British Petroleum's response to the Deepwater Horizon disaster

¶ … company British Petroleum, its products and services, the critical success factors for its operations and its salient stakeholders. It also discusses ways in which the primary stakeholders affect an organisation's financial performance. Then it evaluates the controversial corporate social responsibility issue of Deepwater Horizon Accident of 2010 and the formation of a stakeholder coalition to address this issue, including plans to address the challenges in persuading the affected stakeholders in forming the coalition.

British petroleum is a company with worldwide operations. It provides energy products and services to customers around the world to meet their modern energy demands. Its upstream segment is responsible for discovering oil and gas products around the world. The downstream segment is associated with energy products and services such as fuels, petrochemicals and lubricants (BP, 2014). BP has a range of products and services to cater energy demands of customers.

Air BP: This is the aviation division of the company which provides fuels, lubricants and technical expertise to the aviation industry.

BP franchising: BP aims at growing its retail business through franchising its products and services worldwide to committed and skilled franchisees who can benefit mutually from BP's expertise.

BP target neutral: This is associated with cutting the carbon dioxide emissions of vehicles while improving their performance to support the green economy globally.

BP gas/fuel cards: These cards provide simple and cash free access to fuels and gas on credit in many locations worldwide.

Gas/fuel cards for businesses: These allow access to on-road services, fleet management solutions and exclusive online services in a range of countries.

Motor oil and lubricants: Highly advanced motor oil and lubricants are delivered to customers in a long list of countries which work well with all kinds of engine.

Asphalt and bitumen: BP develops, produces and supplies asphalt products throughout the world from light industrial to highway environments.

BP biofuels: BP is producing biofuels as an alternative to fossil fuels to supply clean reliable fuels reducing environmental emissions and improving security of energy supply.

Gas/petrol stations: BP provides high performance fuels and also cafes with tasty food.

Gas/petrol station locator: It enables to easily locate the nearest BP gas or petrol station.

BP route planner: The route planner helps locating directions while traveling.

Industrial lubricants: It provides oils for industrial use such as heavy-duty engine oils, transmission fluids, gear oils and hydraulic oils.

Gas and power energy: BP finds new markets for gas and power and also develops means to deliver them.

LPG for the homes: BP provides gas to homes without connecting to the mains.

Liquified natural gas: BP constructs and operates worldwide liquefaction plants and operates modern and industry leading efficient tankers.

BP crudes: BP produces and sells many crude oils and provides technical information on them too.

Natural gas liquids: More than half of BP's energy production comprises natural gas.

Marine fuels and lubricants: BP fuels, lubricants and technical expertise to the shipping companies.

Petrochemicals: It supplies petrochemicals which are used in everyday products such as bottles, clothes, lipsticks and painkillers.

BP shipping: BP provides environmentally safe transportation of hydrocarbons worldwide.

MSDS: Details about hazards and safety precautions about each individual product are provided in material safety data sheets (BP, 2014).

External factors affecting organisation success

Economic factors: The population of the world is increasing and it is expected that it will rise by 1.3 billion from 2011-2030. This is leading to increased demand for energy which affects energy security, sustainability and affordability. BP has enough resources to meet energy demand in the foreseeable future, but there are some challenges too. For example, the places with the most concentrated energy reserves are away from areas of energy consumption. There is also an affordability challenge as the trend is shifting from fossil fuels to low carbon fuels which are costly to produce at a large scale. More diverse energy sources will be required to cater to the increased energy consumption, and this is why BP employs oil sands, shale gas, deepwater oil and natural gas production, biofuels and wind. Efficiency in technology and processes is required to conserve energy and save costs (BP, 2014).

Environmental factors: These are crucial factors for an energy company to consider. With increased globalisation, the impact of oil operations on the environment become significant. To reduce the carbon footprint of operations, energy production in a sustainable way is needed. Identification of risks to the environment and their prevention and mitigation are crucial. Careful water usage in places of scarcity of water is needed, and safe waste disposal are also issues of consideration. BP implements environmental performance reporting and aims to restore the environment on decommissioning a site. Additionally, responses to unplanned incidents like oil spills are also concerns (BP, 2014).

