Governance And Ethics In Global Environment Business Essay

Governance And Ethics In Global Environment Business testifyThis Assignment is part of ABE post graduate diploma and it is based on the British Pet divisionum plc a well k presentlyn natural oil color and fellate industries. This assignment hatchs three of import aras which include corporal Strategy, Governance and Ethics in the Global Environment. Module for ABE (PGD) Business Management assignment. This Assignment highlights and discusses about the honourable and bodily governance components which are currently affecting the BP. By analyzing internal andexternal re show quantify, environs, governance and ethics of the high troupein complete. Evaluating how effectively the BP is managing these factors to achieve its corporate goals. To address the three main areas the assignment has been divided into 4-5 parts2.0 INTRODUCTIONBritish Petroleum p.l.c (formerly known as Anglo-Persian oil colour play along) is a registered oil and natural gun for hire industry realised on 14th April 1909 in United Kingdom. According to BP ultimate (2012), during theearly 1900s the oceanrch for oil was began by the Shah of Iran which was nonice in the mid of 1908 and it was known as the first major(ip) find in the spirit East. Its a wantwise say that BP was considered as a subsidiary of Burmah Oil Comp either under the name of Anglo-Persian Oil Company (APOC). However in 1935 it became as the Anglo-Iranian oil party (AIOC). After 45 courses of flourishing services, in 1954 the company got registered by the name forthwith we know which is the British Petroleum p.l.c.Although BP does non have a specific each(prenominal)y labeled mission renderment BPhas published a statement identifying its core interest is say to be progressive, responsible, innovative and performance driven (About.com retail industry, 2012).Each of these words in the statement universe the main target of the company, describes its missions. These in general states that Bp creates a use r friendly environment between them and their customers and as well as Bp would like to ensure that the products that they invent would be environmental friendly.British Petroleum plc (BP) markets its products in more(prenominal) than70 countries and operates22,400 gas stations world total with over nearly 80,000 employees. Being the worldsthird-largest energy company and fourth-largest in terms of revenuesincorporated oil concern, It isvertically-integratedand is active in every area of the oil and gas industry, includingexplorationand production,refining,distribution and marketing,petrochemicals,powergenerationandtrading. It also has majorrenewable energyactivities, including inbio fuels,hydrogen,solarandwind power (Corporate project, n.d).Today BP explores for oil and gas in30 countries and has proventhat they reserves approximately 18.1 billion barrels of oil equivalent. Moreover, according to Corporate Watch (n.d) they are the largest oil and gas producer in the US and also a top refiner, with venture in 16 refineries, processing4 million barrels of crude oil per day.3.0 METHOD OF investigationMain source of information regarding the mixed strategies adopted by BP to confront competitive and unforeseen challenges like, gulf of Mexico oil slips disasters was acquired through.BPwebsites, publicationsand International Oil Spill Conference served as the main sources of information on presidency policies, regulations and laws. Oil drilling regulationsand policiesare taken fromUK, USAand international oil and energy reports and periodic statistical reports published online. unconnected from this,Bp annual reports 2011,articles, journal articles, websites, books and magazines.4.0Literature re shotIntegrated approach to good governance in the interests of a wide range of stakeholdershaving regard to the fundamental principles of good fiscal, social, ethical and environmental practice.Other developments over the past 10 years which have propelled CSR ont o thegovernance agenda include publication of the Association of British Insurers (ABI)Disclosure Guidelines on Socially accountable Investment (2001) (see page 24 fordetails) and the UK Turnbull report Internal Control, Guidance for Directors on theCombined Code (2001), the latter(prenominal) which asks companies to consider the followingAre the significant internal and external operational, financial, compliance and otherrisks identified and assessed on an current basis? (Significant risks whitethorn, for example,include those related to market, credit, liquidity, technological, legal, health, safety andenvironmental, reputation, and backing probity issues).5In Canada, for example, the Canadian Council of Chief Executives (CCCE), seeking to print public confidence in capital markets and the enterprise system on the heels of the corporate scandals, published a statement, Governance, Values and