British Petroleum Decision Process Organization essay
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Baden-fuller (13) asserts that BP is one of the largest gas and Oil Company and is situated in the city of London in the United Kingdom. Measured by the amount of revenue produced by this company, it is ranked as the 4th largest company all over the world. The company has its operations in more than eighty countries around the world. This gas and oil company has largely received criticism due to the fact that it is involved in certain environmental and safety practices that are considered to be dangerous. This paper will therefore discuss various approaches that BP can employ to ensure that right decisions are made with a view of minimizing future disasters’ risk. To do so, the paper will however start by illustrating the problem of oil spills the company faces in details.
The BP Company has found itself being criticized over numerous oil spills. Recently the Obama administration chastised the American BP over its constant spread of oil gusher in the Gulf of Mexico. This was due to the fact that the company could to an environmental disaster that could be very catastrophic.
According to Stamps & Lipnack (3), the gulf oil disaster is defined as an oil spill which happened in the Gulf of Mexico and which lasted for three month in the year 2010. It is considered as one of the largest marine accident found in the history of the petroleum industry. Due to this oil spill, there was a large explosion was eleven people died and seventeen other seriously injured.
Spilled oil generally spread due to currents and storms from time to time. When the amount of oils spreading reaches a certain level, other processes believed to be natural starts to take place. Chemical found in the oil tries to increase the dispersal process therefore the effect is spread very fast across the whole region.
The oil disaster in the Gulf of Mexico leads to very tremendous damage especially to marine animals as well as the wildlife habitats (Huberman, 6). The Mexico government ensured that the spilled oil did not spread toward the beaches by making sure preventive measures are carried out. Due to this, the united state government has accused the BP as responsible and therefore it is the duty of the company to take up the cost incurred in cleaning and damage of properties around the gulf.
For an organization to minimize future risk, it is important that certain measures that influence on the kind of decision it partakes studied carefully. This measure ensures that the company is making required decision to sustain its future development (Baden-fuller, 13). Being a well known company around the world, BP requires significantly requires reorganizing its process in decision making so as to avoid future disaster like that of the gulf oil so as to avoid the numerous criticism it has been forced to work with. It is so obvious being a oil company there are numerous risk involved, it is therefore very important that the organization to come up with system which will ensure that there is control and planning so as to minimize risks in the future (Huberman, 7).
Since the gulf oil disaster, the company has been under pressure in the making of decision that will bring both environmental and safety changes so as to protect the image of the company. Pressures from organization are very effective since they forces organization to formulate new techniques of handling problems such as that being experienced by BP. The formulated ideas and techniques ensure large company remain as leaders and are able to compete in the world market (Huberman 7).
Having understood measure involved in the making of decisions, decisions on how to reduce future risks should be formulated so as to do away with decisions that are not important. For instance, following the recent gulf oil disaster in Mexico it is important that the BP company come up with major decision that will ensure that the disaster does not repeat itself (Baden-fuller 12). Some of the decisions are; Decision on environmental conservation, Decision to engage in joint venture and Decision on international processes.
As Stamps & Lipnack (5) report, it is quite important that there is continuous improvement in the use of energy within the company. The importance of this is to ensure that there is monetization and control of emission of carbon dioxide in the atmosphere. For an industry to be termed as successful it requires to ensure that its activities are not affecting the environment in a negative way. For instance, the gulf oil disaster greatly caused damaged to the environment therefore causing damage to the tourism significantly causing the economy level in Mexico to go down. A good industry should always ensure that the economy of a nation has an upward trend and not a downward trend.
The decision investing on new technologies is very important in ensuring there is environmental conservation. BP has resulted into the usage of solar energy, its main belief is that by replacing the current energy with solar energy it will be able to increase the amount of revenue it collects. Solar energy which is natural will minimize the amount of carbon dioxide being emitted in the atmosphere as compared to the other type of energies (Huberman 6). Should there be an oil spill, carbon dioxide being emitted will be less therefore there will be fewer chances of explosions and hence minimal damages.
For any business to prosper, it is essential that it creates ventures with other companies in order to minimize the kind of risk involved in the near future. BP has come up with the decision of having a joint venture with the Husky so as to invest Sunrise steam assisted gravity drainage (SAGD) which is a project with alignment of increasing the upstream of the company (Baden-fuller 12). This idea is a very competitive since it will improve BP reputation of the gulf oil disaster this will enhance the development in technologies.
