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Environmental and Economic Implication of the British Petroleum Oil Spill
Environmental and Economic Implication of the British Petroleum Oil Spill
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Introduction
Even as the prestigious and economically valued oil and petroleum resources continue to flow into the popular Mexican Gulf, the long-term environmental and economic effects of oil least crosses into the minds of the majority. However, although considered the most valuable economic resources, oil disasters often have negative economic and environmental implications following oil spill-over. One of the world’s worst historical oil disasters that posed great economic and environmental danger was the Deepwater Horizon Oil Spill (BP Oil Spill). The 87 day disaster is the worst oil spill disasters in the history of the U.S. Over that period, over two hundred million of crude oil gallons were directly pumped into the Gulf of Mexico, causing major economic and environmental challenges to the affected regions. This oil disaster affected the leading coastlines of Louisiana, Texas, Florida, Alabama, and Mississippi. The summer 2010 BP Oil disaster led to loss of 11 lives and injuring 17 people following the unexpected oil ring explosion (Foley, 2011, p.525).
Literature Review
Environmental Impacts of the BP Oil Disaster
Depending on the location and timing of oil spill, even minor oil spills cause significant damage to the aquatic lives and organisms. These impacts can either be chronic or acute (short-term). Depending on the concentration and toxicity of the oil spill, aquatic animals and plants are likely to be harmed and killed. This was the case of the BP Oil Spill disaster that killed sea and ocean creatures, thereby, reducing their rate of reproduction, altering their development and growth, and impairing feeding mechanisms for these creatures (Kornfeld, 2011, p.333). The oil spill also weakened these animals and plants to the extents that the survivor became more vulnerable to disease attacks. In particular, the BP Oil disaster killed marine mammals, bird, intertidal species, bottom-dwelling species, and their development life stages. A report by environmentalists warned of the possibility of elimination of the waterfowl’s population along the Louisiana coastal regions (that account for over 75% of waterfowls in U.S.) (Campagna, et al, 2011, p. 395). Not only waterfowls that are at the risk of extinction, but, hundreds of species along the Gulf of Mexico’s coastline. The disaster led to water pollution, thus making the affected coastal waters health hazardous to both human and animal population (Kornfeld, 2011, p.329). Such polluted waters were rendered unfit even for industrial purposes. A report by the Department of Interior revealed that the BP Oil Disaster posed great danger and risk to four National Wildlife Refuges and eight National Parks within Texas to Florida. This further caused environmental damage to the Wildlife Services (Smith Jr., Smith, & Ashcroft, 2011, p.574).
Economic Implications of the BP Disaster
Although the exact economic costs and implication of the BP disaster cannot be determine given that oil gets biodegraded very quickly, it is estimated that the U.S government loss revenue amounting to $132 billion over the three months (Smith Jr., Smith, & Ashcroft, 2011, p.572). This was attributed to the fact that the Gulf of Mexico coast waters accounted for 73 percent of the domestic and industrial water supplies. Secondly, following the incident, the number of tourists activities along the Gulf of Mexico’s coasts significantly declined, hence loss of tourism income (Kornfeld, 2011, p.338). In addition, the company and the federal government had to incur extra financial and economic burden of cleaning up the affected coastlines (Jernelöv, 2010, p.364). This led to diversion of resources that could have been used for other development projects to create employment opportunities and stabilize the economy. On the other hand, the BP Oil Disaster led to inflation in the economy through the unexpected rise in oil prices (Nash, 2011, p.262). The oil disaster affected the real estate values. Following the disaster, the affected land suffered a significant drop in their economic values, hence real estate losses (Smith Jr., Smith, & Ashcroft, 2011, p.574). This further generated inflationary pressure in the American economy given the contribution of oil and petroleum products in the economic well-being of the U.S.
