PART I
British Petroleum Company Profile
BP plc, formerly known as British Petroleum, is a UK based multinational oil and Gas Company with its headquarters located in London, England, United Kingdom. As of 2012, BP is the world’s sixth largest energy company in terms of market capitalisation, fifth largest company by revenues, and sixth largest oil and gas company by production (BP. Financial and Operating Information, 2008-2012). BP is a vertically integrated organisation and it has a strong presence in all areas of the gas sector, including exploration and production, refining, promotion, distribution, power generation, and trading. The company also operates in the renewable energy sector with particular focus given to biofuels and wind power. Official data indicate that the organisation produced nearly 3.3 million barrels of oil equivalent per day and maintained approximately 20,700 service stations as of December 2012 (BP. Financial and Operating Information, 2008-2012).
. The origin of the BP can be dated back to the founding of the Anglo-Persian Oil Company in 1909 to benefit from the oil exploration in Iran. It became the Anglo-Iranian Oil Company in 1935 and later British Petroleum in 1954. The organisation expanded its operations beyond Middle East in 1959, and it gained control over Standard Oil of Ohio in 1978. In a number of stages over the period 1979-1987, the British government privatised the British Petroleum. In 1998, the company merged with Amoco and acquired ARCO and Burmah Castrol in 2000. The company utilises its profits as a major funding source to promote its expansion operations. The BP’s mission statement is “to manage existing long term contractual relationships in a manner which maximises value to producers, customers and the shareholder” (bp.com, 2014, mission statement). Similarly, the company’s values statement reflects that “in all our activities we seek to display some unchanging, fundamental qualities – integrity, honest dealing, treating everyone with respect and dignity, striving for mutual advantage and contributing to human progress” (as cited in Stadler, 2011, p.88).
The company has strong presence in 80 countries around the globe. The BP’s largest division is BP America, which is rated as the second largest oil and gas producer in the United States. In addition, the organisation holds 19.75% stake in the Russian oil company Rosneft, which is the world’s top leading publicly traded company in terms of hydrocarbon reserves and production. BP has been listed on the London Stock Exchange and is a member of the FTSE 100 Index. In addition, the company has been secondary listed on the New York Stock Exchange and the Frankfurt Stock Exchange. As of November 2013, BP employed 85,000 people worldwide. Currently Carl-Henric Svanberg is the chairman and Bob Dudley is the CEO of the BP.
National Public Radio: Company profile
NPR, formerly known as National Public Radio, is a privately and publicly funded non-profit organisation operating under the broadcast industry. NPR is a syndicator to US’ 900 public radio stations and is headquartered in Washington D.C, United States. The organisation mainly focuses on the distribution of news and cultural programming. It is relevant to note that individual public radio stations do not need to broadcast all programmes produced by NPR. Major NPR programmes include two news broadcasts, Morning Edition and the All Things Considered in the afternoon. Both these programmes are broadcasted by almost all NPR member stations as they are recognised as the two of the most popular radio programmes in the United States. The organisation also manages Public Radio Satellite System, which is responsible for distributing the programming of NPR and other independent producers like Public Radio International. The NPR forces its member stations to be non-commercial, to maintain at least five full time professional employees, and to operate at least 18 hours a day.
Following the passage of the Public Broadcasting Act of 1967, the National Public Radio was founded on 26th February 1970 by replacing the National Educational Radio Network. NPR broadcasted its first programme in April 1971, reporting the US Senate hearings on the Vietnam War (Television History - A Timeline, 1878-2005). NPR’s major funding sources include programming fees, contributions, sponsorships, grants from businesses or other organisations. According to the NPR’s 2009 financial report, programming and distribution fees the organisation charges member stations accounted for 50% of its revenues. Over the 1970s and early 1980, NPR operations were mainly funded by the federal government.
The organisation employs 840 full and part time workers across the United States. “The mission of NPR is to work in partnership with Member Stations to create a more informed public – one challenged and invigorated by a deeper understanding and appreciation of events, ideas and cultures” (npr.org, 2013). The major vision of the NPR is to promote its democracy and culture through covering key stories, insight and delight for its audience everywhere (Our mission and vision). NPR enjoys a tax exempt status as it is a ‘private, non-profit, 501(c)(3) corporation’ (NPR Help centre). Currently, Gary Knell is the President and Chief Executive Officer of the National Public Radio.
