Question

In: Operations Management

A former CEO of a major American corporation has the following to say about BP and...

A former CEO of a major American corporation has the following to say about BP and the Deepwater Horizon disaster: In the aftershock, the world watched BP and its chief executive, Tony Hayward, make blunder after blunder while crude continued to gush. ... BP’s talk about caring for the environment was for naught, as its actions failed to match its message. ... Recently, a BP-sponsored Gulf Coast tourism TV campaign has implied that everything is back to normal. No doubt, substantial reparative progress has been made. But does the latest ad make you feel any better about the offender? Let’s assume that you’ve been asked to sit on a panel of randomly selected American consumers convened by BP. The company wants to find out what people like you think about its actions in the wake of Deepwater Horizon. How would you answer the question posed at the end of the preceding quote? How would you explain your response?

Solutions

Expert Solution

In order to make any comment regarding the question outlined in the question, it's first important to rewind and outline, in brief, the cause and effect of the gruesome incident of the Deepwater Horizon oil spill.

20th April 2010: Explosion and fire on the BP-licensed Transocean drilling rig Deepwater Horizon in the Gulf of Mexico. 11 workers at the oil plant are presumed dead. Within the first month of the explosion, it is estimated that around 30 million gallons of oil were spilled into the Gulf. Over the succeeding three months, oil leakage in the Gulf of Mexico created the biggest oil disaster in the United States, with an estimated 184 million gallons of oil spilled.

Environmental Impact: Close to 10 million pounds of oily residue was cleaned from the Louisana shorelines between June 2011 and April 2013. While Lousiana was hit the hardest, it's impact was observed in Alabama, Mississippi and Florida shorelines as well. The impact of the spill on marine wildlife was far from mild. Half of the area's bottlenose dolphins were sickened with severe lung disease and close to 20% of them were terminally ill. Between February 2010 and November 2012, more than 1,700 sea turtles and more than 930 dolphins and whales were discovered stranded. In order to replace lost foraging habitat for ducks and other migratory birds, 79,000 acres of harvested and idle rice fields were intentionally flooded.

Economic Impact: With the government issuing a moratorium on any fishing/marine activities, more than 12,000 workers were stranded with no source of income. ​With no marine activities and oil residual covered beaches, there was a steep decline in the tourism activities in the majorly hit areas. Tourism is crucial for both Louisiana and New Orleans. The tourism industry of Louisiana has an annual economic impact of about $8.3 billion which was majorly affected by the Deepwater Horizon disaster. The state saw an overall decline of more than 23% of its tourism revenue in the months to come. BP was charged with more than $20 billion for the cleanup and restoration activities, however, the effects of the spill were clearly visible even in the years to come. In the wake of the damage, several laws were put into effect and BP faced criminal charges as well.

It is important to outline these details first to understand the depth of the damage done and the efforts of BP in aiding to restore balance. On its website, BP outlines that it has been living up to the commitment for the Gulf region cleanup by allocating:

  • $14 billion - the amount spent on response
  • 66.5 million - work hours invested in responding to the spill
  • 47,000 - workers employed at the peak of the response
  • 1.3 million - air, water, and other environmental samples taken
  • 4,350 – miles of Gulf Coast shoreline surveyed
  • 5 – miles of beach (around 1/10 of 1 percent) remaining under active cleanup

These statistics, even though providing a positive impression of BP in this state of handling the crisis, are not the complete picture of the aftermath of the disaster. It is so estimated that BP induced millions of dollars by the end of 2010 to advertise the cleanups and tourist-friendly beaches as soon as by October of 2010 - six months after the disaster. It is one of these advertisements that is thrown light on in the question outlined above. The PR activity involves BP showcasing the success of its Gulf cleanup activities and the return of "normalcy" in the region which has struck a wrong chord with the residents as they have been struggling to get their lives back. Adding on to that, the depiction of clean beaches and sublime food was not completely accurate with a lot of the beachgoers reporting tar balls on the beaches and more of marine life washing up ashore due to the effects of the spill.

It can be argued that the advertisement was released in support of boosting the tourism industry and providing the tourists with information which is needed for them to be able to return to the beaches - as we have already established the fact that the tourism industry plays a vital role in the state's survival and economy. However, the PR activity was taken to be offensive because little did it acknowledge the damages caused and showcased honest approaches to promote tourism by showcasing the scenarios which resembled the actuality a bit.

But what if BP took an alternate approach to the advertisement by giving voice to those enduring the worst fishing season in the history or showcasing the perils of the people who survive on the tourism industry for their bread and butter? It would showcase an honest approach from the behemoth to uplift the state and also call for support and actions from the citizens. The entire image of any organization lies with the way they appear and promote their activities - and it has often been observed that subtlety in approach goes a long long way than direct on-your-face statistics which tend to paint the impression that the organization is trying too hard to repair its image without having any empathy. That could be the route that BP should have undertaken to call for support from not only the government but also the tourists!


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