Analyzing CSR: The Deepwater Horizon Crisis and Its Impact

This report provides a comprehensive analysis of the Deepwater Horizon crisis, focusing on its implications for corporate social responsibility (CSR). It examines the economic impact on the company, industry, community, and government, highlighting the substantial financial losses and job loss...Read More

Executive summary
The paper analyzes the case study, namely, deep water horizon crisis in the United States which
impacts on the country, company, industry, community, local business, and individuals. The
paper describes the business function areas of CSR which shows that the company has
established Gulf Coast Claims Facility as the CSR activity in order to compensate the individuals
who are affected by the crisis. The crisis has adverse impacts on the industry, community, and
individuals.
The paper mainly analyzes the impact of deep water horizon crisis and its impact. The paper
discussed the economic impact on the company, industry, society and others. The examination of
the crisis on the environment is done and the impact on local business, community, labor force
and well beings.
It can be concluded that the deep water horizon crisis has majorly impact on the economy as a
whole. The company is doing various corporate social responsibilities in order to compensate the
losses occurred from the crisis.

Introduction
Background
In this present paper, we will discuss the case study, namely, BP and the Deepwater horizon
disaster of 2010. The paper also discusses all the possible business function areas of CSR
which are addressed in the deep water horizon crisis. The paper also describes the effect of
deep water horizon crisis on the industry, company, community and government, the
environmental effect at different ecological system and effect on the community, local
business, labor force and potential health hazards and wellbeing.
Objectives
The main objective of the report is to analyze the case which helps to determine the impact of
deep water horizon crisis on the industry, community, company, and government. The objective
of the report is to analyze the environmental effect on the ecological system, community, and
others.
Scope
The plan of the report is to determine the business function areas of corporate social
responsibility, the economic effect of deep water horizon crisis on the government, community,
and others. The environmental effect on the ecological system and others is described in the
report. The business functions areas of CSR include environmental, economic, and social factors
in order to compensate the losses.

1. Business function areas of CSR
There are various business functions areas of CSR which have been discussed in the paper
namely, safety towards the employees, standard safety measures at workplace and others. The
company has also provided compensation to the individuals who had affected from the economic
aftershocks (National Commission on the BP Deepwater Horizon Oil Spill et al., 2011). The
company has also established Gulf Coast Claims Facility as the CSR activity in order to evaluate
the claims of the company and individuals who have suffered from the demonstrable damages.
The intention of the fund also includes the loss of tax revenue to the countries, municipalities and
state organizations. The company has appointed Victim Compensation Fund in order to oversee
the working of Gulf Coast Claims Facility. It is mainly established for the welfare of the people.
The company works for the welfare of the people through compensating the individuals by
considering the human rights. The company works in a sustainable manner by considering the
environmental factors and involves the community through various development programs. The
company has developed good relation with the suppliers in order to manage the supply chain of
the company.
2. Economic effect of Deepwater horizon crisis
a. Company
The company had faced a huge loss of money due to the deep water horizon crisis
which was approximate $374 Billion.
b. Industry
It impacts on the whole oil industry. There were thousands of coastal small business
owners such as shrimpers, fishermen, oystermen and others whose livelihood

depended on the tourism and fishing. There were various tourism industries such as
Louisiana, Alabama, and Florida who were also impacted by the Crisis.
c. Community
The community is also impacted by the deep water horizon crisis because their
livelihood is mainly depending on the company, so the major economic loss is faced
by the labor class and middle-class people. In the gulf region, approximately 250,000
people lost their jobs in the year 2010.
d. Government
The government had lost the tax income revenue, and the gross domestic product of
the country was also impacted by the deep water horizon crisis.
3. Environment effect of Deep-water horizon crisis on the
ecological system
The ecological system is defined as the system which is formed by the interaction of the
community and its environment. The ecological system is extensively damaged which includes
twenty-five national wildlife refuges. The oil was found on the seashores of all the five Gulf
States which lead to the death of many, fishes, birds and reptiles. The impact on the shoreline
was also grown from 287 miles to 320 miles (Summerhayes et al., 2011). The soil and grasses
were also damaged which lead to the wetland ecosystem. The entire generation of the animals
could be lost if the ecology is contaminated with the oil. There was extensive loss due to deep
water horizon crisis which distributed the whole ecological system.