PART II
Obstacles to business
BP faces a number of challenges in the oil and gas industry, and they raise potential threats to the future scope of its business. Increasing government regulations seem to be one of the greatest obstacles to the BP’s operations. In the context of growing consumption of oil and gas products and increased emission of greenhouse gases like CO2, governments worldwide have developed strict policies to limit the environmental impacts of the gas and oil sector. As a result, BP needs to comply with these tougher government regulations so as to remain in the market and to promote its business. As industry analysts point out, many of these government regulations can have a negative influence on the profitability of the organisation. Similarly, the intense market competition becomes another potential obstacle to the long term sustainability of BP. Since BP’s operations have been spread across the globe, the company needs to confront a large number of potential competitors worldwide. Increasing cost of operations is also turning out to be a great challenge to the operational efficiency of BP. As noted already, strict governmental regulations concerning safer storage and transport of gas and oil products force BP to invest additionally to comply with the safety standards. Evidently, this additional investment adds to the firm’s cost of operations, which in turn limits BP’s profitability. As the BP directly engages in the use of fossil fuel, the firm’s business sustainability is challenged by environmental issues on a global scale. Today people are very much concerned about environmental safety, and hence they are not likely to promote businesses that pose environmental challenges. The Deepwater Horizon oil spill on the Macondo Prospect operated by BP was a major crisis that badly affected BP’s business. In order to compensate the liabilities related to this hazard, BP sold its $38 billion worth non-core assets by 2013.
In case of NPR, declining importance of radio programmes becomes a potential challenge to the future operations of the organisation. Nowadays, people are interested in social networking websites like Facebook, Twitter, and You Tube, and hence they rarely listen to radio programmes. Similarly, emergence of new market entrants and increasing need for advanced and costly technology make it difficult for NPR to remain successful in the industry. In the context of decreasing popularity of radio networks, commercial entities or other organisations hesitate to invest in NPR because they have advanced and effective alternatives to promote their operations. As federal contributions to NPR are limited, the organisation struggles to raise funds for financing its daily needs. The recent global recession greatly fuelled the fund crisis of NPR because the firm’s major fund donors were severely hit by the recession. Since NPR is a non-profit organisation, it did not have sufficient cash reserves to vie with the recessionary pressures. The organisation declared job cuts and other similar policies to address that fund crisis.
Ethical Dilemma
The recent oil spill caused BP to lose billions of dollars. This hazard severely affected the eco systems and biodiversity in addition to resulting in the death of 11 rig workers. According to researchers, the muddy deep-sea ecosystem which was greatly affected by the BP oil spill would take decades to completely recover from the impacts of this disaster. The rich biodiversity at the sea bottom was significantly reduced as a result of the oil spill. In addition, the disaster dreadfully impacted birds, mammals, sea turtles, and sea corals at the surrounding area. Researchers indicate that long term impacts of BP oil spill may include unbalanced food web, decline in recreation, and decreased wildlife populations. Although BP has already spent millions of dollars in clean up costs and other compensations, now the company is reluctant to spend more money to manage the long term impacts of the disaster. The company spokesman Tom Mueller stated that BP would not take any extra effort to calculate the rate at which the oil is gushing from the well. The organisation also denied press and scientists to the site arguing that it is a safety zone. However, the actual intention of the organisation was to keep the rate of oil spill a secret and thereby preserve its public image. In addition, the company gained a favourable court order to stop payments to those who did not suffer direct losses from the disaster. Although these practices assisted the company to settle the issue with less costs than what was anticipated, the company was widely criticised for its unethical practices. To be specific, the social outcomes of the BP oil settlement were against the interests of the company.
As discussed already, the NPR extremely struggled to meet working finance during the period of 2009 global recession. Since the organisation has limited external sources of revenues, it was forced to cut down its operating expenses. Hence, NPR planned to reduce the size of its workforce. According to Stelter (2013), as part of this policy, the organisation decided to reduce its staff size by 10 percent by offering a voluntary buyout plan to some of the full and part time employees. As part of this policy, the organisation decided to reduce its staff size by 10 percent by offering a voluntary buyout plan to some of the full and part time employees. The NPR management believed that this strategy would assist the organisation to return to a balanced budget by 2015 fiscal year. Although the employees were not fired by the top management, the voluntary buyout plan to reduce the staff size raised many ethical concerns among NPR workers. In other words, NPR’s job cuts policy negatively influenced its employee morale to a considerable extent.
PART III
Personal Reflections
While closely analysing the case of British Petroleum, it is clear that the company responded to the oil spill disaster in a morally irresponsible way. In the event of the disaster, the company just tried to save its public image instead of avoiding the impacts of oil spill. BP management did not want the public to know the rate at which the oil was spilling from the well. For this, they did not permit media or scientists to access the disaster site. If the organisation had taken sincere efforts to calculate the rate of oil spill, long term impacts of the disaster could have been mitigated to a notable extent. Similarly, the organisation tried all the way to refuse compensation to the indirect victims of the disaster and gained a favourable court order. Here, the firm paid attention only to its financial interests rather than the welfare of the community and environment in which it operates. Hence, BP created the ethical dilemma. If BP had reimbursed all the victims by sacrificing its short term financial gains, the company would obtain strong public support and there would be no case of such an ethical dilemma. From a thorough evaluation, it is clear that BP’s top management was responsible for the ethical dilemma, and this could have been simply prevented through a more tactical management of the issue. Strong media criticism on the issue also affected the management of the situation. The organisation should have considered the opinion of scientists, media, other experts, and the general public to manage the crisis effectively.
