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This Leading Change in a Multinational Organization Assignment critically evaluates BP Plc’s leadership and management approaches, corporate governance systems, risk management strategies, and ethical challenges. The paper explores democratic and laissez-faire leadership styles, FCA and UK governance codes, and risk mitigation models like ISO 31000. Designed by experts at Rapid Assignment Help, this assignment ensures high-quality analysis, academic accuracy, and complete guidance for students aiming to excel in Executive Leadership and Governance Coursework CW2.
Management and leadership are the essential factors for the organisational performance, has a significant impact on the efficiency and productivity (Adatsi et al, 2020). Leadership refers to the actions taken for leading an organisation or a people’s group. It is a set of actions and behaviour adopted by the leader to align the people towards strategic direction in order to execute plans and strategies in effective manner. It aims to facilitate clear direction and vision to the people for the achievement of organisational goals (Siambi, 2022). On the other hand, management refers to the process of getting work done by others for the accomplishment of organisational objectives in effective and efficient manner. Furthermore, it includes the effective allocation and utilization of human and organisational resources in order to meet organisational goals (Pellegrini et al, 2020). Management and leadership are complementary to each other, as these foster innovation and creativity within the organisation and prioritize streamlining of operations and efficiency.
BP Plc. is a British multinational company of gas and Oil Company, considered as the largest company in the world in terms of profits and revenues. It’s headquarter is situated at London, England. It engages in the exploration, refining, production, distribution and transportation of the natural gas and oil. Additionally, it engages in the manufacturing of plastics, synthetic fibres and chemicals (Higgs et al, 2023). BP Plc. adopted the democratic leadership within the organization with a view to encourage the engagement of employees towards the process of sharing opinions and decision making. It is also known as participative leadership as it involves the active participation of the employees. Saiti and Stefou, (2020) mentioned that democratic style of leadership results in the creation for better work culture and positive environment with the creation of loyalty, mutual support, respect and trust among the employees and management. It enables the BP Plc.to create a team of resilient employees by fostering trust and positivity within the organisational environment.
According to the view of Danish et al, (2020) democratic leadership style encourages the participation of employees in the process of decision making, results in active transmission of opinion and ideas. This results in increasing critical thinking and innovation within the management, leads to well-informed decision making. This leads the organization to gain high profitability and competitiveness within the dynamic business environment. However, Berraies et al, (2021) critically acclaimed that it leads to delay in the process of decision making, results in adverse impact on the managerial performance and efficiency of the BP Plc. In addition to that, it is considered as time consuming due to considering everyone’s opinions, results in reducing pace of decision making. The transition model of leadership aims to bridges the gap between the emotions of employees due to arising of change within the organization. Riva et al, (2021) analysis that the transition leadership model helps the BP Plc in enhancing the engagement of employees with a significant understanding of their behaviour and preferences, results in effective organizational performance.
Besides that, Roberson and Perry, (2022) evaluated that democratic leadership leads to enhance productivity of the organisation; as a result, it has been adopted by the BP Plc. With this leadership style, employees of the organization feels recognized and valued, results in increased satisfaction (Imer, 2024). This has a positive impact on the overall performance and efficiency of the organisation as satisfied employees are considered to be highly productivity, leads to achievement of organizational goals in efficient manner. Adatsi et al, (2020) contended that it results in the poor performance of the organization due to arising increased conflicts and misunderstanding during the active participation of employees and the managerial activity. Apart from that, democratic style of leadership enhances adaptability and flexibility within the BP Plc. As per the view of Siambi, (2022) democratic leadership results in understanding the organizational needs and demands for the adaptability and flexibility, therefore, it guides the organisation to adopt flexible approach and enhances its adaptability as per the current business demands and situation.
