Academic journal article Business Management and Strategy

Crisis Management: Lessons Learnt from the BP Deepwater Horizon Spill Oil

Academic journal article Business Management and Strategy

Crisis Management: Lessons Learnt from the BP Deepwater Horizon Spill Oil

Article excerpt

Abstract

The present paper studies the BP crisis management of the Deepwater Horizon Disaster which occurred on April 20th, 2010. The authors content-analysed a large amount of secondary data from various sources, used the three-phase crisis management model and found that BP management of this crisis failed at many levels. The authors mainly highlighted four lessons relating to the connection between the Corporate Social Responsibility and the crisis management, the importance of the initial response when a crisis occurs, the need for strong stakeholders' relationship before, during and after the crisis; and the opportunity to learn from a crisis.

Keywords: Crisis management, British petroleum, Deepwater horizon, Stakeholders, Corporate social responsibility

1. Introduction

On the 20th of April 2010, an explosion and a huge fire were declared in the oil rig Deepwater Horizon. This accident was considered as the largest maritime disaster oil spill in the US history because, aside from the death of eleven crews, its economic and environmental impacts were considerable.

Furthermore, the BP financial damages caused by this accident were particularly considerable. In the London Stock Exchange, the company shares loosed on June 25, 2010 nearly 7% and fell to its lowest level since 14 years, while 50% of the its market capitalization was lost on early July 2010.

The company's reputation has also dramatically collapsed particularly in the U.S.A. Before the completion of sealing of the oil well, as the spill has progressed without a resolution, BP was awarded the grade the lowest grade E, in the Covalence multinationals reputation ranking. The PRWeek/OnePoll's survey conducted about one month after the accident showed that the public feels that BP has not done enough to stop the leak. One year after the Deepwater Horizon oil spill, the ?l2th Annual Harris Interactive U.S. Reputation Quotient (RQ) Survey? revealed that BP was second from last with a score of 49.82 and that BP was still perceived by Americans as one of the companies with the worst corporate reputation (Harris Interactive, 2011).

BP was also facing, by mid-June 2010, remarkable calls for boycott of its products by a Facebook group called ?Boycott BP? and numbering about 640,000 fans. Also, a fake BP Twitter account called @BPGlobalPR was made by an anonymous activist and started sending out messages about the Gulf oil spill to Twitter. By the end of May 2010, @BPGlobalPR had 190,035 followers while the BP account (@BP_America) had only 18, 826 followers. At last, BP was facing thousands claims and lawsuits from many actors such as fishers, hotels, restaurants as well as NGOs like the Animal Welfare Institute (AWI) and other animal protection and conservation organizations.

To deal with the spill oil as well as the reputation and financial losses, BP mobilized substantial means and expended a great deal of effort, but crisis experts' opinions differed on whether BP has successfully or unsuccessfully managed this crisis. However, many models and theories associated with crisis management can be used as a sound theoretical framework to assess BP crisis management of the Deepwater Horizon disaster.

Referring to the three-phase model, the most widely used model in the crisis management field, the purpose of this paper is to examine how BP managed the Deepwater Horizon spill oil. Such an investigation will help us to evaluate BP crisis management of this disaster, but will also give an empirical evidence to some ideas and propositions suggested by many crisis management researchers, not yet empirically validated or validated only through laboratory experiments.

The reminder of the paper is organized as follows: the first section reviews the crisis management literature and focuses on the three-stage model. The second section describes the adopted methodology. The third and final section is dedicated to discuss the main lessons highlighted by this case study. …

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