Case Study 9 Running head: BP & THE GULF OF MEXICO OIL SPILL Case Study: BP & The Gulf of Mexico Oil Spill Central Michigan University Organizational Dynamics & Human Behavior – MSA 601 Abstract This paper will focus on the monumental disaster and ensuing public relations nightmare of British Petroleum (BP). This disaster of course was brought about by the oil rig explosion and fire in the Gulf of Mexico. BP is a multinational conglomerate of gargantuan proportions. They have molded and perfected their public image over decades. This paper will take a look at the lapses in BP’s management and public relations efforts and what measures the company should have taken. BP & the Gulf of Mexico Oil Spill The reason that the authors selected to evaluate British Petroleum (BP) for a case study was due in no small part to the endless media attention given to the oil spill in the Gulf. BP is an extremely popular brand that everyone in this country undoubtedly is effected by in one way or another. One of the initial reasons for choosing BP was the unmitigated disaster put forth on the public relations front in explaining the company’s efforts at dealing with the Gulf of Mexico oil crisis. The authors were further intrigued at this assignment for the poor leadership and decision making acumen of the former CEO Tony Hayward (CMU, 2009, p. 227). With this multi-focal approach, the study will highlight the conflicting messaging presented to the public and the lackluster and ultimately ineffective leadership within the organization. BP is a huge multinational conglomerate whose primary focus is the petroleum industry. The company does business in over 30 countries around the globe. Its annual operating income is $239 billion dollars with over $14 billion dollars in profit in the year 2009. The company employs over 80,300 individuals and owns 16 refineries worldwide. BP operates several subsidiaries under the names AM/PM markets, BP and ARCO gas stations, Aral gas stations in Germany, Wild Bean Café, and Castrol Motor Oil (BP at a glance, 2010). The competition within the petroleum industry is not as plentiful as one might think. There are actually very few players in the game. Due to the limited number of refiners of crude in this country the oil from various sources are blended prior to coming to the consumer. BP doesn’t have much use for the service station business anymore. In 2007, it announced plans to sell the last 700 stations that it hadn’t already sold to franchisees. The company chose to focus on finding and collecting oil. Once companies make a discovery, it comes out of the ground and ends up at a refinery. There, it can be mixed with oil that a variety of companies have poured into the tanks. This is further evidenced by BP’s plans to divest itself of its remaining 700 gas service stations. The highest percentage of income is made from oil exploration and extraction and not in the selling of gasoline at its stations (Lieber, 2010). BP.

1. Case Study 9
Running head: BP & THE GULF OF MEXICO OIL SPILL
Case Study: BP & The Gulf of Mexico Oil Spill
Central Michigan University
Organizational Dynamics & Human Behavior – MSA 601
Abstract
This paper will focus on the monumental disaster and ensuing
public relations nightmare of British Petroleum (BP). This
disaster of course was brought about by the oil rig explosion
and fire in the Gulf of Mexico. BP is a multinational
conglomerate of gargantuan proportions. They have molded and
perfected their public image over decades. This paper will take
a look at the lapses in BP’s management and public relations
efforts and what measures the company should have taken.
BP & the Gulf of Mexico Oil Spill
The reason that the authors selected to evaluate British
Petroleum (BP) for a case study was due in no small part to the
endless media attention given to the oil spill in the Gulf. BP is
an extremely popular brand that everyone in this country
undoubtedly is effected by in one way or another. One of the
initial reasons for choosing BP was the unmitigated disaster put
forth on the public relations front in explaining the company’s
efforts at dealing with the Gulf of Mexico oil crisis. The authors
were further intrigued at this assignment for the poor leadership
and decision making acumen of the former CEO Tony Hayward
(CMU, 2009, p. 227). With this multi-focal approach, the study
will highlight the conflicting messaging presented to the public
and the lackluster and ultimately ineffective leadership within

