Corporate Social Responsibility and Ethics

Corporate Social Responsibility and Ethics

Question 1 Stakeholder and their Interests Stakeholder is one of the most important parts of any organisation particularly for those that are operating globally for the reason that they have to execute their duties viably in order to help the organisation to attain their set gaols and targets. In the considered case of BP, the stakeholders might involve in the process of offshore oil spill of Gulf of Mexico that can be separated by both external and internal stakeholders. Moreover, it is not in the interest of British Petroleum to pay additional amount money than the amount that they previously paid. However, paying additional amount could varnish the firm and other competitors might absorb it, or they just could go into insolvency might be dissolved. The simple reason that can encourage BP for paying additional money is to advance their company image, though they are previously spending many resources in this in a diverse manner, which has nothing to do with the issues (Dion, 2012).

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Internal Stakeholders

Numerous internal stakeholders are directly involved in the business operations of BP. Some of the key internal stakeholders are as follows:

BP Management  

It is noted that this group of stakeholders have the duty to create intelligent choices always concentrate on how to protect the frim from insolvency. Furthermore, they are also fascinated to preserve their work, their salary, and their repute in this order. For that reason, it could be of their greatest interest if the governmental authority will not enforce the company to pay additional money (Levy & Kaplan, 2008).

Employees

Employees are considered as one of the most important stakeholders of any organisation for the reason that they play a vital role in their continuous success. In addition, the workers are concerned in keeping their tasks for the reason that most of them would possibly have relatives to take care about in order to fulfil their basic requirements.  Moreover, they might also be residents of those areas that are exaggerated by the disaster but this element is less imperative for them to keep their income. For that reason, they are quite keen not pay additional money to the government (Arnold, et al., 2010).

Shareholders 

Shareholders are also one of the most vital stakeholders of any organisation for the reason that they are responsible for investing their precious money and helping the organisation to execute their paper plans practically. Moreover, it is conceivable to distinguish two different types of shareholders, the ones who capitalised a massive amount of money in the organisation and the second ones who invested a lesser amount of money & resources. Nonetheless, both the groups are quite keen in not letting the organisation to pay additional money for the purpose of CSR for the reason that this might cut down their revenues, even stop their returns, which means that they would have less money to assist their family unit and pay the liabilities that they might be involved in it. It is noted that if British Petroleum has to pay additional money in order to resolve the effects of oil spattering, the expenditure of the firm in the Gulf of Mexico will also raises for all the associations, which might cut down their incomes by deducting the cost to the incomes engendered for the business (Mostovicz, et al., 2009).

Banks

It is found that most of the large-scale organisation often takes money from different financial institutions such as banks in order to get financial help to keep going with their business operations more viably. However, BP is not exclusion to that, for that reason if BP goes into insolvency numerous banks might be affected by this. In order to consider the environmental issues that might be arises due to the activities of BP, they have to formulate appropriate CSR strategies that would help them to minimise these issues to some extent. For that purpose, they might need extra amount of money & resources that is quite difficult to pay back of with interest and of the principal amount lent therefore the financial institutions would have to help them to set some money to reduce the ecological issues (Laplume, et al., 2008).

External Stakeholders

Some key external stakeholders of BP play a key part in the business operations of an organisation, few of them are as follows:

Nearby Residents to Mexican Gulf

It is noted that the local residents would definitely influence the activities of BP for that reason they have to be very conscious to minimise the risk of environmental issues to the negligible level. Moreover, they have to formulate appropriate CSR strategies in order to help them by offering some sorts of project in their local area that might throw a good impression on local residents. The natives are quite interested in BP to pay some addition amount of money for their betterment and if they do not pay it then it might take extra bit to them to return to their usual life as they were before the devastation (De Colle & Werhane, 2008).

Coast Fishers

Coast fishers are another important stakeholder that should be considered by the top officials of BP for the reason that they might be most affected by the operations of BP. For that reason, they have to take some serious measures in order to minimise the problems and effects of their operations to some extent. Moreover, it is of their awareness BP to pay for covering the reimbursements to the Gulf and the oil spill has instigated them a massive impairment even more than too many of the patrons. Due to the oil spill, numerous parts can be affected by the foremost productive element for the Coast fishers, the sea (Tanner, et al., 2008).

