Executive summary
In this report, Saudi Aramco is introduced and its marketing strategies are revealed and discussed. The report also includes a market segmentation of Saudi Aramco followed by a discussion of how the company caters for the different segments.
This is followed with a discussion of how the company designs and manages its products. The report additionally includes discussions on what Saudi Aramco does to manage customer loyalty and how it promotes its products and its public image.
This report main conclusion is that in order for Saudi Aramco to solidify its current position it should adopt the recommendations made herein.
Introduction
Saudi Aramco (also known officially as Saudi Arabian Oil Company) is a leading Saudi Arabian oil company that is state-owned and a global petroleum-energy based enterprise. The company’s supply chain spans from exploration through refining and marketing to distribution. In 2000 and for the 11th consecutive year, Saudi Aramco was ranked the first in crude oil reserves and petroleum production by Petroleum intelligence (AOC UK Ltd, 2012, 2).
Saudi Aramco’s vision is mainly upholding its commitment of remaining a world leader in its industry, which according to Saudi Arabian Oil Co. is the “production of petroleum-based energy” industry (Saudi Arabian Oil Co., 2012, 1).
To ensure that this vision is within reach, the company ensures that it also remains committed to solving pressing issues arising in its industry e.g. environmental awareness, the need for clean and sustainable energy etc. Embodied, in its vision, is the belief that the company should in all its endeavors be a difference-maker.
This belief is according to Saudi Arabian Oil Co., reflected in a number of ways in the real world one of which is the company’s continual investments in innovation (research and development) and entrepreneurship (Saudi Arabian Oil Co., 2012, 1). In line with this belief, Saudi Aramco is also a creator of educational opportunities, a driver of economic progress, an increaser of environmental awareness, and a pursuant of energy sustainability (Saudi Arabian Oil Co., 2012, 1).
More of the company’s vision is embodied in the company’s strategic intent as it is brought out by Saudi Arabian Oil Co. (Saudi Arabian Oil Co. 2012, 7). Saudi Aramco in the future is aiming at becoming an agile organization that will have attained respectability of a global employer. Another of its strategic intents is becoming what Saudi Arabian Oil Co. describes as “preeminent oil and gas exploration and production business” (Saudi Arabian Oil Co. 2012, 9).
Saudi Aramco is, in the future, looking forward to becoming as Saudi Arabian Oil Co. describes “An integrated global-scale refining and chemicals business ” for which it intends to lead in the aspects of profitability as well as technical innovation (Saudi Arabian Oil Co., 2012, 10).
Saudi Aramco as a strategic intent is aiming at becoming a leader in technological development and being an integral part of Saudi’s flourishing and knowledge-based economy. In addition to all these, Saudi Aramco is also working to enable Saudi’s national economy become energy-efficient and its energy-support industries become more export-oriented.
Discussion
SWOT analysis of Saudi Aramco
A SWOT analysis of Saudi Aramco done by Kobayashi Kobayashi reveals that the company has 4 main strengths. The first of this strengths, as captured in Kobayashi’s SWOT matrix, is the company’s spare production capacity which is, according to Kobayashi, the world’s largest (Kobayashi, 2007, 3).
Another of Saudi Aramco’s strengths is its access to oil that is of low cost coupled with its access to assets of producing gas. Saudi Aramco’s technology portfolio that comprises of advanced upstream technologies coupled with its proactive staff is another of the company’s strengths. The company’s good relationship with the government of Saudi Arabia is also another of its strengths.
One of the company’s weaknesses, as brought out in Kobayashi’s SWOT matrix, is what he terms “sour crude oil” (Kobayashi, 2007, 3). Other weaknesses of Saudi Aramco, as drawn from Kobayashi’s SWOT matrix, is the company’s only and heavy reliance on crude oil and its downstream capacity, which is relatively small.
An opportunity for Saudi Aramco, according to Kobayashi’s SWOT matrix, is the high price of crude oil coupled with the company’s sufficiency in investment capital (Kobayashi, 2007, 3). Another opportunity that is beckoning for Saudi Aramco, as drawn from Kobayashi’s SWOT matrix, is the rising demand for oil in Asia.
The Kingdom of Saudi Arabia’s rise to World Trade organization (WTO) is another opportunity for Saudi Aramco. Kobayashi in his SWOT matrix notes that threats facing Saudi Aramco is the rising local demand in Saudi Arabia for gas and potential drop in global demand for oil resulting from its current high prices (Kobayashi, 2007, 3).