Competitiveness A Commitment to Leadership in 2002. They laid out their views on corp orate governance,Facts, findings, discussion and analysis with suitable sections and headings5.0 FindingsSituational AnalysisThe oil industry has shown great resilience in the calculate of competitive disasters and the fast evolving (PESTLE) policy-making, social and stinting climates, technological environment, Legal and bionomic. According to Cooper et al 1994, it is state critical that the necessary information about the internal and external environment be gathered forward a constructive criticism is made. He also argues that the findings are a very minimum to cover the bases of PESTLE investigation, that is to examine the political, economic, social, technological, legal and Ecological changes that may affect the company and the market. Governments provide and enforce the rules including regulations and policies overdue to Gulf of Mexico oil sing, governing body are drafting more laws and regulations would required that drilling perform nonparasitic audits and hazard ass essment designed to reduce accidents caused by Technological and human errors(Alan Levin, USA TODAY Updated5/10/2010 448 PM).See PESTLE in Appendix 1,2.5.1 Political factorsThese refer to government policy such as the degree of intervention in the economyBP had one of the biggest engineering, logistical and financial problems the oil industry had ever faced, but the company was up to the challenge.BP also faced a great political problem, perhaps the biggest such crisis for an oil company operating in the United States since Teddy Roosevelt stone-broke up John D. Rockefellers stick outard Oil.BPs failure to grasp the fact that its biggest challenge was in Washington, not the Gulf, has led to a series of gaffes and strategic communications errors that have inflamed public opinion, fanned the political firestorm and dragged the companys share wrong ever lowerthe spill cleanup to cost under $30 billionBPs market capitalization is down $100 billion, on expectations it get out face f ines of up to $30 billion as well as curbs on its business in the United States, its most(prenominal) significant market.BPs handling of the spill from a crisis counselling perspective will go down in history as one of the great examples of how to make a situation worse by pestiferous communications, said Michael Gordon, of parvenue York-based crisis PR firm Group Gordon Strategic Communications.It was a combination of a escape of transparency, a lack of straight talking and a lack of sensitivity to the victims. When youre managing an environmental disaster of this order you not only have to manage the problem but also manage all the stakeholders.The company also failed to tackle its image as a serial safety and environmental offender. That was especially align in the United States where regulators had blamed both a 2005 refinery blast that killed 15 give wayers and pipeline leaks in Alaska in 2006 on cost-cutting.BPs in major power to precisely describe the improvements it has made in its safety and operational shade took us by surprise,BP would have faced public anger and political pressureDispute on Iran and other middle east countries causes instability on Stock market prices and the crude oil price will5.2 Economic factorsThese include interest rates, taxation changes, economic growth, inflation and exchange rates. As you will see throughout the Foundations of Economics book economic change can have a major pretend on a firms behavior.For example higher interest rates may deter investing because it cost more to borrow a strong currency may make exporting more difficult because it may raise the price in terms of foreign currency inflation may provoke higher wage admits from employees and raise costs higher national income growth may move on demand for a firms productsCurrent economical crisis and Euro zone, economic crisis is affecting the BP corporative objective of the company5.3 Technological factorsNew technolo gies create new products and new processes to drills deep sea. This will increase efficiency and cost effective demeanor to carried out BP business. Latest technology improves BP production and environmental friendly way to operate its business.5.4 Environmental and Ecological factorsEnvironmental factors include the weather and climate change. Changes in temperature can wallop on many industries including farming, touristry and insurance. With major climate changes occurring due to planetary warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes macrocosm placed on commit travel and the success of hybrid cars) and the general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunit ies.When an oil slick from a large oil spill reaches the beach, the oil coats and clings to every endocarp and grain of sand. If the oil washes into coastal marshes, mangrove forests or other wetlands, fibrous