Business Environment and Strategic Management

This report analyzes the business environment and strategic management of Victoria Oil & Gas Plc, an independent oil and gas company operating in Africa. It examines internal and external factors influencing corporate strategy, including strengths, weaknesses, opportunities, and threats. The report also evaluates challenges faced by the company in implementing its strategy and provides justified recommendations for its strategic direction. This report is available on Desklib, a website that provides past papers and solved assignments for students.

Business Environment and
Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1 Justification of the reason you choose that particular independent oil and gas company........1
2. Critically analysis the internal or external factors which influence corporate strategy in oil
and gas industry..........................................................................................................................1
3. Evaluating the challenges facing the independent oil and gas company in the
implementation of its strategy.....................................................................................................4
4. Make justified recommendation for the strategic direction of Victoria Oil & Gas Plc..........6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
APPENDIX....................................................................................................................................10

INTRODUCTION
Strategic planning is a process and planning of all which is important for the company in
order to achieve its determined goals. Business environment refers and consist all the internal
and external factors that impact and influence business activities and process of the company.
Victoria gas and oil company is a domestic energy supplier in Africa. In 2004, Kevin founded
this company and was responsible for refocus of the company towards natural gas in Africa. This
study will show about the internal and external factors that include strengths, weaknesses, threat
and opportunities of the company which impact decision-making process in negative manner and
in positive manner (Robson, 2015). External factors include political, legal, economic factors
that also help the company in expanding its business by adopting its strengths. On the other hand,
weaknesses and other factors become barrier in the growth of the company that it addresses for
better improvement. This report also shows about flexible approaches of strategic planning and
all the factors that affects the implementation of corporate strategy within the gas and oil sector.
TASK 1
1 Justification of the reason of particular independent oil and gas company
Corporate strategy is the plan of the company that defines ways, method and in order to
achieve corporate goals within strategic management. There are mainly four types of corporate
strategy such as: market penetration, diversification, vertical integration and horizontal
integration. The oil and Gas sector play a vital role in social development and economy. The
strategic decisions of Victoria gas and oil company are highly unstructured, and long term.
Managers in this type of industry talk of midstream, upstream and downstream activities.
Upstream sector of Victoria gas and oil company concern and focus on trading and initial
processing of oil and gas.
The downstream sector of this company concern with marketing and transporting oil and gas to
the customers.
The midstream oil sector focus and concern with refining and transporting a large variety of oil
products.
Nature and scope of Victoria oil company
Victoria oil and Gas Plc conduct its business in accordance with the best practice
standards that govern human rights. The main aim and goals of this company is to respect
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various or different cultures and the rights of the people of local communities. The another main
aim of this company is maintaining and promoting integrity, honesty and high ethical standards.
It wants to make a positive and large amount of contribution to local communities. In order to
compliance with corporate social responsibility, company should ensure that all the members of
staff are aware of the company's commitment towards social responsibility. They also
communicate the company's activities with the community (Rees and Smith, 2017).
This group and company is focusing on developing the natural Gas and compressed
natural gas vehicle markets. Gaz du cameroun is currently the one and only supplier of natural
gas to Douala. Victoria gas company has pioneered monetisation of onshore gas from 57%
owned condensate project and Logbaba gas. It is wholly operates in this project. This company
has hierarchical structure in which it has executive chairman, chief executive officer, finance
director, senior independent director etc.
The strategic planning developed the structure in which models of the company are
applied in order to analyse the strategic process. The strategic planning resolves and tackles
specific issues of the company and their strategic implication.
Qualitative approach: According to qualitative approach these informations are collected it
helped in searching the meaning, definitions, characteristics and concept of the thinks
2. Critically analysis the internal or external factors which influence corporate strategy in oil and
gas industry.
Victoria Oil and Gas PLC
STRENGTHS
 Strong Brand Portfolio- Over the years, Victoria Plc has invested huge amount in
building a strong brand portfolio. It can be very useful if, the organisation wants to
expand into new categories.
 Strong Dealer Community- It has developed a culture among dealers & distributors to
promote company's products and also invest in training the sales team.
 High level of customer’s satisfaction- Company has dedicated customer’s relationship
management department that helps to achieve a high level of customer satisfaction among
present customers and potential customers.
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 Strong distribution network- Over the years Victoria Plc has developed a reliable
distribution network that can reach majority of its potential market (Henri, Boiral and
Roy, 2016).
