Companies need to practice strong business ethics and good corporate social responsibility. These aspects have a great impact on the operations of the business. In essence, these two concepts are critical for the company in its attempt to foster good relations, both the internal and the external, within the communities in which they operate (McWilliams & Siegel, 2000). Studies indicate that companies with strong business ethics and social responsibility have increased their efficiency hence improved their performance as well. In addition, business organizations with high ethical and socially responsible practices have enhanced customer satisfaction, which has, in turn, added more value to the company’s shareholders. As a result, socially responsible behaviors include relationships practiced within the firm. The two concepts encompass all those practices that the firms undertake to increase efficiency in the management of resources as well as enhance good relations with customers, employees, and shareholders (Rushton, 2002).
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This case presents circumstances where companies disregard their ethical and social responsibilities. BP studied, in this case, is a global multinational corporation that does not understand the importance of being ethical and socially responsible. In many instances, the company has flouted the ethical standards and neglected its social responsibility, not only to its shareholders but also to the communities and other parties involved. BP should understand that practicing social responsibility and putting in place strong business ethics have a direct influence on the company’s efficiency, reputation, as well as the employees’ relationships (Rushton, 2002). In addition, these practices are critical to their long-term growth and development (McWilliams & Siegel, 2000).
Aspects of BP ethical culture that could have contributed to the Gulf Coast oil spill disaster
One of the cultural aspects that could have contributed to the spill is the negligence of the regulations that have been put in place. BP has a history of flouting environmental and other legal regulations, as well as some questionable issues that could have contributed to the spill. The company has been involved in various criminal activities, particularly those that endanger the environment and communities in which the firm operates. Actually, these actions have been practiced for a long period despite the fact that they have contributed to the cause of other disasters. Practical negligence is a culture that the company has adopted to cut on the expenses and increase the total revenue. In this case, BP has paid no attention to several legal procedures. The regulations in the acts ensure perfunctory integrity and safety of the operations as well as the environmental well-being.
Negligence of the environmental concerns as well as moral misbehaviors indicates that the company has a long history of failing to take into consideration the well-being of the stakeholders. While the company markets itself as the one upholding ethical standards and greatly concerned with the well-being of its stakeholders, the violations of the legal procedures have contributed to such disasters as the Gulf Coast oil spill.
Coming up with moral organizational culture, the need of assessment to the possible hazards should be taken into consideration. In this case, the company did not succeed in putting in place measures that could ensure the well-being and proper protection from negative factors of its workers, neighboring communities, and contractors. In addition, the company failed to develop measures that could have protected other supportive industries including fishing and tourism thriving in the Mexican gulf. Moreover, the necessary measures could have contributed to its sustainability. Moral organization culture includes examining the following issues, such as workers’ and environmental protection. Important aspects, such as caring for the natural environment, are what the company failed to address.
Further, the company’s set of laws did not succeed to put in place measures that could have prevented one of the most horrible environmental disasters, such as the gulf oil spill. In spite of the company has a code of conduct in face of danger, it did not address the most important aspects of environmental management. Even the management compliance to the stated rules and regulations was not reflected. Moreover, the code itself became questionable. The set of rules that the company uses to protect its image and environment should have gone through the legal processes to examine the most important areas of risk management. In fact, the code was purported to serve in dealing with public relations rather than addressing ethical and legal issues the company might have encountered in its daily operations.
Even though the code did not address the major issues, the company management dealing with moral predicaments found in high-risk areas has applied those set of rules and prescriptions. The code stipulates the required activities as well as limits some specific actions. Nevertheless, it has not been proved that the company ensured compliance to the set regulations in order to avert major disasters.
BP failure in the management of risks
Throughout the disaster period, the company was accused of the failure to manage its risks. In most instances, the company claimed that its crisis management was applied as expected. However, the gaps in the company’s risk management could not be explained. It has been indicated that the company ignored some of the most important risks measures in order to cut the costs meant to be spent on environment protection. In addition, the gulf oil spill was not the only disaster that the company has encountered. In fact, most of the crises the company has faced are blamed on the company’s poor risks management. Therefore, this crisis aroused as a result of the same poor risks management strategies.
There were various investigations to indicate that safety measures had been put in place to avert the crisis. However, the company had a responsibility to ensure that such major disasters as the oil spill would have never occurred. Given the fact that such disasters had happened before, they should have been the lessons for the company to learn from and be able to prevent further accidents. Nevertheless, the company ignored most of risks management measures, particularly those in the use of equipments and flouting mechanical regulations. If the disaster resulted from intractable carelessness, it could be deduced that the company’s systems were inadequate in the management of such magnanimous disaster. Apparently, the company risk management was inefficient, and its inability to manage the risks has resulted in affecting its brand image (Miller, 2011).
Ways through which BP could improve its image and manage risks associated with offshore drilling activities
Many suggest that the company should rebrand and portray its image as socially responsible and caring for its stakeholders and all the parties involved in business. While this claim is true, it is not an easy task for the company given its already tainted image. For the company to improve its image, all its business processes should also be changed. The company’s contracting procedures, the production processes as well as its interactions with the consumers and other stakeholders should undergo a huge transformation. The company has blamed its contracting firms for the failure of some of the processes, which led to the crisis. Nevertheless, the company acknowledges that contracting processes are complex and encompassing, covering almost every stage of the business activities. Therefore, effectiveness and efficient manner in which the contracts are handled are critical for the success of the business (Starcher, 2009).
Besides, the company has claimed that faulty equipments were the major cause of many disasters the company faced. In this sense, procurements of the equipment have become critical in the company’s business processes. Generally, the effective procurements help the organization reduce the costs as well as manage the risks. In other words, those components directly affecting the quality and safety production processes originate from implementation of appropriate procurement process (Starcher, 2010). Contracting managers have the responsibility of identifying the best supplier that would provide quality components to ensure safety and risks management. Besides, the purchasing and supply department should focus on finding less costly source of quality material components and ensure safety not only to the workers but also to the environment (Starcher, 2010). In other words, effective purchasing of supplies and distribution of products and services will enable the firm to minimize costs, maintain quality and reduce risks.
Within the oil and gas industry, efficient chain management is critical in ensuring that the companies follow the safety rules, implement proper waste management and uphold ethical standards. The company has focused on the improvement of its brand image due to being socially responsible for environment preservation through investments in the production of the green energy. However, the company should improve its risks management and put in place measures that would prevent future disasters. The improvements of qualities in the production, contracting and procurement of equipments will improve the business competitiveness by ensuring that the products and the services provided by the company gain benefits to the stakeholders. Besides, it will improve the company image presenting itself as socially responsible organization.
McWilliams, A & Siegel, D 2000, “Corporate social responsibility and financial performance: Correlation or misspecifications?” Strategic Management Journal, vol.21 no.5, pp.603-609.
Miller, L 2011, “The high-performance organization,” European Business Forum, vol.6 no.2, pp.73-79.
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Rushton, K 2002, “Business ethics: A sustainable approach,” European Review, vol.11 no.2, pp.137-139.
Starcher, G 2009, “Socially responsible enterprise restructuring,” European Business Forum, vol.16 no.2, pp.213-246.
Starcher, G 2010, “Towards a new paradigm of management,” European Business Forum, vol.32 no.6, pp.23-46.