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Company analysis (Research Paper Sample)


This a comprehensive analysis of Abu Dhabi oil company.It breaks down the company present prospects, threats and opportunities as well as make recommendations.


Company Analysis: Abu Dhabi Oil Company
Student’s Name
Grade Course
Tutor’s Name
(24, November 2013)
1 Executive Summary
2 Introduction: Abu Dhabi Oil Company
3 External analysis
2 Five Forces Analysis
3 Impact of national culture
4 SWOT analysis
4 Generic building blocks of competitive advantage
5 Distinctive competencies
6 Differentiation strategy
7 Addressing potential problems
5 Stakeholder Analysis
6 Recommendations
7 Conclusion
8 References
Abu Dhabi Oil Company: Company Analysis
Abu Dhabi Oil Company has distinct advantages that can propel it to new heights of growth. There are many opportunities that it can exploit to further its dominance in the local and regional market. The company is State-owned. It therefore enjoys goodwill from the government. Additionally, the government possesses better and effective machineries that the company can deploy for growth. However, association with the government makes the company vulnerable to internal political developments. Abu Dhabi Oil Company has a large and highly competent workforce. This makes it easier for the company to innovate and remain ahead of competitors. The vast natural resources and availability of new prospect in sun and wind energy provides fresh impetus for growth. Similarly, the company has embraced modern technology in its operations. The company enjoys legitimacy and goodwill of the people because of its commitment to corporate social responsibility. However, the company must deal with several threats and challenges. The oil and gas industry is very competitive and entrants of new competitors mean that the company has to grapple with many threats. Additionally, the company must remain cognizant of the dynamic cultural issues that might hurt its image and reputation. It is recommendable that the company ventures into new and less competitive markets in order to reduce overspending through advertisement in an over saturated market.
Introduction to Abu Dhabi Oil Company
Abu Dhabi Oil Company started in 1971 with operations in exploration and processing of oil and natural gas. Since then, the company has increased its activities to include transportation and shipping. The Supreme Petroleum Council runs Abu Dhabi Oil Company. The company has many local and abroad subsidiaries and it produces 2.8 million barrels of oil daily (Maguire 2007). The broadening of operation has spurred growth and the company ranks top ten in oil and gas production. In the last three decades, the company has enhanced its competitiveness by increasing its operations. Maguire (2007, p.7) cites "transportation, shipping, marketing and distribution" as the new activities, that Abu Dhabi Oil Company has ventured. The company has intensified efforts in exploration of new and unexploited resources. However, the management, led by H.H. Sheikh Khalifa Bin Zayed Al-Nahyan, has spearheaded efforts to maintain the balance between resources in the earth crust and people’s needs. ADNOC manages its reservoir prudently in accordance to HSE standards in the Arabian Gulf region. Other ADNOC subsidiaries as cited by Fleigh (2008, p.4) are "ADCO, ADMA-OPCO, GASCO, ADGAS, TAKREER, NDC, ESNAAD, IRSHAD, FERTIL, BOROUGE, NGSCO, ADNATCO and ADNOC Distribution.”
ADNOC produces gas and oil from six major fields. Maguire (2007, p.6) categorizes the fields as "Asab, Sahil, Shah, Bab, Buhaha, and North-East Bab consisting of Dabbiya, Rumaitha, and Shanayel." The company’s strategy is to develop technical capacity to satisfy and exceed customers’ needs by providing energy, transportation and shipping solutions. ADNOC upholds business ethics and follows a set of core values. These values include honesty and integrity, developing people, working together, excellence, accountability and communication. The company expects all stakeholders to follow the core values. The company has many employees, with 19,300 working directly for it. It employs people from diverse cultural backgrounds. United Arabs Emirates is cosmopolitan because of the high percent of immigrants and expatriates. The employment policy at ADNOC reflects this diversity in culture.
External and Internal Analysis
PESTEL and Porters Five Forces Analysis provide the best model for external analysis of a company. PESTEL is acronym for political, economic, social, technological and environment factors that affect performance of a company. Five forces analysis, a tool developed by Porter, investigate how factors outside a company affect its performance. This section will employ the two tools to explore the current and future opportunities and challenges that face ADNOC.
