Question

BP (British Petroleum) faced in 2010 a deep crisis as result of an accident -the worst environmental disaster in the United Stated up to date- in one of the prospection owned by the company. 11 people died, the equivalent to 4.9 million barrels were discharged in the Gulf of Mexico with devastating consequence to the marine life and $42.2 billion were claimed up to 2013 as civil liabilities.

Read the article “BP oil spill: Five years after 'worst environmental disaster' in US history, how bad was it really?”(http://www.telegraph.co.uk/news/worldnews/northamerica/usa/11546654/BP-oil-spill-Five-years-after-worst-environmental-disaster-in-US-history-how-bad-was-it-really.html) and answer the following questions:

Do you think that BP could have managed the crisis more effectively? Why or why not?

Could the reputational damage suffered by the company been avoided by a better/more adequate response?

Do you recall when the crisis was happening? What do you recall hearing about it from the media? Was the company doing enough to respond to the public at the time the crisis was happening?

Answer 1

Question 1&2:

The analysis of BP crisis management of the Deepwater Horizon disaster shows mainly that

there are many failures at managing the three phases of a crisis- Pre crisis, during the crisis, and post crisis.

Through the analysis of BP environmental strategy before the crisis occurs, it turned out that

it was just a Greenwashing, that safety was not a priority to BP, to the point that it has never

envisaged an emergency plan, was not sufficiently prepared to such a catastrophic situation

and did not make enough efforts to avoid crises .Worse still, only few days before the

accident, BP neglected serious warnings and even cut corners on Deepwater Horizon safety.

When the crisis occurred, the BP initial response totally failed. The company was too slow,

tried to blame third parties and abdicated responsibility while it would express concern for

the victims and take its responsibility and reassure all the stakeholders. BP even aggravated

its reputation damages when it censured or delayed the information flow and refused to

cooperate with the media.

Even after the crisis, BP continues to conceal important information about the real damages

of the spill oil, disseminated only information that can contribute to repair its reputation and

continues to blame its partners. Besides, through the succession of accidents and scandals, it

seems that BP has never believed that it could learn from such crisis.

In the light of this case study, at least four lessons can be learnt. The first lesson refers to the

strong connection between CSR and crisis management. This BP case study is in fact a strong

reminder that companies should nowadays sincerely embrace the principles of social and

environmental responsibility and have to consider themselves responsible for more than

bottom-line results. Crisis management literature showed that in time of crisis, CSR acted as

a company insurance policy (Klein and Dawar, 2004) and that the company’s history has an

instrumental effect on how it will be perceived when a crisis occurs (Maresh and Williams,

2010). It is noteworthy that prior to the crisis, BP had tried to build up an image of legitimacy

and trustworthiness, but this does not help it during the disaster. This is due mainly to the

lack of credibility of its discourse. This consequently demonstrates the dangers of the

greenwashing strategy and the propagandist discourse. Carrying a continuous speech of

socially responsible company increases, apparently, stakeholders’ expectations in times of

crisis, and this in turn generates more pressures on it.

In addition, we should not forget that CSR aims, among other things, to protect the interests

of all the stakeholders. Preventing and being prepared for a crisis should then be viewed as

part of the company social responsibility.

We believe that, if BP had set up a prevention and crisis management system and if BP and

its former CEO were well prepared to manage such event, this crisis could have been avoided

or would have been resolved sooner or at least damages would have been greatly reduced.

Crises are in fact, often unpredictable, so it is important to establish a crisis prevention

system to reduce the likelihood of, and anticipate the occurrence of a risk and acts as quickly

and as efficiently as possible in case of occurrence of a crisis.

The second lesson relates to the importance of initial response when a crisis occurs.

In this phase, BP was neither quick, nor accurate and consistent. BP failed then to manage the

initial response phase which caused to the company a remarkable reputation loss.

As many companies, BP seems to ignore that communication during the first hours of a crisis

can have remarkable implications for the image of a company and a brand (Dawar and

Pillutla, 2000), that almost 80% of a crisis management consists of communication and that

much of a crisis lies not in its reality, but in its perception.

This case study, demonstrates that initial actions made by a company in times of crisis,

significantly influence public opinion about the crisis and an organization’s handling of the

event (Hale et al, 2005).

More notably, as predicted by Ulman (2001), BP initial crisis communication was largely

focused on legal concerns and resulted in denials of responsibility, minimization of the exent

of damages and lack of useful information to stakeholders. Referring to Coombs (2007b), in

the initial response phase, BP should have provided information and should have taken

actions that might help affected people to cope psychologically and physically with the crisis.