Influence of primary stakeholders on financial performance

Primary stakeholders are those stakeholders whose influence is vital to the survival of the organisation (Sharman, 1994). They include employees, shareholders, customers, suppliers, lenders and government. Primary stakeholders affect the financial performance of the organisation in the following ways:

Positive and mutually supportive relationships among stakeholders lead to trust and collaborative efforts which result in increased wealth creation, for example, assets of the organisation earned through team work and familiarity

Operating as a responsible and ethical corporate citizen will give a competitive edge to the organisation in the marketplace causing a favourable impact on the financial performance because a relationship has been found between social and ethical practices and indicators of financial performance (growth, profits)

The financial success or failure of a project is dependent on stakeholder management for example, lack of resources, unrealistic expectations, ambiguous objectives and lack of IT management can lead to project failure (McManus, 2002).

The workforce has an impact on the organisation's financial performance. A skilled and motivated workforce will improve the organisation's performance.

Legislation imposed by the government can affect an organisation's financial performance favourably or unfavourably.

Corporate social responsibility concern

A gas release and subsequent explosion took place on 20 April 2010 on the Deepwater Horizon oil rig while working on an exploration well for BP in the Gulf of Mexico. This accident caused eleven deaths and few injuries. The hydrocarbons were released into the Gulf before the closure of the well. The accident was caused by a technical fault in the equipment. BP took the responsibility of cleaning up the spill under the direction of the federal government, took measures to compensate people impacted by accident and to look after the welfare of residents who helped responding to the spill. It also committed to restoring the tourism and seafood industries affected by the accident. The company has spent about 14 billion to the date to compensate the affected community (BP, 2014).

Stakeholder coalition

We are the leader of the seafood industry who are affected significantly by the Gulf of Mexico oil spill accident. We aim to force British Petroleum to address this issue and compensate us for this loss. For this purpose, we intend to form a coalition with other parties who are somehow affected by this accident. The purpose of a coalition is to form an alliance with other parties to address an issue. We intend to form a plan for the formation of the coalition, and in this respect the following steps will be taken to identify coalition members.

A stakeholder analysis will be carried out. The purpose of a stakeholder analysis is to identify the needs and interests of different stakeholders, the relationships between them, their motivations, and their ability to influence the outcomes of the coalition

A stakeholder table will be created to classify the various stakeholder groups. For example, whether they are primary or secondary, the degree of their influence and interest etc.

Validation of stakeholder profiles and positions will be carried out over time to make sure their interests remain the same and have not changed

A strategic vision/agenda will be developed for the stakeholders who have engaged in the analysis and assessment stages of the identification process (WWF, 2000).

We identify tourism industry, National Fish and Wildlife Foundation (NFWF), the U.S. government and local authorities and the local community as key members of the coalition. This is because of the following reasons:

Tourism industry is one of the major industries contributing to the economy of the Gulf. The tourists are affected and threatened by the accident causing the industry to suffer.

US authorities: Losses and expenses are incurred as a result of the accident by States, government entities and political subdivisions. These need compensation payments.

NFWF is concerned with the preservation of marine and coastal environments, ecosystems and birds and wildlife habitats, and the oil spill has affected the natural wildlife habitats.

Local community: This includes the people and businesses who can file claims under The Oil Pollution Act of 1990 for the economic and property damages related with the accident (BP, 2014).

Method to foster collaboration

In order to foster collaboration among these stakeholder groups we need to implement some mechanisms or organisational structures which will work best in the current situation of the stakeholders. The purpose of this is to enable them to consult and negotiate, form policies and make decisions. We intend to create a committee for the coalition to facilitate dialogue and communication among them so that planning and action can be undertaken (WWF, 2000).

Challenges in the formation of stakeholder coalition and their resolution

Forming an agenda which balances the sometimes conflicting interests of all stakeholder groups. This challenge can be resolved by engaging in a dialogue with stakeholder groups clarifying mutual interests and our priorities and theirs

Key parties which we intend to include in the coalition might not be willing to participate. We can overcome this difficulty by conveying to the parties the benefits to them of the restoration of the Gulf, such as continuance of the economy as if the accident had never happened

The cost of collaboration for stakeholders might be greater than the benefits to them. We intend to resolve this by developing a matrix of criteria with the relative importance of each (WWF, 2000).