As mentioned earlier, UAE’s government owns ADNOC. Any political development in the country thus affects the company. In 1998 for instance, the government decided to reduce the number of expatriates in jobs that the local population can do. Low (2012) terms this process as Emiratilization. It sought to increase the number of Emirates natives in the company. UAE government political decisions have affected overseas subsidiaries. Whenever the government is in frosty relations with another country, there is always uncertainty over backlashes that may have consequences on the company. Additionally, political instability in some countries undermines expansion. Morocco and Libya for instance have had political upheavals that hurt ADNOC.
Economically, Abu Dhabi Oil Company has a big financial base. The company contributes over 65% of UAE’s gross domestic income. This has allowed it to expand its operations to many places where there are vast natural resources. Additionally, financial capability has made it possible for the company to diversify its activities to include shipping and transportation. This cushions the company against losses when one sector of the economy is in turmoil. With the financial crisis facing United States and many parts of Europe, ADNOC has experienced slow growth. Whenever the prices of oil fluctuate, the company has experienced stagnation.
Socially, Abu Dhabi Oil Company enjoys cordial relationship with the communities surrounding it. Low (2012) argues that companies engaging in corporate social responsibility enjoy legitimacy and goodwill from the neighboring communities. ADNOC engages actively with communities in areas of education scholarship, social amenities, and entertainment.
Technologically, Abu Dhabi Oil Company has continued to embrace new methods of oil exploration, production, and processing. At the basic level, ADNOC has launched an electronic service to interact with employees, suppliers, and other stakeholders. The company is the first in the Arabian Gulf to use visualization technology. Pendlebury and Groves (2004, p.34) explain that this technology "assembles different technical disciplines to create a combined product that is greater than the sum of its parts”. The automation fields enhance coordination and speed in decision-making. Enhanced oil recovery technology allows the company to replenish its oil fields.
Environmentally, Abu Dhabi Oil Company continues to abide by the Kyoto protocol that controls emission of carbon into the environment. The company has formulated Health, Safety, and Environment Policy to act as a blueprint in environmental conservation, prevention of occupational illness and adherence to local and international environmental laws. In spite of these efforts, UAE is one of the most polluted nations in the world (Kapoor, Paul & Halder 2011). In 2009 alone, there were more than 40 oil spills in UAE.
Legally, Abu Dhabi Oil Company faces little challenges. Because it is State-owned, it enjoys immunity against vexatious legal suits. However, the company does not enjoy similar immunity is its subsidiaries around the world. In United States for instance, labor and pollution laws are very strict. This opens ADNOC to thorough scrutiny from labor unions and conservation groups.
Five Forces Analysis
Porter Five forces analysis reveals that Abu Dhabi has many opportunities that can enable it remain competitive. The first force is the threat of new entrants. Oil and gas market industry is highly profitable and thus attracts many new firms. The more firms there are in an industry, the less profitable the market becomes. The incumbents in the market must therefore devise strategies to bar entry of new competitors or risk spiraling of profits towards zero. For the private sector, the best way to bar new entrants is to provide the highest quality in goods and services so that new entrants have nothing better to offer the market. For a State-owned company like Abu Dhabi Oil Company, keeping off new entrants is easier because the government can enact legislation to limit competition. ADNOC has managed to bar new entrants without resorting to unfair practices. One such method is through partnership with globally recognized brands. Abu Dhabi Oil Company has collaborated with Shell and British Oil, leading brands in oil and petroleum products. This presents an opportunity for current and future growth.
The second force is the threat of substitute products or services. Other fuels can serve as substitutes for oil and gas. The fact that oil is a leading pollutant is pushing people to alternative fuels. Manufacturing industries are using nuclear and electricity energy, which are far efficient and cleaner. The production and increasing popularity of green energy portends a big threat to Abu Dhabi Oil Company.
The third force is bargaining power of customers. When they are many companies producing the same goods and offering the same services, the bargaining power of customers increases. In the Arabian Gulf alone, there are many companies specializing in the same...
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