In accordance with the “Clean Water Act”, the BP will bear more financial burden to the Federal government in the form of fines and violations of the Act. It was estimated that a civil fine amounting to $4.7 billion will be settled by the company (Smith Jr., Smith, & Ashcroft, 2011, p.575). These will further burden the company finically and limit its expansion and growth capacity.
Conclusion
In conclusion, the BP Oil disaster affected all the leading sector of the American’s economy. Although the government responded to the disaster to avert further damage, its effects surpassed the expectations of the U.S. This British Petroleum Deepwater Horizon disasters will remain in history given that it caused both economic and ecological damage, with BP alone incurring losses of approximately $36.9 billion. This oil disaster is, therefore, likely to generate long-term and short-term ramifications for any future environmental policies and energy production.
References
Campagna, C., Short, F. T., Polidoro, B. A., Mcmanus, R., Collette, B. B., Pilcher, N. J., & … Carpenter, K. E. (2011). Gulf of Mexico Oil Blowout Increases Risks to Globally Threatened Species. Bioscience, 61(5), 393-397. doi:10.1525/bio.2011.61.5.8
Foley, V. J. (2011). Post-Deepwater Horizon: The Changing Landscape of Liability for Oil Pollution in the United States. Albany Law Review, 74(1), 515-530.
Jernelöv, A. (2010). The Threats from Oil Spills: Now, Then, and in the Future. AMBIO – A Journal Of The Human Environment, 39(5/6), 353-366. doi:10.1007/s13280-010-0085-5
Kornfeld, I. E. (2011). Of Dead Pelicans, Turtles, and Marshes: Natural Resources Damages in the Wake of the BP Deepwater Horizon Spill. Boston College Environmental Affairs Law Review, 38(2), 317-342.
Nash, S. (2011). Oil and Water, Economics and Ecology in the Gulf of Mexico. Bioscience, 61(4), 259-263. doi:10.1525/bio.2011.61.4.3
Smith Jr., L. C., Smith, L., & Ashcroft, P. A. (2011). Analysis of Environmental and Economic Damages from British Petroleum’s Deepwater Horizon Oil Spill. Albany Law Review, 74(1), 563-585.
Environment, Crime, and Disease
Environment, Crime, and Disease
Name
Institution
Introduction
Globalization is one of the amazing phenomena of the present age. Globalization is a process by which the world is increasingly becoming one i.e. events happening on one part of the world equally affects the rest of the world. Globalisation is associated with increased integration of the world economy and mobility of people, goods, labour, capital and information. Alongside, there are also unfavourable effects that come with globalisation. These include negative environmental impacts, crime and diseases. A number of countries around the world have suffered a number of negative consequences of globalisation due to effect of activities from other areas. For instance, the melting of ice in the polar region due to the global warming is caused by release of greenhouse gases by industries in countries far away from the poles. The spread of negative environmental impacts, crime and diseases through globalisation has affected many countries around the world. Spain, being one of the developed countries with ability to attract a lot of activities in the globalised world has not escaped the wrath of these negative outcomes of globalisation.
Overview
Globalisation has exposed the world to numerous environmental challenges through crime and through diseases. The greatest environmental challenge is global warming, a climatic change that has increased drought in some areas and heavy rains causing floods in other areas. Many people are increasingly losing their clean water resources and habitats through pollution and degradation; hence making the world a common place for disasters. The quality of air has also diminished and as a result more peoples are suffering from several recognisable illnesses (Palme, 2007). In fact, diseases resulting from poor air and water quality have increased considerable in two decades.
Crime too has taken a global outlook, since criminal have formed global networks to perpetuate their criminal activities (BBC Global Crime Report, n.d.). Most common crimes on the international arena are money laundering, human trafficking, and drug trafficking together with illegal immigration. Criminal create the networks to facilitate their criminal activities and go unpunished.