plants and grasses absorb the oil, which can disablement the plants and make the whole area unsuitable as wildlife habitat.Other Ecological factors include the wildlife animal, devil dog environment, High dolphinfish Deaths, fishing birds and lots of fishes move from that area.5.4 Legal factorsThese are related to the legal environment in which firms operate. In recent years in the UK there have been many significant legal changes that have moved(p) firms behavior. The introduction of age discrimination and disability discrimination legislation, an increase in the minimum wage and greater requirements for firms to recycle are examples of relatively recent laws that affect an organizations actions. Legal changes can affect a firms costs (e.g. if new systems and procedures h ave to be developed) and demand (e.g. if the law affects the likelihood of customers buying the good or employ the service).6.0 CORPORATE SOCIAL RESPONSIBILITYAfter the Gulf of Mexico oil spilling incident BP investing billion on Corporate Social Responsibility (CSR) is now prominent and evident more than ever due to the vehemence laid on businesses regarding environmental, social and ethical issues. This is because over the recent years, there have been social, political, ecological and economic pressures on corporate management to pay attention on social and environmental consequences of corporate activities. These pressures motivate the corporate management to actively participate in a wide range of social eudaimonia activities. CSR now-a-days covers around all issues like the use of child labor inequality of employment environmental impact involvement in local anesthetic community products safety company cultures brand image and reputation. Apart from this, BPis now disclosi ng these activities in their annual reports, and one of the parameters to judge the performance of a BP is CSR reporting.CSR is defined by Naylor (1999) and mentioned in the work of Douglaset al.(2004) as the obligation of managers to choose and act in ways that benefit both the interests of the organization and those of society as a whole.Fraser (2005) describes CSR as sustainable development which needs to be carried out by all the publicly held companies. These companies need to be responsible not only for their shareholders, but also its stake holders like the employees, customers, suppliers, government and non-governmental organizations.The speech made by BP Senior Advisor Charles Nicholson in 2002 at the CSR Europe common assembly meeting The boundaries to corporate social responsibility are conceptual. A companys primary responsibility is to its shareholders, to its owners. The boundaries are ideological. A company is not a government. It is not elected. It has no popular ma ndate. It mustnt confuse its role with the role of others. The boundaries are practical. A company has limited resources, limited expertise and limited reach. A company is not a panacea, a cure-all. The boundaries are influenced by self-interest. Business thrives if the society in which it operates thrives. To neglect this is to put at risk the interests of our shareholders. And however you look at it the boundaries are constantly changing. What was a boundary a a few(prenominal) years ago is now a starting point. Bp is leading, accepting responsibilities and demonstrating to building community is a source of human progress through its CSR.At the most basic level it means delivering what we promise. It means being transparent in what we do. It means practicing universal standards of behavior and care and applying the skills we have and engaging constructively in society.Im not implying that business has complete answers. It doesnt, and one of the reasons for taking part in events l ike this one today is to listen to open a dialogue.Every company will also draw boundaries reflecting its own circumstances, of course. For most the key factors are experience and values. At BP weve defined our values in a document called What We Stand For.7.0 CORPORATE GOVERNANCEJonathan Lister (2003), function of Corporate Governance,corporate governance encompasses the policies, initiatives and practices a corporation uses to accomplish its business goals and develop its infrastructure. The functions of corporate governance begin with a corporations shareholders and are passed to the elected placard of directors, who are then(prenominal) in charge of developing governance strategies for the company as a whole.According to bp.com/section generic wine article,Good governance involves the clarity of roles and responsibilities, and the proper recitation of distinct skills and processes.The board is responsible for the direction and oversight of BP on behalf of shareholders and i s accountable to them, as owners, for all aspects of BPs business. The board believes that good governance involves the clarity of roles and responsibilities, and