BP spends $50M in PR -- a good decision

Question

Recently, BP has come under fire for spending upwards of $50M on a PR campaign to get in better standing with the public. This action has been met with outrage, questioning why funds are being spent on anything but the cleanup.

This is a very interesting and complex issue. The Boycott BP Facebook page has 450K+ members and counting. The story of ineffectual management on BP's side gets more deplorable as additional facts are uncovered. And the lawsuits coming from this action will likely result in billions of dollars of damages over multiple years.

Yet, BP also has a responsibility to its shareholders, to protect the rapidly diminishing value of their shares. If they believe a PR campaign can get less people to Boycott BP and thus more profits to pay off these impending liabilities, they are duty-bound to follow up on those actions.

We may not like it, but it is a dereliction of duty (another one) if they do not do everything they can to keep the company afloat and profitable. Its too early to tell if they will come through this catastrophe, but the whole episode provides many interesting business lessons, before and after the incident.

Aveek Guha, President, MBA Day Camp

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BM · Answer

A number of commentators speculate that the company could file for bankruptcy as soon as next month. BP is in a very bad spot right now. The situation also looks grim for Gulf residents, especially those who rely on tourism and fishing for income. Then, of course, there are the British who relied on BP stock for part of their retirement. Along with the loss of wildlife, environmental damage, and others problems facing neighboring countries, this is turning out to be a huge mess. The timing couldn't be much worse, either.

As a resident of the affected area, I can tell you that no matter what BP does or doesn't do, some people will get outraged, whether it's justifiable or not.

As a resident of the affected area, I can tell you that no matter what BP does or doesn't do, some people will get outraged, whether it's justifiable or not.

YourDreamTheater · Answer

Interesting -- I've noticed that all of the videos on YouTube making fun of BP have BP ads scroll across the bottom.

BP also bought Google ad space for search terms like "oil spill" and "gulf of mexico.

And I agree with bmillan01 -- people are going to be very angry for quite a while

Michmax3 · Answer

When I saw their pr pitch on tv a few months ago, I immediately thought, horrible idea, too soon. I think before they started repairing their image, they should've repaired the leak. People are still going to be angry and not going to start forgiving until the problem is fixed first

BP spends $50M in PR -- a good decision

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