Instructions: With respect to the case study below answer the following short and long questions. "There are times when a company like BP needs to act long term in a way that may reduce short term profitability by investing in social issues that ultimately will create a positive environment for us to operate in." 1 - Graham Baxter, Vice President, Corporate Responsibility, BP in 2004. "Our reputation, and therefore our future as a business, depends on each of us, everywhere, every day, taking personal responsibility for the conduct of BP's business." 2 - Lord Browne, Chief Executive Officer, BP in 2004. In the early 1990s, UK-based oil and chemical major, British Petroleum (BP), faced a crisis situation. The company had amassed a huge debt and its share price saw a drastic fall. BP also faced pressure from the external agencies to stop polluting the environment. Lord Browne (Browne) who became CEO of the company in 1995 realized that the company needed to change its policies and re-brand itself if it had to survive in the industry. In 1998, BP entered into a merger agreement with Amoco Oil Corporation (Amoco). Even before the merger, Amoco had framed policies to become environmental friendly. BP was inspired by Amoco's environmental friendly policies and after the merger, in 1999, adopted a new set of business policies based upon the best practices followed by both the companies. BP became the first company in the oil industry to emphasize the need for Health, Safety, and Environmental (HSE) performance. On March 11 2002, while giving a speech at Stanford University on climate change, Browne said it would be necessary to take preventive measures to face climate change He also said BP would reinvent its energy business and would go 'Beyond Petroleum'. BP believed that its HSE performance would be vital for its success in the countries where it operated. The company also changed its name to 'bp', without any meaning being attached to the letters. It incorporated a new catchphrase "Beyond Petroleum". These changes reflected the company's concern for the environment and its entry into renewable sources of energy. The origin of BP dates back to 1901, when William Knox D'Arcy (D'Arcy), an Englishman, got a concession from the Shah of Persia to explore for oil in the Middle East. D'Arcy incurred huge costs on his explorations but failed to discover any oil deposits. Subsequently in 1905, he required more finances and these were met by the Burmah Oil Company. In 1909, oil deposits were discovered in South West Persia. This marked the founding of the Anglo-Persian Oil Company (APOC). D'Arcy was appointed as a director and Lord Strathcona (Strathcona) was made chairman of APOC. The Burmah Oil Company held 97% of the company's ordinary shares and the remaining 3% was held by Lord Strathcona. In 1914, the British government acquired a majority shareholding in APOC. In 1917, APOC acquired a division of the Germanbased Europaische Union which was under the control of the British government and used 'British Petroleum' as its trade name. With this deal, APOC incorporated 'British Petroleum' as its trade name. In 1932, the Shah of Persia terminated the concession due to a disagreement over the share of profit held by the Persian government in the company. However, in 1933, the concession was restored to a limited area and the Persian government was allowed to have a greater share in profits. In 1936, Persia was renamed Iran and with this, APOC became the Anglo-Iranian Oil Company (AIOC). In 1947, the company diversified into petrochemicals through an agreement with the Distillers Company. By the mid-1900s, the AIOC had begun explorations in Canada, South America, Africa, Europe, and Indonesia/Papua New Guinea. It also constructed refineries in Europe and Australia. In 1951, with the nationalization of the oil industry, the Iranian government sought to nationalize the company's assets. The British government was not in favor of nationalization and therefore decided to leave the country. As a result, AIOC decided to expand to other Middle East countries of Kuwait, Libya, and Iraq. In 1996, BP quit the Global Climate Coalition (GCC) which was formed by a group of US-based companies after the report given by the Intergovernmental Panel on Climate Change (IPCC) in 1989. The panel assessed the scientific reports on climatic changes caused by harmful human activities and stated that the greenhouse gas (GHG) emissions were increasing due to harmful human activities and suggested reduction of such emissions. The GCC was not in favor of taking any action to reduce the GHG emissions. BP was the first company to quit GCC. It also supported the Kyoto Protocol, which was an agreement entered into by the industrialized countries to reduce GHG emissions. In 1998, the company reduced the hydrocarbon emissions into the air by 15% from the 1997 levels. Its water discharges were reduced by 6% and the carbon dioxide emissions remained unchanged. However, it failed to control oil spills, which increased by 20% from the 1997 levels. BP promoted regional development programs by way of creating employment opportunities and providing training to people in the regions where it operated. In many places, it encouraged the local business communities to become its suppliers.The company opened an Enterprise Center in Azerbaijan which, by 2004, provided 130 training courses, seminars, and workshops for 3,000 people belonging to the local companies. These courses incorporated many issues including health, safety, and accounting. BP began oil exploration and production in Columbia in 1987. It had oil fields in Cusiana and Cupiagua. Between 1994 and 1996, BP faced protests from the Columbian government and the Human Rights Watch for its operations in that country. It faced accusations of polluting the environment and had to pay a fine of $ 276,000 to the Columbian government in 1994 for destroying the environment. BP also had to face protests from the human rights activists. As a result of the environmental initiatives taken up by BP, the company was successful in meeting the emissions target set in 1998 by 2001, nine years ahead of schedule. The company achieved a 10% reduction in the 1990 levels of 80.5 million tonnes of GHG emissions which was targeted to be achieved in 2010. The investments made by BP in solar and wind energy projects proved fertile as they generated electricity for many households. The company brought electricity to a remote village in the Sahara Desert with the help of its solar power technology. By 2004, all the major operations of BP were independently given international standard certification of ISO 14001 on environmental management. The company aimed to improve its performance continuously by reducing emissions into the air, water, and land. Due to improvements in operational efficiencies and divestments of inefficient sites, the company was successful in reducing the GHG emissions from 83.4 million tons in 2003 to 81.7 million tons in 2004. With solar energy, BP was also able to meet the electricity requirements of California and Peru. It helped in electrifying 1852 schools in Brazil. The company also reduced the average price of the photovoltaic solar modules used in the production of solar energy from $3.79 in 1998 to $3.15 in 2004. Besides, the company also provided electricity tapped through wind energy to the Dutch. Short Questions-Less than 200 words:

Q1. What is Economic Integration. Explain how it can effect BP as a company. (5 Marks)

Q2. What is meant by the statement “organizational goals should be in-line with international marketing”. Explain in the context of BP. (5 Marks)

Q3. Explain the relationship between Exports and Imports. (5 Marks) Long Questions:

Q4. What is meant by Contractible and Expansive method of selecting markets. Which concept do you think applies to BP the most? (10 Marks)

Q5. Explain the role of government in regulating international companies? Link the roles to the case where applicable. (10 Marks)

Answer rating: 100% (QA)

Q1 Economic integration is an agreement between different states or countries to reduce or eliminate trade barriers between them Economic integration can have different levels from a free trade area t... View the full answer