The spread of diseases across international borders has also become a common occurrence (World Health Organization, 2004). The mobility of people across international borders is higher and continuously increasing. This increase also facilitates spread of diseases. Confined circulation of air in mode used during this movement such as airplanes exposes many people to infections. Global tourism also encourages spread of diseases such as hepatitis and HIV/AIDS, and this most happens in sex tourism industries around the world.
Environment, crime and disease challenges in Spain
The Environment
In Spain, there are a number of environmental challenges that can be traced to the globalization wave. The most notable problem is that of population increase due to illegal immigration. The proximity of Spain to Africa has encouraged illegal immigrants to use Spain as a route of entry into Europe in search of better economic opportunities. The increase in population puts a strain on the natural resources in the country. Resources such as water become stretched beyond their ability resulting in their degradation. Spain is also one of the countries that depend on tourism. Tourism in the country has also encouraged overexploitation of natural resources like energy, underground water, and even destruction of landscaped through creation of tourist hotels and resort. There is also increased generation of wastes as tourist flock on the countries beaches.
Another negative influence of tourism on the country is the increased production of greenhouse gases causing climate change and incidences of acid rain. The greenhouse gases originate from gases produced in the process of transporting the tourists to the country and within the country via air and road. Planes in the air and vehicles on the road both generate greenhouse gases that contribute to global warming (El Rincón del Vago, n.d.). Other gases are produced through combustion of fossil fuels leading to formation of acidic rains. Different ecosystems in Spain have been destroyed by different activities. The littoral had been destroyed by construction of concrete wall, while mountainous areas have been destroyed by ski station and invasion by thousands of hikers (El Rincón del Vago, n.d.). The construction of golf courses as tourist attraction scene has increased the use of pesticides and consumption of water used in watering the fields in traditional arid land of Andalucía, Spain. Some areas of Spain such as Benidorm, have numerous tourist hotels close to the beaches. The enormous numbers of tourist who visit the hotel contribute immensely to the pollution of the beaches and the surrounding waters. The greatest impact is brought about by discharge of poorly treated sewages in to the waters causing water pollution, proliferation of diseases and destruction of marine ecosystem. Global climate change and warming are also threatening to wash away the beautiful beaches in Spain due to rising sea levels. This destruction will have terrible effects on Spain’s tourism industry.
Crime
Crime rate in Spain are also high. Again, the high rate of immigration is at the centre of crimes in Spain. Illegal immigrants are believed to be behind the increase of crime in the country for the last 20 years (Lea, 2005). Indeed, the number of immigrants in Spaniard jails is high. The perception of immigrants criminal is also responsible for increase in xenophobic sentiments among the Spaniards.
International criminals also use the country to network. For instance, the traffickers of cocaine consistently use the country to traffic cocaine to France and Netherlands. In the 80’s, Spain ports provided networks for shipment of large cargos of cocaine hauls (Lea, 2005). In recent times, the country has become resourceful to international criminals who traffic cocaine in small packs. They use the country for shipment of the narcotics to the rest of Europe.
Spain is also an effective networking point for human traffickers. Man modern day slaves from the Middle East and Africa are transported to various destinations through Spain. Spain herself also serves as a destination for some of these trafficked victims especially women who go to work as prostitutes in the country. The Spaniard sex tourism industry rivals that of Thailand. This prominence of the sex tourism industry t has encouraged human traffickers to trafficked women and young girls to the country to work as prostitutes. According to Think Spain (2012) 9 in every 10 women participating in sex tourism are held against their will. Also, most of them are from foreign countries and were either kidnapped from their countries or were lured to come to Spain under the disguise of job opportunities.
