Business Ethics Social Performance Of Organizations

BP PLC (famous as British Petroleum PLC) is a multinational company from Britain. The company's headquarters is located in London, England, United Kingdom. The company mainly deals in the production and distribution of oil and gas. BP PLC stands as the sixth largest company in the global oil and gas market-by-market capitalization and fifth in terms of revenue. BP PLC is vertically integrated, which in microeconomics refers to a common style of growth and management control in a variety of related industries. This is when a company expands its operation into levels that are located different points along the same production path.

From this arrangement, BP PLC owns separate companies that are engaged in the production, processing, and distribution of oil and gas and able effectively to reduce operational costs to achieve efficiency (Hotte, Sumaila, & University of British Columbia, 2013). As a global operator, the company conducts its operations in over eighty countries. BP supplies its clients with energy for retail services, gasoline for motor vehicles and plant machinery, lighting, petrochemical products such as jelly and fuel for retail purposes. BP PLC operates two business divisions, including Production and Exploration, and Refining and Marketing.

Factors in the organization's external environment directly affect how the company operates and influences its success or failure. Although various factors exist, two of the main factors are political and social factors. In terms of political factors, changes in government policy in the nations that the company operates have the potential to affect the company. Furthermore, there are instances where changes in government have led to the nationalization of companies: foreign investors lose their investments to the local governments (Simpson, & Taylor, 2013). In terms of social factors, the global community is increasing awareness of the deteriorating climate mainly due to adverse effects of fossil fuels. This leads to societies changing their behavior in terms of shifting from the use of harmful sources of energy, specifically the use of fossil fuels and shifting towards renewable and safer sources of energy. Shifting from the traditional energy sources to the renewable and safe ones determines the extent of BP PLC's success as a leading player in the fossil fuel industry (McWilliams, Donald, Wright, 2006).

Q2

Stakeholders refer to parties that have some interest in the operations of a company. They are individuals who either contribute to the organization's growth and success or benefit from the organization's success. Stakeholders play various roles and their level of involvement varies from full-time involvement to barely being involved in the daily operations of the company at all. Three of BP PLC's salient stakeholders comprise of the company investors, the governments of the regions within which the company operates and the company directors or management. As a publicly traded company, the company investors are the stockholders of the company's shares. Their fundamental role is to provide the capital required by the company in order to grow and expand, or during the initial stages, the investors provided the necessary capital for the company to launch its products into the market place (Simpson, & Taylor, 2013).

During the company's annual meetings, the stockholders act as controls for the directors where they ask a question pertaining to some of the strategies adopted by the company. Furthermore, they participate in elections where they vote in directors whom they deem will promote their interests. The role of the company's directors is to develop and implement a company's overall strategy and direction (Grant et al., 2011). This is coupled with the setting of long-term goals and objectives. Although they do not engage in the daily routine activities of the company, the directors play the critical role of setting long-term goals and design the relevant strategies to achieve such goals. Oil and gas are valuable national minerals: the governments of the regions where the company performs its exploration and production activities have critical interests in the company (McWilliams, Donald, Wright, 2006).

Q3

Based on the roles played by the three salient stakeholders identified above, they can influence the company's financial performance in various ways. One is that as having the responsibility...

By setting out of effective strategies and successfully implementing them, the directors provide the company with the necessary impetus to compete effectively with its rivals and consequently performing well financially. On the other hand, wrong decision making in the top-level management sets the company for failure (Grant et al., 2011).
When investors finance and satisfy the company's financial requirements, it can operate efficiently while competing effectively and spurring growth. When stockholders pull out a significant proportion of the company's funding, the company will be unable to run its growth operations and competing effectively with its rivals. With high interests in oil and gas, governments as company stakeholders have the potential to influence the company's financial performance. When governments increase their tariffs or put in place stringent restrictions on oil exploration, they hinder the company to make adequate profits and consequently affecting its financial performance negatively. In addition, during a time of political instability, governments indirectly influence the company's financial performance as the company's investors and directors are becoming cautious in investing or operating under such conditions (Simpson, & Taylor, 2013).

Q4

Under corporate social responsibility, the company aims to protect the interests of its various stakeholders. Stakeholders in this sense transcend the salient stakeholders identified above, but also go forth to include the society where the company operates and the environment. BP is faced with a myriad of corporate social responsibility issues (Grant et al., 2011). The leading oil company engages in the exploration and production of fossil fuel, thereby linking it directly with the use of fossil fuel, which are known to be the significant cause of major environmental challenges on a global scale. Some critical corporate social responsibility issues plaguing BP PLC include oil spills and plans to employ individuals from communities it serves. The company's risks involved in its exploration and production activities, particularly deep water drilling operations, are borne by the society and the ecological system at large (McWilliams, Donald, Wright, 2006).

Oil spills have resulted in significant negative effects on communities that are not benefiting the company's operations economically. In fact, the situation worsens in instances where the communities may not have been consulted thoroughly before their operations started. Beside the adverse effects of oil spills, the use of the company's products has adversely affected the environment and societies living around, vehicles, and industries who are the main consumers of the company's products. Such effects have contributed significantly to the negative depletion of the world's environment. Carbon fuels lead to the destruction of the ozone layer, global warming, and increase in respiratory diseases (Simpson, & Taylor, 2013).

These issues indicate that although the company is one of the best performing companies in the world in terms of revenue, it faces significant corporate social responsibility issues. This arises from the inability to protect the interests of all its stakeholders, such as communities and the environment while merely protecting the interests of its salient stakeholders.

Q5

One of the most influential stakeholder groups is the top-level management, which consists of the company's directors. BP's main issue relating to CSR arises when the interests of the direct stakeholders are protected while those of the indirect ones are left unaddressed. In order to establish a formidable campaign addressing this ill, it is important to form a stakeholder coalition that can put up a concerted force in compelling the company to address the issue. This involves first identifying the members of the coalition group referred to as stakeholders (McWilliams, Donald, Wright, 2006).

The first approach involves identifying the parties that are affected by the project either directly and indirectly. By demarcating the project's sphere of influence, reveals parties that are directly affected by the project and those that are indirectly affected. This eases the process of analyzing the effects different parties, the degree to which they are affected, and the influence that the different parties could have on the project. Through such an analysis, the findings are effective in forming the basis for building an effective stakeholder engagement strategy. However, it is critical to note that not all stakeholders belonging to a certain group or sub-group will react, share similar concerns, or have common priorities and opinions (Simpson, & Taylor, 2013).

The next approach involves convincing the various stakeholders that the project serves their best interests. Some of the salient stakeholders in the company are the company's investors, employees, and directors. These groups share the common interest of ensuring that the company performs well both in the short terms and the long-term. Combining the benefits of the project and the stakeholder's interest is best performed using the concept of sustainability and corporate governance. Grant et al. (2011, 39) argues that the concept of sustainability shares a common foundation with corporate governance. According to the sustainability theory, firms, the society, and the environment are interrelated…