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On the faithful day of April 20th, 2010 an explosion occurred on the Oil Rig of Deepwater Horizon, operated by oil giant BP. Moreover, there were 11 fatalities from this episode and still a vast amount of oil is being leaked into the ocean at an alarming rate. The large-scale ethical position of BP is not really a good one. The company has been at the centre of a series of incidents in North America over the last decade; the Texas City refinery blast (2005), pipeline leaks at Alaska North Slope (2006), the partial sinking of the Thunder Horse platform (2005) and substantial civil penalties for trying to manipulate the propane market (2004). (Thomson Reuters2010)
This oil spill can be considered as the worst oil spill in the history of the United States and I think that they could have invested supplementary wealth and consideration into the preparation of their drilling. All of this could have been evaded. Shell's boss Peter Voser attacked BP over oil well safety, saying: "Shell would have drilled this well in a different way and would have had more options to prevent the accident." (Jim Preen)
US President Barack Obama and residents of the Gulf coast hit out at BP's Tony Hayward when he said in June that he "wanted his life back" and that the Gulf was "a big ocean". This clearly shows that they don't care or that they just don't understand the extent of their hazardous drilling. Hayward has been extensively criticized over his handling of the disaster following a series of gaffes. The only ethical track for the besieged boss of BP was to simply step down and Tony Hayward did exactly that. He is now replaced by the American Bob Dudley, who is in charge of the cleanup operation. (Russell Parsons 2010)
"Why didn't anyone on the Deepwater Horizon rig intervene before it was too late? Based on the evidence that has emerged so far, it appears that some may have tried to sound the alarm, but higher-ups disregarded them. In other cases, it seems that BP and Transocean workers felt themselves under tremendous pressure to save time and money, despite claims by the company that safety always comes first. Some have even suggested they were afraid they could lose their jobs for making a stinkâ€¦"Martha E. Mangelsdorf This is totally contrary to what BP's code of conduct states. Bp code of conduct states that they empower workers to speak up. Empowering Employees to Prevent Disaster Opportunity to raise and discuss ethical dilemmas: Employees need to feel that they are able to raise and discuss their dilemmas. This requires trust, openness and an awareness of cultural differences, so that employees are able to raise issues and be confident that they will be heard and understood. (BP code of Conduct)
Culture is an organization's operating system, the values that everyone lives by. In the case of BP, the culture didn't work effectively and now its failure is on full exhibition for the world to see. It is possible that the error messages were so frequent that everybody chose to ignore them. Has the culture given way to a voracious need for corporate profits or is the problem simply arrogance? Did management become so arrogant that they forgot that drilling in 5000 feet of water means pushing the edge of technology?
BP's culture allowed extreme thoughtlessness in pursuit of profit at the cost of safety or environmental stewardship. As the drill was planned, BP chose a cheaper casing seal, which reportedly contributed to the blow-up. Can we say BP placed profits in front of safety? This statement can be quite true. The company intentionally cut corners on procedural and safety. For example, last June, exceptions to BP's safety standards were taken to senior executives who approved them. And according to a rig survivor interviewed on "60 Minutes," BP ordered partners to cut corners because their absurdly ambitious drill schedule was off by several weeks. Hours before the explosion, multiple warnings arose; yet all were ignored. So much for the values of Standard Oil and BP. Incredibly, these penny-pinching moves were made as BP racked up record-breaking profits! (Elizabeth Haas Edersheim, 2010)
The implications to their global brand and marketing
The oil spill not on resulted in extensive environmental ruin but it stirred up animosity to BP's brand identity. In spring 2010 the world learned a shocking lesson about what "Beyond Petroleum" really is: an industry that operates beyond the technological capabilities to mitigate the enormous risks of the business to the environment and society.
BP has been leaking $72m (£45.1m) worth of brand value every day since its Deepwater Horizon rig exploded and started polluting the Gulf of Mexico in May, according to Brand Finance. The brand valuation consultancy says BP's brand value fell by 61% to $4.7bn (£2.95bn) by late June after the offshore spill. Before the explosion on 20 May, BP's brand was ranked 53rd in the Brand Finance top 500 brands with a value of $12.2bn (£7.6bn). (Clews, M 2010)
The mock logos circulating these days certainly make it clear that the brand identity of BP is in stark contrast to reality. Deepwater Horizon was not the first disaster linked to the BP brand, but the oil spill in the gulf is unprecedented in its explicitness. It reveals to the world, the real issues of the industry and its social, economical and political relevance. It also shows how an ill-conceived branding strategy magnifies the risks and increases the negative response once things go wrong. And the spill's impact is not just limited to BP the oil industry as a whole may rethink the way it employs its brands. Meeting the incredible responsibility which rests upon these companies will require a higher profile and increased communication, not only in times of crisis.
