The mission of the firm
Abu Dhabi National Oil Company is one of the largest oil companies in the world. The government of United Arab Emirates owns this firm. The oil industry has become very competitive as new players come into the market. According to Mun (2010), this competition has forced this firm to come up with ways of protecting its market share in the global market. To achieve this objective, the firm has developed concise mission statement that would guide its employees in delivering value to its customers. The mission statement of this firm according to Kourdi (2003), says, “We are committed to conduct our business with the highest levels of honesty and integrity.”
The management developed this mission statement upon realizing the need to maintain honesty and integrity while doing business in the international market. This firm also values its employees as a way of making them deliver higher output in duties assigned to them. Employees form a very important part of a firm. It is always important to take care of them in order to improve their productivity. This explains why the mission of this firm also mentions the need to ensure that employees remain satisfied.
The firm’s current objectives and strategies
Abu Dhabi National Oil Company has come to the realization that if it is to manage market competition, then it would need to set objectives and strategies that would make it successful. The management of this firm has developed the following objectives that should be realized by the firm.
- To improve the value offering to the customers by constantly communicating with them in order to understand their needs.
- To expand operations of this firm to new markets, especially in the developing nations.
- To be the preferred supplier of oil and natural gas in the world market.
- To maintain a large base of loyal and satisfied customers as a way of ensuring that the firm remains sustainable.
The above are some of the objectives of this firm as found on their websites and other documents they use in operations. This firm appreciates the fact that their current market- especially the United States market- is very important. The firm should protect it from invasion by competitors. However, it also appreciates the need to expand to other regions in order to achieve growth. The management has therefore, developed a series of strategies that would enable it protect its current market while penetrating new markets.
One such strategy has been the use of subsidiary firms. The management of this firm has avoided direct involvement in most of the new markets that this firm has entered, especially in the developing countries. Instead, it has been using subsidiaries to supply its products on its behalf. All the managerial duties would be left in the hands of the subsidiaries as a way of easing the work of this firm (Ignatiuk, 2008).
This strategy has worked well and it is cost effective to this firm. All it needs to do is to deliver its products to the subsidiary firm and wait for the revenues after the sale of the products. This firm has also been involved in corporate social responsibility as a way of creating awareness of its brand and products. Instead of using advertisement, Abu Dhabi National Oil Company has been involved in various environment protection activities across the world. This has helped in creating a positive image for this firm in the market. The management, in conjunction with other employees of this firm, has also been keen on ensuring that there is efficiency in service delivery. This involves delivering products to their customers within the right time and as per the expected value.
The firm’s current financial condition
It is very important to have a comprehensive analysis if the financial position of a firm in order to determine how well the firm is performing. According to Mun (2010), the performance of a firm will always be determined by analyzing its financial statements and determining how they portray the position of a firm. In order to understand the current financial condition of this firm, analysis will be done on its cash flow statement, income statement, and balance sheet for the last three consecutive years.
Source: (Corporate Profile 2013)
The above income statement indicates that Abu Dhabi National Oil Company has had a healthy flow of cash within the last three years. This is an indication that it has had positive sales in the market. This can be further demonstrated using the income statement below.
Source: (Corporate Profile 2013)
This income statement shows that Abu Dhabi National Oil Company has had a consistent growth of its income. In 2010, the net income to common shares was only 19,024,000. This has since increased by almost eight percent in 2012, an indication of a growth of this firm within the three-year trading period. The balance sheet will help confirm this growth.
Source: (Corporate Profile 2013)
The balance sheet is always important in determining the current financial position of a firm. The above balance sheet for Abu Dhabi National Oil shows that this firm has been growing in asset base in a consistent manner from 2010 to 2012. The net tangible asset for this firm has increased by 3.13% over the last three years. This is an attractive growth given that this is a very large firm. These statements confirms that Abu Dhabi National Oil Company has developed good strategies that would enable it manage market competition.
Analyzing the external and internal environment of the firm using SWOT model
It is always important to have an understanding of both the internal and external forces of a firm that affects its operations in one way or the other. This will help the management in dealing with these forces for the success of the firm. The most popular model for analyzing both internal and external environment of a firm is the SWOT model.
The firm’s external opportunities and threats
In every industry, there are always opportunities and threats that a firm may come across in the external environment. Various opportunities exist for ADNOC in its operations in the global market. One of the opportunities that this firm has had is an expansive market in the third world countries. Most of the oil companies have focused their effort on building a large base of loyal customers in the leading economies like the United States and the European markets. This firm has managed to tap into the emerging markets in African and parts of Asia. The stable economic growth in the major economies means that there is increased opportunity for this firm to increase its sales in such countries as the American markets and the markets in Europe. This growth of the economy means that the consumers will always have enough to spend on the products of this firm.
