Beyond petroliyum case solution

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Xcellon Institute_ School of Business

Case study analysis of BP (Beyond Petroleum) Focuses

on Sustainability

PGP-GBM

(2011-13)

Corporate Governance and Business Ethics

Submitted By: Submitted To:

Manish Kumar Lodha Prof. Vivek Raina

M00103



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ACKNOWLEDGEMENT ________________________________________________________

No task can be achieved alone. It took many special people to facilitate and support it.

Hence, I would like to acknowledge all for their valuable support and convey my humble

gratitude.

I would like to offer my special thanks to Mr. Vivek Raina Prof. Corporate Governance

and Business Ethics, Xcellon Institute School of Business, who were the source of inspiration to

provide the guidance.

Manish Kumar Lodha



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Index:-

_________________________________________________________

Case summary…………………………………………………….. 4-4

Question & Answer ……………………………………………….. 5-7



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Case Summary

BP (Beyond Petroleum) was founded over a hundred years ago by William D’Arcy. D’Arcy was

a wealthy British man who invested all his savings into the search for oil in the Middle East. It

took more than six years and D’Arcy nearly losing all his money befor e he struck it big. In 1908,

in what is today known as Iran, the Anglo-Persian Oil Company was founded. The companies

head manager George Reynolds helped established a pipeline through the area to help transport

the crude oil out. It took several years and a tremendous amount of work to establish one of the

largest refineries in the world. Over the years BP has grown into one of the world’s largest

energy companies. They have faced numerous ethical, environmental and moral issues that they

have tried to rectify to improve their image but not always successfully.

Throughout the years since BP was founded by Mr. D’Arcy the company has had to find ways to

sell their oil to the consumer and ways to obtain oil which meant finding new places to dig and

ways to not go bankrupt. In the early 1900’s under Winston Churchill, the British Navy became

shareholders in BP. This began the long debate of oil companies being involved in Politics. The

twentieth century brought huge change, growth and a shift in power in the oil industry in the

Middle East. This had a major effect on BP causing them go from 140 million barrels of oil

produced to 500,000 barrels. BP was forced to look for other places to dig for oil if they were to

survive. This began the Forties Field off the coast of Scotland and Prudhoe Bay in Alaska. These

remote and oil rich areas presented logistical challenges for BP. They were faced with showing

their stakeholders that they were committed to protecting the environment while trying to build

the largest deepwater pipeline and a 746 mile pipeline through the Alaskan wilderness. Over the

years BP has not always been able to keep its commitment to the environment and its

stakeholders.



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Question & Answer

Based on the history of the company, why did BP get involved in so much questionable

conduct?

I feel that BP has been involved in questionable conduct for a few reasons. Failure to rectify

safety issues, misconduct and negligent behavior is a recurring theme that has occurred over the

century BP has been in business. It seems to me that BP continually fails to take care of major

issues that if fixed they could have prevented major disasters from occurring. It is almost like BP

is constantly trying to hide something in the hope that they will make more money and further

their business. BP was charged with violating the Clean Water Act when the pipeline in Alaska

leaked crude oil. BP had failed to respond to several major red flags.

The pipeline had been corroding and went unchecked for over a decade and eventually led to two

different leaks occurring that contaminated the pristine landscape of the Alaskan tundra. It seems

to me that BP gets into trouble because it historically came close to going bankrupt numerous

times and they would do anything to prevent that from occurring again. It is more about the

bottom line than following the ethical guidelines they set for themselves.

Analyze BP’s efforts to improve sustainability. Do you think they are sufficient or do you

think they need to do more?

BP has done its fair share of implementing sustainability initiatives to adapt to the changing

world. In 2005 BP started its Alternative Energy business. They invested $1.4 billion in the

attempt at “going green”. BP is using wind, solar, biofuels, carbon sequestration and storage,

better planning and implementation as ways to become more sustainable. BP had installed

enough wind turbines to supply power to 6 million homes. BP has also signed agreements with

several producers of solar panels in Asia. They also do 70 percent of their solar business in

Europe due to a higher demand there. In Spain, BP has developed two of the largest solar power

plants in the world. This project will supply energy to up to a million homes. BP has also

introduced a solar-driven pump system in Wyoming in the attempt to help reduce greenhouse gas



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emissions. BP has become the largest foreign stockholder in a bioethanol company. BP views

biofuels as necessary to bridge the gap between oil and the time when better alternative energy

sources are available. Another way BP has been involved in the future of alternative energy is

they have been researching the use of carbon sequestration. This is the capture of greenhouse gas

emissions from smokestacks and other pollution sources and pumping them underground to

empty oil or gas fields. BP has established an environmental awareness program in Britain. This

program aims at helping stakeholder understand the impact of global warming, the importance of

sustainability and the effect of their carbon footprint. I think that the sustainability programs that

BP has implemented are decent. I think that if BP continues to pursue sustainability programs

and phases out their reliance on oil they will be better. BP needs to continue to do much more in

this area even if they continue with the programs they have already implemented. They have

made so many mistakes and made numerous violations that it is the least they could do to rectify

their errors in some way.

Do you believe the BP code of conduct and ethics initiatives will prevent future

misconduct?

The BP code of conduct and ethics is a beautifully written ideal for how a company should

operate. I however do not believe that it is logical or possible for BP or any company to adhere to

such a code of conduct. If I just examine the basics of human behavior and look at the code and

exclude the business side, I do not see how one code can apply to the varied group of people who

are employed at BP. Once you begin to cross cultures, languages and customs, the definition of

ethics and conduct is varied. I understand that BP went to great lengths to study customs of

various cultures and took in to consideration the language differences. I also do not think that a

code of conduct is effective in preventing people from wrongdoing. People will do crazy things

and I do not see how a written document can control the behavior of someone who wants to bedeceptive. Even though this case study was written before the huge Gulf Coast Oil spill, it is

obvious that BP did not properly adhere to a proper code of conduct and ethics. And as the clean

up goes on in the Gulf Coast it is interesting to watch how ethical BP is going to be. I am once

again dumfounded by the lack of ethics and morals that a company can have. BP is just another

example of a company that has it’s prioritize backwards. Money first, people and the



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environment last. It seems to me that they will do anything to hid and cover up and errors or

mistakes. Yes, they are implementing some major sustainability programs and as long as they are

actually used to their fullest capacity they will be beneficial. I suppose that I am biased and that I

do not like the ideals that big companies have. Why can’t we use more solar and wind power?

Why do we have such a dependence on oil? If we were able to decrease our oil consumption then

a company like BP would eventually lose the grip it has all of us. I think that we have been

engrained to believe that the behavior and ethics of companies like BP are just the way it’s done.

I really believe that there is another way to do things and that once we quit looking for another

way to make a million dollars and focus on people and the environment we live in, we all will be

surprised at how things come back around to you.

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