Transparency, communication and participation will become key activities and may prove more effective brand-building measures than the sponsoring of Formula One racing. The brands need to come out of their quiet position and engage with the public at large, taking a lead in providing comprehensive and relevant information to their diverse stakeholder groups.
Most importantly of all, their brands must be rooted in their business realities, reflecting the very nature of the firm's activities instead of searching beyond petroleum for euphemistic branding solutions. A short review of the oil industry unlike other sectors, the oil industry has faced a number of singular pressures that make branding a significant challenge. BP's flawed brand identity was a response to the realities of the industry, as well as recent trends within the sector. Below are some of the pressures the oil industry has faced in the last few years. Extensive vertical integration In contrast to most other industries, where brands primarily focus on customer needs, the oil industry has multiple stakeholders it must satisfy simultaneously.
Upstream, the companies are pitching for drilling rights with the governments. Downstream, they compete for large international customers as well as local consumers. This makes any form of branding a complex balancing act between conflicting stakeholder interests. Pricing that's political although most large industrial countries have adopted a pro-free-market stance, the pricing of oil and the strategic decisions of oil companies have rarely been purely economic. Oil is essential to the world's economies, so preferences about the level, direction and volatility of oil prices as well as energy security are of much national concern. The structure of the markets and the importance as a source of tax revenue are also key political issues. Personally when I hear about BP I automatically think of pollution and the visual of these pelicans draped in oil are sketched in my memory.
As oil is getting harder to find, leading firms are moving further offshore or to the Arctic and seeking to exploit oil sands and shale, further increasing environmental risk. To meet this challenge sustainably, the industry will need to step up its security measures and environmental responsibility. Future projects will become even more complex, as stakeholders will require oil business's to be more socially and environmentally friendly. The environmental cost will increasingly be factored into the price and all "customers" the government, taxpayers and consumers will need to share the cost. Brands in crisis, and a crisis of brands Triggered by mounting competition and increased public concerns, branding in this industry has experienced numerous developments in recent years, and some firms have pioneered new frontiers namely BP, which found the common answer in "Beyond Petroleum," which appealed to the public and investor alike.. When BP reinvented its brand in 2002, "Beyond Petroleum" was meant to capture in words what the new brand identity does visually: highlighting the company's commitment to large investments in renewable energy and the development of a portfolio of clean technologies for the energy mix of the future.
To be clear, BP was by no means the only international oil company investing in renewable energy and technology, nor was the business's dependency on petroleum ever called into question. But BP was the only company turning this activity into the central theme of its brand identity and communication. The fact that renewable energy represented only a fraction of BP's business, and the recent discussions on a possible sale of these activities, raise suspicions that the business's reality did not sit comfortably under the umbrella of the brand's new identity. Was it a good positioning idea to stretch the renewable energy activities, given the fact that the business remains among the largest contributors to carbon dioxide emissions? The damage to the BP brand as a consequence of Deepwater Horizon is particularly severe for three reasons: 1. The incident is strongly associated with the brand because it represents a breach at the very core of what the brand claims to be. It is a strongly "branded" incident. 2. The accident is highly relevant for the global community, not only to those directly damaged. 3. The accident triggered an intensive discussion in all media channels, and this is not expected to fade soon as the traces will be there for a long time. The negative response is long lasting. Brands cannot prevent accidents from happening, but companies that have failed to develop strong and credible brands have a disadvantage in that they have no voice when things go wrong. A strong and credible brand is an instrument that is particularly helpful in managing incidents so they don't escalate into full-blown crises. Without it, other stakeholders will "manage" the crises not necessarily in the best interests of society and least of all of the company. This is what is currently happening to BP. As it becomes obvious to the world that the company has stretched its brand promise too far, the company has lost its voice and credibility. In addition, BP's promise appears unsustainable in the first place,
A strong and credible brand is an instrument that is particularly helpful in managing incidents so they don't escalate into full-blown crises.
