Executive Summary
ADCO is a company in the United Arab Emirates that deals in oil and petroleum products. The company operates in an environment that is highly competitive. In addition, the company faces numerous challenges in its operations. There is need for the management to identify all the challenges that are likely to affect the business and its profitability.
The management needs to come up with a strategy that will address these challenges. The aim is to ensure that ADCO does not lose its competitive advantage. This is a report addressed to the management of ADCO management about the problems that the organization faces currently and the suggested strategies that can address the problems.
Company overview
The Abu Dhabi Company for Onshore Oil Operations (ADCO) is a company that is located in the United Arab Emirates. The company, as its name suggests, deals in oil and oil products. Its operations are in the coastal waters of the Emirates in Abu Dhabi. The company became incorporated in the year 1978.
Since the year 1979, ADCO has grown to cover an area of 21,000 square kilometers after relinquishment, an area that it has been responsible for operations. It was established by Abu Dhabi National Oil Company (ADNOC) with the major aim of exploring onshore oil. Its major products are oil and oil products.
These are products that can be associated with a lot of environmental damage. In fact, the major cause of global warming is carbon dioxide gas that is emitted from burning of fossil fuels. Therefore, ADCO is likely to be faced with challenges of preventing the environment, especially at this age when most people and organizations are advocating for green production methods (ADCO, 2013).
ADCO is headed by a CEO who oversees all the operations in all the divisions. There are various departments, each headed by a senior Vice President. The senior Vice President reports to the CEO. The employees in the various departments report to the senior Vice President. Its shareholders are various companies across the world dealing in oil as well as the government of UAE.
Among the shareholder companies include BP, Shell, TOTAL, ADNOC, ExxonMobil, as well as PARTEX. It is important to note that the company is operating in a business environment that is becoming more and more complex. However, the company has a large network throughout the world, a factor that gives it a competitive advantage.
Its shareholders are known companies that supply oil and gas across the world, thus they help the ADCO to secure a large market. Its ability to use technology and prevent environmental damage is also a competitive advantage (ADCO, 2013).
Challenge
One of the challenges that the ADCO faces is the increasingly complex business that it has to deal with in order to gain a competitive advantage. The complexity in business is due to the increased competition from other organizations that deal in oil, as well as the changing technology that is likely to make ADCOs equipment become obsolete (Estridge, 2013).
It could be better if a pro-active action is taken to prevent any adverse effect on the company’s business. One of the major competitors to ADCO is an American based multinational that is known as Chevron Corporation.
Chevron Corporation, whose headquarters are at San Ramon in California, is a multinational that has established operations in over 180 countries across the world (Books, 2011). It is one of the largest corporations that deal in oil, gas and other energy products in the world.
The internal environment of ADCO includes a management and leadership that are focused on ensuring that the company overcomes the challenges that it faces in its business operations. The company has employees and shareholders who are committed to making it the best in the industry. Its management has the ability to develop strategies that will help the company operate at minimal cost and maximize its income.
Having a high and healthy income is one of the ways that the company can use to ensure that it survives in the complex and highly competitive business environment. In addition to strong personality, there is a high level of technology in the company, a factor that has the ability to give ADCO a competitive advantage (Hellyer, Aspinall & Environment Agency — Abu Dhabi, 2005).
Response to the challenge
If no action is taken to help the organization survive in the business environment in which it operates, there is a high possibility that it will be overtaken in terms of competition by its rivals. One of the strategies that the company can adopt in response to the current challenge is to analyze the market to determine what is required and what kind of services the customers require.
This will help the organization come up with ways to can meet the demands and consumer requirements in order to increase their satisfaction. In addition, the company should try to keep up with the technological trends to ensure that its equipment and production do not become obsolete, thereby losing its competitive advantage (Hults, Thurber & Victor, 2012).
To do this, there might be need to change the organizational structure from a centralized to a decentralized structure. A decentralized structure will enable all employees and members of the organization to contribute to decisions and development of the new strategies. It will also encourage innovation; a factor has the ability to give the organization a competitive advantage.
Planning and implementation should be approached in a manner that has the ability to ensure maximum success of the strategies. Thus, it should involve all the employees, managers and probably the customers and shareholders (Oxford Business Group, 2009). Each of the stakeholders should be contacted since the performance of the organization will have effects on each of them.
Alternatives should be collected from each of the stakeholders and then experts in the executive management sort them out to get the best that will favor the interest of each stakeholder and improve the performance of the organization. Once the best alternatives have been selected, they should be implemented and follow up made to ensure their success.
In implementing these changes there are chances that the management will meet a number of resistances. Not all employees and stakeholders will be open to the changes (Marcel & Mitchell, 2005). To deal with the changes, the management should ensure that each employee and each stakeholder are prepared for the change. This will be done by ensuring effective communication that should be done in advance.
Each of them should be informed and allowed to make his or her point regarding the intended change. Involving the stakeholders in making the changes is an important step that will ensure that they support it and reduce resistance. It is important to consider the culture of the organization in making these changes.
