Contemporary Strategy Analysis, 10th Edition

Case 8BP: Organizational Structure and Management Systems*

When John Browne stepped down as CEO at BP plc in January 2007, he was credited with having transformed an inefficient, bureaucratic, state‐owned oil company into the world's most dynamic, entrepreneurial, performance‐focused, and environmentally aware oil and gas major. Since taking up the job in 1995, BP's market capitalization had increased fivefold and its earnings per share by 600%.

Even before Browne's departure, BP's fall from grace had already commenced. Concerns over BP's HSE (health, safety, and environmental) management had been circulating for years. However, in March 2005 disaster struck: an explosion at BP's Texas City refinery killed 15 employees. This was the first of a series of catastrophes that destroyed the company's reputation and threatened its very survival.

In 2006, a corroded pipeline from BP's huge Alaskan oilfield leaked 4800 barrels of oil. Then in March 2009, BP was fined for safety violations at its Toledo refinery. The next month, an explosion on Transocean's Deepwater Horizon oilrig drilling BP's Macondo oil well in the Gulf of Mexico killed 11 workers and caused one of the worst environmental disasters in US history. The company took an accounting charge of $37.2 billion to cover the likely costs of the cleanup, compensation, and legal penalties, but by 2018 these costs had reached $65 billion.

BP's troubles extended beyond its safety and environmental mishaps. Between 2003 and 2013, BP's ...