Spread of diseases
Globalisation is also at the centre of spread of debases around the spread of diseases, some of them deadly, around world. Spain host may people from different parents of the world. This people come with different diseases and once in Spain these infections spread and affect the Spaniards too. HIV is highly prevalent in the country especially due to the sex tourism industry. During the Swine flue outbreak Spain record several cases of infection. The case occurred in people who had been to Mexico or had been in contact with people who had been to Mexico during the outbreak. The disease was certainly imported from Mexico. A report on imported communicable diseases in Spain noted that various there are different disease in Spain brought in from different parts of the world (Monge-Maillo et al, n.d.). These included tropical infectious diseases such as changes disease, malaria, filariasis, and intestinal parasite. Other which included highly infectious communicable diseases were tuberculosis, hepatitis, sexually transmitted diseases and HIV/AIDS (Monge-Maillo et al, n.d.).
Recommendations for Mitigation
These negative impacts of globalisation in different parts of the world including Spain can be mitigated use different effective approaches. Illegal immigration can be curtailed through a corporation between the countries of origin and the destination of the immigrants. This can be done through ensuring that no one leaves their country without documentation or no one entre another country without documentation. The negative impact tourism can be curtailed through encouraging ecotourism which enhances environmental conservation. Tight regulation can be enforced against hotel owner to ensure that the treat sewerage properly before they release it in proper safe places other that the oceans or seas. All wasteful practices the adversely affect natural environment or waste resources should be discourage. Last, international crime can be stopped through corporation among different countries. Just like illegal immigration, human trafficking should be handled by mitigation effort at the source where victims are captured and the destination where the victims end up. Severe punishment for drug and human traffickers can help deter their activities.
Conclusion
Globalisation encourages the speared of negative environmental impact, international spread or crime and exportation of diseases to other countries. Spain has experience its share of environmental, crime and disease challenges resulting from globalization. Most of the environmental challenges originate from increase in population due to illegal and uncontrolled immigration which increases population beyond what the available resources can carry. The environment is also affect by the countries tourism industry. The illegal immigrants are also at the centre of the criminal activities in the country. Other crimes that are international in nature are orchestrated by human and drug traffickers. Globalization as further lead to spread of many diseases to Spain, these include HIV/AIDS, Swine flue, STIs, tuberculosis, hepatitis and other. Most of the diseases are brought in by tourist and illegal immigrants.
Reference
BBC Global Crime Report. (n.d). Retrieved from http://www.bbc.co.uk/worldservice/programmes/global_crime_report/index.shtml
El Rincón del Vago. (n.d.). Impacts of Tourism. Retrieved from http://html.rincondelvago.com/impacts-of-tourism.html
Lea, J. (2005). Globalisation and Criminal Networks. Retrieved from http://www.bunker8.pwp.blueyonder.co.uk/orgcrim/3805a.htm
Monge-Maillo, et al (n.d.). Monge-Maillo et al Imported Infectious Diseases in Mobile Populations, Spain. Retrieved from http://wwwnc.cdc.gov/eid/article/15/11/09-0718_article.htm
Palme, S. (2007). Water of Life in Peril. Today’s Dietitian 8 (10) P. 54
Think SPAIN. (2012). Human trafficking and low rates make Spain top for ‘sex tourism’. Retrieved from http://www.thinkspain.com/news-spain/21032/human-trafficking-and-low-rates-make-spain-top-for-sex-tourism
World Health Organization. (2004). Globalization and infectious diseases: A review of the linkages. Switzerland: World Health Organization
Entry Modes Into China
Entry Modes Into China
Introduction
Research studies explain that China has steadily risen to become one of the major contributors of the global economy in the last few years. With a gross domestic product growth of an estimated 10%, the country is ranked position three with relation to the world’s largest economies. Economic forecasts predict that by the year 2050, China would have surpassed all industrialized nations with relation to purchasing power parity, and for that reason, will be the leader of the global economy (Fishman, 2005). Evidently, the country has been subject to a considerable amount of economic growth, and more companies are looking into the ways through which they can tap the Chinese market. Accordingly, China’s astounding economic renaissance has encouraged business organizations and investors to examine the different ways through which they can enter the Chinese market.