There are threats that exist in this industry that is worth noting. Technology is probably the main threat that this firm faces in this industry. Most of the major oil companies have developed sophisticated technologies for drilling and even transporting oil. This means that this firm must find a way of enhancing its production strategies to incorporate the use of the emerging technologies. Another big threat that this firm faces is the stiff competition posed by rival firms. This industry is one of the most competitive industries in the world. Any slight mistake by the firm may result in a situation where its market share is taken over by other rival firms
The firm’s internal strengths and weaknesses
ADNOC has some special abilities that can be considered its main strength in the market. The ability of this firm to diversify its products offering to include oil lubes besides fuel products has helped increase its sales. The management of this firm has come up with a quality control unit in all its subsidiaries in order to ensure that it delivers quality products to the customer. Ability to deliver quality service to the customer has made it develop a special niche in the market making its products popular across the world. The firm is also one of the first firms that embraced value chain management. Through this, the firm has been able to continue satisfying its customers at a cheaper cost. The ability of this firm to adopt the emerging technologies has been considered as strength by other firms.
Despite the above strengths for this firm, it has some weaknesses that have impeded its growth to a given degree. One of the main concerns that this firm has not addressed properly is the issue of environmental management. The components of the products of this firm are known to be very dangerous to the environment. Petroleum products are known to cause massive environmental problem if not well handled. This firm has been criticized, alongside other firms, to be leading in the pollution of the environment, especially due to oil spills. This firm is yet to come up with a clear structure on how it can manage environmental pollution caused by its wastes around the globe (Kim & Mauborgne, 2005). The firm has claimed that it has been engaging in corporate social responsibility. However, this has not been enough to make the public believe its commitment to a cleaner environment.
Revising the firm’s mission and objectives
According Kourdi (2003), the changing environmental forces may demand that a firm reconsiders its missions and objectives from time to time in order to be in a position to respond to the environmental forces. The mission and objectives of this firm are effective and may not need a massive adjustment. However, the researcher recommends that the mission and objectives of this firm should also capture the need to protect the environment. This can be through corporate social responsibility and proper management of their products to eliminate any form of spillage.
Corporate and business strategies to be achieved with the firm’s adjusted mission and objectives
This new strategy seeks to give this firm a new image in the market. The commitment of this firm to protecting the environment means that its corporate social responsibility will focus on environment protection. This will give it a favorable image in the corporate world. It will be considered as a firm that is conscious of the environment. This will enhance its business strategy in the world market. A good name will make this firm find market for its products in various other regions that this firm is currently not operating. This strategy will involve the firm positioning itself as a company that operates conscious of the need to protect the environment.
Specific actions needed for implementation of the chosen strategies
As mentioned, the strategy will be to create a culture where every employee of the firm knows that there is need to protect the environment. In this case, the specific focus will be on the human resource and marketing. The marketing team’s main objective will be to convince the market that ADNOC has aligned its operations to the principles set by environmental bodies. This can be done through organizing seminars, conducting corporate social responsibility or funding environmental organizations. The human resource management would start a program that will enlighten the employees to understand the new organizational culture about the environment.
These long-term objectives would be achieved by developing annual objectives and policies. In this regard, the management can set a whole year for direct participation in various activities geared towards enlightening their employees on the need to develop a culture that is conscious of the delicate environment. When the internal stakeholders have appreciated the need to protect the environment, the focus would then move to undertaking practical action to protect this environment (Ignatiuk, 2008). The management can then set organizing corporate social responsibilities in its major markets to protect the environment. Its employees- in conjunction with such institutions as schools and nongovernmental organizations- who already appreciates the need to protect the environment can do this.
The result to be expected from this new strategy cannot be measured directly in monetary terms. However, it will be possible to measure the results by determining the image this firm is given in the market. The marketing department can determine how this brand is received following this new approach. The marketing department can also determine the possible increase in market share of this firm that can directly be attributed to this new strategy. The human resource department can also determine the result by determining how well the employees embrace the need to protect the environment in all their official duties.
Recommended procedures for strategy review and evaluation
It is important to have a clear procedure that can be used to review and evaluate a new strategy. This helps in determining how effective the strategy is in helping a firm to achieve its strategic goals. In this new strategy, the recommended procedure will be simple and straightforward. As mentioned above, the evaluation will be done by the top management of marketing department. A different group from that undertaking the strategy should do the evaluation. This group will try to determine if the image of the firm has been improved due to this new strategy. They can do this by sending questionnaires to specific respondents and getting direct feedback. This review can take three months. This team will also analyze the possible growth of market share for this firm that can directly be attributed to this strategy. This can also be done through a research that can take one month. The reviews will reveal how effective the strategy can help the firm achieve its objectives.
References
Corporate Profile: Abu Dhabi National Oil Company. (2013). Web.
Ignatiuk, A. (2008). Analysis of the best business strategies in the contemporary market. Munich: GRIN-Verl.
Kim, W. C., & Mauborgne, R. (2005). Blue ocean strategy: How to create uncontested market space and make the competition irrelevant. Boston, Mass: Harvard Business School Press.
Kourdi, J. (2003). Business Strategy: A Guide to Effective Decision-making. London: Economist Books.
Mun, H. (2010). Global business strategy: Asian perspective. Singapore: World Scientific.