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1st post (1)
Key Issues
The detrimental impact of excessive emphasis on specialization and business unit autonomy on
safety oversight within BP’s organizational structure and management system.
The inadequacy of BP’s organizational capabilities in preventing major disasters.
The suitability of Saudi Awwal Bank’s hierarchical organizational structure for maintaining safety and
security within the banking industry.
Relevant Facts
BP, under CEO John Browne, adopted a decentralized structure that prioritized individual business
unit performance, potentially leading to cost-cutting measures that compromised safety (Grant,
2022).
Insufficient communication and coordination between different units likely contributed to BP’s
recurring safety problems (Grant, 2022).
BP disregarded safety warnings and concerns prior to both the Texas City refinery and Macondo well
disasters (Grant, 2022).
Actions to Address the Situation
Enhanced Communication and Coordination: BP could have benefited from robust communication
channels across its decentralized structure. Prioritizing these channels would have ensured that
safety concerns received the same attention as cost management or operational goals.
Organizational Capabilities:
Risk Assessment: A thorough and consistent risk assessment process would have facilitated
proactive hazard identification and management.
Incident Investigation and Learning: Emphasizing in-depth analysis of near-misses and smaller
incidents could have revealed systemic weaknesses, potentially averting larger-scale failures.
Employee Empowerment: Encouraging employees at all levels to voice safety concerns and
participate in improvement processes would have fostered a safety-first culture.
Discussion Question 1
BP’s focus on specialization and business unit autonomy created fragmentation. While specialization
offers efficiency, this case highlights the critical need for coordination and cooperation, especially
concerning safety (Grant, 2022). Organizational capabilities like risk assessment, standardized
processes, and safety-focused communication channels could have helped to bridge the gaps caused
by the decentralized structure.
Discussion Question 2
Saudi Awwal Bank’s Organizational Structure: Saudi Awwal Bank utilizes a hierarchical structure.
Appropriateness of Structure:
Prioritization of Safety and Security: The bank emphasizes safety and security, which aligns well with
industry requirements.
Clear Communication Channels: There are established lines of communication for reporting
potential risks or incidents, minimizing ambiguity and potential delays.
Authority and Resources: Safety and security personnel likely possess the necessary authority and
resources to implement preventative measures, indicating an appropriate resource allocation.
Risk Assessment and Investigation: The hierarchical structure potentially facilitates adherence to
best practices for risk assessment and incident investigation, ensuring proactive and systematic
safety management.
References:
Grant, R. M. (2022). Case 8: BP: Organizational structure and management systems. Contemporary
Strategy Analysis (11th ed.). Wiley.
Respond of 1st post :
2nd post ( 2 )
Specialization
Specialization within BP’s organizational structure has led to an emphasis on
separate business units and their particular functional domains, such as marketing,
production, refining, and exploration. Specialization can lead to separated imagining
and a lack of a broad awareness of risks and operations across the organization,
although it can also promote expertise and efficiency within specific fields.
Specialization may have caused BP to concentrate excessively on specific
performance metrics and goals within each business unit to cover safety and
environmental issues (Westlund et al., 2020).
Coordination
BP’s decentralized organizational structure put a strong emphasis on business
unit independence and executive power, especially under John Browne’s leadership.
Decentralization can foster adaptability and flexibility, but it can also present difficulties
in terms of organizing tasks, exchanging data, and meeting broad organizational goals
like environmental preservation and worker safety. The lack of efficient mechanisms
for coordination could have resulted in delayed communication, which can create
weaknesses and raise the probability of incidents (Westlund et al., 2020).
Cooperation
Cooperation is the process by which various organizational components work
together and share accountability to achieve shared objectives such as worker safety.
There were signs of poor coordination and communication between management and
front-line workers about safety concerns and risk reduction measures. An environment
where safety was overlooked may have resulted from a lack of cooperation (Westlund
et al., 2020).
Organizational Capabilities
Organizational capabilities made it easier for BP to coordinate and cooperate
better. The implementation of risk management systems that evaluate and reduce
risks related to safety and environmental preservation, among other areas of
operations. Risks should be properly communicated and addressed using these
systems, which should incorporate feedback from all organizational levels. The
strategy is to establish comprehensive training and awareness initiatives to teach staff
members at all levels the value of environmental preservation and obeying
regulations. In this regard, staff members are able to address possible risks proactively
and foster a common understanding. The strategy is to foster a culture of continuous
improvement in which staff members are motivated to enhance operational
effectiveness, environmental sustainability, and safety procedures. This culture should
place a high priority on applying lessons from the past in promoting innovation in risk
management techniques (Bezerra et al., 2020).
Organizational Structure
BP has used a decentralized organizational structure under CEO John Browne,
who can divide the company into multiple business units, each led by a business unit
leader who answers directly to the corporate center. The organizational structure of
BP changed, and regional divisions and strategic performance units were added.
These adjustments were made in an effort to better coordinate efforts and solve the
problems (Bezerra et al., 2020).
The oil and gas sector works in a number of settings, such as inshore refineries
and offshore drilling platforms. A decentralized structure is more adaptable and
quicker to address local problems through coordination between various operations.
The oil and gas sector needs to implement innovative and collaborative initiatives in
order to handle technological difficulties and environmental concerns that encourage
knowledge sharing and cross-functional collaboration (Grant, 2019).
References
Bezerra, M. C. da C., Gohr, C. F., & Morioka, S. N. (2020). Organizational capabilities towards
corporate sustainability benefits: A systematic literature review and an integrative framework
proposal. Journal
of
Cleaner
Production, 247(2),
119114.
https://doi.org/10.1016/j.jclepro.2019.119114
Grant, R. M. (2019). Contemporary strategy analysis : text and cases (10th ed.). John Wiley & Sons
Inc.
Westlund, O., Krumsvik, A. H., & Lewis, S. C. (2020). Competition, Change, and Coordination and
Collaboration: Tracing News Executives’ Perceptions About Participation in Media
Innovation. Journalism
Studies, 22(1),
https://doi.org/10.1080/1461670x.2020.1835526
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