Global Ethical Position Of Bp Commerce Essay


In a 2006 interview with ProPublica after the Prudhoe Bay spill, published in Fortune BPs chief executive of American operations, Robert Malone, said "There is no doubt in my mind, what happened may not have broken the law but it broke our values.

Corporate social responsibility is simply a duty of care which an organisation owes to its stakeholders and the environment in which it operates.

Hodgetts et at (2006, p65) states that:

"Corporate social responsibility (CSR) can be defined as the actions of a firm to benefit society beyond the requirements of the law and the direct interests of the firm. Pressure for greater attention to CSR has emanated from a range of stakeholders, including civil society (the broad societal interests in a given region or country) and from nongovernmental organisations (NGOs). These groups have urged MNCs to be more responsive to the range of social needs in developing countries, including addressing concerns about working conditions in factories or service centers and attending to the

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environmental impacts of their activities."

According to Stewart Broome the Director of Business Ethics at BP, BP operate under global standards through its use of innovative technology, safe working conditions and operational processes, safer operational practices for the protection of the environment in accordance with global ethical standards.

However, contrary to BP's ethical position the following incidents have occurred within the last five years which resulted in the loss of lives, destruction of the environment, and marine life.

Lustgarten (2010) reported that:

A BP's refinery explored in Texas, March 2005 this resulted in the death of 15 workers and the injury of 170 others. Investigations determined that BP ignored its own protocols in the operation of the tower and that the company's warning system was also disabled. BP consequently pleaded guilty to federal felony charges and was fined more that $50 million by the US Environmental Protection Agency.

One year later 4,800 barrels of oil leaked into the Alaskan snow through a hole in the company's pipeline at Prudhoe Bay. It was reported by Fortune that BP failed to investigate the pipeline in 2002 even though they had been cautioned to investigate the pipeline in 2002, they failed to do so.

As a result a $12 million fine was imposed on BP for a misdemeanor violation of the federal Water Pollution Control Act. It was later determined by a congress committee, that BP had ignored opportunities to prevent the spill and that "draconian" cost-saving measures had led to short cuts in its operational undertakings.

BP's most recent incident, on the 20 April 2010 what was confirmed sealed on 19 September 2010 resulted in the death of 11 persons. Though the company has investigated the possible causes of the oil spill on the Gulf of Mexico given its track record in the past there is a lack of guarantee that such tragedies would not happen again. The families of the workers who died have filed lawsuits accusing BP of negligence.

Reviewing BP's operations it appears that BP should revisit its global ethical position as it relates to the safety of its workforce and the environment. It seems that the proper measures and strategic implementation of processes are not being adhered too. BP should take the necessary steps to ensure the proper maintenance of rigs, regular health and safety training of staff, proper maintenance of plant and equipment to prevent incidents and accidents.

The implications of their brand and marketing

The world over the past twenty years or so have become more environmentally conscientious and caring towards sustaining, preserving and maintaining the environment. The BP brand has been affiliated with preservation of the environment. BP.Com stated: "The systems, standards and technologies we apply to minimize our environmental footprint." In dedicating its operations to responsible global leadership the company was able to improve its reputation and increase its bottom line.

As a result, BP's financial status has been sound as stated by Dailyfinance (2010) stated: "Due to higher oil prices, BP's first quarter 2010 profits were $6.08 billion compared to $2.56 billion in the first quarter of 2009."

The BP brand captured a large share of the target market this was a reflection of the company's success. For 16 consecutive years BP identity as Amoco was rated the best petroleum brand by consumers and they also enjoyed one of the three highest brand loyalty reputations for petrol in the US this was comparable only to Chevron and Shell.

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However, the BP brand is now perceived as socially and environmentally uncommitted to the global environment in which they operate and as a result there will be "fall-out" from the BP brand and its products.

John Kleine executive director of the BP Amoco Marketers Association (2010) stated: "Some BP gas station owners in the United States want to drop the BP name and return to the Amoco brand to recover business hit by public anger over the Gulf of Mexico oil spill disaster. The worst offshore oil spill in U.S. history fouled beaches from Texas to Florida, devastating the Gulf coast fishing and tourism industries. Some environmental groups called for a boycott of BP gas stations."

Due the negative impact of that the company's operations has on the environment they are going to be person who would reject the BP brand.

Kleine (2010) stated:

"The BP spill has had a psychological impact on distributors. He described it as a time of crisis and triage….That really comes from being concerned about their business, their livelihood, their investment, seeing every day the news that would tend to make you believe that the business is going to decline."

Johansson (2006, p11) stated that in global marketing it is essential that marketing activities are coordinated and integrated across geographical boarders. Products are standardize, packaging of products are uniformed with identical branding in a number of countries.

JOHANSSON (2006, p15) states that:

"Global brands are brands that are available, well know, and highly regarded throughout the world's market. Examples include Swatch, Mercedes, Nestle, Coca-Cola, Nike, Mc Donald's, Sony and Honda."

BP can be compared to the case of global company Nike and the allegations of child labour, unsafe working conditions and inhumane conditions of work. Though Nike never admitted directly to any wrong doing they did however, raise the minimum hiring age from 16 to 18 years, improved the conditions of work and the company even created a position of a vice president for corporate and social responsibility.

