident at the Deepwater Horizon. The impact on public relations is still being evaluated. Harlow et al. (2010) indicated that only the passage of time would allow the company to fully and comprehensively reestablish the good public image that it earlier enjoyed. A review of literature indicates that two main things took place as part of BP's initial response to the disaster. The company mainly focused its efforts on two mains strategies. These were to come up with a description on how the problem precipitated and then how to effectively compensate the victims. The second thing is that BP executed this at the expense of several other strategies. As an example, the company never concentrated its efforts to blame shifting activities; neither did they admit blame on themselves. It is worth noting that even though BP did not initiate a full blown strategy for blame shifting the other company (Transocean), the initial press releases had a little effort in that direction. Some of the significant moves made by BP included the acceptance of responsibility for the stoppage of the ensuing damage as well as the compensation of the victims. Harlow et al. (2010) points out that it is very difficult for BP to accept responsibility without having some sort of admission of fault or certain level of responsibility. There are certain legal arguments for fault admittance; the damages were however accepted by BP when it set up a $20 billion fund for compensation. The fact that British petroleum had already accepted responsibility for the cleaning up of the oil spill as well as the compensation of the victims meant that they were already in an effort to repair their damage public relations with a strategy that was somehow focused on the idea of mortification. Avery et al.(2010) suggested the need of coming up with a theoretical critique of the moves that were initiated to address the problems associated with the spill. With the application of Benoit's framework, it is a little bit difficult to outline what BP did to resolve the issues at hand.

Image repair Theory and strategic planning

Image repair theory (IRT) has evolved over time from the time it was suggested by William Benoit (Benoit,1995; Benoit & Hanczor, 1994). Strategic planning is important to scholars and practitioners alike. Grunig & Grunig (2000) pointed out that the processes as well as attitudes of strategic planning are the ones that vary. Evidence suggests that strategic planning in any given organization can range in its applications from the one used to integrate all the functions within the organization to the ones that are used by a manager to correct a single organizational function. Extant literature suggests the application of strategic planning to the field of public relations does exist (Austin & Pinkleton, 2006; Smudde, 2000). Very little literature however is focused on the subject of image repairs for companies in crises such as BP (Gonzalez-Herrero & Pratt, 1995, Mitroff, Harrington, & Gai,1996). The public perception of litigation too is also not covered in most literature as pointed out by Lukaszewski (1995).

The reasoning behind strategic planning

In this section we evaluate the need for strategic planning and how IRT it can be employed in process of crisis planning, evaluation as well as communication by companies such as BP.

According to Axson (2003) strategic planning is a detailed process that is very necessary for virtually any organization. Strategic planning is a top-down process since it begins from the top through the vision which is articulated by the CEO to be realized by the organization. The necessary components for an organization to realize its strategic plan must be transferrable to each and every one of the functional units in the firm. The operational plans for the public relations department must support the overall strategic plan of the entire organization. There exists eleven components of strategic planning and ITR should be applied to about 7 of them.

These components are necessary for the process of image repair. They include; analysis of the opportunity, audiences involved, key messages, the objectives, the strategies, application of tactics, the critical success factors (CSFs),the leading indicators, appropriate timing, budget as well as the evaluation.