WEAKNESSES
 Challenges from new entrants- The company has not been able to tackle the challenges
present by new entrants in the segment and has lost small market share in the niche
categories.
 Product demand forecasting- The company's managers are not very good at product
demand forecasting leading to a higher rate of missed opportunities compare to its
competitors.
 Organisation Structure- IT is only compatible with present business model thus limiting
the expansion in adjacent product segments.
Opportunities
 There is great growth opportunity for the Victoria Oil and Gas, as there is an exponential
growth in the population and particularly in the existing and potential customer segments.
 Through the advanced technological integration Victoria Oil and Gas can decrease cost
and improve efficiency in their innovative products.
 Reduction in the interest rates can improves their financing at lower cost-profitability.
 The emergence of e-commerce and social media marketing trend can be a great
opportunity for Victoria Oil Gas Plc if they can develop strong online presence on
different social networking sites.
 The diminishing boundaries and rising global interconnection allows the Company to get
into the international market and helps to target geographically dispersed customer base
and through that they can increase profitability.
 The subsidies provided by the government and other policies can make the business
environment more friendly for Victoria Oil and Gas Plc.
Threats
 The changing regulatory framework and introduction of new strict regulations impose a
major threat to the Victoria Oil Gas Plc. It makes compliance with legal standards more
complex and challenging for the Company.
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 The rise in inflation rate increases the cost of production and can impacts the business
profitability.
 Shortage of skilled labour in the market can make it difficult for the Company attract
talent with the right skills set (Haines, 2016).
 Increasing competition from the competitive firms can be a threat for Victoria Oil Gas
Plc.
External Factors
External factors are also known as macro business environment that directly or indirectly
influenced the overall Victoria Oil & Gas Plc The impact of those external factors could have
been positive or negative as well. As compare to external factors internal factors of the company
is controllable. Besides, external factors are more challenging for the industry to cope up with.
Such external factors are legal, technological, social, environmental, economical (Ahmad and
et.al., 2017).
Political factors: Oil and gas industry needs labour to work with and they have to pay the
taxes and other charges (Ahmad and et.al., 2017). Oil and gas industry should need to followed
the rules and regulations of government and pay all taxes and other charges which are levied
over it. The industry has to follow the taxation policy, implement labour laws in the industry.
They impact on the Victoria Oil & Gas Plc strategic position that affect the long-lasting growth
of the company. Government provide products and service and decision of government can
affect this industrial sector and also enhance the quality of the infrastructure.
Economic factors: Economic is another significant factor that affect the overall industry
growth. Generally, OPEC countries have earned lot of wealth through the sale of oil and
petroleum to other countries. In oil and gas industry political factor influenced by oil prices with
supplementary goods.
Social factor: the social factor is the most significant factor that affect industry in both
positive and negative manner (Haines, 2016). Social factor in the oil and petroleum industry
shows the demography, income generation, religious, culture and ideological views on the issues.
In this industry most of the employees are from good educational backgrounds. Through they get
good income and wages. People want this kind of industry in the country to make their future
needs more enlarging and effective. It can help them to rise their living standards.
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Oil and gas industry make changes in the people lives and give them good standard of
living. In other ways it helps Victoria Oil & Gas Plc in positive manner through company can
easily implement the corporate strategies into business functions.
Negative impact of social factor is raised when company ignore to adopt pollution free
environment. If Victoria Oil & Gas Plc fails to adopt government laws or rules related social
factors they would have given negative impact on the company image.
Technological factors: Technological is the most beneficial factor for the Victoria Oil &
Gas Plc that can help to remove the effective way of learning and goals. This factor makes
company profitable by introducing new technologies in the production process. Through
company get advantage from the corporate strategy. Industry is working for the complementary
products like ships, vehicles, airplane, petrochemical including synthetic rubber etc. on the other
hand, substitute companies or industry has been produced other products such as nuclear
industry, energy resources and natural gas. in other words, the use of these substitute will
automatically increase the use of oil and gas industry.
The negative factor of technology factor is, due to having advanced services, or
electronic systems they keep reducing the role of oil and gas.
