bp oil spill case study

THE GULF COAST & BP OIL SPILL

CASE ANALYSIS

Ranjeet Kumar Singh

About the Oil Spill

April 20, 2010 - A wellhead on the Deep Water Horizon oil drilling platform blew out in the Gulf of Mexico

About 4.9 million barrels (780,000 m3) of petroleum released

Oil Slick Covering an area of 130 miles by 70 miles

Impact- An Overview

11 People Killed, 17 Injured

From April to June 21, 143 oil spill exposure cases were reported to the Louisiana Department of Health and Hospitals

6,104 birds, 609 Sea Turtles and 100 Dolphins -> DEAD

The projected loss to Gulf tourism was estimated at more than $22 billion. http://www.oceansnorth.org/bp-oil-spill-anniversary

By May 26 of 2010, over 130 lawsuits relating to the spill had been filed.

The cost of the spill for BP as of June 14, 2010 was $1.6 billion

Brand Image

Gulf Restoration- Restoring Environment Natural Resource Damages (NRD) assessment

process

Under NRD process, BP is working to identify the nature and extent of injuries to natural resources resulting from the Deep-water Horizon accident, and from the subsequent response activities

BP had paid more than $600 million for assessment efforts

Wild Life Monitoring

Birds: BP & Trustees conducted more than 12500 bird observational survey sessions from May 2010 to August 2011

Sea Turtle: Seven Marine mammal and turtle rehabilitation centres were set up in which around 450 sea turtles were cared for and released

Marine Mammals: BP is participating and providing fundings for live dolphin assessments and population assessments of marine mammals

Gulf Restoration- Restoring Economy

Promoting Tourism Along the Gulf Coast

Supporting Sea Food Industry

Sea food monitoring and testing ( $33.5 m from BP along with $48 m to promote sea food industry along the coast and around the country)

Community Development in Gulf States

BP provides support for a variety of community organizations and programmes throughout the regions

Support education initiatives, workforce training and large donations to NGOs

But…… If the company wants to get credit for the

clean-up efforts, they should commit to complete recovery.

As long as the area is still affected by the after-effects of the oil spill, the company still has a responsibility to fix the issues it caused.

BP took too long to implement a successful plan, and the time wasted caused a great amount of yet-to-be-determined harm to the Gulf Coast environment

Tourism Elevation

Tourism doesn't happen on its own, it takes marketing dollars, particularly if you're battling an image crisis like the oil spill

Unrelated to the marketing money the company has sent to coastal states, BP has funded its own "Voices from the Gulf" television, radio and social media campaign

More than 100 nonprofit groups and government entities have been picked to get shares of $43.7 million in BP funds to promote the Gulf Coast's tourism and seafood industries following the company's 2010 oil spill.

The first round of grants announced Wednesday by court-supervised claims administrator Patrick Juneau is part of a proposed class-action settlement between BP and a team of private plaintiffs' attorneys.The deal calls for BP to fund a total of $57 million in tourism and seafood promotion grants.The 110 grant recipients were picked from a pool of more than 350 applicants.

In Louisiana, 43 recipients will get $15.9 million. In Florida, 33 organizations will receive $13.4 million. In Alabama, 21 groups will get $8.3 million. In Mississippi, 13 organizations will get $6 million.

"The grants should go a long way toward bolstering the Gulf's tourism and seafood industries and help revitalize the region's economy,"

Obama also went swimming in the gulf along with his daughter to promote the fact that the gulf was safer.

Elevation of TourismBroad Perspective

Strategy Issue addressed

Differential pricing

Seasonal (or promotional) pricing (e.g. discount or free offers

Increasing visitation in low periods. Increasing length of stay. Increasing yield. High prices to decrease congestion in peak season

  Group booking offers Increasing visitation in low periods

 Financial planning and budgeting to manage fluctuating operational costs (employees and other resources) based on cyclical trends

Inability to control fluctuating seasonal costs.

  Closure of business in off-peak season Reduction of operational costs

Diversified attraction

Introduction or development of festivals and events

Increasing visitation in low periods

 Development of the local environment (access to restricted natural attractions)

Increasing visitation in low periods.

 Facility or structural development (e.g. public transport, public amenities)

Increasing visitation in low periods.

 Service level differentiation (reducing opening times in low season)

Reducing costs, increasing yield. Meeting customer needs.

Diversifying into niche product or service areas (e.g. identifying and matching seasonal motivation with product/service or local attraction)

Attracting a different market.

Market diversification

Marketing campaigns to attract different markets in different seasons (a multi segment approach)

Flattening of seasonal peaks and troughs.

  Determination of the optimal segment mix (e.g. financial portfolio theory)

Increasing yield (reducing costs and increasing income)

  Align with tour operators or travel agents to sell product/service

Increasing business in low periods and increasing market penetration.

Facilitation by govt

Environmental regeneration initiatives

Damage to local environment during peak periods.

  Improved and expanded regional infrastructure

Greater access to rural or remote areas during both high and low seasons.

  Development of local business networks and partnership

Provision of greater marketing resources and support for infrastructure development

  Provision of business support services (marketing, financial planning)

Cash flow and other financial problems.

  Staggering of holidays over a longer period

Flattening of seasonal peaks and troughs.

Elevation of Tourism

References www.gulfspillrestoration.noaa.gov/oil-spill/gulf-spill-data/

www.gulfspillrestoration.noaa.gov/restoration/give-us-your-ideas/

gulfresearchinitiative.org.

usresponse.bp.com/go/doc/2911/963787/Health-monitoring.

bp.com/gulfofmexico/inpictures.

restorethegulf.gov/release/2011/07/29/osat-summary-report-sub-sea-and-sub-surface-oil-anddispersant-detection-ecotoxic.

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