BP and gulf of mexico oil spill Case Solution
Discovery of oil in Iran resulted in the formation of the Angelo-Persian oil company which ultimately became the BP. Before the World War I the British government purchased majority stake in the company because of the requirements of the Army and Navy of the UK. The company made huge profits, and in 1954 the company changed its name to British Petroleum. The British government then privatized the company during the tenure of Prime Minister Margaret Thatcher.
In the late 1990s, the company emphazed heavily to reduce its overheads and set extremely tough financial targets for the managers. The company made several acquisitions in that period to compete with the Industrial giants such as Shell and Exxon. The CEO of British Petroleum received many awards and recognitions during that period.
Despite the financial success, the company had a poor record of health and safety issues. The refinery had a major fire accident in 2005 in Texas which resulted in several injuries and casualties. Many safety audits raised concern over the poor safety conditions in the refineries which were the result of cost-cutting strategies. The company had also seen some major explosions and fire after the Texas incident.
In April 2010 the company saw a major accident at Deepwater Horizon, an offshore oil-drilling rig managed by BP, which also resulted in severe financial, reputational loss along with the demise of its labor.
Analysis of Leadership:
The leadership of BP:
The leadership of BP has not learned from the mistakes of its past; the same incident happened in 2005 which also resulted in many casualties and injuries. The Texas incident also resulted in an adverse relationship with society and impaired the reputation of BP.
Also, the lack of communication and unclear roles of the employees and subcontractors has also resulted in this disaster. All the parties who work on the oil field immediatelystart to play the blame game and point out the inefficiencies of the other parties rather than working together to mitigate the financial and non-financial consequences of the tragedy. All the three parties refused to take the responsibilities of the oil spill and that refusal to admit the mistakes again makes it difficult for the regulators to identify the cause of the incident.
The strategy of the CEO and top leadership after the incident was also heavily criticized by the general public as well as government officials and media. After the disaster, the CEO who was the leader of the organization, instead of bringing reforms to the policies of the company, Mr. Hayward took some time off to spend with his family in the United Kingdom which also lead to adverse impression to the general public.
The disaster resulted in the loss of precious lives, it also damaged the environment and sea life drastically, the leadership of BP didn’t take that sensitive issue seriously and the Coca Cola Company’s leadership strategies that make it outstanding in global markets made statements which bring the issue into more limelight. Despite having the vast history of crises and incidents the leadership of BP lacks the ability to tackle these kinds of situations.Furthermore, the leadership of BP is increasingly focused on short-term performance rather than focusing on long-term objectives. The cost-cutting measures results in the poor health and safety management. This cost cutting policy also allows BP to enjoy heavy growth in profits but,only by compromising on the health and safety of the workers and marine life.
The leadership of BP fails to manage the MacondoWell properly some of the workers describe it as the ‘well from hell’ which also provides the evidence of problems they are facing in drilling the oil field. According to the leadership of BP, the oil spill is primarily caused due to thefailure of various systems, however, merely blaming the system is not justified because it is the leadership who is responsible for designing the systems which are effective and sound enough to prevent the disaster and ifhappens to mitigate the loss of disaster.
Analysis of Culture of BP:
To prevent the incident from occurrence, the leadership and management are responsible for designing and implementing the culture of honesty and enforce people to monitor the potential occurrence of a catastrophe.
It can be seen that there is a dysfunctional organizational culture throughout the BP, the authority should be given to the people who possess the necessary skills to make the effective decisions, and this seems to be missing at BP. After the explosion, therewas ambiguity regarding the responsibility of the incident.............................