The irony in the BP's strategy

The BP oil spill situation is regarded by others as a failure that was more than just a mere breach environmental law as well as the improper functioning of environmental agencies that are charged with overseeing the deepwater drilling activities, corporate governance, corporate social responsibility and corporate law (Cherry and Sneirson,2011). The elements of corporate governance, corporate social responsibility and corporate law can also be blamed for the disaster. The oil spill indicated certain strategic questions on corporate governance as well as public perception of the company. The tragic oil explosion as well as the subsequent oil spill revealed a deep corporate culture at British petroleum that was notorious of consistently neglecting the safety of the workers as well as the laid down corporate standards. Cherry and Sneirson (2011) pointed out that BP had a very dismal record on employee and public safety. This therefore lead to several accidents that could have otherwise been avoided through the application of better maintenance standards for their equipment as well as enhanced safety standards. The ironic thing is that at the same time, BP mounted an extremely successful advertising campaign as a strategic move to portray itself as an environmentally friendly corporation and a champion for causes that are environmental. This marketing strategy worked extremely well and saw the company become one of the most profitable multinational companies in the whole world. Its ranking for the way it treated its employees and a champion of corporate social responsibility (CSR) also improved. The work of Cherry and Sneirson (2011) however examined the disconnect that existed on how British Petroleum portrayed itself in the public eye and the actual manner in which it behaved whenever its corporate image was at stake. The advertizing campaign launched by BP had a very striking reality from the realities of its safety records as well as environmental performance. It was noted that BP's actions were primarily centered on areas that had direct implications and effects on the profitability of the shareholders. Its involvement on matters of CSR never went beyond actions that would affect profitability as well as public image. The elements of "greenwashing" were noted in BP's strategies. Through greenwashing, a company may take actions to increase its sales as well as boost the image of its brand via environmental rhetoric while at the same time polluting the environment. The company may also refuse to commit any finances on the environmental causes and employee welfare

The detractors of CSR are many. The opponents of CSR claim the corporations should stick to their core competencies which would guarantee high returns to their shareholders while the proponents argue that CSR can effectively be used to bring about appropriate social changes and benefits. The opponents and proponents of CSR all agree that the use of greenwashing tactics creates a myriad of problems to the business and its investors and clients. The accuracy of all CSR moves is important for an informed consumer choice as well as efficient securities markets. The encouragement of faux CSR is indicated to ultimately lead to the undermining of all attempts of gaining a substantive level of CSR which just lead to the creation of more cynics against the corporation.

BP is to be blamed for a variety of reasons

An internal audit at BP after the spill revealed a lot of damning conclusions. The company was shown to be frequently intimidating employees who raised any form of environmental and safety concerns. The report indicated that managers reduced maintenance costs by employing aging equipment for the longest possible time. Some of the whistleblower on safety and environmental issues were fired.

Other strategies employed by BP

The "Beyond Petroleum" Advertising Campaign

The last couple of decades have BP has made several strategic branding decisions that were designed to make the image of the corporation "green." The initial one was a play that was christened "BP" that claimed that the initials were for "Beyond Petroleum

." The subsequent group of adverts did suggest that BP Corporation was very aware of several environmental concerns and the company was therefore very willing to discuss them as well as initiate actions to mitigate the environmental concerns. By employing a special tagline "It's a Start,," the corporation was taking actions aimed at making most of their operations very efficient as well as the reduction of the emissions of carbon dioxide in the process of extracting petroleum

. The corporation further acknowledged the various issues surrounding the change in global environment. It even advocated that each and every person must be aware of their "carbon footprint

." The other advertisements by BP also highlighted the use and investment several renewable energy sources like biofuels, solar and wind by the corporation. The advertisements all indicated that the companies need to take certain moves to ensure profitability in the long run. Some of the moves included the diversification of their energy sources.

BP also made certain strategic moves like the construction of the Helios House, which is a gas station which is environmentally friendly and located in Los Angeles, carlifornia. The station has solar panels on its roof, has an ultramodern bathroom having enhanced water efficiency as well as several plants that helps in the absorption of carbon dioxide.

What are the implications of BP's strategy in terms of public perception and how may this impact upon their performance?

The strategy employed by BP was put in place as CSR moves. The oil giant has been noted to be looking strong after the spill and is even making profits. Its stock that fell 54% has rebounded and it is now paying dividend to its shareholders (Weber,2011). These positive results can be attributed to strategic moves that were initiated by the corporation just after the disaster. Corporate Social Responsibility (CSR) is one of the strategic moves that have in manner aided the company in regaining its profitability. There is a strong link between CSR and profitability.

