BP Business Strategy
The strategy employed by British Petroleum is balancing the interest of the company to those of the community where the company is operating. BP believes in mutual benefits for investors, government and local people in developing resources in the more than 100 countries where it operates. In Colombia, the strategy is to “balance the requirements for extracting up to 500,000 barrels of oil a day with local environmental and social considerations” (Marsden, 1998). As part of strategy, BP holds a joint venture with the Colombian government and other companies in development of oil resources in the region of Casanare. This strategy has seen BP provide direct jobs to over 1000 people local people. The company has invested millions of dollars to protect the environment while it continually spends 10 million dollars annually to improve the lives of local people through social-economical programmes like education, health and general infrastructure.
Inherent Risk
While BP business strategy in Colombia seems as success, there are inherent problems arising from the company operations in Casanare and its association with government forces in safeguarding the company’s staff and assets. As the economy of Casanare improves, there is rapid development which has led to increased population. This has further caused insufficient governance, prostitution and poor infrastructure like sewer and road networks. The development of Casanare has also seen local people and immigrants to the area frustrated as “their over-inflated expectations dashed” (Marsden, 1998). BP makes use of both the Colombian army and private defence companies to secure its assets and foreign workers. In using the military, the company is in direct war with guerrilla operating in the area. This guerrilla has been sabotaging the company by blowing up oil pipelines.
Issues that BP got involved in and how it approached the controversy
BP controversies stem from the 1995 inter-institutional Commission on human rights which mentioned the company in two instances. “The first concerned an unfulfilled commitment to a community group and the second damage to a forestry reserve” (Marsden, 1998). BP acknowledged this concern and committed itself to address the issues. The matter resurfaced when a Member of European parliament, Richard Howitt, visited Colombia on a fact finding mission. Although Howitt held a meeting with BP official in Bogota, he never visited Casanare where the company was operating. A report would later be presented to European Parliament accusing BP of severe human rights abuse and environmental damage. This report caused anger and shock to BP leadership because the company had committed to address the issue presented in the first report. The company denied all criticism and accusations.
What the Company Should Learn
BP should learn that issues regarding human rights and environment have a unique place in both political and public arena. How the public weigh this issues can mean death or success of a company. Any report regarding human rights issues must be given precedence and cannot be tucked away for future consideration.
What Should BP Change
BP might want to make use of both independent and public report to review its performance in community where it’s operating especially in regards to human rights and environmental issues. The recommendations and commitment to resolve any issue should be made public. The Company must weigh the cost of implementing recommendations against its interest to avoid making unrealistic commitments.
Works Cited
Beder, S. (2002). BP: Beyond Petroleum? Retrieved January 10, 2010, from University of Wollongong. Web.
Marsden, C. (1998). British Petroleum in Colombia. A case study of Business and Human Rights.