Read Case 6: BP: Organizational Structure and Management Systems (R.M. Grant, Contemporary Strategy Analysis, 11th ed. Wiley, 2022).Remember that a case study is a puzzle to be solved, so before reading and discussing the specific case questions below, develop your proposed solution by following these five steps:Read the case study to identify the key issues and underlying issues. These issues are the principles and concepts of the course module which apply to the situation described in the case study.Record the facts from the case study which are relevant to the principles and concepts of the module. The case may have extraneous information not relevant to the current course module. Your ability to differentiate between relevant and irrelevant information is an important aspect of case analysis, as it will inform the focus of your answers.Describe in some detail the actions that would address or correct the situation.Complete this initial analysis and then read the discussion questions. Typically, you will already have the answers to the questions but with a broader consideration. At this point, you can add the details and/or analytical tools required to solve the case.The disastrous explosions at BPs Texas City refinery and its Macondo oil well in the Gulf of Mexico have drawn attention to the organizational structure and management system created at BP by former CEO John Browne.Discuss to what extent Brownes new model created the conditions for these accidents and was this model appropriate to the industry in which BP competed? Here is the first reply.Organizational Structure and ManagementQuestion 1 A number of accidents at BP were caused by Browne’s “new model” organizational structure and management techniques, which were inappropriate for the sector in which BP competed. Decentralization, business unit autonomy, and individual performance contracts were the basis of the model, which fostered a culture of risk-taking, cost-cutting, and lack of control that resulted in a number of disastrous events. Decentralization offered business unit executives a lot of freedom to manage their operations, which made it difficult to standardize and maintain consistency among safety protocols. As a result, there were insufficient safety regulations and practices, which finally resulted in mishaps. Additionally, the emphasis on individual performance contracts encouraged workers to prioritize efficiency and cost-cutting over ssues related to safety and the environment (Grant, 2021). The emphasis on decreasing costs resulted in major budget cuts for maintenance and safety, which contributed to the incidents at BP. For instance, cost-cutting methods that sacrificed safety, like using a single blowout preventer rather than two, led to the Deepwater Horizon oil spill. Furthermore, there was a lack of control and responsibility because the corporate organization’s job was confined to offering support and help to the business divisions. The absence of control and accountability resulted in the inconsistent application of safety regulations and procedures, which contributed to the BP catastrophes. The oil and gas business, which is inherently dangerous and necessitates a significant focus on safety and environmental issues, was not a good fit for Brownes new model. A culture of risk-taking and disregard for safety procedures and protocols was fostered by the emphasis on cost-cutting, individual performance contracts, and decentralization, which resulted in a number of disastrous events. The absence of supervision and accountability in the paradigm also led to the BP disaster (Grant, 2021). In the end, the model was inappropriate for the market in which BP-operated, and it served as a reminder of the necessity of striking a balance between cost-cutting and safety considerations, especially in high-risk industries.Question 2 My company is one of the leading suppliers of agricultural products like seeds, crop protection products, and digital farming solutions. According to information that is readily accessible, my company employs an organizational structure called a matrix that blends functional and product-based structures. Employees are assigned to functional departments such as research and development,marketing, finance, and product-based teams that focus on certain products or product lines within a matrix organization. This structure enables cross-functional cooperation and knowledge exchange, which may promote better judgment and innovation. It is important to note that a matrix structure can still include decentralization (Bruckner et al., 2019) and individual performance contracts when it comes to the three components of Browne’s strategy. Wide-ranging autonomy can be granted to business unit leaders, such as product managers or regional managers, so they can manage their operations and be held responsible for performance. Individual performance agreements can also be used to inspire staff members and help them focus on achieving the aims and objectives of the company. It is questionable, therefore, whether Browne’s strategy is fit for the agricultural sector. While efficiency and cost-cutting are important in any sector, agriculture demands special attention to environmental issues and sustainability. The agricultural sector is highly regulated, and the long-term success of the sector depends on adherence to laws and best practices. As a result, striking a balance between cost-cutting and sustainability is essential, and the agriculture sector may not be a good fit for a decentralized strategy that prioritizes individual performance contracts. In summary, Browne’s principles, such as decentralization and individual performance contracts, can still be applied to my companys matrix organizational structure.Organizational Structure and ManagementCOLLAPSEQuestion 1 A number of accidents at BP were caused by Browne’s “new model” organizational structure and management techniques, which were inappropriate for the sector in which BP competed. Decentralization, business unit autonomy, and individual performance contracts were the basis of the model, which fostered a culture of risk-taking, cost-cutting, and lack of control that resulted in a number of disastrous events. Decentralization offered business unit executives a lot of freedom to manage their operations, which made it difficult to standardize and maintain consistency among safety protocols. As a result, there were insufficient safety regulations and practices, which finally resulted in mishaps. Additionally, the emphasis on individual performance contracts encouraged workers to prioritize efficiency and cost-cutting over ssues related to safety and the environment (Grant, 2021). The emphasis on decreasing costs resulted in major budget cuts for maintenance and safety, which contributed to the incidents at BP. For instance, cost-cutting methods that sacrificed safety, like using a single blowout preventer rather than two, led to the Deepwater Horizon oil spill. Furthermore, there was a lack of control and responsibility because the corporate organization’s job was confined to offering support and help to the business divisions. The absence of control and accountability resulted in the inconsistent application of safety regulations and procedures, which contributed to the BP catastrophes. The oil and gas business, which is inherently dangerous and necessitates a significant focus on safety and environmental issues, was not a good fit for Brownes new model. A culture of risk-taking and disregard for safety procedures and protocols was fostered by the emphasis on cost-cutting, individual performance contracts, and decentralization, which resulted in a number of disastrous events. The absence of supervision and accountability in the paradigm also led to the BP disaster (Grant, 2021). In the end, the model was inappropriate for the market in which BP-operated, and it served as a reminder of the necessity of striking a balance between cost-cutting and safety considerations, especially in high-risk industries.Question 2 My company is one of the leading suppliers of agricultural products like seeds, crop protection products, and digital farming solutions. According to information that is readily accessible, my company employs an organizational structure called a matrix that blends functional and product-based structures. Employees are assigned to functional departments such as research and development,marketing, finance, and product-based teams that focus on certain products or product lines within a matrix organization. This structure enables cross-functional cooperation and knowledge exchange, which may promote better judgment and innovation. It is important to note that a matrix structure can still include decentralization (Bruckner et al., 2019) and individual performance contracts when it comes to the three components of Browne’s strategy. Wide-ranging autonomy can be granted to business unit leaders, such as product managers or regional managers, so they can manage their operations and be held responsible for performance. Individual performance agreements can also be used to inspire staff members and help them focus on achieving the aims and objectives of the company. It is questionable, therefore, whether Browne’s strategy is fit for the agricultural sector. While efficiency and cost-cutting are important in any sector, agriculture demands special attention to environmental issues and sustainability. The agricultural sector is highly regulated, and the long-term success of the sector depends on adherence to laws and best practices. As a result, striking a balance between cost-cutting and sustainability is essential, and the agriculture sector may not be a good fit for a decentralized strategy that prioritizes individual performance contracts. In summary, Browne’s principles, such as decentralization and individual performance contracts, can still be applied to my companys matrix organizational structure.Here is the second reply. Paradigm by John BrowneFormer BP CEO John Browne is largely responsible for the company’s shift from a top-down, bureaucratic structure to a flatter, more commercially driven, and more horizontal structure by implementing a “new model.” The transition, however, produced circumstances that led to mishaps like the 2005 explosion at BP’s Texas City refinery, the 2006 spill of 4,800 barrels of oil from a deteriorated pipeline, and the 2010 explosion at the Deepwater Horizon oil rig. Since it prioritizes profit over the worker and environmental safety, BP’s new model is poorly suited to the sector in which the company operates so far. The stress on localization and personal performance agreements may have led to a breakdown in communication and oversight. As a result of this disorganization and lack of management, many accidents occurred (Grant, 2021). Browne may have done some good by putting a focus on creating a “learning organization” and improving BP’s public image, but he may have neglected BP’s core values, such as safety and environmental responsibility, in the process. After Browne’s departure, BP appointed Tony Hayward as CEO. Hayward made efforts to streamline the company’s operations and save expenses, but the firm’s security and ecological track record remained problematic. Although Browne’s new approach had the potential to improve financial performance and public perception, it was ill-suited to a field where safety and environmental concerns are serious issues (Haider, 2020).Organizational StructureAs the manager of a sports manufacturing unit, I am responsible for ensuring that my company maintains a functioning organizational structure. Employees in an organization with this kind of structure are grouped together according to the functional areas in which they excel, such as production, marketing, finance, or human resources (Holgado et al., 2020).Our industry lends itself well to the hierarchical organization that the functional structure provides, so we can use it to our advantage. We are able to optimize efficiency within each functional area while maintaining our emphasis on the specific aims and objectives of each area, thanks to the framework we’ve put in place. In production, for instance, we have a department that specializes in creating and selling sporting equipment. They collaborate closely with the quality assurance department to guarantee the highest possible standards are met by every product. Likewise, our advertising and branding efforts are directed towards expanding our consumer base. The finance department is responsible for overseeing the company’s money, including the creation of budgets and the preparation of financial reports. The HR department is in charge of hiring, onboarding, and training new staff members, as well as administering benefits and paying wages (Grant, 2021). In general, the functional organization is suitable for the business we are in since it enables us to specialize in our respective areas of expertise and improves the effectiveness of our operations. But we also understand the value of sharing information and working together across departments. We have frequent meetings amongst the various functional divisions of the company to ensure that everyone is on the same page about the organization’s overarching objectives in order to make this process easier (Holgado et al., 2020).
