BP’s future seems pretty bleak at the moment. The stock hit another low this week as the company’s latest effort failed to stop the massive oil leak, which continues to spew millions of gallons of crude into the Gulf of Mexico, severely impacting the Louisiana coastline.
Making matters worse, BP boycotts are underway coupled with an onslaught of lawsuits and fines that undoubtedly will cost the company tens of billions of dollars.
Can BP ever recover? Some on the street say no and that the political, economic and environmental fallout from the disaster will be too tough to overcome. Media pundits have even compared the crisis with the Arthur Anderson scandal of 2002, when the company surrendered its license because it was found guilty of criminal charges for its auditing of Enron.
No doubt BP will become a heavily studied case history among B-schools for years to come. It’s important, however, to understand the dynamic between the company’s crisis communications efforts and its stock price, which dropped more than 30% since the April 20 explosion of drilling rig Deepwater Horizon, killing 11 workers.
No question the fact that they still can’t plug the hole is a key reason for the stock drop. But by how much? Will the boycott hurt business? Sure it will. Will that affect profits? Of course. Could a boycott be prevented? Probably, but only if BP communicates more strongly and frequently about its repair efforts. There has been some apprehension, at least on BP’s part, to get out in front of the problem and be more open in public statements. This only invites public anger, which leads to a consumer backlash that can, in fact, result in a boycott.
BP will never get a handle on the crisis until the leak is stopped. Only then can it begin to attempt to rebuild its brand among investor and consumer audiences. In the interim, BP’s investor and public relations divisions need to work in unison, making sure key messages are tailored appropriately and communicated effectively (and regularly) to each of its core audiences. Understanding the needs of different target audiences creates a stronger overall messaging platform and allows for deeper dialogues between BP and its investors, as well as the media, which is paramount during a crisis.
— George Medici, email@example.com