With a continuous change in the external environment, the interaction between the businesses and the society is evolving. There is an increased importance of corporate social responsibility so as to enable business enterprises to contribute towards the society.
British Petroleum (BP): Nature, Structure and Products
BP previously named British Petroleum is a widely known British multinational oil and gas company. It holds one of the coveted positions among the six oil and gas "super majors". As per current data on market capitalization it is the fifth-largest energy company, judging by 2012 revenues, it is fifth-largest company globally and measuring by 2012 production it is the sixth largest oil and gas company.
As a result of its vertical integration today the company functions in all the areas of the oil and gas industry. This includes exploration, production, refining, distribution, and marketing in the industry. The company also operates in the field of power generation, petrochemicals and power trading. It has also recently begun dabbling in the field of renewable energy activities in biofuels and wind power, and currently holds a 19.75 % stakeinRosneft.
Despite being one of the most widely known and popular company in the business with a stellar history, BP has been mired with a number of environmentalincidents, including history’s largest accidental oil release into marine waters i.e. the 2010 Deepwater Horizon oil spill. To salvage the company’s image from such blunders and become a better global corporate entity than other behemoths from the same sector like Exon Mobil, the company actively participates in a number of alternative energy production sources. The company owned an 18% stake in the solar power almost a decade back, and has been expanding since then to invest in wind power too. It had also significantly reduced its emission much before the targeted deadline; to be precise, reduced it by 10% 8yrs before the deadline.
External factors affecting the Business
All the micro factors, i.e. the within company issues and problems, can deftly and immediately checked by any company, but it is the macroeconomic factors affecting a business which can cause unprecedented changes (Kroon, 2006). In macro economy any change in the market equilibrium has a ripple effect throughout all businesses involved in the market; the ups and downs of one market have a corresponding effect on another market, and the oil and gas market is no exception to this rule.
Two of the most important external factors that affect BP’s success in the market thus include:
The company’s position in relation to its competitors and the demand and supply in the oil and gas market. These factors are obvious macro effect generators because on one hand when BP is outdone by its competitors, it faces losses and vice versa, while on the other hand the volatility in the demand and supply of its products will have parallel effects of price, profit loss and consequent job upheavals within the company.
The second external factor involves the perception and reaction of its stakeholders which includes not only the company employees, but more importantly, its consumers, shareholders, environment groups etc. who can truly make or break the company.
The Stakeholders of BP
Over the last three decades several authors have been contributing to the evolution of the concept of stakeholders. Stakeholders encompass all those individuals and collectives that have a direct stake in a company or a business’s success or failure. It does not imply the inclusion of those groups and individuals in the board of directorsbut it acknowledges their role in making or breaking the company through their responses. Three of the most influential stakeholders of BP are
Consumers: While the consumers and shareholders directly affect the economic well being of the company, it is the environmental groups who act as the mediators, the indirect influence generators here. Over the past few decades the world has been abuzz with the need to go green and the negative impact oil and natural gas consumption is having on our environment, and consequently our presents and futures. People are becoming increasingly aware of the ill-effects of oil and gas consumption, in such an environment when a company like Bp becomes embroiled in global environmental incidents like the oil spill of 2010 and has environment groups shaming it in public, highlighting all its flaws, there will be a definite corresponding negative impact on its client base and shareholders.
Environment Groups: The environment groups will thoroughly and regularly check the company for any harm it causes to the environment and correspondingly hold up its true picture publicly. For any good it does to the same, the environment groups will validate its efforts, thereby bolstering its credibility and image. Thus, the environment group is the lynchpin between the company and the consumers and shareholders, as its validation or invalidation color the opinion and responses of both groups.
Shareholders: The acceptance or alternately rejection of the company and its products by the consumers, based on its review by the environmental groups will determine its profit and loss scenario.Based on the responses of the consumers and environmental groups, the shareholders will decide to stay on board or desert the companies, thereby making or breaking the company as a whole.
CSR controversy of BP
Being a company dealing with oil and gas largely and one with a chequered past in relation to the impact it has had on environment, the biggest CSR related controversy of the company is to portray itself as a sustainable energy company, causing the least to no harm to the environment. In view of the serious oil spill incidents and exploration related accidents in the past that caused considerable harm to the environment and its employees, BP has always been criticized for its corporate practices. Companies like BP are always observed by environment groups like a hawk for any slip up, added to it the horrific oil spill incidents of the past and the currently growing concern with global warming and the contribution of companies working chiefly in the field of conventional sources of energy, a major part of the company’s image depends on the way it effects nature.
Coalition building as a leader of the most significant stakeholder
The problems and their mitigation
However, forming the aforementioned coalition would be anything but a cakewalk. The most significant problems in this path would be
- The still prevalent unawareness among the public with regards to the negative effects of non-renewable, unsustainable energy
- The economic clout that companies like BP and their investors wield to get their way
- The reluctance of major political factions and groups to forego the fiscally rewarding yet environmentally harmful energy producing methods, which keep old and outdated policies still in operation.
Firstly, unite all bases by locating a commonality i.e. locates those corporate lobbyists who are pro-environment, these would include the business which are responsible for cleaning up toxic wastes, and refuse from non-renewable energy production companies. On the media front, those sources will have to be reached out to which have longstanding reputations of being unbiased and responsible, while on the government front, the more liberal, responsible and democratic lobbyists have to be appealed to, who can see beyond the short term gains and on the long term picture.
Second, each stakeholder will have to be further incentives with something of their individual interest – corporate lobbyist – better corporate branding and social image, political party – credible image of a party which cares for the people and the environment alike and media – first crack at the most noteworthy news and occurrences in the field involving such significant players.
Finally – Presenting a systematic and strong front of all the stakeholders together, providing one single, unified message which has the power to overcome the economic clout and political force of the opposition, and reveal the potential to influence major parts of the consumer, shareholding and employee base of the company, thereby truly emphasizing the significance of the issue.
Thus, by addressing all these issues individually and collectively will a strong and effective coalition of stakeholders be formed, which will consequently effect positive change in mitigating the CSR controversy of BP.
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