Strategic Analysis on Apache Corporation (Research Paper Sample)

-952500-89535000 STRATEGIC CASE ANALYSIS OF APACHE CORPORATION Submitted to: Prof. name By: Student name University Fall, 2014 TABLE OF CONTENTS TOC \o "1-3" \h \z \u 1.Executive Summary PAGEREF _Toc401353207 \h 62.Company History PAGEREF _Toc401353208 \h 72.1Background PAGEREF _Toc401353209 \h 72.2Purpose of the study PAGEREF _Toc401353210 \h 83.External Analysis PAGEREF _Toc401353212 \h 83.1General Environmental Analysis PAGEREF _Toc401353213 \h 93.1.1Demographic Segment PAGEREF _Toc401353214 \h 93.1.2Economic Segment PAGEREF _Toc401353215 \h 123.1.3Political/Legal Segment PAGEREF _Toc401353216 \h 143.1.4Socio-Cultural Segment PAGEREF _Toc401353217 \h 153.1.5Technological Segment PAGEREF _Toc401353218 \h 163.1.6Global Segment PAGEREF _Toc401353219 \h 173.1.7Summary of General Environment Analysis PAGEREF _Toc401353220 \h 193.1.8Driving Forces PAGEREF _Toc401353221 \h 203.2Industry Analysis PAGEREF _Toc401353222 \h 213.2.1Description of the Industry PAGEREF _Toc401353223 \h 223.2.2Industry Dominant Economic Features PAGEREF _Toc401353224 \h 233.2.3Market Size PAGEREF _Toc401353225 \h 263.2.4Market Growth Rate PAGEREF _Toc401353226 \h 263.2.5Industry Trends PAGEREF _Toc401353227 \h 273.2.6Five Forces Analysis PAGEREF _Toc401353228 \h 273.2.7Industry Key Success Factors PAGEREF _Toc401353229 \h 344.Internal analysis PAGEREF _Toc401353230 \h 344.1Organizational Analysis PAGEREF _Toc401353231 \h 354.1.1Corporate Mission PAGEREF _Toc401353232 \h 354.1.2Product and Services PAGEREF _Toc401353233 \h 364.1.3Leadership PAGEREF _Toc401353234 \h 364.1.4Organizational Culture PAGEREF _Toc401353235 \h 374.1.5Structure PAGEREF _Toc401353236 \h 374.1.6Strategy PAGEREF _Toc401353237 \h 384.1.7Summary of Organizational Analysis PAGEREF _Toc401353238 \h 414.2Analysis of Firm Resources PAGEREF _Toc401353239 \h 424.2.1Tangible Resources PAGEREF _Toc401353240 \h 424.2.2Intangible Resources PAGEREF _Toc401353241 \h 444.2.3Summary of Firms Resources PAGEREF _Toc401353242 \h 454.3Capabilities PAGEREF _Toc401353243 \h 464.3.1Value Chain Analysis PAGEREF _Toc401353244 \h 464.3.2Core Competences and Sustainable Advantages PAGEREF _Toc401353245 \h 514.3.3Summary of Firms Capabilities PAGEREF _Toc401353246 \h 514.4Financial Analysis PAGEREF _Toc401353247 \h 524.4.1Valuation Analysis PAGEREF _Toc401353248 \h 534.4.2Growth Analysis PAGEREF _Toc401353249 \h 544.4.3Profitability Analysis PAGEREF _Toc401353250 \h 554.4.4Financial Strength Analysis PAGEREF _Toc401353251 \h 564.4.5Management Efficiency Analysis PAGEREF _Toc401353252 \h 584.4.6Summary of financial analysis PAGEREF _Toc401353253 \h 595.Strategic Issues Analysis PAGEREF _Toc401353254 \h 605.1Critical challenges PAGEREF _Toc401353255 \h 615.2Resources and Capabilities PAGEREF _Toc401353256 \h 645.3Strengths or Weakness Analysis PAGEREF _Toc401353257 \h 665.4Opportunities or Threats Analysis PAGEREF _Toc401353258 \h 675.5Summary of Strategic Analysis PAGEREF _Toc401353259 \h 68References PAGEREF _Toc401353260 \h 70 LIST OF FIGURES TOC \h \z \c "Figure" Figure 1- Global population and share of consumer class in global population PAGEREF _Toc401738368 \h 10 Figure 2- Forecast for consumption of oil and pattern of energy resource consumption in transportation sector PAGEREF _Toc401738369 \h 11 Figure 3- Gas consumption by regions and sectors PAGEREF _Toc401738370 \h 12 Figure 4- Motorization curves and car fleet growth PAGEREF _Toc401738371 \h 17 Figure 5- Forecast for number of wells in Bakken formation for countries in North Dakota PAGEREF _Toc401738372 \h 18 Figure 6- Forecast for global biofuel production PAGEREF _Toc401738373 \h 19 Figure 7- US natural gas productive capacity from 2012 to 2035 PAGEREF _Toc401738374 \h 25 Figure 8- US oil production from 2012- 2035 PAGEREF _Toc401738375 \h 25 Figure 9- Apache's revenue and production mix PAGEREF _Toc401738376 \h 26 Figure 10- Porter's five forces model PAGEREF _Toc401738377 \h 28 Figure 11- Apache's organisational structure PAGEREF _Toc401738378 \h 38 Figure 12- Porter’s generic value chain PAGEREF _Toc401738379 \h 47 Figure 13- Oil and Gas industry’s generic primary activities PAGEREF _Toc401738380 \h 48 Figure 14- SWOT Analysis PAGEREF _Toc401738381 \h 69 LIST OF TABLES TOC \h \z \c "Table" Table 1- The Porter’s five forces analysis and future expectations PAGEREF _Toc401738382 \h 33 Table 2- Apache’s and Exxon’s valuation comparison. PAGEREF _Toc401738383 \h 54 Table 3- Apache’s and Exxon’s growth numbers PAGEREF _Toc401738384 \h 55 Table 4- Apache and Exxon Profitability Ratios and pictorial representation PAGEREF _Toc401738385 \h 56 Table 5- Apache’s and Exxon’s liquidity ratios and graphs PAGEREF _Toc401738386 \h 57 Table 6- Apache’s and Exxon’s Management efficiency ratios PAGEREF _Toc401738387 \h 59 