Primary Responsibility of Every Company †Myassignmenthelp.Com

Question: What Is The Primary Responsibility Of Every Company? Answer: Introduction Due to the irresponsible activity by BP, there was a major leakage of crude oil into the Gulf of Mexico, which disrupted the smooth flow of operations of the entire region. Furthermore, many industries like tourism, fishing, etc were badly hampered because of the oil spill. As a result, some of such industries even had to be shut down in order to avoid additional losses in their businesses. Moreover, the spill also resulted in a significant drop in the oil prices from $86.19 to $68.03 in the year 2010. After evaluating such circumstances, BP undertook the liability of sustaining the entire environment (Jefferson Bowling, 2011). These activities included compensation processes, cleaning up activities, and research activities. Nonetheless, the company aimed to restore the entire economy so that the harmful effects of the disaster can be controlled. Legitimacy theory Legitimacy theory depends on the social contract ideology wherein companies seek a Accounting interconnection with the society in order to obtain a secure accessibility of resources. Furthermore, companies rely on such social value and the assumption of societies that are associated with the organizational performance. Nonetheless, a discrepancy is of primary concern to the company, thereby posing a risk to its legitimacy. Such risk or threat to legitimacy is a key concern that must be addressed because it hampers the bond betwixt the company and its stakeholders, thereby limiting its resources. Moreover, this can be in the form of a massive threat that can enhance strict regulations by the government, a lesser level of employment, disinvestment by creditors, fall in customers demand, etc (Broder, 2012). Considering all these issues, it is vital that the company must conduct its activities in a manner that is not detrimental to stakeholders interests, thereby assisting in the attainment of key goals. In the case of BP, legitimacy crisis had occurred due to the massive tragedy, and to assure an effective public response, it is important to pursue an effective form of disclosure in reporting measures (Jacobson, 2013). However, the company had no past record of precautionary measures that would be implemented in case of an oil spill. On a whole, the company defied the theory of legitimacy. Stakeholder theory This theory is associated with detecting who are the stakeholders of the company and the way by which they interact and implement them upon the organization. Besides, companies that can frame an effective interconnection with their stakeholders can perform better than other organizations. On a whole, with the assistance of social contracts, such companies make the stakeholders responsible for their objectives. The tragedy on April 20 shook the entire Gulf coast because many industries were affected and some even had to be shut down. Moreover, the combined economic affairs of such affected industries amounted to more than forty billion dollars. The residents do not possess a direct authority over the company but in relation to long-run, they pursue an indirect authority. Furthermore, based on this theory, BP must enhance its bonds with stakeholders in order to restore social legitimacy (Dittrick, 2010). For such, it has to make ways for the restoration activities to minimize the impacts of the spill. Besides, the occurrence of spill resulted in the establishment of a US trust of twenty billion dollars that the company must pay for a response to its ineffective affairs. This sheds light on the indirect authority of the community and therefore, BP must conduct such operations effectively and rapidly. Public interest theory This theory is related to the companies and their role towards securing the efficacies of the entire economy. Agencies are duty bound to implement strict actions during the occurrence of any urgencies. Furthermore, it must also be established when the action must be implemented and entrusted to the statutory bodies. Moreover, it has become problematic on the part of trustees to track the various products and services that have disappeared from the environment (Lahav, 2014). Therefore, considering the BP oil spill tragedy, the theory of public interest is not applicable in any case because the company never focused on the efficacy of the entire economy. Besides, its annual report also did not highlight any activity undertaken to assist the people or benefit the economy. Interconnection of the theories with Accounting Record The legitimacy theory provides that companies that are viewed as legitimate must function within a prescribed set of rules and regulation. Besides, disclosure is one such step that can assist in maintaining legitimacy as it can address the concerns of society regarding the companys functioning. However, in relation to the case of BP, it can be viewed that the company is accused because it has failed to implement adequate disclosure measures in its reporting framework, thereby resulting in the loss of societys confidence (Cherry Sneirson, 2010). Moreover, if the company had not restricted the details regarding the oil spill, it would not have resulted in such a situation. Therefore, the company must make steps to keep its stakeholders adequately informed of its activities in order to stay legitimate as a whole. According to the public interest theory, it can be observed that there is a