Running Head: BRITISH PETROLEUM AND SOCIAL PERFORMANCE

BRITISH PETROLEUM AND SOCIAL PERFORMANCE
Victoriano Reyes
BUS 475
Professor Anthony
November 1, 2014

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BRITISH PETROLEUM AND SOCIAL PERFORMANCE
Nature structure and product/service offered
The world economy is increasingly becoming integrated and interdependent; as a result,
the relationship between business and society is becoming more complex. British Petroleum is
one of the leading and biggest companies operating the oil industry. BP is integrated with various
gas and oil operations. “Among the key services offered by the company are energy for heat, and
light, fuel for transportation, petrochemical products and lubricants for continued movement of
engines.”(British Petroleum 2014) The company operates in 80 countries globally, has over
eighty-three thousand employees and is estimated to have an economic value of 403.3 billion US
dollars. BP has two segments (upstream and downstream) through which it operates; developing
and producing energy sources before turning them into products that the respective consumers
can use. Its business strategy is to stay focused in its primary goal of oil and gas operation with
the intent of delivery value over volume.
“There are several factors that may affect the company” (Majocchi, 2005). These factors
may be of an international, regional or national level environmental forces; all having significant
potential threat. In the case of BP, politics and its related issue is a big threat. The company’s oils
spill four years ago showed just how much such an accidental incident can be politicized by
individuals and nations that do not have the company’s best interest at heart. Another potential
threat for the company from the external environment is volatility of the oil industry and
alternative energy sources.
The oil industry is usually marred with numerous fluctuations in terms of production,
availability and even prices, making it a highly volatile area in terms of business. Increasing need
for alternative energy sources that are more environmental friendly make this volatility even

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worse, as various parties are working tirelessly to do away with oils and fossil fuels as the main
energy source.
Three salient stakeholders
BP is seen to have a wide array of stakeholders so that it may properly understand the
society’s expectations for it. From a general perspective, the company's stakeholders are various
organizations and individuals who are in any way affected by the activities of BP; either in its
role as an employer, an energy provider or revenue generating company. Three vital stakeholders
to the entity are the company shareholders, the employees and the customers. These are there
three stakeholders that determine the existence, operation and extent of the entity's functionality.
While the shareholders contribute in the making of vital decision, the employees are responsible
for working all made decisions; all of which are done for the benefit of the customers.
5 ways that primary stakeholders influence BP’s financial performance
One way that the primary stakeholders influence BP's financial performance is by making
decisions in regards to which ventures ought to be undertaken and which ones may be too risky
or with little profits. Primary stakeholders may also determine the laws that the company
operates under as well as the legal requirements for their establishment in any nation; leading to
the payments needed for the company's legality. Another financial influence of the primary
stakeholders is through the investment money provided for the entity's operations, where
shareholders may or may not invest much of their funds in various undertakings. Primary
stakeholders are also seen to determine the terms and agreements of contractual and partnership
relationships in relation to different undertakings.
Controversial issue on corporate social responsibility

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BP is currently one of the largest companies operating in the oil and gas sector, having a
turnover that dwarfs that of others states. The company has been engaged in numerous activities
for the benefit of the society, owing to the general expectations of corporate social responsibility.
One such social venture that has caused much controversy is that of its rebranding and a new
commitment to sustainable energy production. While this undertaking-of a corporate social
responsibility nature, has impressed many, it has also been the reason for others' irritation.
“Corporate social responsibility abbreviated as CSR is defined as the way an organization is able
to relate policies and operations with the society in ways that are of benefit to them and society
as well” (Van Oosterhout & Heugens, 2006).
The actions are obtained for reasons that are far beyond the legal and economic
obligations of the organization. Some of these actions are sometimes said to be purely voluntary
and philanthropic and are meant to benefit the social constituents of the organization. It is an
important tool in organization development. Those organizations that make use of the concept
acquire more benefits such as trust from the clients, customer loyalty, and improved attitudes on
the brands, improved financial performance and positive publicity. BP's use of oil derived from
fossil fuels alongside its claim to seek more sustainable sources of energy has been two
paradoxical issues in regards to the company's operation. There are few aspects in terms of how a
company ought to act as a corporate person due its size; with the most significant one in BP's
case is the environmental impact of its key operations. Due to this paradox, the company's
attempts of turning to more environmental friendly sources have been met with much
controversy.
Coalition to address controversial issue