For BP it was better to take its responsibility, to reassure victims and specifically to begin by

expressing concern for the victims of the crisis which could reduce the negativity effect of the

crisis.

BP also ignored that when a crisis occurs, crisis leaders, specifically spokesperson have a

central role in building and sustaining organization’ s trust and credibility among

stakeholders (Schoenberg, 2005) and that in times of crisis, leaders and therefore

spokesperson must be able to communicate with all stakeholders and should be exceptional

communicators (Seijts, 2004). Because of being not prepared to a crisis, former BP CEO has

significantly contributed to BP loss of reputation with his arrogance, negligence and famous

statements.

This case study provides then empirical evidence on the importance of the initial actions in

times of crisis as a significant factor influencing the public opinion about the crisis and an

organization’s handling of the event (Hale et al., 2005).

The third lesson refers to the relationship between the company and its stakeholders. This

case study is in fact a strong reminder that a company should no longer operate independently

of their stakeholders. It has rather to interact and to build strong relationship with them, not

only during and after a crisis, but also prior to a crisis.

Prior to crisis, the company can benefit from its interaction with its stakeholders by

implementing standards of corporate responsibility that meet their expectations (Heath, 1997),

by understanding how stakeholders might react to a crisis, what resources and information

they might have available to assist in the management of a crisis, how they might be

impacted by the crisis, and how they might exert a negative impact on the organization’s

ability to manage the crisis (Mitroff et al., 1996). In addition, companies that build alliances

and achieve coordination with their stakeholders prior to a crisis will experience greater

success outcomes and less failure outcomes in crisis management than will those

organizations lacking such alliances (Pearson and Clair, 1998).

Even, if the interaction with stakeholders can not help an organization avert every crisis, it

can at least play an important role in how the organization resolves a crisis (Ulmer, 2001).

Otherwise, if a company doesn’t have strong relationship with its stakeholders, they may

withdraw their support during a crisis, prolong the effects of a crisis and even intensify the

threat associated with the event (Ulmer and Sellnow, 2000).

Furthermore, during a crisis, companies have to be open and transparent vis-à-vis of their

stakeholders instead of emphasizing their own concerns over those of them. They must rather

cooperate with them, respond to their questions and keep them up-to-date on a company’s

crisis plans and actions.

In addition, Stakeholders want to feel informed, safe and connected when a crisis occurs

(Seijts, 2004). So, open, timely and trustworthy reporting, as well as regular dialog and

communication with all stakeholders should be maintained in times of crisis. The company

should also be honest about what it knows and does not know, which would give it far more

credibility. Specifically, the company must not ignore the central role of media during the

crisis, because the majority of the information stakeholders collect about organizations is

mainly derived from the news media; therefore media coverage is an important feature of

reputation management (Carrol and McCombs, 2003). Seeger (2006: 240) said that ?rather

than viewing the media as a liability in a crisis situation, risk and crisis communicators

should engage the media, through open and honest communication, and use the media as a

strategic resource to aid in managing the crisis?. Lastly, after a crisis, a company should

collect information from a wide range of stakeholders -including external stakeholders and

has to continue to work in close dialog with them in order to reduce feeling of anger and

blame, to reassure them, to understand how they perceive and feel about it after the crisis and

to involve them in effort to repair reputation damages (Coombs, 2010).

The fourth and last lesson is that company should learn from a crisis. The succession of BP

accidents demonstrates that nothing has been learned from its previous accidents. From the beginning of the crisis and until today, BP often gets defensive position and denies its whole

responsibility.

Ideally, companies should consider the end of every crisis as the beginning of the preparation

step for the next one (Jaques, 2007). Recovery is not just getting back to work, but it is asking,

what we have learned to prevent this happening again and what could we have done

differently. Surely, crisis inevitably creates severe harm, but it also has the potential to serve

as a renewing force for the organization (Seeger et al., 2005). Companies which can survive

after disasters are more prepared for future challenges (Penrose, 2000). Unfortunately, this is

often not the case.

At last, companies would not learn only from their own experiences, they must consider the

critical events and experiences of other companies and try to learn from them (Baum and

Dahlin, 2007). Besides, the BP disaster has served as a lesson to its closest competitors. Four

of the world’s largest oil companies (Exxon Mobil, Chevron, Shell and ConocoPhillips)

agreed to form a $1 Billion joint venture, called the Marine Well Containment Company, to

create a rapid-response system to capture and contain oil spills in the deep waters of the Gulf

of Mexico. The created new company aims to develop response plan and technology that will

be able to act into 24 hours and to capture and contain up to 100,000 barrels of oil from

deep-water rigs in the case of an accident.