Democratic leadership enhances the smooth functioning of the BP Plc with the strategic streamlining of its business operations. In the dynamic business environment, democratic leadership style is considered as the most effective and suitable style as it promotes open communication and transparency of operational management within BP Plc. Pellegrini et al, (2020) revealed that democratic leadership improves the operational transparency, results in significant improvement in performance. Along with that, it enhances open communication among employees and organisational management team by way of active participation or providing feedback, results in fostering of interpersonal relationship and sense of collaboration. However, Higgs et al, (2023) argued that democratic leadership sometimes lead to issues of communication failure, due to lack of understanding and ineffective communication.
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In addition to that, BP Plc. has implemented the Laissez-faire style of management as it operates its business at vast level. According to the opinion of Saiti and Stefou, (2020) This management style focuses on the effective delegation of work, results in streamlined operations of the BP Plc. It emphasizes on the work delegation and requires minimal supervision. Furthermore, management of the BP Plc delegates the responsibility of the decision making to its employees, results in increasing their creativity and analytical thinking skills. Danish et al, (2020) mentioned that the laissez-faire style of management offers high autonomy to the organizational employees as they are the responsible for their own decision and actions. BP Plc is known for its competitiveness and strategic operations among which the laissez faire style of management plays a crucial role. However, Berraies et al, (2021) contented that with this style of management, BP Plc can lost its control over the operational actions and quality as this style provides autonomy to the employees related to decision making, results in degradation of operational quality and work performance.
Riva et al, (2021) analysed that the Kotter’s model of change management facilitate the BP Plc. To emphasize on the operational quality and encourages the organization to implement necessary changes. With the implementation of model of change management, BP Plc can maintain its quality standards and enhances its competitiveness within the competitive business environment. It includes the development of vision and effective communication for the successful implementation of actions. Roberson and Perry, (2022) evaluated that this results in increased organizational performance and efficiency with the setting of standards and development of visions, results in motivation of employees towards quality and standard performance. This leads to strategic growth and development of the BP Plc. Conversely, Adatsi et al, (2020) acclaimed that the laissez-faire style of management fosters the development and learning of the employees by providing them the responsibility of decision making. This enables them to gain practical experience by facing the real world issues and demands, results in gaining skills and knowledge.
However, Siambi, (2022) critically contended that the laissez-faire management style involves the increased risk of declined and inconsistent performance, results in minimizing the productivity of the BP Plc. Due to lack of managerial control, overall performance of the organization has been hampered, leads to decreased productivity and competitiveness, emerges as potential disadvantage of the laissez-faires style of management. According to the view point of Pellegrini et al, (2020) BP Plc. Strengthens its performance with the creation of positive work culture and positive environment leads to increased productivity of the organization. Furthermore, this management style boosts morale and sense of collaboration and trust among employees towards the organization. Apart from that, Higgs et al, (2023) stated that the laissez-faire management enables effective decision making as it focuses on the active participation of employees with reducing the chances of micromanagement. This results in autonomous employees which are engaged in identification and addressing of issues by themselves within seeking help of top level management.
There are multiple practises, rules and processes framed by the government for the effective control of the organisations, termed as a framework of corporate governance. This focuses on meeting or fulfilling interest of organizational shareholders. Wang et al, (2020) mentioned that an effective compliance with the corporate regulations and governance results in increased transparency and trust among organisational shareholders, leads to increased competitiveness and ensures smooth streamlining of the business operations of BP Plc. The regulatory board of the BP Plc oversees the application of strategic corporate governance system for the effective external and internal control and for the implementation of its governance framework (Musa and Ibrahim, 2022). The internal governance mechanism refers to the methods and ways used by organization for the strategic management aims to enhance the shareholder’s value. It constitutes the structure of organizational ownership, audit committees, board of directors, board of remuneration and compensation.
These internal mechanism constituents focus to accomplish the internal organizational objectives and aims to maintain trust and transparency of its shareholders (Swain and Chaudhury, 2021). The corporate governance rules related to diversity and ethical responsibility has been adopted by the BP Plc to ensure the active engagement of its shareholders by ensuring their meeting of needs related to loyalty and trust. Furthermore, BP Plc promotes the ethical behaviour within the organisations by fostering positive corporate culture and with maintains communication within organisational structure (Naz et al, 2022). On the other hand, external mechanism of the corporate governance comprises of issues based on the regulations and rules of the external market. It includes the services and goods prevailing in current market, intermediaries and multiple external factors of market (Cheffins and Reddy, 2022). Compliance with the corporate governance process and rules results in better engagement with its shareholders, leads to increased financial performance of the BP Plc.