Misrepresenting the nature of the core business is not a good starting point to develop a brand. Branding in the oil industry The oil spill in the Gulf of Mexico will have an impact on the industry as a whole because the risks involved, the technological capabilities, and the installed security measures are all largely the same among the big international firms. In the eyes of the public, the Gulf disaster is to the oil industry what the financial crisis was to the financial industry. Because risks were underestimated, the result will likely be more regulation and control. But equally important, the disaster may trigger more debate about the broader relationship between energy and society. It may paint an honest picture of the predominant role of oil and gas across the globe and ensure that hopes for an immediate, boundless carbon-free, low-cost alternative are more aligned with the realities of the situation. It may also make the general public more energy literate, which will lead to changes in the perceived cost of energy and what customer expect of oil companies in regards to society. The oil spill has made it clear that there is a need for more information about the broader issue of energy, the activities of the oil industry, and the potential impact the industry's activities could have on the environment. The sector has to rethink where and how it engages in communication, as well as what its communication has to achieve and how success should be defined (and possibly measured). The engagement will need to begin at the corporate level and touch people wherever they can be reached on social media, in schools or at work genuine commitment is required to reach the hearts and minds of target groups. The brand plays an essential role in supporting this development. More than ever, the stakeholders need trusted partners. Conveying trust is a core function of a brand. Building brands on the basis of a genuine partnership, particularly with the public at large, will be a core capability and key competitive advantage in this industry. Given the complexity and perceived destructiveness of the business, retaining the trust and support of the customers, shareholders and the communities in which these companies operate is certainly not a simple task. brand experience as' subjective, internal consumer responses(sensations, feelings, and cognitions) as well as behavioural responses evoked by brand related stimuli that are part of a brand's design and identity, packaging, communications and environment ' . Brand experiences can be positive or negative, short-lived, or long-lasting. (Bernd H. Schmitt, Lia Zarantonello)
Despite the existence of valuable brands in the industry, most companies struggle to develop brands as a viable guiding principal to the organization and exploit them as an effective cornerstone to interact with the various stakeholder groups. The brand's development is mostly left to the marketing departments' or worse, it falls between departments instead of moving to a central level, where it can give a face to the company's mission and inform the business as a whole. The ambivalence of the role in the organization and the lack of (credible) profile in the eyes of other stakeholders make brands vulnerable, particularly in times of crisis. Starting from within, companies will need to take their branding program a step further and employ it as the core guiding principle for the business and its employees.
Clearly defined values, rooted in the core business and conveyed by the brand, can steer the organization and employees' behavior. As responsibilities and risk become "softer" less explicit and prescribed leadership requires a vision and role model for responsible behavior and action, enabling employees to respond quickly and equitably to upcoming issues.
What Global Marketing Strategy should BP adopt now?
I've been trying to think if there is anything valuable to learn from this unending misfortune of BP. It's piteous to state that as oil is still spreading and surfacing in the Gulf of Mexico, people are having less faith in BP's reputation. BP's name is fast becoming unavoidably linked with this ecological calamity the same way in which EXON's name was tarnished whith the Valdez tanker cataclysm which transpired in 1989. How ironical is this when BP has made current attempts to rebrand itself as the green company which incorporates the use of solar energy technology and more eco-friendly.
Furthermore, the dilemma that BP is experiencing in light of the repercussion of this disaster is derived from a lack of ethical guidance. Instead of doing what was right I believe that the problem BP is facing in the aftermath of this disaster is a result of a lack of strong ethical guidance. Instead of doing the right thing, it appears that BP's management has resorted to arguing the issue of liability in the court of public opinion. BP's C.E.O., Tony Hayward, has recently said, "This was not our accident." He has pointed to Transocean, the rig owner, and Halliburton, the company that constructed the concrete encasement that sealed the well, as the true culprits.
While company attorneys would be negligent if they failed to advise BP to avoid accepting legal responsibility for the disaster, this does not mean that BP should publicly blame others. It appears that the company's public relations and legal positions have become entangled with BP resorting to indictment as its chief strategy. Such actions should be reserved for the courtroom, not the media. People are expecting BP to express sorrow and regret for the disaster, not cast blame and divert attention from its own actions. Its reputation is suffering as a result.
Modern business ethical theory and corporate responsibility emphasize the importance of taking stakeholder interests into account. Stakeholders are those parties that a company's actions affect. In developing a public response to the gulf oil spill, BP had failed to properly place its stakeholders at the center of its strategy.
Instead of being fixated on legal liability, which primarily impacts internal stakeholders (i.e., management, employees, and shareholders), BP should have empathized with external stakeholders that will suffer from the oil spill. These include Gulf Coast fishers, nearby residents who rely on tourism dollars, those concerned with harm to wildlife, and those who simply enjoy the physical beauty of the area. Proper corporate responsibility could have involved BP, Transocean, and Halliburton working together to formulate a relief package to address these economic and environmental factors, regardless of who was ultimately responsible for the spill. "Long-term issues of restoring environments and habitats will be years." They definitely have to revamp the way in which they do their drilling. A high profile stratagem in BP way forward is reaching out to the public especially the environmentalist and maintaining relationship w Build alliances with industry partners and NGOs. for NGO's because its not about money for them its about money for BP but BP ahs to look past that. Part of BP's damage control plans are BP has established a trust and a $20 billion escrow account to pay legitimate claims arising from the Deepwater Horizon incident and the resulting oil and gas spill.
The purpose of the escrow account is to assure those adversely affected by the spill that BP indeed intends to stand behind its commitment to them and to the American taxpayers.
Deep-water drilling is risky, as BP found out in the Gulf of Mexico. Nevertheless, I think BP ought to have known that before.