The world may largely perceive BP as an irresponsible company not currently taking caring for the environment, its workers and the global community at large. BP's company image as it relates to the environment, marine and wildlife is tainted due to the number and severity of oil spills, especially given the length of time approximately five months (September 2010) which it took for the well to be sealed.

The public appears to have lost trust and faith in BP's ability to conduct its operations in a manner which is safe for their workers and the environment in which it operates. Non-governmental groups would clamour for stricter control and harsher penalties for companies through their operations.

The fishing industry, largely small businesses, along the coast expressed concerns that they may be taken for "a ride" due to BP's delay in dealing with their claims for losses, after what has been considered the worst natural disaster in recent times.

There is the urgency for stricter legislation by governments which would ensure that companies that operate in their country follow health and safety policies according to the Occupational Health Safety Act.

Failure by any company to implement safer working conditions and operations can only weaken the company's image and pose a threat to the survival of the company. Persons would seek alternative products and services from other companies which in its production and manufacturing stages are not harmful but safer to the environment.

PERREAULT (2005, p256-257) stated that:

"Brand rejection means that potential customers won't buy a brand unless its image is changed. Rejection may suggest a change in the product or perhaps only a shift to target customers who have a better image of the brand. Overcoming a negative image is difficult and can be very expensive."

Global customers dissatisfied with brand image can result in consumers globally rejecting the brand which would ultimately affect BP's profits.

What global marketing strategy should they adopt now?

In review BP has a "up- hill" battle to rebuild its bruised reputation through its adoption of an international culture of safety for their workers and the environment. Fredrx, (2010) argues that:

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"BP may have plugged the leak in the Gulf Oil spill, but the damage done to its brand will take years to fix. A new marketing industry report released Wednesday shows the British oil company has tumbled off a list of the world's top 100 brands."

It is highly recommended that BP strengthen its brand integrity through corporate social responsibility and global ethical behavior, which would attract customers once again to the BP brand. By signaling to its stakeholders it is committed to meeting its moral obligations and expectations beyond what they are required to do by legislation allowing for the buy-in to the BP brand.

It is essential at this time the BP re-strategize its operations to 'regain' its image of an environmentally friendly "green" petroleum company. Therefore, it would be prudent for BP to restructure the company and its management structure.

Freeman et at (2007, 6) stated that: (conscientious brands,...mean brands that see socially responsible behaviour as an integral part of what they do, rather than as an add on. ....conscientious brand owners are human-centric and transparent, focused on creating positive change in the world (not just on minimising the negatives) and aware of the needs of all stakeholders."

To recover quickly it is of crucial importance that BP focuses its resources and attention on issues of safety. The appointment of Mr Robert Riley to the position of Head of Safety and Operational Risk, Competency and Capability Development was as a direct result of his 10 year reign at the head of BP Trinidad without incidents and accidents. The company wants to foster a culture on zero accidents in their global operations.

Paul, (2010) stated that:

"In this new role Riley will report to Bly and will lead BP's worldwide efforts to develop industry leading quality and rigour into BP's operations, particularly as it relates to safety and operational risk. …As a consequence of the spill BP established a new Safety and Operation Risk unit to allow officials to intervene in all of BP's technical activities."

This move was necessary to deal with the concerns from the global environment regarding the issues of safety in BP's operations which resulted in the oil spill of April 2010. Their intention is to standardise BP's global safety and operational integrity to a level which would eliminate accidents and incidents leaving negative impacts on the environment. Mr Riley was therefore given this appointment to help rebuild the image and reputation of BP as an environmentally caring company, since Mr Riley while he lead BPTT had zero incidents.

Johansson (2006, p537) stated:

"Global public relations is a form of indirect promotion of products and services that focuses on creating goodwill towards the corporation as a whole. The corporate communications staff at headquarters and its counterpart in the various host countries serve as promoters of the corporation to various stakeholders interested in the company's foreign expansion"

It is important that stricter policies on the Occupational Health and Safety Act are properly implemented and enforced. The Company's image has to change reflecting that they are an environmentally conscientious company. Therefore this is an attempt by BP to rebuild its brand and image. Their image has to change to one which is socially, ethically and environmentally conscious.

The spill of April 2010 has certainly impacted negatively on BP's image as a "green" company. It is important that they return to the company's vision and develop and implement strategies which would enable the company to deal with its image and brand rebuilding.

"The millions of gallons of oil that have spilled into the Gulf of Mexico are more like an epidemic, one that we will be fighting for months and even years. 

But make no mistake:  We will fight this spill with everything we've got for as long as it takes.  We will make BP pay for the damage their company has caused.  And we will do whatever's necessary to help the Gulf Coast and its

people recover from this tragedy." In the aftermath of the spill it would be advisable to BP to redrand its promoting the "new" company as a more human-centric and environmental conscientious company. BP would also be advised to work with its stakeholders to ensure such a disaster never happens


Four possible ethical stance BP can adopt

Exploring Corporate Strategy, Seventh Edition © Pearson Education Ltd 2005

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