Table 7- Critical Challenges PAGEREF _Toc401738388 \h 64 Table 8- Status of challenges PAGEREF _Toc401738389 \h 66 Table 9- Strength and weakness analysis PAGEREF _Toc401738390 \h 67 Table 10- Opportunity and threat analysis PAGEREF _Toc401738391 \h 67 EXECUTIVE SUMMARY Apache is an exploratory and development company in the energy sector. Being one of the key operators in many regions, the company faces certain challenges in order to stay competitive in the energy or Oil and Gas industry. It is imperative that the organization evaluates its strengths and exploit opportunities, at the same time, work on weaknesses to be better equipped to fight out threats. An external environment scanning and evaluation is performed to evaluate the general environment in which the organization operates in and how they influence the organizational performance. Various components of influence such as political, environmental, socio-cultural, technological, economic, and legal factors are evaluated. Upon analysis, many initiatives can be deployed to cut costs, increase profits, facilitate change, enhance business knowledge, and understand the driving forces that can change the industry and competitive conditions. The industry analysis scans the industry landscape in general to understand the complexity of the industry and the identification of economic factors that can help make strategic maneuvers. Market size, market growth rate, and trends in the industry is evaluated along with five force analysis that provides an insight of competition intensity. Key success factors of the industry are discussed. Internal analysis is performed through evaluation of mission, products and services offered, leadership capabilities, culture of the organization, and strategy the firm employs. The tangible and intangible resources of the organization are evaluated. Capabilities and firm core competencies are evaluated followed by financial analysis. Strategic issue analysis is performed to analyze critical issues the company faces followed by SWOT analysis which helps the company to adapt strategically to dynamic challenges it faces and possible solutions that can help the company to combat weaknesses and threats are discussed. COMPANY HISTORY Background Apache Corporation is an American oil and gas corporation and is headquartered at uptown district of Houston, Texas. Apache has global presence, with regional offices and operations within the United States of America, Argentina, Australia, Canada, Egypt, and has also has presence in the North Sea. The company is a major player in the segment of natural gas, with roughly half of natural gas and half of oil, with reserves at an estimated 2.95 billion barrels of oil equivalent at the end of 2010. Established in 1954, Apache Corporation has fully grown to become one among the major oil and gas exploration and production corporations, with US$61.64 billion in total assets at year-end 2013. Apache’s growth and progress resulted from a various team of committed personnel that share values of integrity, diligence, and respect for others. The corporation provides its workers with the most sophisticated technology and empowers them for proper utilization of technologies to fuel the organization’s growth. Apache stretches the bounds of what’s potential through determination, ability, discipline, a way of urgency, and a long term perspective. Apache’s subject matter expertise is in the field of exploration, cash-generating production facilitates it owns, and monetary flexibility. This enables the corporation to grow further and reinvest through exploration of resources, developing mature fields with conservative investment, and run economical and robust operations. Apache Corporation is known as an established company through proven revenues and its continued commitment to the best standards of safe and environmentally accountable operations. The corporation participates in several programs that foster innovation and improve the standard of life in our communities through corporate social responsibility initiatives. Purpose of the study The purpose of this study is to perform analysis by obtaining driving forces and key success factors, through a thorough investigation of the external and internal environments that have an effect on Apache Corporation’s business. These forces and success factors can then be assessed against company resources and capabilities, to get a clear picture on whether or not the business is well equipped to encounter them. Moreover, the current strategy of the company will be evaluated to get an understanding if it's presently equipped to face the challenges known from the driving forces and key success factors. In order to overcome the challenges, critical issues have been identified to generate recommendations. EXTERNAL ANAL...