Local Tourism

It is noted that the local tourism can also be affected due to the activities of British Petroleum that might create problems for the top officials of a country to attract more tourists to visit their places frequently. Tourism is one of the most important factors that play a vital role in the success of countries’ economies that is why it is important for BP to consider this element at the time of executing their activities in Mexico for the reason that it would create problems for them to continue their business operations viably. It is a core duty of BP to concentrating on tourism in order to clean up all the beaches that are full of oil dirt from the spilling because if they are still remain same then no one would go to that place and it throws a bad impression of BP on others (Russo & Perrini, 2010).

 Non-Government Organisations (Green peace)

It is observed that the green peace is quite interested in BP to pay deprived of any doubts. The concern of this type of organisation is simply about the atmosphere and dissimilar wildlife, animals, and they do not care regarding the issues of BP except the effects are going to influence directly to the atmosphere, which is not the situation (Frederiksen, 2010).

U. S. Citizens 

It is noted that the most of the US citizens are quite interested in BP to pay; nevertheless, there is a minor group of them, which cannot be interested. This small group are the US citizens who work in BP and other diverse groups and associations, which are doing a little business with BP for instance: advertisement organisation from the US, which have an agreement with BP to accomplish all the image promotion (Mostovicz, et al., 2009).

American Media 

It is found that the American media are interested in British Petroleum not to pay additional amount. Moreover, at the existing moment, BP have numerous diverse contracts with dissimilar American media due to that they have capitalised sufficient amount of money in the American media business for refining their image viably. For that reason, if British Petroleum has to pay out extra money to the reason of the catastrophe they will not be capable of affording all the agreements that they have with the U.S media (Mostovicz, et al., 2009).

Issues Involved Stakeholder Interests

  • The BP organisation intrigues for minimising its expenses for shutting the spill clashes with the local occupants of Mexican Gulf to have the spills fixed as brisk as could be allowed (Tanner, et al., 2008)
  • The BP administration interest to reduce the organisation costs and keep the organisation picture clashes with the American media interest to show exact date on the tremendous ecologic disaster in Deep-water horizon
  • The interest of BP Company to search for and show outside reasons as a bottleneck`s of deficiency clashes with the other included BP business accomplices (Transocean, Halliburton Co, Cameron International Corporation) (Brown & Forster, 2013)
  • The BP organisation interest to keep their business as in place as could reasonably be expected clashes with the U.S. resident interest to consider the organisation in charge of the calamity and charge it as a guilty one to take after safeguard methods
  • The NGO is as Green Peace interest is to uncover the BP organisation`s issue with a specific end goal to forestall future natural disaster and make BP organisation and other working in the oil business to actualise better security methods (Mostovicz, et al., 2009)

The organisation representatives to keep up their compensations bringing may get up in inconsistency with the Government enthusiasm to drive BP to spend as much cash as expected to seal the submerged spill sources instantly. Then again, an additional spending for the benefit of British Petroleum may constrain the organisation to lessening its representatives` compensations (Dion, 2012).

The government interest to work out the issue rapidly repudiates with BP organisation shareholders` intrigues, which are willing to expand benefit. The Government enthusiasm to demand BP to pay the genuine expenses for the damages expenses repudiates with the organisation financial specialist’s intrigues on the grounds that huge segments of the organisation assets will need to strive for discovering and actualising a route to illuminate the Mexican Gulf oil spilling disaster (Russo & Perrini, 2010).

Question 2

Ethical theories are considered as effective for the purpose of assessing the performance of the organisation especially related to corporate social responsibility.  Two different ethical theories that can be used in order to assess the actions of British Petroleum towards the problem of the oil spill are Deontology and Utilitarianism (Retolaza, et al., 2009).

