British Petroleum is a company that operates in a high risk industry with many factors having an impact on the revenues. A drop of the prices on the oil market can lead to significant financial losses that will result in the cut of dividends paid out to the shareholders. BP Oil Company is known for its strategy of having dividends paid out to the shareholders on a constant and regular basis as a top priority of the corporation, but current events in the oil industry have had an influence on some managerial decisions.
According to the article published in The Economic Times, recently there was a bounce in oil prices and the market manager to rebalance its decreasing trends, and this bounce let British Petroleum oil company to maintain the payout of dividends (EconomicTimes.com, 2016). However, the current situation on the market was taken into account by the top management of the company, and they have changed the company’s position regarding the payout of dividends. It became one of the key decisions of the BP Oil company’s management as it changed the core values of the company. The managerial decision was to keep paying out dividends, but making secure investments a top-priority goal of the company.
Often, management of companies requires making ethical decisions, and British Petroleum Oil company is among the companies, decisions of which can have a significant impact on the environment and lives of millions of people.
British Petroleum is also known as a company that caused a massive oil spill in the Gulf of Mexico in 2010. More than that, the company’s management decided to agree that the company was guilty of the environmental crime in the Gulf of Mexico that resulted in the spill of 200 million gallons of oil (Lustgarten, 2012).
Management of the company decided to make an ethically right decision and agreed to plead guilty to charges of lying to Congress in 2010 (which was not an ethical decision made back in 2010) about the drilling rig explosion in Deepwater Horizon. Also, BP Oil company’s management agreed that the company was guilty of the manslaughter and environmental crime (Lustgarten, 2012).
A part of the company’s decision to act ethically was an agreement concluded with the U.S. Department of Justice, according to which the company would pay a $4.5 billion fine. This was the largest fine in the history of the United States imposed on the corporations. The spill catastrophe was also caused by the managerial decision taken by BP engineers. They ignored the results of the pressure test, and it led to one of the largest man-made catastrophes in the history of mankind.
BP Oil company is also known for its unethical decision to lie in the court about the amount of oil spilled into the Gulf of Mexico in 2010. David Rainey, a former vice president of exploration of the British Petroleum company was accused of lying to the court about how much oil was spilled (Finn, 2015). His managerial decision was highly unethical as he willfully made a fraudulent statement about the operations of his company, and for his lying to the federal law enforcement agents, he faced a sentence of 5 years.
The company managed to resolve this unethical decision by paying the fine of $4.5 billion, and it also paid a penalty of $13.7 billion under the Clean Water Act (Finn, 2015).
Thus, it can be concluded that unethical decisions made by the managers working at companies operating in the oil industry can have long-term negative consequences, and such decisions can turn out to be rather expensive for the companies.
References
Economictimes.com. (2016). Fuel prices: British Petroleum says dividend payouts no longer a priority. The Economic Times. Retrieved 20 April 2016 from http://articles.economictimes.indiatimes.com/2016-04-14/news/72322770_1_fuel-prices-oil-price-dividend-payouts
Finn, K. (2015). BP Executive acquitted of lying about Gulf of Mexico oil spill. Reuters. Retrieved 20 April 2016 from http://www.reuters.com/article/us-usa-court-bp-idUSKBN0OL23020150605
Lustgarten, A. (2012). BP Agrees to Plead Guilty to Crimes in Gulf Oil Spill. Business Ethics. Retrieved 20 April 2016 from http://business-ethics.com/2012/11/15/1958-bp-agrees-to-plead-guilty-to-crimes-in-gulf-oil-spill/