In defining CSR Siegel and Vitaliano (2007) pointed out that CSR takes place when a corporation is engaged in activities that appear to in a manner advance the greater social agenda that is beyond the one that is required by the laid down laws. In other words, CSR occurs when a corporation devotes its resources for a social course while sacrificing its profits for that cause. The question that lingers on our minds is if CSR leads to a sacrifice of profits, then can it really leads to profitability? Manne (2006) pointed out that corporate law should be appropriately be modified to discourage corporate social responsibility. Despite all the questions, CSR has indeed become the order of the day.

Extant literature has been dedicated to the concept of CSR and the link that exists between it with profitability. Siegel and Vitaliano (2007) came up with a thorough review of the correlation. According to their work, CSR has a link to profitability. According to Siegel and Vitaliano, (2007,p.776) "CSR is a form of product differentiation, a form of advertising to establish or sustain brand loyalty." This therefore means that it can be used for gaining competitive advantage by virtue of differentiation. The main signaling role of CSR is explored by Goyal (2006). He analyzed the signaling role of CSR through a consideration of FDI. McWilliams and Siegel (2000) also studied CSR through a study of the short-term impacts of corporate social responsibility (CSR). The long-term impacts of Corporate social responsibility (CSR) are studied by McGuire, Sundgren and Schneewies (1988). McWilliams and Siegel (2000) have also pointed out that methodological errors can have an effect on the outcomes used in the resolution of some of the key differences.

BP strategy

For several decades, time and space had been the most important factors to consider in the running of business. Companies were more concerned by what is being produced at the end of process. In the modern society, the economy has forced companies not to focus on material objects as the outcome but to gradually transform into service economies and embrace the ever growing technological of work (Stehr, 1994). In the modern world, risk has been a very important aspect in the life of many companies. Most companies consider risks to be a sign because modern risks have become perceptible and largely shown through evidence available through scientific models. It is therefore justifiable to say that modern risks exist only as far as they can be pointed out through a scientific theories and experiments (Gephart, 1996) particular type of signs in business is systematically being adopted.

The importance of CSR (Corporate social responsibility) to British Petroleum Company in salvaging its image

The main aim of all business enterprise is profit making, while in the business of profit making, companies utilize amenities from within their reach, these includes; raw materials; roads; human resource and environmental recourses. In this process, some of the companies have ended up in causing many effects to the communities where they are located including both negative and positive effect (Friedman, 1970).

In the recent past the international (global) companies have been involved in giving back a percentage of their profit to the local community members. When a company gives back a percentage of its profit either in terms of cash or in charity, this is called social cooperate responsibility.

According to a white paper from the Economist Intelligence entitled; "The importance of corporate responsibility"

corporate responsibility has no clear definition for social corporate responsibility. It is stated that there are several different names for same practice; i.e Corporate social responsibility, corporate citizenship, Global Citizenship and Corporate Accountability. Despite all these terms, the principle guiding the idea is that there is a company which is responsible for providing more benefits to both share holders and the society apart from the profits

The topic of social corporate responsibility is becoming very relevant since the change of trend by business sector. It is on this ground that this reports finds out the importance of social corporate responsibility in relation to the computer industry.

In the most of the countries, laws governing social responsibilities have been developed while there is no universally recognized statute which gives guidelines on the social responsibility. In the developing countries, the large companies have been writing codes and social responsibility memoranda to enable them have a general guideline on how best to corporate with the consumers and the community at large. Financial markets are also adopting corporate social responsibility by employing tools which reflects the social corporate responsibility on the shares. In most countries, there are set rating agencies which evaluate commitments of the companies' in relation to social and environmental behavior.

In the year 2010, British petroleum Company experienced oil spillage in the Gulf of Mexico, this spillage was considered to be the major spillage which the world has experience in the recent past. The spillage had both political effects and business effects and many have been waiting to see how the oil company is going to address such a massive environmental disaster and on how the United States of American government would react to the situation. It is also important to note that this spillage had devastating effects not only to the environment but also in other sectors including local businesses and tourisms.