In addition to that, corporate governance process related to strategic alignment, compliance of procedures and policies and measurement of performance has been implemented by the BP Plc to boost the reputation of the organisation by meeting the shareholder’s interest within organizational performance and related to efficiency (Akuffo and Akuffo, 2020). BP Plc implements the agency theory based on the corporate governance to serve the organisation in the best possible manner to enhance and maintain the shareholder’s interest within the organisation (Madari, 2023).This theory focuses to address the key issues within the organisation and provides effective solutions to address them with an aim to maintain the interest of shareholders. BP Plc implements the agency theory for the strategic compliance with the corporate governance to serve the best organizational interest (Worme, 2023). This results in maintain the shareholder’s interest within the organisational performance and profitability. It ensures the smooth relationship between the management and shareholders, results in stronger organizational performance and better operational efficiency.
The UK Corporate Code of governance and the FCA
BP Plc constitutes the board committees, worked with the compliance of UK’s corporate code of governance, with a primary aim to fulfil the interest of its shareholders. The external rule of governance was followed by the BP Plc with the establishment of four committees, termed as governance and cultural committee, sustainability and safety committee, remuneration committee and audit committee (BP Plc, 2024). These committees’ works within the practises of UK’s corporate code of governance to ensure the accountability, awareness and transparency of the organisation, furthermore, the practices of sharing responsibility and impartiality has also been adopted by the BP Plc to ensure the meeting of shareholder’s interest (Segrestin et al, 2021). Compliance with these practices aims to facilitate support to the organizational shareholders by encouraging high transparency with the deeper and detailed review to promote the governance practices of Transparency.
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In addition to that, the FCA (Financial Conduct Authority) is a systematic framework of corporate governance aimed to control and directs the governance body of the organisation that is the BP Plc.’s board (Solomon, 2020). FCA as a corporate governance framework specifies the board to distribute the responsibilities and rights to the BP Plc.’s committee, in order to streamline the regulatory functions in efficient and effective manner. Apart from that, BP Plc complies with the process of constitution of FCA to set out the decisions of the organisational board for the delegation of authority and responsibilities to the employees and committees for the smooth compliance with the governance (Khaireddine et al, 2020). FCA is known for its commitment towards the meeting of corporate governance standards, as a result of which, it was ensured by the BP Plc for the effective compliance with the code of UK’s regulatory governance code within FCA. The authority of financial conduct (FCA) assists the organisation to present the annual report of its financial statement to provide a brief explanation about the expenditure and revenue income of the BP Plc within the governance code (Kim et al, 2021).
The French Corporate Governance Code, the AMF, and the French Commercial Code
BP Plc applies the external regulations and rules of the French code of corporate governance which outlines the principles and rules of remuneration for the management and corporate officers to control the financial transparency (Shaikh, 2023). It is primarily based on the principles of fairness and disclosure, results in increase the attraction and interest of the organisational shareholders towards the financial performance. Furthermore, the principle of fairness within the French code refers to the equality of treatment and remuneration, for example, all the BP Plc.’s shareholders received equal rate of dividend irrespective of the difference in number of shareholdings hold by them to ensure the fairness practice within corporate governance (Nambukara-Gamage and Rahman, 2020). This includes the governance process of agreement with the organizational shareholders with an aim to maintain the fair treatment with them and to promote their interest towards better financial performance.