ADCO has the culture of ensuring the safety of people while dealing with the complex business. Therefore, introducing new technology and other strategies that will give it a competitive advantage will have a positive impact on the culture of the organization (Manuele, 2012).
Measuring progress in managing the challenge
Measuring the progress of a challenge is one if the important steps in any implementation. There are chances that change might be implemented and it does not have any positive impact on the organization. The aim of implementing change is always to improve the performance of the organization, as well as improve the current situation or other solves a certain problem within the organization.
Therefore, once the change has been implemented, it is important to measure the progress to ensure that it achieves the success it was intended for. The management needs to gather some information that can help it measure the progress of such changes. For instance, information regarding the performance of other organizations in the same industry would be important.
This will enable the managers determine whether the changes are having any impact on ADCO’s business. The importance of measuring this element is to determine whether the competitors are doing better so that, in turn, ADCO managers can come up with better ways to improve on its competitiveness (Davidson, 2010). Competitors to an organization are always doing their best to overtake it in terms of competition.
They are always thriving to get a large share of the market so as to make more profits. Therefore, they try as much s possible to come up with new technology, new innovation and implement changes that have the ability to edge out their competitors in terms of competition.
ADCO should find out the performance of its competitors in order to determine whether the change it implemented is having a positive impact or not. It is important to note that if the competitors are found to be doing better than ADCO, then this could be an indication that the organization has lost some customers to competitors.
The other element that should be measured is the performance of ADCO following the implementation of the changes. This will be important to find out whether the changes have had a positive or a negative impact on profitability. If the performance is negative, then it will be important to change the strategy and come up with a new plan (Garber, 2013).
In addition, measuring the progress in managing change can be done through collecting some data from the organizational stakeholders. For instance, the customers can be interviewed on their satisfaction with the services and products offered by the organization. In fact, customers have the ability to give the most accurate measurement of the progress. Their level of satisfaction will be directly proportional to the response of change.
The aim of the organization is to maximize its income. To do this, it has to ensure that customers are satisfied. It is only when customers are satisfied that they will come to buy the products from the organization. In addition, maintaining the current customers will depend on their level of satisfaction.
Measuring the number of customers will give a measurement of the progress in the change implementation. It is expected that the number of customers will be more if the change progress is positive, while on the other hand there will be less or no change in the number of customers if the change progress is negative.
Ethical issues that may result from the response
An organization should always ensure that it is acting in a manner that is ethical. Ethical behaviors may sometimes seem not to lead to profits for the organization, but in the long run they are a competitive advantage. When an organization behaves in a manner that is ethical, there is a higher chance that customers will be loyal to it.
For instance, an organization that is socially responsible creates a good reputation and increases its relations with its customers. Therefore, customers become loyal to the firm and its products and the brand image becomes better. A good brand image is like an asset to any organization.
To improve its business, ADCO might find itself committing some ethical misconduct if it is not cautious. Therefore, it is important to identify the ethical issues that may result in order to avoid them as much as possible. ADCO is an organization that deals with oil products, products that are likely to have negative effects on the lives of human beings and even animals.
The products can also damage the environment if they are not well handled or if the correct procedures are not followed in the production process. In fact, oil products are likely to cause long term effects on the environment. It follows that one of the ethical issues that may result in trying to increase production of oil is production of sub-standard oil products.
For instance, in order to produce more oil the company might not carry out thorough purification, thus the oil that might have effects on the environment and human beings (Estridge, 2013). Another ethical issue that might result is workplace malpractices that might result from conflict of interests. For example, money has to be spent to implement technology.
This means that there will be more expenses and fewer profits. The aim of shareholders is to maximize their wealth. Therefore, this action might lead to conflict of interest between the managers and the shareholders.
References
ADCO (2013). About us. Web.
Books, H. (2011). Chevron Corporation, including: Gulf Oil, Texaco, Unocal Corporation, Sam Nunn, Baku-tbilisi-ceyhan Pipeline, Robert James Eaton, Carla Anderson Hills. Charleston, CA: BiblioBazaar.
Davidson, C. M. (2010).The Persian Gulf and Pacific Asia: From indifference to interdependence. London: Hurst.
Estridge, C. S. (2013). Transform your enterprise. Industrial Engineer: IE, 45(4), 42-46.
Garber, P. R. (2013, Jan. 10). Managing change at work. ASTD. Web.
Hellyer, P., Aspinall, S., & Environment Agency — Abu Dhabi. (2005). The Emirates: A natural history. London: Trident Press.
Hults, D. R., Thurber, M. C., & Victor, D. G. (2012). Oil and governance: State-owned enterprises and the world energy supply. Cambridge: Cambridge University Press.
Manuele, F. A. (2012). Management of change. Professional Safety, 57(7), 35-43.
Marcel, V., & Mitchell, J. V. (2005). Oil titans: National oil companies in the Middle East. Washington, D.C.: Brookings Institution.
Oxford Business Group. (2009). The Report: Abu Dhabi 2009. Oxford: Oxford Business Group.