Case Study:
The BP Oil Spill: The Assignment BP was not the only global company with a PR problem in 2010. Japanese automaker Toyota found itself under fire for quality issues, and Wall Street investment firm Goldman Sachs was fined more than $500 million for securities fraud. As PR specialist Howard Rubenstein noted, “These were real reputational implosions. In all three cases, the companies found themselves under attack over the very traits that were central to their strong global brands and corporate identities.” BP chief executive Tony Hayward became a lightning rod for America’s anger and frustration about the spill. At times, Hayward appeared in public in pinstriped suits; his attire was in stark contrast to the overalls worn by shrimp-boat operators and others whose livelihoods were threatened by the spill. Some of Hayward’s public statements appeared insensitive. For example, The Guardian, a British newspaper, quoted him as saying, “The Gulf of Mexico is a very big ocean. The amount of oil and the volume of dispersant we are putting into it is tiny in relation to the total water volume.” Critics also pilloried Hayward for two other statements he made during a television interview. “There’s no one who wants this thing over more than I do,” he said. “I want my life back.” Some industry observers wondered whether the rhetoric directed against BP was motivated in part by the perception that the company is British. Global companies must ensure that they have successfully positioned themselves as diverse entities with representation from the various markets in which they have operations. As brand consultant Wally Olins noted, the BP disaster “shows you need people at, or near, the top of the business who can speak the language and use the style of the countries in which they operate.” In this regard, many observers agreed that both BP and Hayward himself came up short. Crisis management practitioners are in wide agreement that in times of crisis it is imperative for company spokespersons to tell the truth and to take responsibility. Failure to do so can result in lost credibility. Rubenstein is especially critical of BP in this regard. The company’s early assessment of the spill was that very little oil was leaking into the Gulf; these reports were contradicted by estimates from specialists outside BP. Also, BP tried to pin blame for the blowout on contactors. Rubenstein said, “It was one of the worst PR approaches I’ve seen in my 56 years of business. They tried to be opaque. They had every excuse in the book. Right away they should have accepted responsibility and recognized what a disaster they faced. They basically thought they could spin their way out of catastrophe. It doesn’t work that way.” Another point of view is that some corporate crises are so monumental that traditional PR approaches will simply not suffice. Eric Dezenhall is a communications strategist who holds this view. According to Dezenhall, BP’s attempts to win over the American public were bound to be futile as long as the oil was leaking. Dezenhall says, “Two things that are very hard to survive are hypocrisy and ridicule. It’s the height of arrogance to assume that in the middle of a crisis the public yearns for chestnuts of wisdom from people they want to kill. The goal is not to get people not to hate them. It’s to get people to hate them less.” Hoping to regain some credibility in Washington, BP assembled a team of consultants and lobbyists to help it prepare for congressional testimony and respond to government inquiries. The team included James Lee Witt, former director of the Federal Emergency Management Agency (FEMA). BP also tapped Hilary Rosen, a partner in the Brunswick Group public relations firm, for assistance. Some observers were dismayed that people with political connections would agree to be on BP’s payroll. Robert Weissman, president of the Public Citizen Action Network, asked, “Do these people go to bed at night and think, ’I hope I get to wake up in the morning and represent a corporate criminal?’” In response to such criticism, Donna Brazile, a Democratic strategist, noted, “This is an enormous challenge and it doesn’t matter who they hire to contain the spill, clean up the mess and compensate those who have lost so much.” Although the crippled well was finally shut down in August 2010, BP faces the prospect of criminal and civil suits that will likely keep the company in court for many years. For example, the U.S. government could prosecute BP for violating the Clean Water Act or the Refuse Act. Also, because the spill coincided with spawning and nesting season for the Gulf’s wildlife, the Migratory Bird Treaty Act could also be the basis for legal action. Thousands of private lawsuits are also pending. BP has established a $20 billion compensation fund; BP’s lawyers hope that individuals whose livelihoods were harmed by the spill will apply to the fund rather than go to court. Finally, there is the prospect of shareholder suits from investors who have seen the value of their BP holdings plummet in the wake of the crisis.
Q1. Some industry observers think that BP should not have spent money on print and TV ads to reassure the American public. Do you agree or disagree? Explain.
Q2. On October 1, 2010, an American, Bob Dudley, replaced Tony Hayward as chief executive of BP. Does this change surprise you?
Q3. How might the advice from BP’s lawyers differ from the advice BP receives from PR professionals?
Q4. What factor(s) will affect whether BP’s corporate reputation can be repaired?
Your answer must be, typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.