On the other hand, BP Plc comply with the AMF for the application of governance rule of disclosure, results in the disclosure of information related to organizational performance, financial activities, involved risks and related to the application of present and future strategies of business in order to maintain their interest (Okougbo et al, 2021). Compliance with the AMF guides the BP Plc for the implementation of disclosure principle, primarily based in the disclosure of information on the concerned matter to ensure the accurate and timely information to the shareholders. Furthermore, this principle or practice of the corporate governance enables the shareholders to get access to the factual and clear information, results in the reflection of social, environmental or financial position of the BP plc (Choubey, 2024). Governance framework of AMF further assists the organisation to comply with this principle by providing the advantage of well-informed decision making and increased confidence among the shareholders.
Effective compliance with the French Commercial Code by the BP Plc results in the adoption of provisions of commercial matters such as corporate and commerce (Jejeniwa et al, 2024). This code guides the organisation for the application of the governance principle related to the accountability to ensure the protection of the shareholder’s interest. For the effective application of the governance principle of accountably, BP Plc advises its board of director and committee to explain the primary aim of the commercial activities conducted within the organisation and outlines the results of its commercial conduct (Ahmad et al, 2021). This code aims to streamline the organizational activities with the effective compliance with the corporate governance by foster the sense of accountability within the management for the performance, potential and capital. This results in the meeting the interest of the shareholders towards the financial performance and achievement of objectives of the BP Plc (Ren et al, 2021). Apart from that, this code involves the commercial provisions related to bankruptcy and commerce to facilitate smooth business transactions of the BP Plc.
Risk management refers to a procedure of recognizing, evaluating and controlling threats to a company related to capital earning and operations. Risk can be emerge from the wide range of sources such as legal liabilities, financial uncertainties, technological issues, accidents, natural disasters as well as strategic management errors (Chance and Brooks, 2021). BP plc faced several kinds of risk while operating its business activities. Risk management is important for the organization to calculate the uncertainties as well as forecast their impacts so that operation of the company runs in the smooth as well as easy manner. Companies by effectively manage the risk can decline the chances of negative shocks, able to increase gains as well as better quality decision that positively impact company growth.
The company operates its business among 80 countries of the world. One of the main risk faced by the company is related to supply and demand risk. The operation of the company takes large amount of capital and time. The lack of demand of product leads to decline the profitability of the company. For instance, during the time of COVID, the demand for the oil and gas decline as all relevant company `s operations came to halt. This leads to majorly impact the BP plc revenue and profitability.
In addition, the company faces other risk related to the shortage of efficient manpower. Extraction of the oil and gas is somehow riskier as well as difficulty in working in the remote area leads make risk for the company regarding availability of lack of suitable and efficient employees. This leads to impacts the operations of the company in the significant manner which is not fruitful for the profitability of the company.
The third risk face by the BP plc is related to exchange rate fluctuation. As the company operates its business with the 80 countries as a result the decline in the exchange rate of other company leads to impact the profitability of the BP plc. It is because of the reason that when a countries exchange rate declines, it make costlier for the BP plc to sell its oil and gas on less price.
Thus, this three risk faced by the BP plc significantly impacts the success of the business as well as make difficult for the company to retain its footprint in the large competitive environment. It is important for the company to respond effectively to the risk as well as take corrective action to overcome it within a set timeframe.
To respond to the risk in proficient manner, BP plc can use a 4 T process of risk management. It defined as an effective strategy of identifying, evaluating as well as managing the possible risk so that able to minimize the negative influence of risk on the organization. This risk mitigation strategy aids the BP plc in manage the risk event efficiently by evaluating impacts as well as executing appropriate control options. These are as under:
The BP plc can use an ISO 31000 approach risk management model to overcome the increasing risk of labor shortage within the oil and gas industry. This model furnishes general principle and guideline for setting a risk management framework as well as integrating the risk management into the decision-making (Hardjomidjojo, Pranata and Baigorria, 2022). With the help of this model, the company first tries to identify the reason of labor shortage and by measuring the risk company tries to evaluate the best risk management strategy. For example, company can develop the strong retention as well as on boarding strategies to make the recruiting more efficient. For this, organization include comprehensive training as well mentoring programs that leads to enhance the performance of the employee as well as aid in broaden the labor pool. Majorly, the main reason of labor shortage is difficult work condition as a result BP plc tries to make the work condition effective for the employees by providing them all essential requirements at the workplace and by rewarding the employees according to their contribution within the company, Thus, ISO 31000 approach risk management model aids the company to manage the risk of labor shortage effectively and efficiently.