Environmental factors: The geographic industry or the refinery industry has been given
great impact on Victoria Oil & Gas Plc. As per the latest report of the OPEC declares that, most
of the countries which produced oil are Russia, Iran, Nigeria, China, Qatar. On the same side,
due to natural disasters such as earthquake, tsunami, storms, cyclones, snow storm. This industry
would have facing lot of trouble. Indirectly this factor impact on the investors in the oil and gas
industry. To use of oil and gas products are very necessary rather than oil and petroleum
products. In order to overcome from this factor Victoria Oil & Gas Plc needs to make effective
strategic plan or utilize all potential resources to prevent the situation in safe manner.
Legal factors: this is the last factor of external factors that influence Victoria Oil & Gas
Plc corporate strategy and affect in both positive and negative manner. Legal factor is all covered
from laws, regulations that compulsory for the companies to adopt which is related to company
law, employment law etc. this factor influence corporate strategy in different manner such as
regulations in competition, pollution, international trade and consumer protection. In other
words, the positive impact of this factor is company can free by applying this law in case of any
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uncertainty they have their safety precautions. It helps company to make good deal with the
overall environment.
Quantitative approach: Quantitative approaches helped in finding out the logical things.
This approach includes interviews, questionnaires and surveys that helps in collecting all the
necessary informations. It has 4 types like descriptive, experimental, correlation al and quasi
experimental.
3. Evaluating the challenges facing the independent oil and gas company in the implementation
of its strategy.
Reducing costs to remain competitive in the industry
Oil and gas industry appears to have weathered the storm of the 2015 price collapse and has
responded with considerable accomplishments. In other words, oil and gas companies has facing
complex situation in global and national frameworks. In other words, for oil & gas industry is
facing challenges and issues in making refined products at lower cost to stay competitive in the
one of the complex industry (Ahmad and et.al., 2017). It is the responsibility of O&G companies
to utilizes environmental resources and on current operating sites and optimizing effective
products ion system. This is the main concern or challenge facing by the company due to which
they fail to implement company objectives and aims to get success.
Improving performance to make sure the valorization of assets
O&G company majorly depend upon water and energy resources and its therefore subject
to increasingly stingingly environmental standards. The supply of Oil and gas products are very
high as compare to its supply. Such as Victoria Oil & Gas Plc should also need for some new
sources for transport, refining which certainly very costly and complex to get. So this is the
another big challenge that this industry faced while implementing the corporate strategy.
Meeting environmental relations
It is the another most difficult challenge that company faced during the implementation
of the corporate strategies to accomplish the company set aims and objectives. From the time
when oil and gas companies will become the consumer of energy and water resources they
become the severe environmental standards.
However, reason behind for failed strategies are varied, but most hinge on the fact that
strategy implementation is resource intensive and challenges to perform the task into proper
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manner (Top 10 challenges in oil & gas industry, 2012). they fail to put the right source at the
right place due to some major challenges are given below:
Frontier acreage and access to reserves
Frontier acreage is the challenge which explore and develop the new area which is too
difficult for Victoria Oil & Gas Plc to acquire because it is very expensive or unstable to justify
the company operations.
Unconventional resources
These resources were not commercially viable until recently. Such resources in oil and
gas industry are shale gas, oil sands and coalbed methane (CBM) etc. however, technological
resources consist some other resources such as hydraulic fracturing, etc. this is the challenge due
to which sometimes company does not find the way or enough resources to get the good
outcomes to perform the productive goals outcomes.
Rising emerging market demand
This is another significant challenge that Victoria Oil & Gas Plc faced while
implementing the strategy into business action. Due to rapid increasing demand, Victoria Oil &
Gas Plc could not arrange the enough resources from the marker due to which they not producing
the enough supply of demand (Scherer and et.al., 2016). It makes improper decision-making
approach on the overall development process thing.
Investing in innovation and research and development department
R&D is now become the most significant department in the company or industry which
requires huge investment on innovation activities. It should need to adopted by the long-lasting
goals and services to become a leading management target.
Corporate social Responsibility
This corporate social responsibility is the main concern and issue for the oil and gas
company to follows. This challenge directly impacts on the company relation with several
stakeholder’s groups, health and safety concerns. Human rights, employee rights, environmental
protection, community relations, transparency and corruption issues. These issues generally
facing by the Victoria Oil & Gas Plc while implementing the corporate strategies. CSR is most
significant for the oil and gas companies to stable the good relation and become potential partner
of private and public strategic goals.
