British Petroleum Oilspill And Its Effects Business Essay

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INTRODUCTION:

British petroleum is an international oil and gas company.It is having branches all over the world.The headoffice is located in London.It is one of the six oil and gas supermajors energy company.It is vertically integrated company.It is listed on London stock exchange(LSE).It carrier out various operations right from exploration and production,to refining distribution and marketing.It also carries out operation in petrochemicals,power,generation and trading.The company is also dedicated to having major intrest in renewable sources of energy.Due to these dedication they are foccussed on biofuels,solar and wind power.the company is foccussed to invest over $1billion for development of renewable energy source.company is also dedicated for investing $8billion on renewable energy sources from 2005 to 2015.They are having 80 branches all over the world.BP produces 3.8 millions barrels of oil per day.The company largest division is situated is situated in America,head office in Houston,texas,which is the highest producer of oil and gas in USA.It is having secondary listing on newyork stock Exchange.

OILSPILL AND ITS EFFECTS:

BP is the principal developer of the Macondo Prospect with 65%share.While 25% is owned by Anadarko petroleum,and 10% by Moexoffshore.BP leased the minerals rights for Macondo to Minerals management services.On april20,2010 he explosion took place in deep water horizon.It was owned by Transocean and was under lease to BP.At the time of exploision the rig was drilling at a depth of 5,000 feet.

On april 20,2010 exploision happened in the deep water horizoin rig which was carrying out drilling.eleven workers died in the incidence .efforts to close the flame were unsuccessful.It was burnt for 36 hrs continuously and finally sank on the morning on april 22,2010.Suddenly on afternoon aprill 22,oil leak was discovered.the estimated amount of oil leak is 4.9 millions of barrels which is the largest in the oilspill in us controlled waters.BP stock was decreased by 52% in 50 days on NYSE.,which was lowest since june 1996.

Future statrategies to regain position in USA after the disaster:

Strategic management is a concept of acheivings organizations objectives by allocating proper resources,policies and plans in order to implement the future objectives effectively.It can be achieved by studying many factors . Macroenviromenal factors is one of those factors and integral part of company's strategic policies and its effects on the company business.Macroenviromental factors have direct impact on the organization strategies.macroenviromental factors includes Political factors,Economical factors,Social factors,Technologicalfactors,Environmental factors and Legal factors.I will discuss the factors and how they will impact BP for their future business in USA after the oil spill disaster.

1)POLITICAL FACTORS:It includes government rules and legal consequences as well as define both formal and informal intervention under which the organization must operates.For instance it includes areas such as taxpolicy,labour law,environmental law,trade restrictions,tariffs.

In US it is a well known fact that oil companys pays a lot of money to fund the elections campaign.there are two major companies in US both are funded by energy companies.these companies pay a lot of money to get benefits like higher subsidies,influence energy bill and to get tax break.also they want less rules and restrictions for environment protection.There are many examples of influence of energy lobbying being done to influence many reforms.for instance in Bush administration the government has consulted one ot the top oil company on the Kyoto protocol.The present government led by Obama has also received a lot of money from BP and its employees.almost $3-5 millions in last 20 yrs.According to the Americans tax cide oil production business is the heavily subsidized business in US.So to continue future business in US,BP has to continue to influence the government in power.After the oil spill there was a ban on deep offshore drilling.There was a lot of pressure on obama administration so deep offshore drilling ban was lifted a few days before it expiry.these clearly shows the intrest of US government as well as people for offshore drilling and oil.There are lots of reasons for lifting the ban.One of them is lobbying by energy company.Other is loss of job due to the ban.Drilling hold results in loss of 20% of oil rigs job and 12,000 jobs in total in gulf of mexico.government is losing a lot of money on royalties.Government lifted the ban but introduced new safety rules and tougher criteria.so BP has to comply to all those new rules and regulations.goverment has told BP to pay for clean up cost for sea and environment.BP has to settle all claims filed by people and the government to get the trust of people and US government for their future and existing business.

