Swot Analysis Of Oil Companies (Essay Sample)

SWOT ANALYSIS OF OIL COMPANIES
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Introduction
The oil and gas industry does encompass a variety of processes and activities that play part in the transformation of available resources of petroleum into consumable end-products. Oil companies have two categories: national oil and international oil companies. The research paper focused on attracting investors. Therefore, management and leadership are the centre of discussion. The oil industry is a vital economic platform because it guarantees investors huge profits, thus most mega businessmen prefer them to other business fields. Petroleum drilling is one of the most lucrative business ventures (Badiru & Osisanya 2013 pp. 187-251).
For instance, the British Petroleum (BP) and Saudi Aramco are one of the most prominent petroleum companies. The British Petroleum Company was founded in 1909, but gained prominence in 1950s when they began exploiting oil from Persia – the present Iran- in large quantities. They are headquartered in London, Unite Kingdom and produce petroleum, natural gas, petrochemicals, aviation fuels, and motor fuels. BP is ranked the fifth largest oil producer in the world. On the other hand, Saudi Aramco are a national oil company based in Dhahran - Saudi Arabia - and are 80 years old. This company understood the increasing demand of oil in the world. As a result, Aramco committed themselves to harness as much oil as possible, as well as exploring more potential oil reserves.
Management and leadership strategies are the backbone to every company's success. Having poor management and leadership tactics in an organization may be catastrophic.
MANAGEMENT STRATEGY
Crisis Management
Crisis and risk assessment departments have a difficult task to guarantee employees, the environment, and the community safety. Just a small mistake may cost the company billions of dollars. How unforgiving is this? BP is a living example. The safety engineer did not implement the operating management system at Deepwater Horizon. The company, which is located along the Gulf of Mexico, experienced one of the deadliest oil spill accidents in the world. Nothing could have been done to save the lives of 11 people at the work site. The deep-sea-drilling facility went up in flames causing the big lumen oil delivery pipes to burst. Allegations claimed that the management ignored the operating management system to control such occurrences.
BP is counting its losses now. The Gulf of Mexico accident which happed in 2010 cost BP $4 billion as compensation. There is an ongoing court case, and if BP are found guilty, they will suffer a further $12 billion.
The life of marine creatures was hugely affected. Fishing activities were not spared either. The accident changed everything people could have thought about BP. It quite customary that investors were pushed away by the loss, and most of them think twice before investing in BP.
However, BP deserve a standing ovation for the improvements they have made on their emergency response strategy. They have implemented the operating management system. It was believed that if the system were in place, then the disaster could have been minimized to easily manageable levels.
Saudi Aramco have never suffered a major industrial accident, although that does not make them a better company. Aramco implemented Operating Management System to zero the frequency and reduce the severity of accidents. Managers do not relieve themselves of the obligation to contain risks. To them negligence does not exist. Each and everything they do is based on accurately calculated risk management procedures. However, no matter how much BP may defend their so-called poor crisis management strategy, employees may be tempted to refuse to work for them. Also investors do not want to invest in risk-prone firms, because no one can bank on a losses.
Corporate Social Responsibility (CSR)
Being one of the leading oil companies, BP have been on the front line in ensuring that the community benefits. Besides providing employment opportunities for many around the world, BP vowed to continue taking precaution to produce environmental-friendly oil with small concentration of hydrocarbon impurities. BP has sponsored hundreds of needy students from developing nations. They train scholars on the field of petroleum studies and turn them into incredible professionals. However, a problem surfaced after the Gulf of Mexico oil spill.
Allegations that BP was reluctant to implement operating management systems have made people question the role of BP in CSR activities. It was almost expected that people would rage when such a thing happened. People thought that BP cared about their profits alone, but man is subject to errors. Nevertheless, the disaster was not a reason to judge BP with such prejudice. Interestingly, BP agreed to take care of the cleaning-up costs and compensate all workers who lost their jobs. This move reveals how concerned about the wellbeing of the community BP are.
To the contrary, Saudi Aramco is another British owned company and has never experienced any problems concerning industrial safety. They truly understand their role in shaping the future of the Kingdom of Saudi Arabia. They strive to reach out to the communities by establishing the culture of safety, giving out charity, and promoting health and wellbeing of the society. It is a hard to say this, but Saudi Arabia has recently reported that diabetes and cardiac diseases have gone up significantly. To broaden their CSR program, Aramco fund non-profit organizations to support their activities.
For the society to have a brighter future, Saudi Aramco contributes a lot to community health initiatives: improving healthy eating, promoting physical activity, and reducing the levels of smoking. Aramco have improved the safety of Saudi highways through their Traffic Safety Signature Program. Under this program, emergency response, training of drivers, engineering of roads, and tightening traffic law enforcement to reduce road accidents. With 7,300 people dying road accidents in Saudi Arabia, Aramco is using every resource in their disposal to reduce deaths (Corporate Social Responsibility Forum)
Motivation Factors
Motivation goes together with company success. Both BP and Aramco use this management strategy to guarantee company success. Abraham Maslow's theory of motivation has been implemented at BP and Saudi Aramco to motivate the employees.
MASLOW'S HIERARCHY OF NEEDS
Self-actualization

Self Esteem

Affiliation or Acceptance

Security or Safety

Physiological Needs

Physiological needs and acceptance allows the employees to feel wanted and appreciated. Safety does not encompass physical security only, it also covers job security. Workers need to be assured job permanency, otherwise would focus on getting a more secure job elsewhere and this may undermine business prospects. The pride and ego of employees must be respected. Use of courtesy within the organization regardless of the level of office one is in is a wonderful ingredient to building a solid organization.
Self-actualization and self-esteem go together. Employees would wish to have happiness after retirement. No retiree wants to have financial problems in future, because there is nothing more emotionally damaging than having the thought that one has wasted his past.
Abraham Maslow's model has been used for decades and it is amazing just how effective it is.
The following are the things either of the two or both do to instil high spirits on employees.
Employee Benefits
Both the two firms pay good money. However, there is a slight difference regarding benefits. BP was funding the pension schemes of its employees until 2010 when they confirmed that new employees would not be accorded this privilege. Lucky were the 12,000 veteran workers who were promised that they would continue receiving the pension funds. Having 12, 000 employees means that BP has provided many job opportunities to people all over the world. It is such a giant employer. It is worth noting that pension schemes help a company gather employee confidence and commitment and this puts BP in some kind of trouble in the future. BP is a wealthy company whose annual profits dwarf the GDP of most developing nations. It makes around $12 billion pre-tax profits per year and giving their employees' pension funds may not have significant financial burden. This threatens BP as there is a possibility that most fresh graduates might be unwilling to join them. Pension funds are the first thing an employee considers before accepting the job. Some may just take the job and work shortly to beef up their CVs before walking away (Freudenburg and Gramling, 2012, pp.73-132).
The management of Aramco differs from BP's. Aramco offers their employees retirement, savings, and insurance plans. Depending on the pay, each employee gets either the company-matched savings plan, annual cash payment equalling 17% of yearly basic salary, company-funded retirement plan plus a variety of insurance options. What a remarkable move which renders the worker flexible to make personal decisions on savings and insurance, in addition to other benefits offered by Aramco (Burton, 2001).
BP has Employee Savings Plan (ESP) which allows workers to save a given percentage of the eligible pay to ensure that they do not end up being frustrated with life at their golden age. However, this does not qualify as a benefit since the employees pay for their own savings. In addition, the ESP encourages employees to acquire loans for personal developments.
Educational Assistance
To supplement local scholarships, Saudi Aramco does reimburse workers, up to certain limits, to enrol their children in private schools abr...