BP EC - Shashank Gupta Professor Gordon Extra Credit BP BP...

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Shashank Gupta Professor Gordon Extra Credit: BP 12/04/10 BP: Robert Dudley restructures BP BP’s recent oil spill disaster led to its CEO, Tony Hayward, stepping down, making Robert Dudley its current CEO. In light of recent events, Mr. Dudley has split up the organizations exploration and production department and ordered an evaluation on how their third party contractors are managed. After listening to several criticisms, he has also set up a review to restructure the company’s incentive program which is based on performance and earnings while completely ignoring safety. Further, safety specialist Mr. Bly, has been given the authority to pull the plug on any operation that does not meet with the common safety standards of the industry. Additionally “BP’s upstream operations until now have had a single boss”, which is being changed by Mr. Dudley. He has split the upstream operation into three different parts controlled by executives who report directly to him. BP has accepted part of the fault for the failure of the deepwater horizon; however, it has placed a significant amount of the blame on its contractors. I believe Mr. Dudley has taken an organizational approach towards the company to combat the company’s problems and ensure that similar incidents are not repeated. He has been re-structuring the organization by dividing existing positions and their responsibilities. This has lead to an increase in levels in the organization and a lower span of control for almost all of its current executives. Ironically, he has increased his span of control by increasing the amount of people reporting to him. Similar actions were promised to be taken by Mr. Hayward when the
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Texas refinery blast had taken place in 2005, however, the new procedures that were put in place failed to be sufficient and led to the deepwater horizon disaster. Mr. Dudley’s actions have to work for the company this time because if his actions fail like Mr. Hayward’s, the company is almost guaranteed to go bankrupt. I believe Mr. Dudley’s actions will be successful for multiple reasons. In a crisis like the one BP is facing, restructuring the organization is a very good decision because that leads to Mr. Dudley getting a centralized
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