2)ECONOMICAL FACTORS:Economic factors have effect upon the buying power of potential coustmers.It includes various factors like taxation changes,economic groeth,inflation and exchange rate.here we will discuss about the US economy and its dependence on oil,as we are relating it with BP future potential business in US.

US economy is heavily dependnt on oil.US consumes approximately 21,000,000barrels of oil per day.domestic production os 6 millions barrels per day.US depends heavily on foreign imports for oil.Both the government are keen to reduce dependence on foreign countries for oil and start producing more oil domestically.so obama administration has given permission to offshore drilling.US is having a large quantities of oil in atlantic and pacific coasts.Large quantities of oil is untapped under the rocky floors of Atlantic and pacific ocean off the US coasts.these has created a huhe oppurtunities for oil and gas companies to do drilling business in US.Morever the US oil consumption is increasing day by day.Even oil and gas prices are going high day by day,so huge demand is there for oil.According to Energy information Administration by 2030 Us oil demand will climb to 23 millions barrels with global consumption is expected to top 18 millions.US govermenent is collecting a lot of money from oil companies in terms of royalties for offshore drilling(approximately $8billion a year).morever these companies are creating employement for many peoples.so business point of view US is very good prospect for BP.But due to oilspill BP have to pay a huge claen up cost and other claims and settlement.Looking to its future growth and to maintain its existence in US,BP has agreed to obama to give $20 billion relief fund for victims of oil spill.these is the worst loss in history of BP,but for good future business BP needs to discover more prospect for oil drilling.also fullfill the commitment of clean up of coasts,compensate victims and creates more jobs for people of US,and comply to new safety rules and regulations.

3)SOCIAL FACTORS:social factors includes the customs,lifestyles and beliefs that potray the society in which the business firm functions.It will influence the ability of company to get the resources,and makes its goods and services available to the People.It consists of everything within context of society which is having enough effect to impact the organizations.for example demographics,rising literacy level,norms and values and behaviour towards social responsibilities.

In US coustoms and lifestyles of people is very energydemanding which is very good for all energy companies.as when there is demand there is supply,due to which revenues is generated.Higher prices of oil have made deep offshore drilling economically feasible.there are plenty of resources available for BP right from exploration,manpower as well as demand.

BP cultural social responsibilities-BP has changed its name to beyond petroleum and has spent almost a decade and large of money in rebranding itself as a "beyond petroleum"with green and yellow sunburst logo.Company was taking its responsibilities to global warming and focused to invest in alternative energy,which earn them approval as a green brand.but after oil spill and crisis it created has done a tremendous harm to environmental conditions,subsequently hurting the public confidence ,which they were creating as a green brand.

BP accepted its social responsibilities and announced to donate its net revenue which it will get from oil recovered from mc252 spill to national fish and wild life foundation.BP has paid $5 millions immediately to NFWF to restore Americas wildlife and species.BP has paid $104 millions to residents living on the gulf coasts for the claims filed as a result of oil spill.BP has understood its corporate social responsibilities and giving money to fishermans,srimps and condoowners who are not able to earn due to oil spill.A1000 member team is working to receive and process claims.There are 33 offices setup and company is working around the clock to settle claims.

To regain trust BP has to settle all the claims and compensate all the people who are affected diretly or indirectly by oil spill.The gulf fishing and tourism industry are worst affected.fishing industry is washed out as nobody is eating seafood in gulf.all the tourist have stopped booking th hotel and cancel their trip to gulf beaches as beaches are contaminated with oil and no longer safe.

4)TECHNOLOGICAL FACTORS-Technology is a important point which a companies should keep in mind while developing strategic plans.changing technologies can create new oppurtunities for company or it can threaten its survival.It can create novel product and services.It can be beneficial to coustmers as well as company.It can reduce cost and improve the quality.

Technology failure was the reason for explosion and oilspill,so for BP doing future business in US technology advancement is very important.

Due to the equipment failure(failure of blow out preventer)and lapses in safety measures caused the explosion.

Clean and safe technologies should be developed by Bp to do future offshore drilling.