Market segmentation
Saudi Aramco most likely uses a geographic market segmentation of its market as evidenced by its petroleum exports, numerous affiliate organizations in different parts of the world and the fact that it is a multinational company.
In geographic market segmentation, an organization segments its customers along the basis of their physical location, which in Saudi Aramco’s case is country or continent (WebFinance, Inc., 2012, 1). This type of geographical segmentation is important for Saudi Aramco because it enables it identify high priority geographical locations (countries or continents) where it can increase its investments or marketing efforts.
Another market segmentation that is most likely being used by Saudi Aramco is “Positive” market segmentation, in which the company’s customers are divided mainly according to their needs. The reason why this is a possibility is that Saudi Aramco is not dealing in petroleum only but also in petrochemicals (Kobayashi, 2007, 20 ).
By this fact, they have customer’s with different needs and, as such, can only be segmented by the “Positive” market approach. By doing this, Saudi Aramco is able to better identify how it can improve its customer relations most likely through continual improvement of its products.
How Saudi Aramco caters for market segments
In whichever segment, Saudi Aramco mainly caters for its customers through innovation. Through innovation, Saudi Aramco continually comes up with new technology, which it uses to improve its services, e.g. improving its energy supply. The company believes that its innovative culture has been crucial and instrumental in ensuring that it remains at the fore front in the petroleum-based energy business and guaranteeing a bright future not only for the company but also for its customers as well (Saudi Arabian Oil Co., 2012, 1).
Saudi Aramco acquired its 100th patent in 2010 and it is still aiming at acquiring more. In the heart of Saudi Aramco’s innovation, there are its two research centers which, according to Saudi Arabian Oil Co., are the “Research and Development Center (R&DC)” and the “Exploration and Petroleum Engineering Center Advanced Research Center (EXPEC ARC)” (Saudi Arabian Oil Co., 2012, 1).
The article “Innovation at Saudi Aramco” says this of the company’s innovative culture “Today, you can see innovation in every aspect of our business. It’s why we’re widely recognized as an industry leader in using advanced technology throughout our company”(Saudi Arabian Oil Co., 2012, 1).
Clearly, this statement underpins the importance of innovation to Saudi Aramco’s public image and relations. Saudi Aramco’s internet portal is another way in which the company indirectly caters for customers in its various market segments (Saudi Aramco, 2006,2).
Through this internet portal, customers are able to communicate their desires with Saudi Aramco, thus, facilitating easier problem-solving. Another way in which Saudi Aramco caters for its customer is though its organizational culture. Saudi Aramco’s organizational culture ensures that the company’s staff is highly motivated throughout. Highly motivated staff is essential in ensuring that an organization’s customers are satisfied.
How Saudi Aramco designs and manages its products
Saudi Aramco’s innovative culture and philosophy imply that the company designs and manages its products using the continuous quality improvement and total quality management approaches respectively. The use of both of these approaches is to ensure that customer satisfaction is attained.
According to Department of Children & Family Services, continuous quality improvement (or CQI) is “a process of creating an environment in which management and workers strive to create constantly improving quality” (Department of Children & Family Services, 2012, 1). Total quality management is defined by the American Society for Quality as “management approach to long-term success through customer satisfaction” (American Society for Quality, n.d, para. 1).
Continuous quality improvement is a performance oriented procedure in which the current performance of a product or process is measured, analyzed and improved. One method of continuous quality management that is applicable in Saudi Aramco’s case is the Failure Mode and Effect Analysis (FMEA). Generally, in FMEA, potential failures of a product or process are identified before hand and prioritized then possible solutions formulated to deal with them.
To achieve total quality management, an organization like Saudi Aramco should integrate within its processes statistical quality control procedures coupled with dedicated employee involvement in the company’s continuous quality improvement program. It is important to note that in total quality management, the customer holds the definition of quality and, as such, his/her standard should be met. In addition to these, the organization’s point of view should also be taken into account.
How Saudi Aramco promotes its products
Following the discussion above, it is inferred that Saudi Aramco’s main method of promoting its products is through providing its customer base with products of high quality through advanced technological processes. In this way, the products market and promote themselves.
Saudi’s main effort of improving the quality of its products and processes as seen the company’s public image improve as it has been shown in the article “Innovation at Saudi Aramco”, which says that this of the company’s innovative culture “Today, you can see innovation in every aspect of our business. It’s why we’re widely recognized as an industry leader in using advanced technology throughout our company” (Saudi Arabian Oil Co., 2012, 1).