In the case of NPR, it seems that the organisation responded to the financial crisis in a morally responsible way. The company offered a voluntary buyout plan to some employees to downsize its workforce and thereby trim down its overall operating expenses. The voluntary buyout or voluntary redundancy is a financial incentive offered by a company to persuade its employees to terminate their job voluntarily. Under this plan, employees may or may not accept this proposal. However, generally a voluntary buyout proposal is offered to company’s weaker employees, and therefore it negatively affects their employee morale. Hence, voluntary buyout strategy often indirectly works as forcible termination policy. While scrutinising the situation, it is obvious that this decision was unavoidable for the organisation because NPR is a private, non-profit venture. In this case, the ethical dilemma was the outcome of an unforeseen force, the global recession. As noted already, grants from businesses and other external contributions constitute some of the major funding sources of the NPR. Evidently the global recession hit businesses and other for-profit institutions, and consequently this situation affected the revenue sources of the NPR. Under this particular circumstance, job cut was the only possible strategy for NPR to continue its operations efficiently, and to ensure the organisation’s long term sustainability. The organisation could do anything else to avoid this ethical dilemma because it was badly in need of working finance at that particular point of time. For the same reason, it is unfair to blame the top management for taking such a decision to address the financial crisis.
PART IV
Theories Applied
The BP used the egoism theory to formulate the decision and to handle the situation. According to Pojman and Fieser (2011, p. 87), the philosophical theory of egoism states that individuals are ought to do what is in their own self interests. As Fieser and Moseley (2012) point out, under this theory, moral agents are not required to harm the interests of others when taking a decision. As discussed already, BP responded to the oil spill in a way that entertained its own self interests. The company just tried to conceal the actual environmental consequences of the disaster by denying media and scientists to the site. Although the company had no intention to harm the community members or the environment, it gave focus only to its personal business interests. From an ethical perspective, egoism was not the best framework to manage that situation because this theory is not apt to support the long term interests of the organisation. In other words, it can only entertain the short term needs of the firm. Utilitarianism could be a better option for the company as it is a potential ethical framework to minimize the negative consequences of an action. This theory might persuade the BP management to consider the long term impacts of the oil spill on the biodiversity and the environment.
The NPR relied on the Utilitarianism approach to respond to the severe fund crisis caused by the recent global recession. According to the Utilitarian view (as cited in Brandt, 1992, p.370), ethical justifiability of an action is based on the level of utility derived from it. As Fieser and Moseley (2012) purport, simply, an action could be ethically justifiable if it maximises happiness and reduces suffering. It is obvious that PNR’s decision to offer voluntary buyouts to employees was the proper course of action in a Utilitarian view point because it maximised happiness (PNR could cut down operating expenses) and reduced suffering (employees were offered a better plan to leave the organisation). If the organisation had not declared job cuts, it would have faced more severe fund crisis and eventually ended up in a winding up. Here no other theories such as egoism, virtue ethics, or moral relativism could be as effective as Utilitarianism.
There is an ideal relationship between bad or suffering and profit. In order to increase the profit, an organisation has to undertake some level of suffering. In other words, suffering or risk taking is inevitable to improve profitability. The proverb that ‘no pain, no gain’ can best used to illustrate this ideal relationship. Running an ethical business is not an easy task for a company. To be an ethical business venture, the organisation needs to give equal importance to the needs of its all stakeholders including buyers, suppliers, creditors, investors, community, and general public. More importantly, the organisation must be cautious about the ethical implication of a particular action. It is recommendable for a company to disclose all possible business information to the stakeholders to strengthen customer relationships so as to maintain its competitive edge, and contribute to overall good or happiness in relation to its workers and customers.
References
Bp.com. (2014). Mission statement. Retrieved from http://www.bp.com/subsection.do?categoryId=3050086&contentId=3050161
BP. Financial and Operating Information 2008-2012. Retrieved from http://www.bp.com/content/dam/bp/pdf/investors/FOI_2008_2012_full_book.pdf
Brandt, R. B. (1992). Morality, Utilitarianism, and Rights. UK: Cambridge University Press.
Fieser, J & Moseley, A. (2012). Introduction to Business Ethics. Bridgepoint Education, Inc.
Npr.org. (2013). Our mission and vision. Retrieved from
http://www.npr.org/about-npr/178659563/our-mission-and-vision
NPR Help centre. (n.d.). Retrieved from http://help.npr.org/npr/consumer/kbdetail.asp?kbid=539
Pojman, L & Fieser, J. (2011). Cengage Advantage Books: Ethics: Discovering Right and Wrong. US: Cengage Learning.
Stadler, C. (2011). Enduring Success: What We Can Learn from the History of Outstanding Corporations.US: Stanford University Press.
Stelter, B. (Sep 13, 2013). NPR Plans Buyouts to Cut Staff 10%. The New York Times. Retrieved from http://www.nytimes.com/2013/09/14/business/media/npr-plans-buyouts-to-cut-staff-10.html?_r=1&
Television History - A Timeline, 1878-2005. Retrieved from http://tarlton.law.utexas.edu/exhibits/mason_&_associates/documents/timeline.pdf
