Index IntroductionCurrent Challenges for BPCCreative Thinking and Problem Solving StrategiesManagement CompetenceJudgment/Decision MakingLeadershipAnalysisTeamworkCorporate Governance and CSREthicsTransparencyAdequate and Effective ControlIndependenceCorporate Social Responsibility (CSR)ConclusionIntroductionDeepwater Horizon is a film 2016 directed by Pietro Berg based on the real-life explosion of the Deepwater Horizon oil rig in the Gulf of Mexico on April 20, 2010, killing 11 of 126 employees. It is the worst oil disaster in U.S. history in which the explosion it lasted 87 days causing the escape of 210 million people. gallons (estimate) in the ocean. This semi-submersible offshore oil drilling platform owned by private contractor Transocean (an offshore oil drilling company) and leased to British Petroleum (BP), was starting to drill off the southern coast of Louisiana. The film depicts accurate events according to the chief electronics technician aboard the platform, Michael "Mike" Williams (Mark Wahlberg), whose job was to supervise the platform's computers and electrical systems. He was one of the last workers to leave the platform, bypassing the lifeboats to help rescue others who were still trapped. The film also focuses on James "Mr Jimmy" Harrell (Kurt Russell) who is the manager of the offshore installation, Caleb Holloway (Dylan O'Brien) who is part of the drilling team, Andrea Fleytas (Gina Rodriguez) the operator dynamic position, and BP managers Donald Vidrine (John Malkovich) and Robert Kaluza (Brad Leland). The film depicts the problems that went wrong causing the plant to explode and the employees to be rescued. The research below details the events and challenges that occurred and the reasons behind them. Many are due to having/lacking management and corporate governance skills. The purpose of this project is to analyze what went wrong as a company and why. Strategies are also provided to help BP plan for the future and address challenges that have arisen. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original Essay Current Challenges for BP The Deepwater Horizon spilled an estimated 210 million gallons of oil into the Gulf of Mexico, making this the largest accidental ocean spill in history according to the Smithsonian. A 22-mile-long oil plume was reported during the spill, which allowed the oil to mix with seawater and settle just below the surface. 20% of the oil spilled ended up on the surface and seabed. This has damaged deep-sea corals and other invisible surface ecosystems that are still trying to heal. According to biologydiversity.org, BP is responsible for harming/killing 82,000 birds, 6,165 sea turtles and 25,900 marine mammals. When the facts about the start of the oil spill reached the public, BP found itself having to create a bad image. Their customers didn't want to be loyal to a company that didn't care about following proper safety procedures for its employees and was harming the environment and marine life so drastically. This is demonstrated by statistics evaluated by Experian Simmons DataStream: BP has lost a significant number of American customers. The percentage dropped from 26.4% to 16.4% between April 26 and June 28, 2010, or a 38% loss of customer base in nine weeks. In the sameBP's loyal customer base declined by 56% over the period. BP faces the challenge of winning back lost customers. The loss of customers was one of the factors that led BP to suffer a loss of $6.26 billion. BP had to pay $61 billion in damages. This is larger than the market capitalization of the two largest US independent oil companies ConocoPhillips and Occidental Petroleum, and more than double the size of the largest US independent oil company Anadarko Petroleum. Damage costs were paid to various parties including hundreds of attorneys, 400 local governments, thousands of plaintiffs such as Transocean, and the Environmental Protection Agency (EPA) for Clean Water Act fines and damage to natural resources. EPA-specific payment includes medical and cleanup costs, property damage, and economic losses. An oil analyst at Oppenheimer & Co, Fadel Gheit, said that “before the accident, BP had a market capitalization of $180 billion. The incident reduced the company's market capitalization by a third. It's a miracle the company is still in business.” BP initially attempted to challenge the appellants' conciliation decision in the Supreme Court, but lost the case. This translates into uncertainty for the company over how much it will still have to pay beyond the first settlement demand of $18.7 billion. In 2015, five years after the oil spill, half of the parties who had filed financial compensation claims against BP had still not been paid. This means BP could be sued and forced to pay more money than expected. BP shares fell 51% in the forty days following the spill on the New York Stock Exchange. It went from $60.57 billion to $29.20 billion. They had to sell up to $30 billion in assets and nearly $22 billion in divestments. This resulted in a decrease in the value of their company and therefore also in share prices. The total value lost by BP is $105 billion since the oil spill on April 20, 2010. Creative Thinking and Problem Solving Strategies The Delphi technique can be used to help solve the problem of the large amount of oil spilled in the Gulf of Mexico which killed thousands of people. of marine animals. BP can organize an initiative to get experts from around the world to provide input and advice on the best method to use to clean up the oil. As a facilitator, BP can propose the initiative as a questionnaire by collecting a lot of information in an