Deontology

This is the ethical theory that states that it is the duty of individuals or organisation to follow to their responsibilities and duties at the time of evaluating an ethical problem. For this, it could be observed that an organisation must at first adhere to their own responsibilities that they have towards society or individuals. For instance, an organisation that is following the theory of deontology would always make efforts in keeping the promise related to social responsibility and will make efforts to follow the law. However, by following this theory, the management would be able to make consistent decisions as they are based on the set duties of individuals (De Colle & Werhane, 2008).

 Moreover, with the help of this specific theory, grounds for some special obligations and duties towards specific people or society are provided. Despite this, although there are many benefits of the theory, some of the flaws are also present.  The most prominent one is that no logical basis or rationale is present through which decisions can be made by the management related to some specific matter. Without proper rationale, the organisation such as BP would not be able to comprehend that duties and actions that they hold towards the society. It is observed that their actions of oil spill has causes extensive societal problem, which can only be assessed and overcome by effective implementation of this ethical theory (Dion, 2012; Brown & Forster, 2013).

There are three important features of deontological ethics. The first one is that responsibility must be conducted for the sake of duty. The wrong or right aspects of a rule are considered as the intrinsic ethical structures of that kind of rule. For instance, this might include being aware of the responsibility that organisation holds towards society and avoids it intentionally. The second feature of this ethical theory is that individuals should be treated as matters of intrinsic ethical value. While on the other hand, third feature of this particular ethical theory is that a ethical principal is a definite imperious that is universalisable that is it must be applied to everybody who is in the similar moral condition. This means that British Petroleum can analyse their responsibility towards society by making use of this specific ethical theory (Tanner, et al., 2008).

With the help of this theory, the actions of BP towards oil spill can also be evaluated in the manner that the rules and obligations of the company in relation to social aspect will be determined. In addition to this, through deontology ethical theory the management would be able to identify the obligations and rules of every employee that must be followed by them in the process of conducting their duties and operation. The actions of BP led to the oil spill because they were negligent of their responsibility towards implementation of effective corporate social responsibility. Due to this particular ethical theory, the strategies and rules that they used for developing and analysing those actions can be evaluated and analysed effectively (Arnold, et al., 2010).

Utilitarianism

This particular ethical theory is developed on the capability to forecast the significances of an action. To an organisation following utilitarian theory, the option is considered as ethically accurate if it is yielding the greatest benefit to many of the people. One of the prominent advantages of this selected ethical theory is that same predicted solutions can be compared along with the use of a point system in order to identify the choices that are more advantageous for the society. With the help of this point system, a rationale and logical argument for each of th3e decision is obtained (Mostovicz, et al., 2009).

Two of types of utilitarianism are there which includes rule utilitarianism and act utilitarianism. Under act utilitarianism theory, the organisation adopts such as action and procedures through which majority of the people that is society is benefited. While on the other hand, under rule utilitarianism law towards corporate social responsibility is addressed along with consideration of fairness. This depicts that under this type of utilitarianism theory, the benefit of the society is focused but by making use of just and fairest means. Based on this, it is noticed that the added benefit of this particular type is that it gives value to justices along with providing benefit to the society. However, the major flaw of this particular theory is that due to it the future is not predicted accurately. Apart from this, this theory justifies things that are immoral as moral. Therefore, based on this, the negligence of BP towards CSR would be considered as moral also it is completely unethical (Frederiksen, 2010).

However, this theory can be used in analysing the actions of BP towards oil spill in the way that it would assist in determining the steps that they adopted towards their responsibility and duty to the society or individuals. It would also help the organisation such as BP to determine the significance or importance of the actions that have been used by them in relation to their unethical actions of oil spill. Apart from this, the main perspective of this theory is that if focuses on the actions through which benefit can be provided to majority of the people particularly the whole society. British Petroleum can make use of this theory in the assessment of its actions in the manner that they could determine the implementation of the main aspect of the theory in their CSR approach. They could identify the rules and regulations that they considered at the time of proceeding with their strategy, which gave birth to oil spill.  However, because of its one of the major problem that is considers immoral aspects as ethical the BP can make effective use of the deontology ethical theory for assessing their actions towards the problem of oil spill. The first ethical theory is regarded as best in comparison of utilitarianism theory because it emphasises rules and regulations of CSR on the organisation through which the problem of oil spill can overcome (Brown & Forster, 2013).