Moreover, the BP plc by using the three horizon model, think about the future of the organization. It leads to assist the company in manage the growth of company in effective and coordinated way. The company can decline the risk of currency fluctuation by use of hedging. It is a kind of risk management strategy that is used to offset losses by the company. In this, the BP plc leads to use an advance or forward agreement to sell a product at the pre-determined price even in the future data. It leads to decline the chances of loss to company as the exchange price is already set by the two parties.
The above recommendation aids in managing the risk faced by the BP plc in the most effective and proficient manner. Further, it is identified that the board of directors of the organization plays a crucial role in the risk management process. In the context of BP Plc, board of directors develops policies and procedure related to risk that is face by the company. For example, the board of directors approved the policies related to human resource, financial resource and overall management of the company. They approved fund for the activities of risk management so that company able to effectively overcome such kinds of risk within the business (Alabdullah et al, 2021). In addition, the role of Board of directors also includes monitoring the risk as well as its relevant control system. After implementation of risk management policy Board of directors ensured that policy work as they are intended. For instance, to overcome labor shortage risk, the company use reward policy, thus board of directors timely evaluate the policy to monitors the effectiveness of the set action. Also, their role includes taking corrective action to increase the risk awareness as well as encouraging a culture that is effective for adjusting the risk in an appropriate manner. Thus, the role of Board of Directors of the BP Plc is important and vital in the process of risk management.
Ethical challenges faced by BP Plc
Ethical challenges refers the non-compliance with the business ethics, practices and policies, result in arising conflicts, reduces morale and satisfaction of the employees, and affects the performance of the organisation in adverse manner (Kuenzi et al, 2020). BP Plc faced the ethical challenge related to the practices of unethical accounting and non-compliance with the standards of environmental policies. Unethical accounting is related to the practices of misrepresentation in the financial records and statements, manipulating or omitting financial disclosure and falsifying records and documents (Afsar and Umrani, 2020). Unethical accounting provides the investors, stakeholders and regulators misleading or false information about the financial health of the organization, results in entailing of manipulation and dishonest practices aim to misrepresent the expenses, liabilities, revenue and assets. Finance or accounts related unethical practices are conducted in the form of window dressing, misrepresentation of funds or due to tax evasion to protect the organization from tax or other sort of financial paying (Al Halbusi et al, 2021).
Apart from that, BP Plc faced the ethical issue related to the non-compliance with the environmental practices, leads to arise risks related to the air and water pollution, ecosystem destruction and adverse change in the global climate (Wang et al, 2020). BP Plc emerges as one of the largest gas and Oil Company, engages in the exploration, refining, production, distribution and transportation of the natural gas and oil. In addition to that, it engages in the manufacturing of plastics, synthetic fibres and chemicals, results in increasing the environmental pollution due to release of smoke and other harmful gases (Musa and Ibrahim, 2022). This emerges as an ethical issue faced by the BP Plc, leads to raising ethical issue within the context of promotion of diversity and preservation of ecosystem. Currently, the oil and gas industry faced the key ethical challenge related to the production, extraction and consumption of chemicals and fossil fuels. This results in the adverse contribution of the BP Plc towards the degradation of environment by emission of greenhouse gases and climate change (Swain and Chaudhury, 2021). As a result, BP Plc faced increased pressure to minimize its carbon footprints and related to the adoption of renewable sources of energy within the organization.
Impact of ethical challenges on stakeholders and organization
Issues related to environmental degradation and unethical practices of accounting are considered as ethical as there non-compliance leads to argument and arises as a controversial matter for the organisation. Moreover, these issues are come as a matter of discussion and controversy due to the non-compliance with the business practices, ethical standards and policies (Miller, 2022). As the BP plc faced the issue of unethical accounting, it has faced controversies and becomes a subject matter of argument or discussion, results in the decline in the reputation and brand image of the organization. These issues have an adverse impact on the stakeholders and organisation. From the shareholder’s perspective, ethical issues results in loss of confidence and trust of the stakeholders, is considered as significant for the long-term stability, development and success of BP Plc (Naz et al, 2022). Unethical practises within the business erode the trust and transparency of the business, results in loss of partnerships and financial support.