It, therefore, follows that research and development is at the centre of Saudi Aramco’s product promotion services. The research and development give Saudi Aramco the knowledge it needs to advance its technology and subsequently improve the quality of its products. Saudi Aramco is also involved in creating environmental awareness, which is another way in which the company improve its public image and subsequently promotes its products.
How Saudi Aramco maintains its public image
Saudi Aramco maintains its public image primarily through ensuring high standards of quality in its process and products. This is inherently achieved through the company’s innovative culture, which facilitates the realization of new and advanced technology. This is again shown in the article “Innovation at Saudi Aramco”, which says that this of the company’s innovative culture “Today, you can see innovation in every aspect of our business.
It’s why we’re widely recognized as an industry leader in using advanced technology throughout our company” (Saudi Arabian Oil Co., 2012, 1). It follows that research and development is at the centre of Saudi Aramco’s efforts aimed at maintaining its public image. Again, the research and development give Saudi Aramco the knowledge it needs to advance its technology and subsequently maintain high standards of quality in its products.
Another way in which Saudi Aramco maintains its public image is through its organizational culture, which ensures that the company’s staff are motivated through out. Highly motivated employees in a company means that the company’s employee turnover rate is low, which is good for a company’s public image. Sigma Systems Inc. points out that a high employee turn over rate easily leads to poor public relations
(Sigma Assessment Systems Inc., 2012, 11). Another way in which Saudi Aramco maintains its public image is through its involvement in activities aimed at increasing environmental awareness. Such involvement portrays to the public the image of a responsible company. Another way in which Saudi Aramco maintains its public image is though creating educational opportunities, which again portrays to the public the image of a responsible company that is giving back to the community.
How Saudi Aramco manages customer loyalty
One way in which the company manages its customer loyalty is through its organizational culture. Saudi Aramco’s organizational culture ensures that the company’s staff remain highly motivated. This is integral in ensuring that the company’s customers are satisfied. When the customers are satisfied, it is most likely that they will be loyal than when they are not. Another way in which Saudi Aramco is managing its customer loyalty is by ensuring that it maintains the good public image it has built for itself.
Saudi Aramco is dedicated to innovation which, at the moment, gives the company a good reputation. Saudi Aramco is also dedicated to creating educational opportunities and promoting environmental awareness. These efforts boost its public image. A good public image is an ingredient of strong customer loyalty. Another way in which Saudi Aramco is managing its customer loyalty is through its internet portal through which customers can post their comments or problems.
Recommendations
One recommendation to Saudi Aramco is for the company to couple its research and development activities with knowledge integration. By doing this, Saudi Aramco will ensure that available knowledge is not discarded but put to optimal use in formulating solutions to the challenges the company is facing in its growth.
Another recommendation that this report makes to Saudi Aramco is for the company to maintain a high code of ethics coupled together with an ethical decision making model. A high code of ethics is instrumental in maintaining a highly motivated staff and strong public relations.
Another recommendation this report makes to Saudi Aramco is for the company to integrate within itself a critical thinking culture, which will ensure that there is objectivity and rationality in the company. Eventually, this will safeguard the company’s already good public relations and maintain customer loyalty.
Another recommendation this report makes to Saudi Aramco is for the company to maintain (or if possible improve) its current organizational culture that has enabled it maintain a highly motivated staff.
Another recommendation to Saudi Aramco is that it should maximize on its strengths and take hold of its opportunities as they are captured in Kobayashi’s SWOT matrix. Another recommendation to Saudi Aramco, is for it to eliminate its weaknesses and be mindful of its threats, as they are captured in Kobayashi”s matrix.
Conclusion
Saudi Aramco has established itself as a leader in its industry and it has the potential to remain just that. If Saudi Aramco can adopt the recommendation of this report, then it will solidify its position and have an edge over its competitors.
References
AOC UK Ltd. (2012). About Saudi Aramco. Web.
American Society for Quality. Total quality management (TQM). Web.
Department of Children & Family Services. (2012). Continuous quality improvement (CQI). Web.
Kobayashi, Y. (2007). Corporate strategies of Saudi Aramco. Web.
Saudi Arabian Oil Co. (2012). Innovation at Saudi Aramco. Web.
Saudi Arabian Oil Co. (2012). Our vision. Web.
Saudi Arabian Oil Co. (2012). Our vision. Web.
Saudi Aramco. (2006). Help and support. Web.
Sigma Assessment Systems Inc. (2011). Overview of employee turnover research. Web.
WebFinance, Inc. (2012). Geographic segmentation. Web.