BP Company needs to have policies which will work hand in hand with its decisions in the joint venture. Implementation of policies guarantees that the company will be able to withstand future risk should there be a reoccurrence of an oil spill. Joint venture will mean that should there be any risk in the future the risk will be shared among all the party in the joint venture. BP Company will be able to minimize the pressure it received from various governments since the other members in the venture will also be held responsible (Baden-fuller 12).
BP has the mandate of engaging in debates that involve in climatic changes so that they can be able to have an understanding on how to handle their activities to minimize the risk of explosives. Through engaging in debate the industry is able to come up with new ideas which will be effective in ensuring that such dangerous occurrences do not reoccur (Baden-fuller 12).
For effective management to occur at the British petroleum, the management needs to remember the management CREAD. CREAD stands for Communication, Recognition, Empowerment, Accountability and Development. This acts as a guide to success for a manager and it is usually a daily guide. The management needs to ask questions such as how effective is the communication between them and the employees, how properly are the employees being recognized and whether the employees are being empowered equally in the organization. The management also needs to check whether each employee is being held accountable for their responsibilities and also check whether the organization is developing its employees so that they can feel their own success in the organization (Lippie, 30).
Wideman (77) asserts that the key principles that the main decision makers should have included to avoid the oil spill are as follows. The management should have defined a strategy that was effective to prevent the degradation of the environment from happening. The management should also have attached the value of the natural resource in monetary terms; the Deepwater horizon project would have been made less complex. There was also a need for clear policies to be accessed on demand as well as the rights of users to natural resources.
According to Fayol, principles of management are statements that show truth that is essential. They serve as basics for decisions of managers as well as their actions. Fayol’s principles of management are outlined below and the British Petroleum should have applied these principles (Bing, 40).
Division of labor where a person or employee specializes in the area where they are skilled is another good approach. When a person specializes in his or her area, there is labor efficiency and increase in productivity. Further, there is an increase in speed of workers as well as an increase in accuracy.
Authority and responsibility principle where commands are issued and responsibility for commands consequences follow. In authority, a superior has the right to give order to his or her subordinates and there is performance obligation in responsibility (Baker et al, 1).
Discipline is another principle of management; it refers to a situation where one has proper conduct while relating with others in the organization and is also exercising obedience and respecting authority. This is very important for an organization to function.
Baker et al (1) reports that unity of command is also very essential and it states that only one superior should give orders to the subordinate and also be accountable to one. An order from many superiors can cause conflict and confusion in the organization. There is also unity of direction principle which states that people working in the same line must have the same objectives and all activities that are related must be under one group and there should be one action plan for them and one manger should control them.
Remuneration is another principle which states that there must be sufficient pay for workers because pay influences workers as well as their productivity. Other principles are the level of centralization, scalar chain, social and material order, fair and just treatment of employees, stability and tenure of employees, initiative and Esprit de corps (Baden-fuller, 12).
The Gulf of Mexico oil spill or Deepwater Horizon happened while the drilling was going on. The oil drilling by BP was a project and the management needed to have a guide for this project. In order to avoid such disasters happening again in future oil drills, several management principles should be applied. I am going to give the principles of effective management in terms of this Deepwater horizon project undertaken by BP (Maltzman, 1).
The first principle to be observed in this management was the principle of success. The main aim of the Deepwater horizon drilling was to drill oil and also build an oil well. This shows that in order for the project process to be successful, the project manager must measure the success of the project at the beginning. Thus it is important for a project manager to have the principle of success so that a good quality product can be produced.
The other principle that a project manager should have is the principle of commitment. There must be commitment that is mutually acceptable between sponsors of the project and the project team. The major stakeholders should have sufficient knowledge in the project being undertaken, the involved process and the expected risks. The goals and objectives of the project should be agreed upon in terms of the project scope (Baker et al, 1).
The other principle necessary for the project manager to have is a principle called tetrad-Tradeoff principle, where there must be a mutual consistency among product scope, time, quality and cost. These core elements are interrelated and one if one corner is anchored, the other two must be affected. The commitment principle and the principle of success give an extension of this principle.
The unity of command principle should also be observed by the key players in a project. This is where the project sponsor and the project manager have a channel of communication between them so that the commitment in a project is administered in an effective and efficient manner. The project manager is the one responsible for all the work in a project and the representative of the workers in a project.
There must be the principle of cultural environment where the management must give out a cultural environment that is informed and supportive. The other principles are the process principle where the policies and dealings that are in place for the project commitment conduct have to be efficient and effectual and the Life-cycle principle which states that for the process of project management to be successful, the planning activity and the doing activity must be in place (Baden-fuller, 13).