5)ENVIROMENTAL FACTORS-weather and climate change can impact the companies.It depends on the nature of business the company is carrying out.like farming,travel industry,oil and petrol exploration,perishable products supplied in biotech industry.due to global warming increasing day by day,companies have to draft policy which will protect environment and have less hazardous effect on population.for instance clean up cost,waste treatement for most of companies have increased due to global warming awareness and compulsion to use recycled products.

The oil spill in gulf of mexico is the worst environmental disaster in US.petroleum toxicity,oxygen depletion and use of chemical dispersant are expected to be the main factors for damage.2,6,814 dead animals have been collected which includes 6,104 birds,609sea turtles,100 dolphin and other mammals.oil have harm fish directly.the microbes used to clean oil have created oxygen depletion.methane gas created due to oilspill in deep water is killing marine life.

Sea food is affected and is considered to be unfit for human consumption. fishes and strimps are badly affected. All these factors have badly impacted fishing industry as well as travelling industry. Due to the oil spill ban was put on offshore drilling. To consider future business in US BP has to focus attention on clean up of environment which includes cleaning of gulf coast. US have introduced to increase the liability cap for company which are polluting the environment. Offshore drilling itself is the serious threat to the environment. BP has to find out safe and effective ways to do deep offshore drilling. All industries says that offshore drilling is environmentally safe but major incidents like katrina spill, gulf of mexico spill suggest that it is not safe. BP should focused on newer encleaned technology and should see that safety equipment should work properly whenever there is a spill.

ECOLOGICAL CONCERNS:

Oil spill has caused harmful wildlife which has come in contact with oil through various ways like physical, ingestion, inhalation and absorption. Floating oil has caused major harm to plankton like algae, fishes and larva of invertibrates. The birds which are oiled have lose the ability to fly and have also ingest oil while preening. Marine birds are also exposed to oil by feeding on carcases of contaminated fish and wildlife. Oil ingestion is harmful in many ways and have show to suppress immune system, organ damage, ulsuration and sometimes even death.

To do future business in US BP needs to find way to depend on low carbon emission energy sources. BP has already focused on alternative energy like solar energy and biofuel. Solar energy was first developed by BP. BP has invested $500 m over 10 years to establish energy biosciences institute to find alternative sources of energy with low carbon emissions.

6)LEGAL FACTORS-The company must functioned according to the legal rules and regulations which is designed by the country government where companies operates.the introduction of labour law,age favouritism,working hours allocation are the examples of laws which affects organisation actions.

After the oil spill US government has decided to make new laws and tougher regulations for deep offshore drilling.

The government have decided to increased liabilities costs and clean up costs under the oil pollution control act.BP as taken full responsibility for clean up costs and other damages caused by oil spill.BP has promised $20 bilion spill response Fund.Around 300 lawsuits are already filed against BP and its partner.BP has set up a committee to settle claims.The aim of committee is to reduce the numbers of lawsuits against company.even criminal charges are being files against BP.it is assumed that it will take around 20 yrs to come out of all lawsuits.

Marketing plan to recover from the disaster and to regain people confidence

It is essential that the company pursue a more customer centric marketing plan because company need restore it brand value. British Petroleum response toward the environmental issue comes to a point just below fatuous. It is time to go beyond and find an alternative solution to the environmental issues faced by the British Petroleum

Sharing Concern

British Petroleum's Chief Executives are making frequent media appearances not to show his individual apprehension but to convey the message that the company is actively responding to the environmental issue. It will help the company to portrait itself to be more cautiously responding to the environmental issue. The company understands the impact of tragic shock on customers and that on high priority

Casualty aid

The company had taken measure to support the families of the despaired and injured. Financial aids are in place for the people who lost their job because of this disaster. It takes leadership in encouraging other companies in the same sector to flow new safety measures and policies to avoid further incidents like this. BP should also create more employment opportunity to help the local residents who relied on marine sources to earn their daily bread.