2. the organization.
BP is a huge multinational conglomerate whose primary focus is
the petroleum industry. The company does business in over 30
countries around the globe. Its annual operating income is $239
billion dollars with over $14 billion dollars in profit in the year
2009. The company employs over 80,300 individuals and owns
16 refineries worldwide. BP operates several subsidiaries under
the names AM/PM markets, BP and ARCO gas stations, Aral
gas stations in Germany, Wild Bean Café, and Castrol Motor Oil
(BP at a glance, 2010).
The competition within the petroleum industry is not as
plentiful as one might think. There are actually very few players
in the game. Due to the limited number of refiners of crude in
this country the oil from various sources are blended prior to
coming to the consumer. BP doesn’t have much use for the
service station business anymore. In 2007, it announced plans to
sell the last 700 stations that it hadn’t already sold to
franchisees. The company chose to focus on finding and
collecting oil. Once companies make a discovery, it comes out
of the ground and ends up at a refinery. There, it can be mixed
with oil that a variety of companies have poured into the tanks.
This is further evidenced by BP’s plans to divest itself of its
remaining 700 gas service stations. The highest percentage of
income is made from oil exploration and extraction and not in
the selling of gasoline at its stations (Lieber, 2010).
BP has done an excellent job of fine-tuning its brand image to
the public. The company has crafted a persona of being
environmentally friendly. This presentation stretches from its
“Beyond Petroleum” tag line, which reflects the ideal that it is
not a petroleum company, but some sort of green energy hybrid
(Tharoor, 2010). This image that BP successfully marketed to
the public worked quite well. The downside is that the
petroleum industry inherently has risks associated with it. This
came to light on April 20, 2010 with the Deepwater Horizon oil

3. rig disaster. The oil rig explosion released millions of gallons
of oil into the Gulf of Mexico and killed 11 workers. BP, which
had done an excellent job at marketing its image and receiving
positive feedback from the public, was not prepared for the
immediate backlash that ensued.
Challenge Within the Organization
The public perception following the rig explosion was that BP’s
response in getting a handle on the rig explosion was slow,
poorly orchestrated, and lacked transparency. Instead of getting
a handle on the disaster a BP spokesman stated, “The sort of
occurrence that we’ve seen on the Deepwater Horizon is clearly
unprecedented. It’s something that we have not experienced
before…a blowout at this depth” (Burdeau, 2010). The finger
pointing and blame game continued with BP initially not taking
responsibility and blaming its partners in the oil venture. While
the oil continued to spill into the Gulf and stretching more than
130 miles long and 70 miles wide, the public relations train
wreck continued. BP’s CEO Tony Hayward further degraded his
company’s image with several infamous quotes: “The Gulf of
Mexico is a very big ocean. The amount of volume of oil and
dispersant we are putting into it is tiny in relation to the total
water volume.” He later stated that he thinks, “the
environmental impact of this disaster is likely to be very, very
modest.” The final slip up came when he stated, “I want my life
back.” His poor leadership style and lack of sensitivity are great
examples of a dysfunctional conflict (CMU, 2009, p. 227). The
lack of direction exhibited created an unnecessary conflict. In
spite of the disaster, it was his job as the leader of the
organization to marshal his forces and control the spin.
It is also quite possible that the backlash exhibited by the
American public could be indicative of ethnocentrism (CMU,
2009, p. 316). There was a lot of grumbling and outward
hostility that BP was not as concerned with the devastation

4. caused by the oil spill since it is a British company and America
is not its top priority. BP’s embattled CEO, Tony Hayward,
further stoked the flames of this sentiment when he went
yachting in England during the height of this disaster (Boyce,
2010).
Solution
to Organizational Dynamic Problem
The conflict facing BP was complex in nature and an
environmental disaster. The conflict as well as the publicly
made comments made by BP’s CEO, Tony Hayward, was
threatening not only the organizations interests but also that of
the nation. The U.S. government had no choice but to use a
dominating conflict-handling style to deal this type of
dysfunctional conflict (CMU, 2010, p. 237).
The government forced BP to act by increasing political
pressure during congressional hearings. On June 4th, President
Obama publicly “warns BP against skimping on compensation
to residents and businesses”. Two days later, Obama increases
pressure on BP by asking “whose ass to kick” over the oil spill.
On June 9th, U.S. Interior Secretary Ken Salazar informs BP
that the company is required to pay the salaries “of thousands of