In addition, unethical practices related to misrepresentation of accounting and financial records leads to arise the situation of conflict and misunderstanding among the stakeholders, results in reduction of organisational performance and efficiency (Cheffins and Reddy, 2022). Apart from that, unethical practices has a negative impact on the inter-relationship between multiple organisational stakeholders, includes employees, customers, suppliers, partners, shareholders and regulators. This results in delay in the decision making process and further, leads to ineffective decisions. Furthermore, ethical issues leads to reduce the commitment of the stakeholders as they faced complexities to trust the organizational functions, leads to adversely impact the sense of integrity, responsibility and fairness of the stakeholders (Akuffo and Akuffo, 2020). In addition to that, these ethical issues related to non-compliance with the standards of environmental policies and unethical accounting practices has a negative impact on the organisation as it leads to hamper the reputation and goodwill of the BP Plc in adverse manner. Additionally, there is a significant decrease in the productivity of the organisation as it engages in the unethical practices by which engagement of stakeholders was declined. Due to non-compliance with ethical standards of environmental policies, there is a significant loss in the profitability of the BP Plc, due to lack of public credibility (Worme, 2023). Besides that, as a result of poor ethical practices within organization, BP Plc can faces legal issues due to misrepresentation in the financial records and statements of the BP Plc with a bad intention.
However, to overcome the ethical issues related to environmental degradation, BP Plc had adopted the framework of triple bottom line (Segrestin et al, 2021). This conceptual framework enables the organisation to focus on the environmental or social issues, unlike the profit maximization. Apart from that, this framework emphasizes on the improvement of organizational performance towards finances, environment and society to enhance confidence and trust of the stakeholders along with the preservation of environment from degradation (Solomon, 2020). This model is based on the Sustainability, results in increased brand reputation and perception, leads to enhance organizational sales. With the application of conceptual framework of triple bottom line, the operational efficiency of BP Plc has been increased, leads to attract diverse range on investors and enhances the expansion opportunities. Moreover, it emphasises on the improvement of local communities with construction of employment opportunities and through the conservation of environment to promote better health within the society (Khaireddine et al, 2020).
For the mitigation of unethical challenges related to environmental degradation and unfair accounting practices, it has been recommended to the BP Plc that it could adopt the ethical leadership to minimize the poor ethical practices within the organisation (Kim et al, 2021). Ethical leadership encourages and guides the organizational leader for the compliance of ethical conduct, values and principles within the work culture. With the adoption of ethical leadership, BP Plc can address the unethical accounting practices and its contribution towards the environmental degradation through release of harmful and greenhouse gases within environment (Okougbo et al, 2021). Besides that, this leadership style demonstrates strong ethics and moral principles to the top management of the BP Plc, helps in the formulation of ethical procedures and polices within the organisation (Shaikh, 2023). It has been suggested that the ethical training could be provided to the employees of BP Plc to enhance their knowledge about ethics and ensures about their ethical performance.
Ethical training further helps the employees to understand the impact of their unethical actions, results in decline in unethical practices (Nambukara-Gamage and Rahman, 2020). In addition, it has been recommended that the top management and leaders can adopt the review policy and updates its existing accounting procedures and policies to ensure their strategic compliance with the legal regulations and ethical standards. Furthermore, it has been advised to the BP Plc to adopt the green initiates to minimize its carbon footprints and emphasise to adopt the renewable sources of energy and sustainable practices to reduce the adverse environmental impact (Jejeniwa et al, 2024). With the adoption of ethical leadership, the ethical behaviour of employees will be identified and it will help the BP Plc to manage the ethical issues before commencement and helps the management to take prior actions to mitigate them.
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