organized way. Using this strategy BP will be able to carefully analyze each completed questionnaire and a decision will be made once each option has been discussed and the best way forward has been chosen. For example, BP can start by putting physical barriers in the ocean that trap all the oil together and make it easier to clean it up and not lose any of it. The bad image created by BP caused a threat. They risked losing a large part of their customers resulting in losses. This is exactly what happened. As mentioned above, they lost 38% of their customer base and suffered a loss of $6.26 billion. BP can use the strategy of performing an external SWOT analysis. The threats have already been identified, so BP can work on how to create opportunities for itself. For example, they must involve journalists in their cleanup initiative to report to the public and news channels on everything BP is doing to help clean up environmental damage. This advertising will offer to BPthe opportunity to show the public their good deed and win back lost customers when they see that BP is making an effort to improve the situation. This strategy is important for BP to use to analyze what went wrong and what can be done to fix it. BP had to pay $61 billion in damages. Their new goal should be to recover the money paid and rebuild the value of the company for the benefit of shareholders and customers. A decision tree strategy can be used because it aims to promote rational decision making and clarify the available options and the consequences of each. You can calculate the decision-making processes and arrive at a value that shows the probability of success of each option. This will help BP as the decision to help this challenge can be to improve its image. This will lead to the return of customers and therefore an increase in sales. Decisions on how to improve their image will be entered into the decision tree and each option will be discussed and weighed. BP must have options to improve its image in a cost-effective and ethical way, for example by publicizing the rescue of endangered marine animals affected by the oil spill. BP faces the problem of potentially being sued and having to pay more money than expected because it had not initially paid the claimants. BP needs to draw up a pros and cons table as a strategy to help in this challenge to analyze whether non-payment of the claimants will benefit them in the long run. As it stands, BP has two downsides: potentially being sued and having to pay more money than expected. An additional disadvantage they may add is that they will lose more customers because customers do not want to support a company that does not care about helping those affected by the spill. The only advantage would be that they would save the money that would have been paid. It is important for BP to adopt this strategy because it will be able to better analyze its decision and clearly see its consequences. The cons in this chart will outweigh the pros, so BP will realize that their decision to not initially pay the claimants was a bad idea. They can then formulate a strategy that will help them in this challenge, for example by apologizing to the parties affected by the failure to receive the complainants and regaining their trust in BP. Their sales can improve by advertising their good initiative to the public and they can regain some of the customer base they initially lost. BP's stock fell, so the company's value and stock prices fell. A value chain analysis can be used to help this challenge. BP has to be very careful about where and how it spends its money because of such huge losses after the spill. This strategy can be used to analyze where value is created for them in the overall management of their business. This way they will be able to stop activities where no or little value is created and thus save costs that they cannot afford to spend. They can start by analyzing each business in each industry and determine from there where value is/is not created. Management skills Judgment/decision making There is mud in the pipe drilled into the seabed to pump oil. This mud is called "cement" in the film because it is used to prevent flammable gases and oils from escaping and exploding on the equipment. BP executives, Vidrine and Kaluza sent away the Schlumberger crew that was supposed toperform a mud test to see if the presence and quality were strong enough to allow drilling to begin (cement bond log test). This was a decision made because BP was 43 days behind schedule and $50 million over budget. BP took the initiative to reduce expenses by not carrying out the test, thus anticipating the expected time and not losing further money. As a company they should be risk oriented, but they have sacrificed a test that ensures the safety of their employees before performing dangerous work. If they had performed the test, Schlumberger would have found that the mud was not strong enough to hold excessive pressure and the explosion could have been avoided. Vidrine and Kaluza should have evaluated their judgment of the situation before acting, as wise leaders should do to clearly decide whether what they were doing was right. They should have acted with integrity, but instead they acted out of selfishness. The reasoning for not testing was illogical and jeopardized employee safety. Leadership The unexplained results of two negative drill pipe tests have created a challenge on board the rig. The pressure was high but there was no sludge coming out of the pipe onto the system. Normally if there is high pressure it means there is a leak and mud will rise out of the drill pipe. Vidrine took