As researchers explain, it is crucial the organizations device new approaches regarding the entry and retention of the business into the Chinese market. Further research on the issue explains that by the year 2005, China had reached a economic high, as the country attracted a revenue of about $1 billion per week (Naughton, 2007). This goes to show how good of a market that China has become over the years. For that reason, business organizations have considered various modes of entry into the country so as to assure their companies of the best possible success in the international market. Most of the firms that have made it in China have looked into business strategy options such as the acquisition of resources and supplies, the diversification of the different sources of supply and low-cost business strategies for the Chinese Market (Fishman, 2005). An examination of the performance of these businesses and firms in the Chinese market, as well as, the market entry modes and the different factors for success is necessary to understand how firms can best survive doing business in China. Though most organizations are reluctant in revealing company information regarding this issue, various successful entry modes have been identified to help in understanding of the Chinese market and its significance to businesses and organizations.
This paper examines the different types of entry modes available for companies wishing to expand their business to the Chinese market. Fundamentally, the paper identifies home production, contractual market entry, and foreign production as the three key entry modes into China. The advantages and disadvantages of each mode will also be examined, and a discussion of the various ways in which the modes have changed overtime provided.
Entry Modes into China
The mode of entry into a new market is one of the most fundamental decisions that business organizations have to make at one point in their business cycle. As research studies explain, a company’s choice of entry into a new market influences the organization in various ways including an organization’s production and marketing strategies. Fundamentally, the choice of a business’s entry mode into a new market determines the how the company faces the various challenges it faces in the new market (Gielens & Dekimpe, 2007). There are as many as fifteen different modes of market entry options for firms wishing to enter a new market. However, these modes of entry vary according to the market, which the company aims to expand its business. More specifically, researchers and economists have identified three chief entry modes into China including, home production, contractual market entry and foreign production (Li, 1995). These three key modes of entry have been subdivided into other options, which companies have employed to ensure their success in the Chinese market.
Home production
Also referred to as the export strategy, the home production entry mode into China defines a market entry point whereby an organization produces goods and services at their respective home countries, and sells to China as their host nation. With an estimate 200 million consumers, China has paved the way for companies to export products and services to their market, thus making it a preferred entry strategy for most businesses and organizations (Gielens & Dekimpe, 2007). This entry mode has been identified as one of the best business strategies for entry into the Chinese market, especially since it avoids the costs related to setting up shop in China. This entry mode, however, cannot work without the use of private entities that help the business organization in selling their products or services in China (Li, 1995). Accordingly, home production, as a mode of entry into China can occur in two main ways including direct and indirect exporting.
Direct exporting
Direct exporting is a form of home production that companies entering China export directly to Chinese customers interested in the purchase of the company’s products and services (Li, 1995). With such an entry mode approach, the business organization handles all market research activities, as well as, the distribution methods that the company will take on for success in the Chinese market. However, the organization will be required to have a connection to the Chinese market, which may be in the form of foreign sales representatives or foreign distributors. If a company opts for the use of foreign sales representatives, they will be required to assign representatives in China to sell their products and services (Gielens & Dekimpe, 2007). The use of foreign distributors demands that companies assign distributors in China whose responsibility will be the distribution of company products and services to the Chinese market. Some of the advantages of this market entry approach is the potentiality to increase profit owing to the elimination of intermediaries, as well as, having full control over the company’s activities. The main disadvantage of this strategy is that it demands a considerable amount of people power, so as to, ensure that the business is successful in China.
Indirect exporting
Indirect exporting is the second approach when considering the option of home production as a market entry strategy into China. As research studies illustrate, companies that have used this entry mode as a strategy have been successful in acquiring Chinese customers especially since it demands the use of Chinese intermediaries to facilitate business activities. This market entry approach requires a company to sell their products and services to an intermediary, who in turn sells these products and services to Chinese consumers (Li, 1995). Accordingly, this market entry approach can be conducted in two main ways including the use of local agents and trading companies in the home country, which in this case is China. The main advantage of this market entry mode is the fact that it is a risk free strategy, that assures the company of almost immediate acceptance of their products and services into the market (Gielens & Dekimpe, 2007). It also frees the organization from various responsibilities, thus allowing the organization to focus on other important business activities.