presence of delicacy on the market and it will not perform adequately if permitted to function on its own. Since there was a restriction of sufficient resources; the agencies became incapable of operating in an appropriate way. Besides, even the enforcement resources of the company were insufficient that resulted in the major downfall of the companys trust and the tragedy as a whole (Cherry Sneirson, 2010). Based on the stakeholder theory, there is an urgent need for adoption of ethical activities on the part of the management. BP must be able to concentrate on matters relating to the development of an effective bond with its stakeholders. Besides, since the company had to go through major dissatisfaction from the public post the oil spill, it can be said that the company was responsible for the tragedy (Khatchadourian, 2011). However, it maintained a strong position by progressing in the right direction towards facilitation of restoration activities. Role of regulators The role of statutory bodies is very important for companies like British Petroleum because they can assist in framing an effective balance, thereby ultimately resulting in a smooth functioning. Furthermore, adherence to statutory rules and regulations become easier with the help of such regulators. Moreover, companies can also enhance their brand image in the eyes of the public through addressing their issues on the direction of the regulators (Juhasz, 2011). However, in relation to BP, resources and other enforcement resources were insufficient that could have assisted in protecting the public. Besides, a minimal focus was granted towards drilling and other relevant operations. Explanation of the position Determination of the influence of costs is very problematic, especially when these are non-quantifiable. However, in relation to BP, these costs possess a vital part in giving shape to the future of the company. As per my notion, the following proper patterns of the disclosure can assist in enhancing the corporate image of the company. Therefore, it must disclose all the relevant costs that are incurred on the part of other industries regarding the occurrence of the oil spill (Rampton Gardner, 2012). Moreover, adherence of IAS 37 can be a relevant consideration for the company because it takes into account contingent liabilities, assets, and provisions (Broder Krauss, 2011). Besides, such provisions for cleaning process are required under the standard that must be measured under the amount. In addition, it can also assist in the calculation of environmental impacts of the oil spill through consideration of economic standards. On a whole, it can be commented that the model can play a key role in permitting the company to quantify the decline of natural resources and thereafter determine the future value with effectiveness and flexibility. Conclusion BP oil spill had a major influence on its market capitalization that resulted in the deterioration of its financial position as a whole. The company had to expend more than thirty billion dollars in response to the compensation procedures, cleaning processes, research activities, and lawsuits that were made against it. Moreover, as of June 25, the stock prices of the company reported the lowest and this could be attributed to a major impact on the companys market capitalization. Nevertheless, even though the financial position of the company was powerful, yet the accident resulted in degrading its stock prices. On a whole, implementing effective steps in the future can assist the company to make up for the losses incurred due to the tragedy. Besides, laying a framework of CSR activity on the part of the company is also relevant. References Broder, J. M 2012, Ruling Favours Owner of Rig in Gulf Spill, The New York Times, viewed 19 May 2017, https://www.nytimes.com/2012/01/27/Accounting/energy-environment/transocean-not-liable-for-some-gulf-spill-claims-judge-rules.html. Broder, J. M., Krauss, C 2011, Regulation of Offshore Rigs Is a Work in Progress, The New York Times, viewed 18 May 2017, https://www.nytimes.com/2011/04/17/us/politics/17regulate.html?pagewanted=all_r=0 Cherry, M.A Sneirson, J.F 2010, Beyond Profit: Rethinking Corporate Social Responsibility and Green washing after the BP Oil Disaster, Tulane Law Review, vol. 85, no.4, pp. 983-1038. Dittrick, P 2010, Investors ask firms to outline deepwater risks, spill-response plans, Oil and Gas Journal, vol. 108, no. 30, p. 26. Jacobson, M 2013, By the Numbers: The Oil Spill and BP's Legal Troubles, PBS News Hour, viewed 18 May 2017, https://www.pbs.org/newshour/rundown/2013/07/gulf-oil-spill-by-the-numbers.html Jefferson, J Bowling, N 2011, The Economic and Biological Impacts of The BP Oil Spill, NDS 372.01 Environmental Studies Capstone Seminar. Juhasz, A 2011, Black tide: the devastating impact of the Gulf oil spill, John Wiley and Sons, New Jersey Khatchadourian, R 2011, The Gulf war, Was there any heroes in the BP Oil Disaster, viewed 18 May 2017 https://www.newyorker.com/magazine/2011/03/14/the-gulf-war Lahav, A 2014, The ideas that underly BPs cert petition dont make sense, viewed 18 May 2017 https://neworleans.legalexaminer.com/toxic-substances/professor-lahav-the-ideas-that-underly-bps-cert-petition-dont-make-sense/ Rampton, R Gardner, T 2012, U.S. bans BP from new government contracts after oil spill deal, viewed 18 May 2017 https://articles.chicagotribune.com/2012-11-28/business/sns-rt-us-bp-contractsbre8ar0m1-20121128_1_bp-plc-deepwater-horizon-oil-spill