5. works laid off by a moratorium on drilling” (Reuters, 2010).
In an effort of good faith and bowing to both social and
political pressure (CMU, 2009, p. 357), BP leadership met with
the Obama administration and agreed to a $20 billion dollar
fund. This fund was set up to compensate the affected
communities for their losses and to aid with the cost of
environmental cleanup and restoration. BP went a step further
and on July 28, 2010 announced that the embattled CEO Tony
Hayward would be replaced with an American Robert Dudley.
Evaluation Techniques and Evidence
To evaluate BP’s performance the authors reviewed Gallup poll
opinions and cross referenced this data with the company’s
stock performance. Gallup is a world renowned research
company that provides the most up-to-date findings on societal
viewpoints on current events as well as a wide variety of other
issues (Gallup, 2010). This technique will provide a broad
overview of the public perception on BP’s performance
handling this crisis. By cross referencing this data with the
company’s stock performance the results will include impacts
on not only stockholder confidence, but also that of the general
American public.
In a USA Today/Gallup Poll conducted June 11-13, 2010, the

6. majority of American’s polled believed that BP should “pay all
losses, even if it goes out of business” and rated the company’s
handling of the oil spill as very poor. During this same time
period, the American public also felt that President Barrack
Obama had “not been tough enough in dealing with BP in
regards to the oil spill”. While Americans are dissatisfied with
BP’s handling of the spill, they are divided at who should be
responsible for controlling the oil spill, BP (49 percent) or the
government (45 percent). These results suggest that the
American public is losing confidence in BP’s ability to control
the spill when compared to a Gallup poll conducted less than
two months earlier. In late May, 68 percent felt that BP “should
be in charge of the efforts to control the oil spill and its effects”
(Gallup, 2010).
After BP successfully placed a temporary cap on the spill,
Gallup conducted another poll to examine if the publics
perception had changed. The majority still did not approve of
BP’s handling of the oil spill but were divided on whether the
company should be allowed to drill for oil in the Gulf. When
asked about the damage from the spill, 44 percent felt that the
damage was worse then they thought it would be, 29 percent
thought is was about what they expected, and 22 percent did not
think that the damage was as bad as they expected (Gallup,
2010).

7. Gallup poll opinions seem to somewhat coincide with
stockholder opinions. On the date of the disaster, BP’s closing
stock price was $60.48. The stock spiraled downward to a 52-
week low on June 28, 2010 at $26.75 (see Appendix A). The
downward spiral can be attributed to a variety of factors: failure
to take responsibility for the spill; several failed attempts to
stop the leak; and, BP’s announcement in May that it may take
two to three months for a relief well to be in place (Reuters,
2010).
In mid-July, BP sealed the leak with a temporary seal. This
announcement is followed the announcement that BP had
replaced its CEO with an American. Stock prices began to
slowly rise. The stock reached a high of $41.33 on August 6,
2010 but has tapered off and has fluctuating between the mid-
to-high $30’s (Marketwatch, 2010). Stockholders seem to mirror
the viewpoints reflected in the Gallup polls. BP announced on
September 19, 2010 that the seal is in place and that the well is
no longer a threat to the Gulf, yet stock prices remain static
since this announcement (Reuters, 2010).
Conclusion
In summary, the public relations disaster of BP was largely self-

8. inflicted. BP’s dysfunctional organization allowed the story to
get out of hand and the media and public perception turned
negative because of this. BP illustrated poor organization, a
lack of transparency and candor. Not owning up to the problem
and being reactionary diminished the public’s good will and
compassion. Stock prices and poll results prove this.
BP’s new CEO, Robert Dudley, needs to refocus company in
order for the company to meet its organizational goals. Instead
of being reactive, the company needs to have proven safety
measures to handle a disaster of this magnitude. BP needs to
improve its safety track record and practice “programmed
conflict” to deal with organizational issues (CMU, 2009, p.
234).
References
BP (2010). BP at a glance. Retrieved September 20, 2010, from
bp.com: http://www.bp.com
Boyce, G. (2010, June 21). Retrieved September 20, 2010, from
New Orleans Progressive Examiner:
http://www.examiner.com/progressive-in-new-orleans/tony-
hayward-s-i-want-my-life-back-weekend-yachting-and-grey-
poupon-mustard
Burdeau, C. (2010, July). Document: BP didn't plan for major

9. oil spill. Retrieved September 19, 2010, from KVAL 13:
http://www.kval.com/internal
CMU. (2009). Organizational dynamics and human behavior
(2nd ed). Boston: McGraw Hill Learning