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As the leader of a key stakeholder group, formation of a coalition to face the issue as a
unit would be greatly beneficial to both the company as a whole and the respective stakeholders.
This will, therefore, be the first point to be raised, offering sufficient reasons and explanations as
to just how beneficial it will be to resolve the issue of much controversy. In doing so, the essence
of a coalition will come out rather clearly, as two heads are always better than one. It then
follows that suitable members of the coalition should be chosen, hence the need for a proper
selection process. The involved steps in this case should not be too complicated or too simple as
to let in anyone. For this reason, therefore, the selection of members will be primarily based on
the individuals' and entities' like-mindedness. Such a target group will be effective in the said
undertaking due to the similarity in regards to what they are working towards. Like-minded team
members will mean that the members have similar attributes; a factor that goes a long way in
facilitating group one and unison.
Coalition among the members should, therefore, come rather automatically due to their
apparent similarity and like-mindedness. As seen most cases, many coalitions-of whichever kind,
are formed rather hurriedly and fail to consider whether or not the included persons have any
similarities in terms of their basic nature and not just the goal for a particular undertaking.
Potential challenges to the coalition and means of addressing them
Despite the various achievements that stem from having like-minded persons on the said
coalition, one potential threat that could arise from it is a dislike and among the members due to
their similarities. Often, persons with similar traits will find each other's company to be good,
apart from the few instances when such similarities make them want to be away from each other.
However, this is just but a possibility and therefore the coalition still has a fair chance of fairing
on without such a problem. To completely mitigate it. However, the selection will be such that

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similarities that do not lead to constructive results when in abundance will be avoided. Another
potential challenge in the encouragement of members to form a coalition is their availability. All
potential members for the coalition are fully engaged in the various undertakings and including
them in this coalition will only mean that they add more to their hands. This could be however
addressed by ensuring that all the sought members have sufficient time to help in the coalition
and if not, have the capacity to make such time that will be needed. Willingness to help and
understanding of the issue at hand is also a potential challenge, as other stakeholders may not
care about BP’s undertakings or simply have a poor understanding of the issues in which BP is
engaged. This is a challenge that could be addressed by offering the selected persons with the
necessary information and material to have a proper understanding of what the issues to be dealt
with are.
In my conclusion, BP is one of the leading and biggest companies operating the oil
industry. BP is integrated with various gas and oil operations. The oil spill was very harmful to
the earth. Today’s society and businesses are more about being socially responsible than ever. I
believe there will always be some controversy when it comes to social performance. However,
BP did their best to clean up the damage that was done and all businesses make mistakes.

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References
British Petroleum. (2014). BP At A Glance. Retrieved on 30th Oct 2014 from
http://www.bp.com/en/global/corporate/about-bp/bp-at-a-glance.html
Doherty, N. A., & Smith, C. W. (1993). Corporate insurance strategy: The case of British
Petroleum. Journal of Applied Corporate Finance, 6(3), 4-15.
Friedman. M. (1970).The Social Responsibility of Business is to Increase its Profits. The New York
Times Magazine.
Mathis, A. (2008). Corporate social responsibility and public policy-making: perspectives, instruments,
and consequences: University of Twente.
Majocchi, A. (2005). Corporate Governance and Social Responsibility in Europe: an Analysis of French
and Italian SMEs. The European Union Review, 10(2), 71.
Van Oosterhout, J., & Heugens, P. P. (2006). Much ado about nothing: A conceptual critique of
CSR

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