Question 3

The BP did not act correctly by not giving dividend for three quarterly periods to its shareholders. They considered as step on the basis of mutual agreement by Tony Hayward. This is considered as effective because the organisation is paying extensive amount to this person and is ignoring the shareholders who are the major investors for BP. It is very important for the management of BP to make sure that there shareholders are satisfied, as they are major reason behind gaining capital for the operations and projects. By not providing the dividend, the shareholders could be distracted and they would not give their efforts towards the performance of the organisation with such dedication then they would with the achieving dividend. Moreover, shareholders are always in search of the return that they avail from their investment, if the return is not provided to them for three quarterly periods that is from June 2010, they would stop making investment and BP would then have to face the problem of financial crisis. Therefore, based on it, this decision is not regarded as correct in terms of long-term gains (Laplume, et al., 2008).

This perspective can also be explained by making use of stakeholder theory. The stakeholder theory is regarded as the theory that is linked to the organisation management as well as business ethics with the help of which the morals and values are accounted in relation to the management of the organisation. According to this theory, the shareholders are the most important part of an organisation and it is the binding fiduciary duty of the organisation to put their needs at first priority so that value can be improved and increased for them.  This theory states that there are some other parties involved, which comprises of customers, financiers, employees, governmental bodies, suppliers, trade unions, political groups, and trade associations. Competitors are also considered as stakeholders and their status is derived from the ability to influence the stakeholders and firm (Russo & Perrini, 2010).

Moreover, this theory also suggests that stakeholder opinion of strategy incorporates both market based and resource-based view along with the incorporation of socio-political level. One common form of stakeholder theory helps in defining the particular stakeholders of an organisation. It also assists in evaluating the situation in which the managers treat these parties as stakeholders. Therefore, based on this it is noticed that stakeholder theory also suggests that organisations must give importance to its stakeholders as compared to others. They are the major part of the business and contribute to making the organisation successful. According to this theory, shareholders are the one that contribute to the success of actions. Therefore, BP must give their shareholders top priority in relation to others due to the fact that they would help them in dealing with the problem of oil spill. In addition to this, the organisation under consideration must be also focus on giving dividend to its shareholders because through it, they would be motivated and their dedication would increase towards operations. Therefore, with the help of this BP would also be able to implement effective corporate social responsibility (Retolaza, et al., 2009).

Question 4

With the help of ethics and stakeholder theories discussed above it is noticed that BP was not able to handle its crisis very effectively. Although they made use of strong measures and reduced the acitvit4ies through which issues were taking birth this does not contributed as significant as they ignored some other important aspects such as corporate social responsibility and ethics. Moreover, they also did not focused on stakeholder theory and ethics theory of deontology due to which they were not able to determine the ways in which the issues can be controlled. However, BP could have responded more effectively towards the crisis if they would have implemented effective strategies. Moreover, they could also reduce the problem by monitoring and evaluating the operations, which are the major reason behind the crisis. With the help of monitoring the procedures, they would come to know the areas that need concern so that the crisis can be dealt effectively. Furthermore, they could also make use of CSR strategies, which would bind them towards the perspective of society rules. They would come to know about t the responsibility that they hold towards society and would implement the procedures through which the societal problem can be dealt. Hence, these are main ways that British Petroleum can adopt in order to deal with the crisis without harming much to their reputations, performance, and profitability (Levy & Kaplan, 2008).

Impact of CSR and Ethics

It is noticed that there is a strong impact of CSR and ethics on an organisation for the reason that it would bound them to consider the ecological or other issues that might be faced by an individual due to their business operations. Moreover, by imposing effective CSR it plays a vital role from a British Petroleum prospect to throw a good impression on the stakeholders and on local resident where they currently operate. Due to the poor image of BP, it is a core duty of higher management to execute their activities more viably and attain their set goals and objectives in a more appropriate manner.

 

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