Restoring the loss

British Petroleum should join hand with NFWF (National Fish and Wild Life Foundation) by providing assistance to preserve the species mostly affected by the oil spill in the deepwater incident and because of this incident some of these species like shorebirds, water fowls, marsh birds, sea turtles and other marine vertebrates living at this part of ocean got merely extinct. Taking this point into consideration, British Petroleum should liaison with marine and wild life conservative organizations to replenish the lost population of those marine species. The company should also appreciate other external bodies and volunteers who wish to be a part of this restoration program.

Combined Effort

BP should take steps to make customer aware, through there retail outlets to the extent of company's efforts in restoration from the environmental disaster and encourage the customer to share their valuable feedback in developing new safety procedures or to promote the willing customers to render their share of inputs in mitigating the time involved to restore things back to their normal state.

Online Measures

An online discussion on this matter will give everyone around the world to talk about their opinion into it. While creating an online blog or community on this issue asking for valuable suggestion would definitely bring up some serious feed back from people related to this field and also of the general public. When public gets aware of the fact that BP is using such a polite way to ask for suggestions from even a common man, there is a mere chance of regaining the goodwill of the general public.

Forming Research foundation

Bp could exploit this situation to bring in more industrial support, and corroborate with other organization in the same field and with the government to device custom made solutions which could fit in with the situational requirements. BP could bring up a research foundation mostly oriented to solve future incidents like the one happened in the Gulf of Mexico, the best solutions can be shared with the government authorities and the environmental regulators to bring up new safety norms which can be put into action in the near future.

Recovery strategy

British Petroleum is now in a midst of a critical situation where it is losing its brand value in terms of market share and people support. It has made a severe impact on its macro environment, so it needs to deal with all economical, social, political and technological failures. Hence one single solution cannot address all these issues and an open strategy need to be adopted that provides custom solutions to every aspect of its macro environment. Thus it should be an integrated approach that adds more value to it at each point of recovery attempt. Here is some recovery methodology which could be implemented by the British Petroleum:

Safety measures:

BP needs to come up with better safety techniques that could prevent future incidents like this. They could spend more money on procuring good quality equipments and proper equipments maintenance. They could also develop a way to improve communication by creating better response team, who shall be trained for generating a quick reaction to any future adversities, by mitigating the impact of a huge event like what has occurred in the Gulf of Mexico.

Eco friendly Drilling Techniques and waste disposal

BP needs to do a bit research in developing a Eco Friendly Drilling Methods (EFDM) that address:

Least impacting drilling technology that reduces the mark of drilling activities

Less heavier driller rigs that has low carbon emission system

On-Spot waste disposal techniques

The prime goal behind this initiative would be to recognize, build and test inventive technologies which could eliminate the environmental effects on oil and gas which could result adversely on sensitive environmental locations. BP can look forward in building its global tie-ups in developing partnership programs that enable technology transfer and develop fresh attempt that would deals with environmental worries.

Highly trained and qualified professionals

BP needs to recruit better trained and highly skilled professional who are capable to handle adverse situations effectively and efficiently. The advantage of employing trained ones could help in detecting the problem prone areas in the earlier stages so that preventive measures could be adopted.

Charitable initiatives

Oil spill has destroyed the goodwill holdings and company should do the needful to restore it in a very short duration to avoid further loss. The focus should be placed on more social engagements that would keep the brand close to public. More charitable endeavors need to given priority to calm down the agitated groups that raise voice against and tamper the recovery moves that the company undertakes.

Celebrity endorsement and ad campaigns

Company could also use media to have celebrity endorsements and creative ad campaign to keep the customer focus on to the final product quality. More importance should be given toward product differentiation and product placement.

Tourism and Seafood Promotion

Oil spill has impact the lively hood of the local fisherman community and the regional tourism adversely. Hence it the added responsibility of the company to restore everything back in place. Either they should make necessary arrangement to compensate the loss or make provisions to boost the morale and join hand with the people in bringing things back to normal. Company could initiate adventure sports activities/organize international seafood festival that stands out with high quality tested seafood's.

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