What Was Bps Strategy Prior To The Accident Business Essay

What Was Bps dodging Prior To The Accident Business EssayDeepwater Horizon was an offshore oil-rig set(p) in the Gulf-of- Mexico, owned by Transocean, leased by BP and deployed by Hyundai. 20th April 2010, during the drilling, a tear in the riser-pipe caused an uncontrollable leakage of petroleum, claiming 11 lives, injuring 17 others. The fervidness fed by the oilfield continued for next 36 hours causing the rig sunk ultimately. Dis assurement in the midst of different stakeholders caused a delay in winning measures to snare the oil-leakage. This leakage from the oil-field could only be stopped after 87 days, resulting approx 60,000 barrels/day of oil-leakage into the gulf-of-Mexico causing irreparable damage to naval and coastal ecosystem. Beaches bear closed, tourism and related business suffered, seafood was contaminated and oil killed marine-life across the US-coast. BP on Nov-12 agreed to plead guilty to 14 criminal acts related to this event and to bear $4.5 billion. Th e potential fine for the spill low the act is $1,100 to $4,300 a barrel spilled, (NY Times, 2013). This incident also triggered government, MNCs and purlieual agencies to agree upon and device stringent measures on modify the safety of offshore oil-rigs, safeguarding the environment, enhancing the post-disaster measures (OCS report, 2011).this incident damaged the strong portfolio value of BP apart from causing it immense financial loss. Preparedness is of utmost important, a process should be devised and actively in-place to tackle much(prenominal) disasters, in such an environment, strategies originate in formal plans (Mintzberg and Waters, 1995) precise intentions exist both government and MNCs , formulated and articulated by primordial leadership government, backed up by formal controls to ensure complete adherence by MNCs, to increase preparedness for disasters in an controllable or predictable manner- for the most part this approach converges towards planned-approach. Despite of BPs commitment towards maintaining readiness to respond on larger-scale, to minimize damaging-effect and facilitate mitigation activities- the order of the deepwater incident was enormous in magnitude and unprecedented which caught BP in its mitigating scheme-formulation. Environmental and social impact assessment is an inherent part of BP scheme (BP, 2013) which analyses the potential assay to environment and on human in the neighborhood of such establishments, though the state-of-art technologies BP failed to assess the risk of this oil-rig. BP lacked in the collaboration with all stakeholders in addressing this disaster. The traditional-way of aerial and satellite imagery in estimating the actual deep-underwater military position failed (Jernelov, 2010). Another failure of BP was to manage the media in restricting the exaggerated and conflicting facts spread across worldwide thus damaging BPs strong portfolio-value.Strategy Literature Re cycloramaWe can relate the concept of strategic space (Fiegenbaum Thomas, 1990) with the Deepwater-horizon disaster we would map as the first-step the characteristics of the business environment, termed as strategic space. Three dimensions, a) the levels of organisational strategy (e.g. US government and BP-corporate), b) the strategic decisions do process (e.g. scope, resource deployment), and c) the time period which defines the broad characteristics of the strategic space.First firms inquire to throne on a well-designed, skilfully-sound, and precise research, placed in spite of appearance a comprehensive framework covering initially the stable aspects of group behavior, then moves progressively to theory developing and testing of dynamic behavior (Fiegenbaum Thomas, 1990). MNCs and government need to join hand to invest on the study of this incident to identify the root-cause of this failure and then agree to devise put upd preventive measures for such future incidents. It is clear that tradition al countermeasures failed, which necessitates for a new approach of risk-management. In the aftermath of this, US govt is taking monumental measures to improve regulatory oversight on offshore drilling (OCS report, 2011). We can see competition as a dynamic process in which firms continually take actions to outperform each other (Rindova et al, 2010), once one competitor faces such disaster the other firm eagerly willing to take the advantage of the situation by airing negative campaign and aggressive advertisement e.g. as Shell did. During such disasters we can argue that a firms decisions as a series of competitive actions provides audience with necessary cues in framing impression about it, as well as comparing it to other players in the kindred market. Firms competitive actions thus act as a dynamic mechanism for firm specific reduction of ambiguity. Emergence period of such disaster on which we management is relatively short and creates a dynamic environment in which firm s BP need to make rapid changes in their strategies responding to the changing need of the ground-situation, Rindova et al (ibid). Deepwater-horizon or such incidents are huge in magnitude and poses significant capability to cause damage we need to introduce -out-of-the-box thinking and improvisation/innovation to devise strategies to skin with such situation the dynamic nature of such incidents requires prompt action taking capability in the terms of financial, technological resource.Insurance and reinsurance firms also come under scope during such incidents their risk evaluation process need to be enhanced and routine check-up should be stringent. Product diversification and size dimensions are two such aspects that needs close inspection while determining the value of such huge installations Fiegenbaum Thomas (ibid). Having a good strategy and right death penalty of the very(prenominal) is essential for a good-management (Thompson et al, 2012) all stakeholders need to contrive a well-defined strategy in-place to manage such disasters and absolute adherence is needed when calamities occur. The strategy need to be flexible exuberant to adept itself responding to the actual ground-situation feedback loop. A deliberately sudden approach might be useful Mintzberg Waters (ibid). MNCs need to be made responsible to adjust themselves during the unexpectedly tough business-environment by undertaking strategic defense and approaches that enables them to overcome the adversity Thompson et al, (ibid). But at the same time government also cant escape its responsibilities. Off course a good strategy is essential to obtain and sustain market-position strong enough so that the firm is capable to yield profitable financial performance despite unforeseen events/external factors e.g. disaster, natural calamity or potential competition.A review on BP StrategyWhat was BPs strategy prior to the accident?BP being a trusted company adheres to a higher set of standard s in everyday work (BP, 2011). Business doesnt occur in vacuum, the place and time is important (Parry et al, 2007)- stakeholder theory (Donaldson and Preston, 1995) emphasizes on considering all stakeholders in the environment in which firm operates not only the shareholders interest strategy-making. Several stakeholders and their competitive interest are associated with such huge installations. BP needs to respect this and maintain balance among all such groups while making their strategy. BP seemed to follow a deliberate approach until this event.BP states its objective as create value for shareholders (BP, 2011) it being a global MNC needs to be responsible towards environment and people in the region it operates. Safety remained top-priority for BP, when disaster happens BP needs to be flexible enough to response to the situation and devise measures to control the aftermath- we observed that they pass three days in discussing the approach. Constructive dialogue with all stak eholders and prompt action in such cases is needed. Government authorities, local-people, environmental-organizations, employee and shareholders, opinions from all should be considered during formulating the strategy which lacked in the case. This incident also shows that neither government nor BP was prepared to sustain such disaster this shows an obvious lack from BPs part in conducting appropriate risk assessment (OCS report, 2011). Experts conclude that this disaster could have been avoided, preparedness and prompt-action is pivotal in managing such disaster.Analysis of BP actions in light of the strategic frameworksResource based viewVRIO resources for BP is its strong portfolio value inimitable and rare, its technical expertise valuable and rare, financial and organisational strength valuable. BP has lost two of its VRIO resources, resulting from this incident its brand-value and financial-strength to pay the huge fine. BP lacked the technical-expertise to avoid the inciden t and then failed to restrict the leakage it lost its valuable and rare resources infrastructure, human life. The myth of inimitable technical expertise of BP and its strong portfolio value were shattered by the incident. It is a huge loss for a firm.Approach based viewBP followed a planned approach in addressing this unprecedented disaster and their lack of being flexible and adapting/enhancing strategy to mitigate this series of events caused the continuous oil-leakage for 87 days. They also lack the coordination with different stakeholders and discussions on approach prevented them three days to take measure. Consensus approach would have been primal Mintzberg Waters (ibid) as they need to take input from US government agencies, environmentalists and other lease-partners to devise the most appropriate damage control mechanism. Flexibility and artless communication would have been key in estimating the damage and make containment plains where BP failed in establishing consensu s and maintain transparency about the actual size of the disaster. A combination of emergent taking input from all stakeholders and Umbrella approach would have been reduce the damage. Ideological approach, Mintzberg Waters (ibid) where collective vision of all stakeholders are respected might have been useful.Five-Force analysisBP has strong supplier groups US government, Transocean, Hyundai they are few and supply highly differentiated products so they pose significant threat to the industry (Porter, 2008/1979). BP suffered here as in future these suppliers would either expel BP US govt already did a ban on future explorations by BP in US or impose stringent conditions. BP loses its takings capability directly affecting its market-share, posing a moderate threat to BP from strong buyer perspective. Substitutes and new-entrants are of minor threat solely rivalry is of major impact. Shell initiated aggressive campaign against BP after this incident, causing more damage to BP br and-value.Conclusions/RecommendationsIn our time protection of the environment is a priority and such environmental disasters have a huge impact created and multifold by media and environment agencies to damage the portfolio value of the Oil-MNC. Firms needed to justify their actions to all stakeholders including the valuable shareholders. Firms need to balance between profitability and right (Breeze, 2012) and demonstrate their adherence in a sustainable corporate social responsibility. Not only in their vision statement but also everyday acts. Assurance of human safety and environmental protection is pivotal for any industry such things remain sometimes neglected in leased oil-rigs, reforms is necessary both at the government layer imposing regulatory steps on quality-control and the firms internal decision-making process to ensure their political autonomy, technical expertise, and their full consideration of environmental protection (OCS report, 2011). Instead of one-sided blam ing MNCs for this disaster we need to equip ourselves from preventing such incidents to occur, suggestions Strengthen the collaboration between government-agencies and MNCs,Firms need to invest on RD to improve spill-response.Analyze the traditional measures to contain the spill and introduce upgrades both Firms and Govt. responsibleBP to invest to enhance its spill preparedness and control mechanisms locate on robust design, leakage measurement and containmentGovernment and BP need to ensure fair, transparent damage control and estimating mechanism.Restore the coastal wild life and marine food-chain, trust building measures need to taken by government to assure the seafood consumers.Firms and government need to establish stringent measures to safeguard the human-life on the rig and the rescue-staff. coarse term restoration of the marine life plan is needed from Government funded by BP to mitigate the irreparable loss of the coastal-life.Government should impose laws on the financi al responsibility of the firms operating in the area during such disasterSuch confidence-building measures would slowly but steadily improve the environmental situation of Mexican-Gulf and lessons learnt from this disaster would help firms to enhance their disaster preparedness. Disasters caused by blow-outs might occur in future too and investment needed to prevent such situation failsafe mechanism, if that fails capping of blow-out need to be do swiftly and relief-walls might be suitable to restrict the leakage, Jernelov (ibid). Consensus and umbrella approach, Mintzberg and Waters (ibid) where strategies originate/revolve around consensus- in such a multiparty environment reaching consensus is of utmost important, no stakeholder can devise/deploy strategy in single handed. Government needs to develop the boundaries of tolerance and impose safety-mechanisms, within which firms need to operate and periodic checking mechanism should be in place to ensure firms operate within their limits set by government. Corporate Social state determines the expected behavior of a firm towards its commitment to society and responsibility of conducts for environment BP needs to demonstrate this in their future plants.