on the characteristics of a leader to address the situation and explained what he thought was wrong and what needed to be done. Vidrine's solution was to do another test again, but on the kill line and not on the drill pipe because, in his opinion, it was just a bad sensor reading. If there is no pressure on the kill line, this demonstrates the fact that there was an incorrect sensor reading on the drill pipe. - Vidrine underlined that this solution was logical because no one proposed another and even if not everyone agreed he still started the test. As a leader he has to make sure things go according to plan, so if he had accepted the fact that there might be another reason why the mud wasn't seeping in it would have meant that the additional expenses for the return of the Schlumberger crew would have increased, stopping the drilling operation and carrying out the cement bond log test. But because BP was so behind schedule and over budget, it motivated its theory and solution on employees by making them doubt themselves, thus demoralizing them. Analysis No testing of safety procedures was performed in an emergency. Vidrine and Kaluza should have collected relevant information on all controls in their system. From this they could see how a problem could arise and lead to challenges. Alternative plans would be created and necessary emergency safety procedures practiced, so solutions would be anticipated. All this happens in the aftermath of the explosion. When the mud first exploded three situations occurred: Caleb Holloway yelled at the engineers "what do we do?", an engineer told an employee to stand ready at the EDS (also known as the AMF Deadman System) to cut the pipe if necessary and Holloway rescued an employee and told him to go to the lifeboats. If Vidrine and Kaluza had implemented a safety procedures test, employees would have known what to do in case of an emergency. Teamwork In the office Jimmy Harrell and BP executives were not cooperating because each party had a different view of the situation to send the Schlumberger crew leaves without testing the cement. BP executives don'tthey listened to what Harrell had to say and the point he made about taking employee safety into consideration. BP defended itself by saying it had confidence in the integrity of their work in the cement industry. Each party has different goals, but as a team they should all work together to achieve the same goal. This disagreement was not expressed constructively and ended with Harrell blaming the intentions of their decision and them talking about Harrell as if they were right. As a team they did not find a way to work together cooperatively and Jimmy tried to find a solution to take care of the safety of the employees. Harrell and his managers have a different point of view: Harrell is concerned about the facility and the crew who live there. Managers only care about the cost of the company trying to get it as high as possible. Corporate Governance and Ethics CSREIn the office Harrell confronts the BP managers (Vidrine and Kaluza) about their unethical behavior for sending the Schlumberger crew away without doing a cement bond log test for fear of discovering a problem to fix. This would incur additional expenses to resolve it and further delays. This testing is permitted by the Mineral Management Service (MMS) which has not been carried out and is therefore unethical. As a manager, it is ethical to ensure that your employees work in a safe environment that they have not prioritized. Harrell ensures compliance with ethical standards by forcing managers to perform a negative pressure test to determine the integrity of the concrete, which is important for certifying employee safety. Safety was overlooked, so a thorough risk analysis that would have prepared employees for an emergency case was not conducted. Transparency There is a moment in the film during the negative pressure test scene where none of the employees are able to explain why the pressure in the pipe was very high but no mud was coming out. This was caused by the lack of transparency. Employees didn't have accurate facts and figures about the pipe and the quality of the mud inside it because BP executives sent the Schlumberger team away before they could perform the test. If this had been done the employees would have had the correct information to understand what was happening in the pipe and be able to strategize what to do next in a clear and confident way. This lack of transparency led to employee uncertainty, but production continued thanks to Vidrine's insistence. BP executives should have ensured that the cement bond log tests were carried out so they could have confidence in the integrity of the results which would lead to better decision making than initially done. Adequate and effective control After the fire breaks out on plant two you can see the employees in the control room trying to help each other. One is putting the jacket on the other and telling him what to do (get to the lifeboats and swim away from the platform). BP executives never had adequate and effective oversight due to the lack of safety evacuation procedures implemented in the event of an emergency. The result is shown in this scene where the employees didn't know exactly what to do in their state of shock. Managers should have ensured that all employees have a balance of knowledge and skills essential to a safety culture by exercising the control they exercise. It was the managers' responsibility to ensure that in the event of an emergency, a safety team was present to lead the evacuation. Since no control was carried out on employee training and.