Introduction In today’s oil and gas hypersensitive business environment, social and ethical issues stem from the perception of stakeholders. This is seen in BSP chain of crisis event. In addition, America’s 16th president Abraham Lincoln illustrated the stakeholders perception idea himself in his statement ‘Public sentiment is everything. With public sentiment, nothing can fail: without it nothing can succeed. On April 22, 2010, Green peace claimed that BP committed the greatest environment crime in history due to the Departed Horizon blowout crisis (Mason, 2011). In addition to that, other crisis events due to mismanagement of stakeholders and safety issues have cost BP its reputation. The curtail paper focuses on the issues of stakeholder mismanagement and reputation damage as it relates to the case of BP. Theoretical Background Corporate stakeholders are individuals or groups who can affect or are affected by a firm’s objectives or policies.
They have a ‘stake or vested interest’ in a firm and as a result their management is of key strategic importance to an organization. The underpinning issue of stakeholder management is to deal with conflicting interest twine the organization and its stakeholder group (See Appendix 1). Stakeholders trust and perception of a company also defines the reputation of that company (Freeman, 1984; Carroll and Bucktooth, 2011). A firm’s reputation is the ‘collection of perceptions and opinions, past, present, about an organization which resides in the consciousness of its stakeholders’ Money, 2003).
The next section highlights the stakeholders perception of BP in conjunction with the company’s stakeholder management approach. Stakeholders historical perception of BP Fact or fiction can bring a company’s to its knees whether it is based on evidence or speculation. BP notoriety for its long term legal and ethical violations has unlocked some serious allegation about the companies past history. Some scholars (Manumit and Marriott, 2002; ), have argued that BP have violated human rights for profit minimization in the Iraqi/loran invasion and Columbia massacre in the asses.
They also argue that the organization is indirectly linked with sponsorship of Angola and Sudanese civil wars and violent conflicts. The image of the company was refrained ROR to previous mishaps under the reign of former CEO Lord Browne in July 2000. The image rebinding followed environmental and social consideration which was a strategic move to mislead stakeholders and as such earned the top spot by Financial Times and PricewaterhouseCoopers’ 2001 survey as World’s most respected companies (Financial Times and PricewaterhouseCoopers’ survey, 2004).
BSP Stakeholder Management Approach: What do they claim to be doing? Prior to changing its name from British petroleum to Beyond petroleum, BP put in place an tentacle Ana compliance team In 2 no peduncles an article tattle o Commitment to Integrity to exercise commitments to its stakeholders. In addition to the effect, BP regarded itself as a Green company by diversifying energy since it invested 5 percent of its capital investment in 2005 in renewable energy like wind, solar and bio-fuel.
In addition to gain a good perception of stakeholders, BP intended to give clear guidelines for individuals covering five key areas: health, safety, security, and the environment; employees; business partners; government and communities; and company assets and financial integrity. The company also argues that it is regulatory compliant with laws, polices and requirements from the Mineral Management Service (MS) (Spence, 2011). Furthermore, BP also tried to win a good reputation among Academics by holding ‘green workshops’.
In the name of social responsibilities, they distributed carbon print toolkits to 80% of British high schools and earned a prestigious award for e-learning at the International Visual Communications Association (PICA) awards in 2007. An evaluation of BSP stakeholder management approach in conjunction with former CEO Tony Hayward statement: “My enduring priorities are, firstly, continued improvement in the safety of our operations all around the world” (Daily Mail, January 13, 2007), one may be forced to argue that BP was merely a victim of unfortunate events.
However, given their culture of deceit and arrogance linked with strong evidence from the evaluation of external stakeholders, it is only logical to see that more than bad luck was involved. The public relation act to mislead the stakeholders has lead to the advertisement of the company’s bad product in relation to major crisis it faced. The opinions of external stakeholders that lead to BSP serious reputation damage are explored in the next section.
Pressure Point: Evaluation of external stakeholders’ perception of BP Nothing kills a bad product faster than good advertising. In 2000, BP was ironically awarded the “Greengage Award” by the US based MONGO ‘Corporate’ upon it rebinding scheme (Burn, 2000). The refrained BP gained limelight and serious scrutiny about the sincerity of its claims. Wall Street Journal among many media groups indicated that such ambitious campaign could hurt the company and its warehouses (Bate, 2000). Justifying the Medias opinion, Greenback declared on its website (wingspreads. Erg) that BP stands for ‘Burning the Planet’ and also concluded that BP displayed a triumph of style over substance since it spent more money on its logo than it did on renewable energy and safety policies (Router; the Times; Wall Street Journal; Daily Mail 2000). Following the rebinding pressure, in 2002, Financial Times and an activist Charles Hammer claim to have received information from BSP workers that the company was cutting down cost and as a exult of such profits had taken precedence over safety and the environment issues (McNally, 2002, 2003).
In the course of cost-cutting claims, government bodies like U. S. Chemical Safety and Hazard Investigation Board, Occupational Health and Safety Administration (OSHA), Clean Water Act, Clean Air Act, Mineral Management Service (MS) started investigating BP and in the course of the investigation, OSHA found 270 safety violations that had been previously cited but not fixed and 439 new violations by BP. MS also claim that BP illegally drilled the largest oil well in history 35, fat) which caused the Deep Water Well explosion (Hoffman and Jennings, 2011 ; King and Johnson 2010).
Evidence from stakeholders evaluation of the company then proved correct as ten company was Involved In 4 major crises Trot z Texas City refinery explosion involving 15 dead people and over 170 injured occurring in 2005 (Mare and Tinsels, 2010). In 2006 to 2008, a series of accidents in Texas City also followed with the death of 3 people and also the oil spill in Alaska (Bower, 2010). North Sea helicopter accident in 2009 (Byers, 2009) and in conclusion with the worst IL spill in US history ‘The Deep Water Horizon Well Explosion’ in 2010 involving the death of 11 people (Hoffman and Jennings, 2011).
The effect Following the crisis situation, BP subsidiaries over the years have been convicted 3 times for environmental crimes in Alaska and Texas, including two felonies. It remains on probation for two of them. The company has also paid several fines for work safety violation and is still undergoing investigation for 13 safety violation at Cherry Point refinery near Fernando, Wash. The reputation damage also lead to loss of investors such as Henderson Global, a leading I-J ethical fund company, who sold its BP holdings due to lack of confidence in Up’s commitment to the environment and safety issues in Alaska.
World Wildlife Fund (WFM), cited in the FT also sold its BP share for reason evident after FT quoted a WFM spokeswoman: “Their performance on health and safety over the last 12 months is not what we would have expected… We can’t in good conscience keep BP on our books” (McNally, 2003). Also, since investors were worried about BSP reputation damage and so it stock fell by 52% in just 50 days after the deep horizon crisis (See Appendix 2) Money, 2003).
The guardian also claims that BP has lost more than Bean from its market value not even to talk about other cleanup costs and compensation for the affected fishermen due to crisis situations (Cocoon, 2010). Business Insurance has also revealed that BP does not have a crisis management plan and as a result has suffered severe damage to its reputation in recent years (Business Insurance, 2011). Conclusion BSP lack of ethics, lack of regulation, personal gain greed, hypocrisy and corruption as mimed from stakeholders perception has clearly demonstrated that the company lacks what it takes to effective manage its stakeholders.
Hence, this paper has clear demonstrated how lack of stakeholder management can lead to reputation damage. However due to its length it cannot fully capture all the disasters that BP faced but it clear shows that BP failed to effective implement it stakeholder management program as it relate to health and safety issues. Recommendation Stakeholder Engagement Regulatory Compliance Have a good crisis management plan
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