Reference no: EM132720009

*CASE STUDY* During 2012 BP aimed to cut overheads and re-energise the oil and gas company by making significant changes in its organisational structure. Victoria Smaill, the chief executive, insisted the overall strategy was not about 'cost reduction and cull', but about a radical change in the culture. There were no specific numbers for how many staff would be cut, but Mrs Smaill said that it "could be thousands over several years".

The BP boss sent a message to her 100 000 staff outlining other plans to streamline the business into two basic units. This would be exploration and production on one side and refining and marketing on the other, similar to the type of structure at Exxon (the world's largest petrochemical company). The third segment, gas, power and renewables, is to be incorporated mainly into the other two. Sophie Geden, a city investment analyst said, "I think it is really good. This is copying the Exxon model of keeping things simple and ensuring unit managers are given responsibility but held accountable too."

Mrs Smaill promised that in the future, corporate infrastructure would be 'rigorously' reviewed and up to four layers of management would be shed in a process of delayering and shortening chains of command. "Managers will be listening more acutely, particularly to frontline staff. I have a vision for a less hierarchical organisation here at BP. We will make sure individuals are fully accountable for things they control - even as significant delegation is happening," she said.

ANSWER THE FOLLOWING QUESTIONS:

1. Define the following terms from the case study.

A. Organisational Structure

B. Delegation

C. Chain Of Command

2. Outline two advantages and two disadvantages of increased delegation at BP.

3. Differentiate between accountability and responsibility.

4. Explain two factors that would significantly influence a firm's organisational structure.