the proper utilization of distinct skills and processes. The board therefore focuses on activities that enable it to promote shareholders interests, such as the active shape of strategy, the monitoring of executive action, and ongoing board and executive management succession.To achieve this, it has developed and approved a set of corporate governance principles which set out its approach in this area. approximately writings on governance situate its evolution within the backdrop of the corporate governance scandals at companies such as Enron, WorldCom and Lehman Brothers these two decade and this financial crises, which drove a concern for accountability and transparency amongst corporate leadership and regulators. This, coupled with growing shareholder activism, changing societal expectations about the role of corporat ions, and the globalization of capital markets, has resulted in a proliferation of governance principles and codes of conduct over the past 15 years.According to experts.blogs.lincoln.ac.uk, the impact of the BP oil spill in Gulf of Mexico has resulted in a fallen its share value by 45% and drop in its credit rating, downgraded by rating agencies such as Moodys, Standard and Poor and Fitch. There are fears that the claims from Americas worst environmental disaster could reach $100 billion.To cover the cost of the Gulf of Mexico oil spill BP has divest some of its noncore assets and reduced its capital investment funds to raise cash to compensation.The market has analyzed the impact of the Corporate Governance (CG) practices of BP and adjusted accordingly. Corporate governance is a vital issue for firms in the global market. To raise funds to finance their domestic and international growth requires firms to demonstrate strong CG credentials, so that investors do not discount their st ock. To ensure all the corporate governance practices BP following one tire board system.8.0 ETHICSOne of the biggest environmental disasters happened around this time. The BP oil spill has leftundeniable impressions on how we view oil drilling and non-renewable sources of energy. This has had a knock-on effect on CSR, PR and marketing. The BP spill is possibly the most high-profile CSR/PR disaster of recent times.It is true that BP has had a questionable safety record, but the spill could have happened to any of the companies operating a deep sea rig. It is the nature of the business and demand for oil has made it paying for oil companies to take these risks. Of course BP has accepted blame, but it has resulted in PR disasters for the company that has ultimately reflected on its CSR profile as well.A year after the spill BP is still gunning to get back into oil drilling the Gulf of Mexico, this time with higher safety standards. There are still questions about what these standards top executive be.Residents in the area have reported various health problems.Of the 954 residents in seven coastal communities, almost half said they had experienced health problems like coughing, skin and eye irritation, or headaches that are uniform with common symptoms of chemical exposure.The aftermath of the spill is still being felt especially on the marine life in the region which in turn affects many livelihoods in the area.Hundreds of very endanger Kemps Ridley sea turtles have been washing ashore and dead dolphins are showing up at10 times the normal rate. Right after the spill,over 6,000 birds, 600 sea turtles and 160 dolphins were killed. Traces of oil have been found in the larvae of blue crabs and questioners have found carcinogens in the water. These carcinogens have alsopercolatedthrough the food mountain chain affecting Gulf shrimp and fish which have been shown to contain toxic hydrocarbons. More than 20% of the endangered blue fintuna spawnwere killed in the spill.Despite the clean-up efforts, theoil spill has damaged fragile coral reefs and dispersants being absorbed by zoo plankton and fish. Theeffectsof the spill in the marshes and coastal areas will still be felt for years to come. A year on, there are still reports of tar balls being washed ashore which no one can verify because BP does not give reporters access to the beach. A year on and the biggest CSR disaster is that BP still has not issued any reports with real transparency regarding their clean-up efforts, compensation and concerns of safety in their operations.9.0 CONCLUSIONSDespite domestic and international competition PB has managed to retain its position into the Market. This is mainly due to BP ability to successfully implementing Corporativegovernance, CSR/PR and other major changes necessary to overcome the challenges faced by Gulf of Mexico. moment factor is even after this unexpected incident BP had certain exclusivities like market position, investing alternati ve energy, investing CSR, changing its safety standards, improving corporate governance, taking blames and paying