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Case question 1 There are 4 control processes. The first one is establishing performance objectives and standards.

BP group has set performance objective and standards in their sustainability report which stated we are committed to the safety and development of our people and communities and societies in which we operate. We aim for no accidents, no harm to the people and no damage to the environment. From this statement, we can deduct that their performance objective and standard is to have no accident, no harm to the people and environment. Thus BP group has shown the first process of control. Second process is measuring the actual performance. This can be seen from the scale of the accident itself. The company failed to achieve the objectives they have set. 11 lives were taken and approximately about 1 million barrels of oil is flowing into the sea. This severity also added by the fact that the oil itself will get trapped to the sediment on the nearby coasts resulting in continuous discharge of oil from the sediment although the oil pipe has been fixed. This would further prolong the period in which BP has to take full responsibility regarding the impact of the incident. Third process will be to compare the actual performance with the objectives and standards. After the disaster happens, BP quickly measure how they actually perform compare to the objectives they have set. It realizes that as an international corporation, inflicting damage to other countries will bring detrimental effect to the image of the company. After the incident, a number of countries in which BP operates may see BP as incompetent in terms of safety issues. United States itself give fines of US$35000 per day as long as the oil spill still exist, excluding compensation to the families of victims. Other countries may impose tighter regulation for BP which surely bring significant loss in revenue and loss in future prospect in oil exploration as they are currently operating in 100 countries around the world. Thus, BP needs to restore its public image after the incident in order to tackle these problems. Last process of planning is to take necessary action. This action is based on how close BP actual action to the objectives that theyve stated to the public. BP has two problems to deal with. First is to take full responsibilities on the spill itself. Secondly, is to clear up public image of BP destroying the environment. In order to tackle the first problem BP had pledged to spend US$ 20 billion in order to clean up the oil spills and restore the affected environment. Social media sites had also been used to pass on news and updates to stakeholders about the cleaning of the oil spills and restoring the environment affected by the oil spills. We think BP had done enough in taking full responsibilities of the incident. However, the company didnt do enough to clear up a bad public image.

Question 3 Things that BP had learnt are divided into three categories. Firstly is regarding the feedforward controls meaning, to ensure the right directions are set and the right resource inputs are available. In this case of crisis control, BP as an Oil company had failed to abide by the safety rules and regulation set by Minerals Management Agency which is a federal agency charge with oversight of US offshore oil-and-gas industry. The example of this safety measurement is the shutoff switch of the pipe if there is leakage to prevent the crude oil from gushing out to the sea and spark an explosion. The explosion that happened was due to the malfunction blowout preventer that had been leaking fluid hasnt been replaced with the new one. Furthermore, BP decided to use a less costly well design that is risky. From this BP can learn that, continuous checking of safety tools to make sure that it is working is crucial in preventing or at least minimize the effect of the accident. The failures of the checking of the blowout preventer can be due to the engineers who suppose to check it but didnt do his job properly or the safety manager of the drilling rig itself who failed to invent ways to ensure that the engineers do his job properly. Another lesson learnt is that saving few millions in investing in low level safety tools or equipment is not worth it if the risk of the offshore oil drilling is really high. Thus, cost minimizing idea can be implemented in other aspect of oil rig but not the safety measure as this is really important in order to minimize risk of failures that can cost them really high, as much as $100 million a day. In future operations, BP should pay its highest attention to safety measures as their offshore oil drilling is very risky by inventing more efficient safety procedures and also invest more on safety tools and equipment. Another category is concurrent control meaning, to ensure that the right things are being done as part as a workflow operations. In this case of crisis control, BP had tried its best to prevent the oil from spreading out to even larger area. It took them 4 months to stop the oil from gushing out by installing plug and relief wells. The company had also spent $20 billion to compensate business people suffering from the disaster as more than 640 miles of shoreline are tarred with oil and an uncountable loss of wildlife that had lived beneath the waters surface. The CEO during that time was Tony Hayward who had successfully bring BP net profit to US$ 6.08 billion in the first quarter of 2010 had failed to show his empathy on the oil spills incident. The fact that he was attending a yatch race just after the explosion that kills 11 men made the shareholder decide to force him to resign. The lesson that can be learnt from this is that they need to install 2 relief wells instead of 1 and they did. This refers back to feedforward control in which accident can be prevented. The compensation is also done during the oil spills itself which is helpful in clearing the public image of BP as irresponsible international company. Another lesson learnt is that BP had exercised internal control which is the force resignation of the amoral CEO to prevent the company to lose its credibility in the eyes of the share holder. In future operations, choosing CEO is not be based on how they acting in comfort but based on how they react in times of crisis. This is not only applied to CEO but also other higher executive position.

Sources Electronic copy of Joseph Karl Grant, What can we learn from the 2010 BP Oil Spill?: five important corporate law and life lesson. http://ssrn.com/abstract=1701892 http://cengagesites.com/academic/assets/sites/4004/BP_1439042233_250174_WM.pdf

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