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British Petroleum Company – free market, Sustainable Management Futures

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economics
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Wakaba J.
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documents in English
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  1. Critique of British Prime Ministers attack on the Free Market
  2. Corporate social responsibility by BP
  3. Discussion
  4. Conclusion

The free market theory postulates that there should be numerous participants within the same market engaged in the buying and selling of numerous and varied products. All such producers have the opportunity to take part in production activities and, therefore, share the profits present in legitimate business ventures and the consumers are deemed to have full information about prevailing market conditions. Furthermore, it argues that the ultimate gain is to consumers who enjoy the benefits of increased product diversity as well as competitive and affordable pricing on the same; in that the prevailing prices are a consequence of a ?push and pull? forces of demand versus supply respectively. These ideal conditions of the free market form the basis and support for an economic practice that has become synonymous modern day trade under the banner of capitalism.

For perfectly competitive markets, the ideal economics of a ?free market? exist. This was the prevailing economic theory of the period of 1960-80. However, the current trends in economics suggest that big markets hardly operate under perfect competitive conditions since primarily; households are conscious about the markets; producers curve out their market shares therein effectively seeking profit and shutting out other competitors. Most markets in both the UK and the US are not ?free markets? but oligopolies where a few firms control a large portion of the market (Hoetzlein).

[...] So then, can it be argued that the collapse of free market theory was purposely orchestrated by the few economic moguls of the world? Or that the passing of time in the absence of a concomitant change in conditions of the market both in regard to capitalism and regulation naturally prophesized doom for the developed economies? If this be the case, does it therefore offer a legitimate case for government to be engaged in the regulation of commerce whether it is in the form of local, regional or international bodies? [...]


[...] He gives an example of capitalism reward for organizations that are accepted by the society as those which obey environmental laws. Furthermore, he identified that although most consumers are neither keen on environmental conservation nor willing to pay extra for the purchase of environmentally-friendly goods, the same consumers will easily shun down organizations that do not uphold environmental laws. Therefore ethics would direct the firm's to consider-in the absence of obligatory powers-formation of best policies and implementation of best practice. [...]


[...] Is there a moral ground for such extremes? (Baum, Bowie and Johnson). Moreover, in response to the intense pressure by climate change lobby groups and environmental protection activists and agencies over transparency and responsibility in their environmental obligations, BP has embarked on an ambitious social innovation project with the sole aim of causing no harm to the environment where it operates. Most encouraged is the move especially in light of the fact that oil and natural gas production are two of the most potent causes of atmospheric pollution through release of carbon gases, oil spills and explosions at oil rigs notwithstanding. [...]


[...] The decade has seen the highest number of maritime oil spills by tankers which have left a serious ecological impact on the mangroves and the coral life that is a wonderful addition to the maritime community. Other human damages to the pipeline on land and the rise of armed, militant groups in production sites have meant that the company continues to incur heavy operational costs, and thus affecting its returns to its shareholders. British Petroleum Company has also been at the center and scrutiny of climate change advocates over its environmental as well as its social performance. [...]


[...] The basic argument for the proponents of free market policies is in opposition to governmental interference in business operations and instead in favor of a natural restoration of balance within the economy. The ability and willingness to freely engage in exchange of commodities would therefore suffice in creating a natural order within the market that favors all parties involved. It is based on such an understanding that the British Prime Minister, David Cameron faults the previous regimes over their apparent apathy in regard to the exercise of free market policies. [...]

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