4. Effect of deep water horizon crisis
a. Community
The effect of deep water horizon crisis was worse in the community, and it directly
impacts on the livelihood of the people. There were 250,000 people who had lost their
jobs (Norse et al., 2010). There was a huge economic loss to the public which disturbs
the whole livelihood of individuals.
b. Local business
There were small coastal businesses such as shrimpers, oysterman, and fisherman
whose livelihood was depending on the fishing, they were impacted badly because
they faced an extensive economic loss. The local business was stopped, and it impacts
on their livelihood extensively. The tourism industries had also suffered huge
economic loss which leads to shutdown various companies.
c. Labor force
The labor force which mainly depended on the operations of the company, so their
livelihood is majorly impacted due to which there were some people who had lost
their lives.
d. Potential health hazards & wellbeing
The wellbeing of an individual is majorly impacted because the source of income has
stopped due to the shutdown of various small local businesses. A large number of
people died due to increase in the health hazards which arises from the deep water
horizon crisis.

5. If I have been hired as a Manager
Environmental initiatives
There are various environmental initiatives which were taken by me as a manager such as
grown of more trees, initiate programs for the awareness of global warming among the
employees. The company will focus on waste minimization through waste management. The
company will focus on utilizing the environmental resource in a sustainable manner in order
to provide long-term benefits to the stakeholders (Bansal et al., 2000).
Initiatives to support the community
The various employee welfare programs and other programs will be started for the welfare of
the people. The deep water horizon crisis impacts on the livelihood of the people due to
which there was huge economic loss which can be fulfilled providing various opportunities
to the people. There are various initiatives such as education programs, awareness programs,
and others which will be started by me in order to create awareness among the people which
provide benefits to the people.
Potential CSR projects to increase the profit
There are various projects such as go green, and others which will be started by the company
in order to improve the sales volume of the company. The anti-hunger plan will be initiated
by the company which helps to build the brand image in the eyes of the customers, and it
directly impacts on the overall sales volume of the company (Husted et al., 2006). The green
project initiatives help to minimize the operational costs which enable to maximize the profit
margin of the company.

Five potential risks
Following are the five potential risks and related to the corresponding stakeholders:
1. Price risk
It is one of the major risks which impacts on the profit margin of the company. The high
geographical barriers impact on the price of the company. The unconventional extraction
costs high which maximize the overall cost of production. It is the constant risk, and the
stakeholders who are affected by the price risk include shareholders, directors and other
profit shareholders (Hamilton et al., 2008).
2. Geographical risk
There are certain geographical locations on which it is difficult to extract the oil which
impacts on providing the products and services to the end users. The corresponding
shareholders of the geographical risk are customers of the company.
3. Demand and supply risk
The nature of the production is uneven due to which the price of the products and
services are volatile in oil and gas industry. It is one of the risks which correspondently
related to the shareholders of the company.
4. Operational risk
The operational cost increases due to increase in the cost of extraction which directly
impacts on the profit margin of the company. It is the risk which corresponds with the
shareholders of the company.
5. Political risks

It includes the rules and regulations of the states related to the extraction which directly
impacts on the sales volume of the company. So it is also related to the shareholders of
the company.
Conclusion
It can be concluded that the deep water horizon crisis has impacted on the ecological system
adversely. It affects the community, industry, government, labor force, local business, and the
wellbeing of an individual. The crisis had impacted on the livelihood of the people due to which
a large number of people died. There was a huge economic loss which was faced by the
government, small local businesses and others. The company had suffered a huge economic loss
and approximately twenty-five centuries are impacted by the crisis which leads to the death of
various birds, fishes, and reptiles. Then the company had established Gulf Coast Claims Facility
as the CSR activity in order to compensate the people who are affected by the deepwater horizon
crisis, and it also intended to provide a fund to the government due to compensating the loss of
tax revenue.

References
National Commission on the BP Deepwater Horizon Oil Spill. (2011). Deep water: the Gulf oil
disaster and the future of offshore drilling (p. 398). Perseus Distribution Digital.
Summerhayes, C. (2011). Deep Water–The Gulf Oil Disaster and the Future of Offshore
Drilling. Underwater Technology, 30(2), 113-115.
Norse, E. A., & Amos, J. (2010). Impacts, perception, and policy implications of the Deepwater
Horizon oil and gas disaster. Environmental Law Institute, Washington, DC, 40, 11058.
Bansal, P., & Roth, K. (2000). Why companies go green: A model of ecological responsiveness.
Academy of management journal, 43(4), 717-736.
Husted, B. W., & de Jesus Salazar, J. (2006). Taking Friedman seriously: Maximizing profits
and social performance. Journal of Management Studies, 43(1), 75-91.
Hamilton, J. D. (2008). Understanding crude oil prices (No. w14492). National Bureau of
Economic Research.