The key strategic and operational issues
Disasters affecting natural ecosystems attract governments’ attention because of the governments’ role in safeguarding the safety of the people and adequate management of natural resources. The BP Deepwater Horizon oil spill attracted global attention because of its scale and associated losses to the ecosystem, lives, and property.
The main issue around the accident was the safe removal of hazardous water from the water and affected coastlines in the Gulf. There was also the compensation of victims, according to stipulated fines on the company by courts and relevant government authorities. The company needed a strategy to deal with the crisis after the accident to protect its reputation and ensure that similar accidents did not happen in the future (Barrett 2013).
Stakeholders in the accident encountered difficulties in identifying human and environmental impacts to quantify the losses due to the oil spill. In addition to short-term immediate losses, many affected communities, such as local anglers, would end up suffering long-term losses due to contamination of breeding grounds for marine life.
The design of oil rigs and their ability to prevent accidents, the concerns of the company regarding maximizing profits and minimizing equipment and management costs were strategic choices that attracted scrutiny due to their role in facilitating the accident. The ownership of blame was also an issue to consider, given that BP relied on third party suppliers and maintainers of its equipment; it made the risk and liability analysis difficult for external observers. Consumers now perceive marine food from the gulf as tainted, even though clean-up efforts are complete (Olson 2010).
BP’s strategy before the occurrence of the oil spill tragedy
The crisis management phase that comes before an accident happens is determined by the strategies put in place to prevent the accident from occurring and how to respond if the tragedy comes. In the BP case, the company needed to have adequate mechanisms of dealing with an oil spill if it occurred and have active policies that sought to prevent such an accident. According to media reports, the safety devices that were used in underwater drilling experienced multiple failures. For example, the company failed to take appropriate test measures to ensure the safety of its rigs. During the crisis, the management had mixed and disorganized objectives for recovery.
While the use of blowout preventers was a good move in preventing a crisis, BP still failed in its safety appraisal. It failed to maintain the blowout preventers that were essential for crisis management. It also failed to employ a robust crisis management plan that would ensure communication persisted in clear and timely ways with relevant actors in an oil spill crisis.
Poor management exposed stakeholders to harm. Employees and immediate communities did not get sincere information from the company’s management. Failing to test rigs and blowout preventers according to expert recommendations made the company liable for losses resulting from the accident. Crisis management requires firms to assess the reputation and safety threats of all possibilities in a crisis and intensify actions to evaluate crisis history and reputation impact (Mejri 2013).
Implications of BP’s post-accident strategy in terms of public perception
Everyone affected by the accident, directly and indirectly, played a part in the cleaning, while BP did the coordination. The company was also instrumental in providing required resources, such as aircraft for transportation and materials to assist in cleaning up. The company embraced the cleaning exercise as a public relations activity. It sought to change the negative impression that the accident had caused on its corporate brand.
It also wanted to appear as a responsible and fast-acting global corporation that does not neglect the needs of any community. Nevertheless, the PR exercise focused much on providing resources and managing the exercise from a control perspective. It did not provide room for stakeholder engagement that would not only take care of the problem but also fix future perception problems among members of the public.
In its marketing campaign after the accident, BP insisted on its funding for the restoration of the Gulf Coast ecosystem by ensuring that communities in the affected areas got meaningful economic activities that would be sustainable, both economically and socially. Reports show that BP had a difficult time honouring its commitment and got involved in legal battles with the plaintiffs (Barret 2013). As a result, its image suffers in public, despite the expenditure and other public relations commitments.
BP’s interests vs. the wider interests and expectations: Striking a balance
The BP accident is an example of a product-harm crisis, where the company needs to offer clear-cut support to victims and relevant stakeholders. It helps to resolve the crisis faster and to find a sustainable long-term solution. A defensive response seeks to protect the organization from harm in both financial and social terms. Firms try to maintain favourable reputations to ensure that their brands continue to perform favourably in the market.
BP would not like to have a boycott of its products in the global market. It would also like to maintain good relations with its suppliers and contractors as a contingency plan against the increased costs of service provision. Failure to maintain a defensive position in its crisis response strategy jeopardizes its relationship with contractors and other suppliers.
The continuum of disaster response frameworks moves from categories that are explicitly defensive to those that are agreeing to the responsibility. A typical firm can choose to attack accusers, deny responsibility, find excuses to absolve itself, justify actions and reactions, ingratiation, become proactive through corrective actions and offer a full apology, or choose mortification. Therefore, any crisis management process is long-term. Nevertheless, the three stages involved vary in duration, with the first two being short-term.
The process is considered to be universal when considering the crisis in a non-linear model, where activities happen independently. For example, while the government’s response to the oil spill in BP’s case was immediate, it did not affect the public’s reaction or the crisis management efforts of BP. Therefore, the initial concern by the government could qualify as an independent activity within the crisis context. Later on, in post-crisis management, BP had to act according to the government and community responses to limit damage and recover and learn.
Stakeholder management theories call for the integration of stakeholders’ interest in the company’s strategic decisions. The company has to consider the responses of the employees, government, communities, and consumers when deciding to overlook outreach activities or safety inspections. Nevertheless, the transition from response to recovery remains slow due to the complexities of interrelationships between the stakeholders involved. Shareholders seek to maximize financial gains, while communities seek protection and sustainable exploitation of resources.
Reference List
Barrett, PM 2013, ‘BP’s Robert Dudley on the Gulf Oil Spill’s legal aftermath’, Businessweek.Com, p. 68.
Mejri, M 2013, ‘Crisis management: Lessons learnt from the BP Deepwater Horizon spills oil’, Business Management in Strategy, vol 4, no. 2, pp. 67-90.
Olson, L 2010, The Deepwater Horizon Gulf oil spill: response, resilience and recovery, Web.