British Petroleum
British Petroleum is a UK oil company with extensive global operations in more than 80 countries (BP, 2014). Recent reports show that the company is among the six biggest global oil corporations, in terms of revenues and oil production capacity (Jennings, 2010). The main activities of the UK-based company include oil exploration and production (BP, 2014).
Other activities include refining, distribution, and marketing of oil products. In line with its corporate social responsibility (CSR) activities, BP (2014) has also invested in “green” energy, such as wind power. Environmental concerns have prompted the company to invest in biofuels, as well (BP, 2014).
Recently, BP (2014) has received negative publicity for its poor safety record and its determination to make profits at the expense of the environment (Jennings, 2010). At the center of this controversy is the company’s failure to comply with existing health and safety standards (Morris, 2010).
This paper proposes a coalition group strategy to change the company’s “casual” attitude of non-compliance. However, to have a proper conception of the plan, this paper analyzes key external organizational factors that affect the company’s operations, its main stakeholders, and how they affect the company’s financial performance.
Key External Organizational Factors that Affect the Company
Since BP (2014) is a multinational oil company, many factors affect its operations. Political instability is a key factor that affects it in this regard because it influences the company’s regulatory environment. Badiru & Osisanya (2013) say the main problem facing oil companies in this regard is the changes in trade agreements with foreign companies, even after they have invested a lot of capital. This is a huge global concern for oil companies because the agreement they sign when investing in a country often changes when they start operations.
Geological Risk is also another issue that affects BP (2014). Since its main operation is oil drilling, it currently faces the challenge of drilling in unfriendly environments because oil companies have already exploited existing oil reserves. This challenge often results in increased production costs and dwindling oil reserves that cannot sustain the company’s operations (Badiru & Osisanya, 2013).
Lastly, supply and demand risks affect the activities of the organization because the oil and gas industry often experiences market shocks that reduce investment values. Moreover, other economic pressures in the macroeconomic environment, such as the global economic crisis, or currency fluctuations, further worsen this situation (Badiru & Osisanya, 2013). Since most investments made by BP (2014) are capital-intensive, it is difficult to recoup them when oil prices decline.
Stakeholders
The stakeholders of BP (2014) include groups, or institutions that the company influences through its operations. Employees, shareholders, and customers are the three salient stakeholder groups of the company. They are pivotal to the company’s existence because they provide the vital resources and revenues needed by the company.
How the Stakeholders Influence the Company’s Financial Performance
Revenue
Customers outline an important stakeholder group for BP (2014) because they provide the revenue for the company, through sales. The company uses this revenue to manage its operations, expand into new markets, and pay its workers. Without the customers, the company would have no market for its products or services. Consequently, its revenues would decline.
Capital
Shareholders provide the capital needed to run the company’s operations. Moreover, they are the “real” owners of the company. Often, BP (2014) works to fulfill their interests. This stakeholder group has the biggest effect on the company’s financial performance because its financial contributions created the company. Without its capital, the company would not have assets.
Operating Costs
Operational costs significantly affect the financial performance of BP (2014) because they erode the company’s profits. Employees increase this cost through salary and wage demands. Moreover, its benefits, emoluments, rewards, and similar monetary benefits erode the company’s profitability.
Demand for Products and Services
The demand for products and services has a direct correlation with a company’s revenues. For example, high demand for the products and services of BP (2014) increases its revenues and profits. Customers have the greatest effect on this demand. Indeed, their demand for the company’s products and services affects its financial performance. This is why many companies strive to “please” their customers.
Performance of Equity and Capital Markets
Since BP (2014) trades on the London Stock Exchange, the performances of its equity and capital markets affect its financial performance. Customers and shareholders have the greatest impact on the company’s performance in this regard.
For example, if shareholders develop a negative perception of the company’s management, they could cause a decrease in the company’s shareholder value. Similarly, if customers do not buy the company’s products and services because of a negative brand image, BP (2014) is likely to report significant losses in equity and capital market performances.
Controversial Social Responsibility (CSR) Concern
Morris (2010) says BP (2014) has among the worst environmental and safety records in the oil industry. For example, from 2007 to 2010, he noted 97% violations of the US safety and health regulations (Morris, 2010). Experts say systemic failures within BP (2014) contribute to these violations (Morris, 2010). Environmental pollution is the most visible impact of such violations. However, the company’s failure to abide by the industry’s safety and health standards also endanger the lives of its employees.
