Essay Example: Strategic Evaluation of Oman Oil Company

2021-07-28 15:25:38
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Sewanee University of the South
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Essay
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Oman Oil Company (OOC) operates in Omans oil and gas industry. It was founded in 1992 and incorporated in 1996 to provide downstream, midstream and upstream gas and oil services (Oman Oil Company, 2014). Its 25 years of existence elevate it as one of the leading operators in oil and gas sector. The mission of OCC encompasses developing a cost-effective business with a sustainable competitive advantage within the local and global energy sector. OCC has the vision of contributing to Omans economy by diversifying its operations internationally and domestically to make optimum use of the countrys geostrategic location, workforce, and natural resources. OCCs objective statements include:

Developing and investing in profitable commercial ventures within and outside Oman

Creating meaningful employment opportunities for Oman citizens

Maximizing value from the countries natural resources

The objective of the portfolio is to evaluate Oman Oil Companys strategic capabilities, ethical consideration and the companys positioning status basing on the Bowmans Strategic Clock and the SWOT tool.

Evaluation and Analysis

Laying Down Purposes

Before doing anything else, it is essential for an organization to lay down its purposes of determining the companys long-term direction and underpinning its vision, mission, strategies, procedures, and policies. According to McFarlane (2013), purposes are reference points and anchors in decision making and resource utilization. Laying down purposes as a strategic administration tool assist in achieving control, guidance, and leadership for steering an organization towards a common objective. According to Shakhshir (2015), systems theory of management advocates for laying down purposes in a company before anything else because it is a strategy that enables managers to coordinate plans and programs for delivering companys goals.

Business Ethics

Among the critical ethical considerations expected from Oman Oil Company include transparency, good governance and corporate social responsibility which incorporate the integration of environmental and social concerns into the companys operations (Rogers et al. 2012, p. 47). Oman Oil Company considers adherence to ethical codes of standards to be ways of making its daily operations trustworthy and credible in the public eye (Szegedi 2011). The companys strategy for adhering to ethical standards is integrating ethics norm and principles into their daily corporate practice. It is for that reason that businesses in the oil and gas industry must have appropriate incentives in place for an internal and external stakeholder to guide them in pursuing company goals (Szegedi 2011, p. 112).

Bowman Strategic Clock

While Oman Oil Company does not utilize all the eight clock positions in the Bowman Strategic Clock, the company operates at Position 3 and 4 which are hybrid and differentiation respectively. At Position 3, Oman Oil Company position itself as the most preferred gas and oil dealer by combining lower prices and product and service differentiation through acquisition and mergers. An example is the 2013 acquisition of Oxea Chemicals Company in OOCs strategic move aimed at strengthening its position in chemical business globally (Business Monitor International 2017). At Position 4, product differentiation is responsible for OOCs increase in relative production ranking in refining, production of Liquefied natural gas (LNG), gas and oil for local consumption and export. The fact that the government owns 60% of the company enhances branding among global customers thus the company is better placed in achieving the reputation than private competitors. Leveraging the two clock positions contributes to OCCs strong consumer base, diversified service and product portfolio (Baroto et al. 2012, p. 125).

Strategic Recommendation

Oman Oil Company is facing challenges such as competition, the decline in oil prices, and resource depletion as shown in the companys SWOT analysis in Table 1 below together with critical review and strategic recommendation.

Contexts or Frameworks Critical Analysis Strategic Recommendation

Strengths Monetary support from the government

Increased product portfolio

Strong exploration capacity Enhancing its vertical integration in downstream, upstream and midstream markets (Olmstead 2012, p. 38)

Weaknesses Declining oil prices in the global market.

Increased cost of development and research in gas and oil sector

Intense competition from local and international players Diversification of operations to evade crisis in oil pricing

Increase funding for research and development (R&D) of the industry especially in environmental protection-reducing carbon emission (European Commission 2015)

Opportunities Mergers and acquisition (M&A) for talents and technology

Using cutting-edge technology to increase production growth.

Increased demand for energy globally

Strategic expansion of business across developing countries to leverage the growing demand for energy

Investing in floating liquefied natural gas (FLNG) production techniques

Threats Increasing overreliance on alternative energy sources globally

Depletion and decline of available crude oil reserves in the sultanate

Drilling and exploration risks Governments commitment to investing in frontier exploration

Investing in drilling and exploration technologies such as seismic techniques for more in-depth exploration of resources

Conclusion

Oman Oil Company is among the leading players in the oil and gas sector in Oman. As the company strives to improve its competitive advantage, it should lay down its purposes before anything else because it assists in the coordination of plans and programs to deliver organizational goals. Oman Oil Company should also adhere to ethical standards which entail integrating ethics norm and principles into its daily corporate practice. The analysis of Bowman Strategic Clock shows that the company operates at positions 3 and 4 which are hybrid and differentiation respectively. Oman Oil Company has opportunities to strengthen investment portfolio by investing in research and development (R& D) and technology for marketing, refining, production and exploration of gas and oil products.

 

Reference List

Baroto, M., Abdullah, M. & Wan, H., 2012. Hybrid Strategy: A New Strategy for Competitive Advantage. International Journal of Business and Management, 7(20), pp. 120-129.

Business Monitor International, 2017. Oman Oil & Gas Report. [Online] Available at: https://store.bmiresearch.com/oman-oil-gas-report.html[Accessed 23 December 2017].

European Commission, 2015. Strengths, Weaknesses, Opportunities, and Threats in Energy Research, Belgium: European Commission.

McFarlane, A., 2013. Defining your organization's purpose: The importance of Vision, Mission, and Values. [Online] Available at: http://knowledgenet.carmichaelcentre.ie/articles/defining-your-organisations-purpose-importance-vision-mission-and-values[Accessed 24 December 2017].

Olmstead, R., 2012. Competitive advantage in petroleum exploration. Oil and Gas Journal, 2(3), pp. 34-39.

Oman Oil Company, 2012. Introduction to Oman Oil Company. [Online] Available at: http://www.oman-oil.com/About.html[Accessed 23 December 2017].

Oman Oil Company, 2014. Oman Investment Forum: About us, Muscat: Oman Oil Company.

Rogers, V., Ethridge, J. R. & Marsh, T., 2012. Ethical and Environmental Disclosures: an Analysis of the Oil and Gas Industry. Journal of International Energy Policy, 1(2), pp. 43-47.

Shakhshir, G., 2015. Positioning Strategies Development. 2 ed. Cluj-Napoca, Romania: University of Babes-Bolyai.

Szegedi, K., 2011. Ethics Codes and Ethics Management in the Oil and Gas Industry. 2 ed. Hungary: University of Miskolc.

 

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