Assignment 1 – Essay
Gina Riveros
Strayer University
Business and Society
Professor Mandiveyi
February 2, 2014

BP is ranked 3rd largest energy company in the world has certainly many perks. BP integrated oil company operates with an established network throughout the world, which means it does not necessarily need to rely on other companies to complete its products. BP is one of the world’s leading oil companies on the basis of market capitalization and proved reserves. It is a global group, with interests and activities which cover three main business segments of Exploration and Production, Refining and Marketing and Gas, Power and Renewable. In today’s oil and gas hypercompetitive business environment, social and ethical issues stem from the perception of stakeholders. However, primary weakness can be that BP has been involved in various significant accidents regarding its operations. Weak management is one of the key reasons to affect the company that can be control internal and its part of the structure. External problems are always harder to control and are not always predicable at times.
The external problems that the BP has to be extra careful and already had to face in previous accidents have been due to safety. Highlight of low awareness of importance safety have been a result of the Prudhoe Bay oil spill, Texas City chemical leak, Deepwater Horizon oil spill all have been external problems that affect the image of BP and how customers view the company and whether or not people will invest on the company and the products.
After the recent accidents in Alaska and Texas, financial performance has slumped. Over this past year, BP's share price is down by 6.18%, while those of competitors Chevron and Exxon-Mobil are up 28.03% and 23.96%, respectively. Nevertheless, upper-level management has continued to be compensated. Although Sir Browne's salary recently decreased, he is still on track to receive the entirety of the $140 million bonus allocated to him, even though many of the problems have been associated with his ambitious goals.
BP's handling of the cleanup has raised serious questions about the concern the company has for the environment. Five months following the accident, 17,000 gallons of crude oil remained to be drained from the surrounding areas of the pipeline. Following the accident, BP has faced pressure from the Justice Department, the Environmental Protection Agency, and Congress due to the environmental damage. Prior to the spill, the company was already being investigated by the EPA for possible violations of the U.S. Clean Water Act due to pipeline corrosion. It now faces a grand jury investigation which may lead to charges by the Justice Department . In addition, the House of Representatives' Energy and Commerce Committee is pressing for hearings on the disaster. The Federal government's pipeline safety rules do not apply to the particular pipeline used in Prudhoe Bay because it is a low-pressure pipeline located in rural area not close to commercially navigable waters, suggesting that BP in fact was following a minimum standard approach to fighting corrosion .
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). One of the reasons for this can be attributed to BP's decentralized management system in which responsibility and decision-making is pushed "down the chain." Sir Browne implemented this organizational structure, and it has proven to work in his favor. He has been able to avoid claiming accountability and continue to receive lavish compensation.
The reputation damage also lead to loss of investors such as Henderson Global, a leading UK ethical fund company, who sold its BP holdings due to lack of confidence in BP’s commitment to the environment and safety issues in Alaska. World Wildlife Fund (WWF), cited in the FT also sold its BP share