off damages to local and international community might improve its business image.As now BP has completely illogical its stay exclusivities it will face new challenges from Russia and most of the Middle East Countries overchanges in political and economical condition. thereof good corporate strategy, CSR and good governance will maintain oil price and Alternative energy.10.0 recommendationAccording to OECD report 2011, There are perceived threats to the BP as well as oil company in future it need to be more proactive to these changes , which can be perceive by the knowledgeable among the corporateEven after facing major chellges faced by BP, had some exclusivity, with those exclusivities lost it may have to come up with strategies to compete in those areas especially in risk management safety and environmentally friendly way drill.Challenges will keep emerging for thi s, Bp needs to adopt a learning organization concept to be proactive to change and keep ahead of competition.Increase investment on alternative energy like biofuels, wind and keep close tie on Middle East countries may achieve its corporate strategies.Investing on emerging economies like India, chain and brazil will give competitive advantages in the near future.Making strategy and policies towards on efficient electrocution engines and power train technologies, including hybridization, combined with use of biofuels, could offer the quickest and most effective pathway to a secure sustainabilityTo meet future challenges BP is changing its strategy towards on ethics, CSR and improving its corporate governance.11. Works CitedAndrew, C and Dirk, M. (2007) Business Ethics Managing Corporate Citizenship and Sustainability in the age of Globalization.Linda K.Trevino Katherine A.Nelson (2010) Managing Business Ethics Fifth Editionhttp//www.bp.com/liveassets/bp_internet/globalbp/ staging/gl obal_assets/downloads/I/IC_bp_strategy_presentation_march_2010_slides.pdfhttp//www.pikeresearch.com/research/pike-pulse-report-biofuels-commercialization-by-oil-majorshttp//www.reuters.com/article/2012/03/20/idUS71431+20-Mar-2012+BW20120320http//experts.blogs.lincoln.ac.uk/2010/06/21/corporate-governance-the-bp-saga-and-a-travesty-of-justice/http//www.afaanz.org/openconf/2011/modules/request.php?module=oc_proceedingsaction=view.phpa=Accept+as+Paperid=224http//www.zdnet.com/blog/projectfailures/bp-oil-spill-leadership-and-it-failure/9901http//www.guardian.co.uk/environment/2010/jun/02/gulf-oil-deepwater-sink-bphttp//www.smh.com.au/business/us40b-share-slumpinvestors-sue-bp-20100525-w9e0.htmlhttp//www2.accaglobal.com/documents/bpcs.pdfhttp//www.bbc.co.uk/news/world-us-canada-17243097http//www.guardian.co.uk/environment/bp-oil-spillhttp//www.ibtimes.com/articles/308388/20120303/deepwater-horizon-oil-spill-disaster-bp-transocean.htmhttp//www.oil-rig-spills.com/http//www.crrc.unh.edu/dee pwater_horizon_blowout/The_Gulf_War_Were_there_any_heroes_in_the_B%5B1%5D.pdfhttp//www.crrc.unh.edu/publications/RDworkshop-report_FINAL2011.pdfhttp//www.afaanz.org/openconf/2011/modules/request.php?module=oc_proceedingsaction=view.phpa=Accept+as+Paperid=224http//www.transworldnews.com/815818/c1/bp-plc-strategy-swot-and-corporate-finance-report-new-company-profilehttp//www.usatoday.com/money/industries/energy/2010-05-09-drilling_N.htmBig Oil Revenue Equals More Than 10% of U.S. gross domestic productBig Oil Revenue Equals More Than 10% of U.S. GDPhttp//www.businesswire.com/news/home/20050615005396/en/BP-HSBC-RBS-UK-Companies-Awarded-Tophttp//topics.nytimes.com/top/news/business/energy-environment/oil-petroleum-and-gasoline/index.htmlhttp//www.guardian.co.uk/business/2010/nov/02/bp-oil-spill-costs-40-billion-dollarshttp//www.reuters.com/article/2011/10/17/us-bp-idUSTRE79G0WF20111017http//www.guardian.co.uk/business/2010/jun/07/bp-and-corporate-responsibilityhttp//www.smartplanet.com/ blog/smart-takes/corporate-social-responsibility-learning-from-the-bp-oil-spill/8055http//www.prnewswire.com/news-releases/bp-celebrates-25th-anniversary-of-the-bp-community-scholarship-program-159405915.htmlhttp//www.justmeans.com/CSR-Disasters-BP-Spill-A-Year-On/48568.htmlhttp//www.mallenbaker.net/csr/CSRfiles/bp.htmlhttp//www.npr.org/templates/story/story.php?storyId=1390353411.0 SELF-EVALUATIONI happen to come crossways lots of valuable research work carried by the respected scholar in this field throughout my effort to seek answers to various questions in this field that was not very clear. I noticed that when a difficult concept is assessed in various angles explored by scholars it widens the knowledge of that concept and gives an insight into the grounding of the concept in the field.I came across difficulties and the risk of operating business in global prospective, especially in field of oil business. Most importantly, how well ethicaland corporate governance will help to overcome the challenges facing modern business world.