BP Texas

CASE ANALYSIS
BP TEXAS CITY
SUBMITTED TO:
PROF. F.A. FAREEDY
SUBMITTED BY:
ZAINAB SALMAN
ID: 13P00039
MBA II- SECTION C (2014)
LAHORE SCHOOL OF ECONOMICS
WRITTEN ANALYSIS OF CASE (WAC)
INTRODUCTION TO BP:
British Petroleum is a multinational oil and gas company and is indulged in both
upstream and downstream operations.
This company had to face a massive explosion and fire in March 2005, at its Texas
refinery, which resulted in the death of 15 people and resulted in the injury of 500 people. This
was declared as one of the worst U.S. industrial accident in more than 10 years.
PEOPLE INVOLVED THE CASE:

DESIGNATION
Chief executive of BP
NAMES
Lorde Brown
Chairwoman of US chemical safety Board
Carel Merritt
US secretary of state
James Baker
CORE PROBLEM:
The core problem of the case was that the CEO was not good enough to perform his
duty of establishing good organizational culture that should have had safety of employees as a
part of it. All budget cut offs were in the areas where due importance should have been given
to employees safety. In his role of maximizing profits while reducing costs, he was inefficient to
not direct attention the areas of safety despite the fact that workers were being harmed at an
increasing pace.
In a nutshell BP has failed to provide effective process leadership and was unable to
establish process safety as a core value. Also didnt incorporated process safety into
management decision making.
OTHER CHALLENGES:
BP needs to revise its management policies such as profitability and cost cutting that
could compromise safety. The problem being that they need to reduce costs but not in terms of
maintenance cost that could make the workplace unsafe.
All the business units of BP witnessed significant safety gaps. And the more fundamental
problem as mentioned in the case also being the potentially explosive situation inherent in the
depreciating machinery at BPs plants.
RECOMMENDATIONS:
As already recommended by Bakers panel, BPs leadership should set the process safety tone at
the top of the organization and establish appropriate expectations regarding process safety
management.
BP should ensure that everybody complies with the safety standards and strengthen the
accountability for process safety performance.
Above all, it is the top managements job to promote a culture therefore BP should
change its top management and the CE primarily who knows that establishing a safe work
environment is not an option rather an obligation on part of company.
QUESTIONS AND ANSWERS

QUESTION 1:
The textbook defines ethics as the principles of conduct, governing an individual or a
group, and specifically as the standards one uses to decide what their conduct should be. To
what extent do you believe that what happened at BP is as much a break down in the
companys ethical systems as it is in the safety systems, and how would you defend your
conclusion?
ANSWER:
It was definitely a break down in the companys ethical system along with its safety
system.
There exists a tradeoff between profit maximization and safety, and thus that becomes
an ethical issue. What happened at BP was that the CEO, who is responsible for setting up a
companys values, beliefs and instill a culture, he was unable to understand that the safety
culture should not be something separate from or in addition to the organizational culture;
rather safety is a fundamental part of the organizational culture. In any company CEOs are the
ones who have the power to shape the corporate culture and in any organization, corporate
culture is safe cultures. In this case, BPs CEO had a checkbook mentality and clearly even
knowing about the shortcomings in the BPs safety process, he never gave due attention to it
instead initiated even a further budget cut. Every organization is supposed to give utmost
importance to its workforce safety and that being an ethical obligation, but BP neglected the
issue despite the increasing number of accidents over the years.
QUESTION 2:
Are the occupational Safety and Health administrations standards, policies, and rules
aimed at addressing problems like the ones that apparently existed at the Texas City plant? If
so, how would you explain the fact that problems like could have continued for so many
years?
ANSWER:
The OSHAs safety and health standards are intact to provide every worker with a safe
and healthy work environment. This law is enforceable almost in every organization in the US
and in my opinion it did address the safety concerns of BP such as ensuring equipment are safe,
the safety standards are being met, process safety ensured, but since its not mentioned in the
case therefore I will assume that BP was not complying with its regulations and thus the
accident occurred.
QUESTION 3:
Since there were apparently at least three deaths in the year prior to the major
explosion, and an average of about one employee death per 16 months for the previous 10
years, how would you account for the fact that mandatory OSHA inspections missed these
glaring sources of potential catastrophic events?
ANSWER:
The case clearly highlights that BP created a false sense of confidence that it was
properly addressing process safety risks. It was due to the fact that BP did improve on just one
dimension over the years and that was personal safety performance, but had not laid any
emphasis on the overall safety process, this lead to misrepresentation of facts that it was
thought that the improving personal injury rates was an indication of acceptable process safety.
It was also seen that the safety culture at BP Texas city lacked the positive, trusting,
open environment that are an essential part of a proper safety culture in any organization. So
due to all the above reasons, it is quite the likelihood that OSHA may have been misled through
distorted facts or incomplete information regarding the safety conditions being improved at
Texas City Plant.
QUESTION 4:
The textbook lists numerous suggestions for how to prevent accidents. Based on
what you know about the Texas City explosion, what do you say Texas City tells you about
the most important three steps an employer can take to prevent accidents?
ANSWER:
First thing of due importance is the fact that a firms top management should know that
its not an option to maintain a safe culture but an obligation.
1. Now as for the three steps, first up is that the employers, that too the top
management first, should promote an organizational culture of safety and make
people aware of the importance of working in a safe and healthy environment.
2. Secondly, all the staff should be given process safety knowledge, trained on how
to work safely, and oriented on the importance of safety.
3. And last but not the least, employees should be encouraged to come forward
and complain about any safety matter if they see one. A culture such that should
be in place where the staff can easily report their safety concerns without any
kind of employers fear.
QUESTION 5:
Based on what you learned in chapter 16, would you make any additional
recommendations to BP over and above those recommendations made by the Baker panel
and the CSB? If so, what would those recommendations be?
ANSWER:
Baker panel and CSB have made very detailed recommendations to BP, which if fulfilled
will greatly reduce the risk in terms of safety for BP.
But one additional strategy that may be pursued by BP to ensure a safe culture within
an organization is to attach rewards with the implementation of safety management within an
organization. Safety should be a part of every individual working in an organization and should
also be reflected in an organizations performance management systems.
QUESTION 6:
Explain specifically how strategic human resource management at BP seems to have
supported the companys broader strategic aims. What does this say about the advisability of
always linking human resource strategy to a companys strategic aims?
ANSWER:
At BP the aim was to cut costs and increase profits at any stake, and thus they
compromised safety, cut down the costs from there and had to pay in terms of explosion.
Now, a companys sub strategic aim is to achieve competitive advantage. That in
traditional or conventional terms is thought to be achieved with more assets, better equipment
etc. that is emphasis is laid on the resources such as the ones mentioned but now in modern
times, and the most important resource that cant be even manipulated is the human resource.
Greater competencies are gained through a skilled workforce, a distinctive organizational
culture and management policies and practices. And this will enable BP to compete in the
market with respect to better product quality, differentiated products, technological innovation
and safety.

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CASE ANALYSIS

WRITTEN ANALYSIS OF CASE (WAC)

PEOPLE INVOLVED THE CASE:

Chairwoman of US chemical safety Board

QUESTIONS AND ANSWERS

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