BP is the leading energy company. BP took its name from the initials of the company's previous official name British Petroleum. The business was wanting to persuade everyone that it was an environmental friendly company that was using and develop alternative energy technology. During its existence it paid a whole lot in fines for pollution that it's become clear that management didn't really value the surroundings, but only about maximizing profit in anyway. It was easier for them to pay fines than to change their management system and prove safety improvements in the workplace. After the explosion, BP's stock price and its own reputation transpired, and it is one of the numerous results of the disaster. They have definitely happened due to a lack of strong ethical guidance.
BP- Texas City Oil Refinery Explosion (2005) - Case Summary
In one of the most significant oil refineries in Texas City, on March 23, 2005, the explosion and fire took place, which took away 15 lives, injured over 170 people, and obligated thousands residents that lived close to the plant to stay in their homes. BP generates diesel and jet fuel, and gasoline. In 2005 an enormous cloud filled with hydrocarbon ignited approximately 1:20 pm. The explosion caused solid harm to the plant and also to its name. Actually, the company had couple not serious accidents prior to the explosion, and there were none engineering problems addressed by the management of the company. Because of a cost-saving plan, the maintenance and safety was paid less attention that needed to avoid the disaster at the plant. For certain, all the duty of the accident should be blamed on executives in London that were alert to the safety issues and budget cuts. It had been definitely strong mismanagement at the BP and this was proved by investigations that occurred in cases like this. In fact, one of them was provided by Chemical Safety and Hazard Investigation Board that "offered a scathing assessment of the company. "
It is vital for taking stakeholders interests into consideration. BP didn't properly place its stakeholders at the guts of its strategy. Instead of being fixated on legal liability, which actually impacts internal stakeholders (management, employees, shareholders, creditors, customers); BP must have empathized with external stakeholders (like the general public, communities, media) that will suffer from the explosion. Finally, BP has hurt most of its stakeholders.
1. What exactly are the reality of the case?
I think the most significant fact is that BP was neglecting evident warning signs about the plant's weakening conditions, and was focusing on the minimizing costs and the maximizing profits. Employees were alert to the working conditions at the plant because every day they were going to utilize a fear that something terrible can happen anytime. BP failed to repair a lot of safety problems they knew about, and it resulted in the explosion in 2005, 15 deaths and over 170 injured. BP reduced its expanses for buying safety equipment for employees, cut its budget to lower number of inspection, and maintenance workers at the plant. Indeed, BP did not repair a lot of multi-safety problems that at the end caused the explosion, and by the end the company was fined. Cost cutting and poor maintenance are the main factors in this case that conducted to the disaster.
2. What are the ethical issues?
BP has failed in the inspection and the maintenance of equipment, risk and staff management, working and safety culture, as well as health and wellness and safety assessments. Employees were alert to the working condition at the plant, however they cannot protect themselves because they knew that management team would not pay attention to them and ignore almost all their ideas. The business's internal reports indicated that the business had the deficient understanding of the risk, and its own workers had the poor understanding of possible consequences.
The Chemical Safety Board's investigation advised that budget cuts critically influenced on the safe procedures at the refinery, and that its executives didn't provide efficient guidance, as well misunderstood the value of controlling main risks.
The company was running for a major profit and forgot about employees' safety. There is not enough knowledge of what can occur. Perhaps it was enough in order to make a decision whether to pay more money for safety or even to pay fine down the road. Management definitely did calculations how much it will cost to pay fines and what the price will be for a lost human life in case there is the disaster. As always it was better to ignore all the safety issues, and hope that nothing happens.
3. What exactly are the norms, principals, & values related to the situation?
The company has violated the CLIMATE Act, and the federal environmental laws. Furthermore, families of its victims sued the company as well. Unfortunately the company is constantly on the break the federal environmental laws, with the exact the same and analogous violations that resulted in the explosion in 2005.
4. What exactly are the alternative courses of action?
The company must book the expenses for safety and never do budget cuts for this. The management has to understand the importance of safety in this field of business, and improving, not ignoring process of safety will pay off in future, by saving the nice name of a company and avoiding to pay unbelievably high amount of fine. The management system at BP has to focus not only on measuring and managing occupational safety, but also on process safety. The business has to pay attention to safety and working conditions at the plant.
5. What's best plan of action?
I think all three courses should be combined to avoid future disasters, deaths, and injuries at the plant because with paying more focus on safety, working conditions will help to create a strong company reputation. Regular improvement of maintenance and inspection will lead to satisfactory working environment and conditions. A better knowledge of the safety culture and management systems in the business by management will solve a concern with mismanagement at the plant.
6. What are the consequences of every possible course of action?
Combine all the span of actions will help to avoid many disasters and explosions in future, save lives of workers, and reduce injures in the working place.
7. What's your choice?
In order to stop those violations regulations should become more serious and strict. For ignoring safety improvements, health and wellness and safety assessments, as well as for violations of law the management team should be delivered to the jail plus they should comprehend that consequences will be very serious. The annals demonstrates paying fine won't stop the company from violating safety assessments. It would be a good idea to open a hot line for employees to report any violations at the plant, and those phone calls should be anonymous. It can help to avoid those disasters in future because usually employees know about safety and other issues inside of the company.
The Texas City's inhabitants are remaining faithful to the oil refinery, even though chemical issues and deaths had place. The main reason for their dependence of BP. This company contributed giant donations to the town, including its parks, schools, and a community center. People know that their town would fade if the refinery would be close because the company isn't only the town's biggest employer, but also its best-paying jobs.
BP company violated almost all of 6 pillars, included in this trustworthiness, respect, responsibility, fairness and caring.
Definitely, the business has to provide regular meetings with the management of the company and explain the importance of all actions to boost safety and working conditions. Because management must understand that contribution in the current business will lead to saving cash and help to avoid disasters in future. It will also keep carefully the company name and price stock high, and meet needs of stakeholders as well. But as BP's history shows, those disasters are happening over and over after years and no actions and real focus on improve and avoid it, nobody takes it seriously. For example, one more explosion that happened on Deepwater Horizon in April 2010 and took away 11 lives, and led to an oil spill that heavily polluted the surroundings. It has a serious influence on the fishing and tourism industries, as well as on fish and animals.
It seems that for this company it is better to pay fines and money to family's whose relatives died at the plant as a result of disaster than to change their course in doing fair business and ethical decisions making. People do not understand that by those disasters, they ruin not only the business reputation, but also the surroundings in general, and do not think about good and healthy future for another generations. Management must realize the value of having safe jobs, more responsible managers, and ethically making decisions.
Finally, management has to not only give attention to minimizing costs and maximizing profits, but also do everything necessary for employee's safety and the unpolluted environment. The business has to recognize that people's lives haven't any cost. For their neglect and prefer to earn as much money as is feasible and to spend less while risking the safety of their workers, and as the effect people die at their work and their families are left without loved ones.
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