The principles given above are applicable in various areas in an organization. They can be used in change management, organization process, when making decisions can be used by managers to improve their effectiveness and also under hoe people can view management.
The principles are important in that they will enable the management to see the organization structure clearly and make better strategies. For example, if the structure of the Deepwater horizon was well defined, the management would have come up with better strategies and plans of how to avoid oil spill during the process (Maltzman, 1).
The principle of project process would have been applied better if the Project managers and sponsors had a template of project charter for the Deepwater horizon which gave details of impact on a certain section of the environment. This would have alerted the project stakeholders and they would have come up with ways of preventing oil spills and respond on time to spills. This charter would have helped BP to give attention to the process of clean up incase of the oil spill.
The above principles would also have helped BP to come up with better safety measures to curb the oil spill. When the supervisors and the platform worker raised concerns about the default found, the management should have acted faster by responding to the defect and maybe avoid the oil spill (Wideman, 85). The principle of responsibility would have been applied here where the people responsible for providing the machinery for work should have been contacted. Since they were responsible for providing equipment, they should have been the first people to be contacted instead of the project managers going to the executive management first.
The division of work principle should be applied in the case where BP should have staff who specialized id in dealing with disasters when they happen. They should have disaster response team to save lives and also people who have done environment studies to help the management on assessing the impacts of an oil spill (Maltzman,, 1).
The unit of command principle would have been applied better if there was a better communication between the stakeholders group. BP should ensure that all major stakeholders are involved thoroughly and a stakeholder management plan that is well thought of should be in place. If all groups of stakeholders like NGOs, fishing group associations were involved when BP was developing and implementing the oil rig, the disaster would not have happened. The principle of commitment also comes along in that is if each major stakeholder was committed in playing their roles, there would have been no oil spill.
Lippie (35) is keen to note that the application of the principle of success is useful where in order to avoid any future disaster like the “Gulf oil spill”, BP should be prepared in terms of risks. The management should have a risk plan where although the project is expected to be successful; there is a probability of risk. The company should consider the probability of a blowout occurring to be high especially when considering the impact on the environment. There would have been less cases of environmental degradation. If the company had included the impact of environment on the 1969 blowout that occurred in Santa Barbara, the organization would have been better prepared. Thus in future, when assessing the environment for another project, BP should assess all the impacts or disasters that happened in the past and also have better risk management.
The principle would also help BP to prevent future disasters by being able to validate their vendors if they meet environmental requirements or not, understand how the companies environmental policies and approach project is being aligned by their vendors. BP partners or vendors should be able to provide BP with feedback on how environmental policies will be aligned upon request. BP should also be able to audit whether the vendors observe the environmental policies and whether the environmental criteria of the deliverables meet the required standards. This will help in procurement management and a possible oil spill can be avoided (Wideman, 80).
The principle should also help BP in defining a good organization structure. The oil spill may have occurred due to a structure that was not well defined. The employees may have been confused on who m to tell when they noticed a leak and maybe there was no defined roles. With a defined structure on proper protocols for response, such a disaster may be avoided in future (Maltzman, 1).
The principle of remuneration should also be applied where BP should consider paying it workers well to avoid such disaster. May be the workers were not being given good pay and when they saw the oil leak, they were reluctant to report ion time. The company should offer good rewards to its employees.
By having good management principles, the management will always have a better response to such disasters and also avoid critique by the public. Performing assessment on environment before staring a project, involving major stakeholders and also carrying out a risk assessment plan before the start of a project is very essential. The company will have knowledge of the environment, better management structure and also a clear form of communication between the stakeholders and the project manager (Lippie, 40).
Wideman (80) points out that the management principles of the decision makers are applicable when making decisions on whether to approve a certain oil rig project or not. The management can approve whether to allow it based on the skills of the project team and their areas of specialization. If the team is well prepared, then the right measurements have been taken and can be given a go ahead.
For BP to continue to enjoy being a market leader both in gas and oil, it ought to ensure that there is no repeat of the gulf oil disaster like it was witnessed in Mexico. It is very important that it makes decision that will consist of mechanism which will work to ensure that there is minimal or no oil spill (Baden-fuller 13). The company should focus on ensuring that all sectors within its organization so that it is able to tackle risks that might a rise in the future. It is very essential for the BP to establish a design which will focus on decision making principles in management.
The BP oil spill disaster caused a major concern in the world. It raised concerns among major players in the oil industry. One of the questions raised was whether the decision makers were using their management principles in making crucial decisions on such oil rigs (Baden-fuller 13). The principles of management help us to understand how decision makers go about making decision and they also act as a guide to the major stakeholders in the big companies.