Contractual Market Entry
Researchers have also identified contractual market entry as the second mode of entry for business organizations wishing to gain a market share in China. In definition, contractual market entry defines the use of contracts as a way of penetrating into a new market. Contractual trade in business involves two or more companies entering into a contract and agreeing to do business with each other. Research studies explain that contractual market entry has long been favored by companies when entering foreign markets (Gielens & Dekimpe, 2007). In most cases, the contractual agreements involve the main company contracting other local companies for the sale of their product and services. In essence, the entry mode requires that a formal permission be granted to local companies in a host nation for the use of the foreign company’s resources for payment. This can occur in two main ways including licensing and franchising.
Licensing
Licensing is a form of contractual market entry strategy whereby local companies are provided with licenses to operate with the main company’s resources and facilities (Li, 1995). Most companies that have succeeded in their market entry into China grant Chinese local companies the permission to conduct business activities using the various brands that the company has. The main advantage of franchising as a market entry mode is that it helps in building a company’s corporate image, and facilitates the development of marketable products and services (Gielens & Dekimpe, 2007). However, this strategy provides a lot of restriction for the companies being licensed, and if not, the licenser will not have control over the sale of the products or services.
Franchising
Franchising is another form of contractual market entry strategy, and it has also been widely used by companies entering into the Chinese market. It is a mode of entry that defines the use of a firm’s name or business model so as to conduct business operations in a particular place (Li, 1995). Franchising in China is commonly used as a business strategy for international companies in the food and beverage industry. Just like licensing, the main advantage of this entry mode is that it helps build a company’s corporate image. This entry mode also benefits companies in terms of staff training and development, as the local franchise companies are provided the opportunity to train their staff members to the standards of the franchising company.
Foreign Production
Also referred to as the equity strategy, foreign production refers to the a mode of entry, whereby a company carries out both production and sale activities in their local home, as well as, the host nation (Gielens & Dekimpe, 2007). Research studies illustrate that out of the three entry mode strategies into China, foreign production is the most widely used entry mode strategy by big companies such as Coca Cola.
Strategic Alliance
A strategic alliance refers to a hompe production approach to market entry whereby a business organization enters into an agreement or collaboration with another firm in the host nation. With this entry mode, the companies that are in alliance share responsibilities of the production and sale of goods and services (Li, 1995). This strategy is advantageous to companies wishing to gain a market share in China because it assures the foreign company of an already existing market. By obtaining an alliance with a company in the host nation, foreign companies benefit from the host company’s market share. However, this strategy can be disadvantageous because of the sharing of profit between companies.
Joint Ventures
The last identified mode of entry for organizations into china, joint ventures are an approach to foreign production whereby instead of sharing company duties and responsibilities, they share ownership of the company (Li, 1995). Accordingly, joint ventures allow shared ownership between the foreign company and a company in the host nation. The advantages and disadvantages of joint ventures are similar to those of strategic alliances.
References
Fishman, T. (2005). China*Inc., How The Rise of The Next Superpower Challenges America
and the World. New York: Simon and Schuster.
Gielens, K. & Dekimpe, M. G. (2007). The Entry Strategy of Retail Firms into Transition
Economies. Journal of Marketing, 71(2): 196-212.
Li, J. (1995). Foreign Entry and Survival: Effects of Strategic Choices on Performance In
International Markets. Strategic Management Journal, 16(1): 333-351.
Lou, Y. (2000). Multinational Corporations in China. Hendon, VA 20172-0605: Copenhagen
Business School Press.
Naughton, B. (2007). The Chinese Economy: Transitions and Growth. Cambridge
Massachusetts: The MIT Press.