For example, the organization’s failure to adhere to the stipulated environmental, health, and safety standards caused the Deep-water Horizon spill, at the Gulf of Mexico, in 2010. The same disaster caused the deaths of 11 employees and 17 injuries (Jennings, 2010, p. 365). Consequently, the following section of this report outlines a stakeholder coalition plan to force the organization to comply with the existing environmental, health, and safety standards.
Stakeholder Coalition Plan
Key Steps for Identifying Members
Finding willing partners who share the concerns and interests of the proposed coalition and seeking the support of influential individuals (and groups) in the society are the main steps for identifying members of the coalition. Based on these steps, the coalition team needs to show dynamism by including many stakeholder groups to provide a dynamic support network for achieving the group’s goals. For this purpose, the coalition would include members from three groups – stakeholders, community opinion leaders, and policymakers.
How the Target Members Would Help to Accomplish the Coalition Goal
The targeted coalition members (mentioned above) would help to carry out the intended goals of the coalition because they wield immense powers that could influence organizational decisions. For example, the failure of BP (2014) to abide by existing health and safety standards mainly affects employees, as the main stakeholder group. Therefore, they will provide the main “drive” in the coalition group. Furthermore, they are likely to energize the group and provide enough impetus for managers to act on their concerns.
Since the community opinion leaders would involve influential members in the community, such as civic leaders, clergymen, and business leaders (among others), they would help to spread the concerns raised by the coalition (AFSA, 2014). Moreover, they can influence other people to join the coalition’s mission.
However, their most important contribution to the group’s effort would be their contribution to raising the group’s credibility. Furthermore, community opinion leaders often enjoy a good record of accomplishment in positive leadership, which they could use to draw attention to the need for oil companies to comply with health and safety standards (AFSA, 2014).
Lastly, policy-makers would help to achieve the coalition’s goals because they can influence policy decisions that could help to bring desired changes in the company (AFSA, 2014).
For example, they could introduce “stiff” penalties for BP (2014), if they do not comply with the existing health and safety standards. Such a move would create the need for managers to discuss the concerns of the coalition. Comprehensively, stakeholders, community opinion leaders, and policymakers hold immense power in helping the coalition to achieve its goals.
How to Foster Collaboration
Learning to Use Existing Talents
As shown above, every group member specializes in one area of group performance. Indeed, every group member has a specific role to play in the group. The coalition will use group talents to improve the coalition’s performance. Therefore, the coalition would not require group members to complete tasks that they have no knowledge or skills. This strategy would reduce conflicts within the coalition.
Creating a Creative Environment
Allowing team members to brainstorm in a non-intimidating environment could help to create a collaborative environment for all coalition members. As a team leader, I will encourage all group members to perceive the foreseeable group challenges as hurdles that they can overcome. Similarly, I will allow team members to question the coalition strategies within a “can-do” team culture. This strategy would make sure there is a member “buy-in” (CTB, 2014).
Possible Challenges
Domination by Elitist Groups
Among the greatest challenge that could affect the proposed coalition strategy is group domination by professional or elitist groups. Such groups may involve employees with advanced degrees or influential business people. They could undermine the spirit of collaboration within the stakeholder group because they would want to solve problems without involving everybody (CTB, 2014).
Bad History
Some coalition groups may have bad working history, which may undermine the spirit of collaboration. Consequently, they may develop the idea that working together is a bad idea or a fruitless exercise.
Lack of Adequate Time
Since influential people are part of the proposed coalition team, finding an appropriate schedule that suits all employees could be difficult. This challenge could significantly affect the collaborative spirit that experts expect of successful coalitions (CTB, 2014).
How to Overcome the Challenges
To overcome the challenge of domination by elitist groups in the organization, I would create a participatory environment to reign in on the “special” groups who may think they have all the solutions for the coalition’s concerns. To overcome the bad history among stakeholder groups, I would solve all existing tensions and grievances before including the members in the coalition (CTB, 2014).
If the concerned parties fail to solve their issues, the coalition will exclude them from the plan. Lastly, to solve the scheduling problem for coalition members, most coalition activities would occur during weekends when people are not busy. These recommendations should guarantee the coalition’s success.
References
AFSA. (2014). Build A Coalition. Web.
Badiru, A., & Osisanya, S. (2013). Project Management for the Oil and Gas Industry: A World System Approach. New York, NY: CRC Press.
BP. (2014). Our stakeholders. Web.
CTB. (2014). Section 5. Coalition Building: Starting a Coalition. Web.
Jennings, M. (2010). Business: Its Legal, Ethical, and Global Environment. London, UK: Cengage Learning.
Morris, J. (2010). Renegade Refiner: OSHA says BP has systemic safety problem. Web.