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4. Make justified recommendation for the strategic direction of Victoria Oil & Gas Plc
As per the current market growth and strategic planning Victoria Oil & Gas Plc should need to
make plans as pert he current needs and wants. Along with that, it is also necessary for the
company to make the efficient product or services for the clients or buyers. As Victoria Oil &
Gas Plc take strategic and complex decision making in daily basis (Skjærseth and Skodvin,
2018). For them, strategic direction is very necessary. To meet the current standards, company
should always need to make efficient strategic plan to gain market attraction.
From past few years oil and gas industry suffers due to high demand and low prices due
to which they cannot earn enough profit in the market. By implementing some strategic direction
Victoria Oil & Gas Plc can gain some amount of profit and improve entire value chain to earn
the national or international platform. To gain market response Victoria Oil & Gas Plc should
need to make efficient vision and geographic focus to make unique outputs. In order to get the
company, set aims and objectives Victoria Oil & Gas Plc should need to adopt some strategic
plans for some of the areas as given below:
Strategic directions
Supporting production growth: helping a new upstream CEO improve production a
poor reserve replacement ratio and total shareholder return by focusing the portfolio, finding new
areas of growth and looking for the new opportunity for reducing the cost as well. It makes
proper and influencing target plan in order to meet out the company aims and objectives.
Identify new energy segments: in order to expand future strategic goals, it is necessary for the
future scenario to grow the effective learning task. In order to that, company should invest on the
new oil company with mapping future global energy systems in 20 different segments (Skjærseth
and Skodvin, 2018).
Developing a Gas Master Plan: this is another strategic direction that could help
company to gain future profit and goals. It helps company to gain market growth and good
reputation in front of stakeholders. Working with Middle Eastern Government to develop a gas
master plan to meet 2030 demand. The main purpose of this new plant is to gain the economic
impact.
Providing perspective on regulatory change: This is another major challenging and
conservative goal and object that company should need to adopt in order to move in the overall
industry. Company sometimes facing regulatory implications imposed by the company.
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Corporate performance diagnostic tool is another strategic direction that company could
adopt to measure interpret and manage the real sources of value in their company (Skjærseth and
Skodvin, 2018). It will help to continue grow in the business.
CONCLUSION
On the basis of above given report, it has been analyzed through out the study that business
environment and strategic management is the two elements which is most significant in the oil
and gas industry. It has been critically analyzed the internal or external factors that how they
influenced company corporate strategy. Therefor, report discussed about the brief introduction of
the chosen company and background of the industry as well. It helps to make the overall good
impact on the study findings. Likewise, it explained the challenges which faced by the
independent oil and gas company in the implementation of the strategies in business functions.
Low cost is the main concerned issues that study discussed in oil and gas industry. In order to
summing up the whole study, it also concluded the recommendation strategic direction that faced
by the overall target performance.
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REFERENCES
Books and Journals
Ahmad, N. K. W. and et.al., 2017. An integrative framework for sustainable supply chain
management practices in the oil and gas industry. Journal of Environmental Planning
and Management. 60(4). pp.577-601.
Ahmad, W. N. K. W., and et.al., 2017. Evaluation of the external forces affecting the
sustainability of oil and gas supply chain using Best Worst Method. Journal of cleaner
production. 153. pp.242-252.
Amuna, Y.M.A., Al Shobaki, M.J. and Naser, S.S.A., 2017. Strategic Environmental Scanning:
an Approach for Crises Management. International Journal of Information Technology
and Electrical Engineering. 6(3).pp.28-34.
Haines, S., 2016. The systems thinking approach to strategic planning and management. CRC
Press.
Henri, J. F., Boiral, O. and Roy, M. J., 2016. Strategic cost management and performance: The
case of environmental costs. The British Accounting Review. 48(2).pp.269-282.
Kirchoff, J.F., Tate, W.L. and Mollenkopf, D.A., 2016. The impact of strategic organizational
orientations on green supply chain management and firm performance. International
Journal of Physical Distribution & Logistics Management. 46(3).pp.269-292.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
McMillan, C. and Overall, J., 2016. Wicked problems: turning strategic management upside
down. Journal of Business Strategy. 37(1).pp.34-43.
Prajogo, D. I., 2016. The strategic fit between innovation strategies and business environment in
Rees, G. and Smith, P. eds., 2017. Strategic human resource management: An international
perspective. Sage.
Robson, W., 2015. Strategic management and information systems. Pearson Higher Ed.
Scherer, A. G. and et.al., 2016. Managing for political corporate social responsibility: New
challenges and directions for PCSR 2.0. Journal of Management Studies. 53(3). pp.273-
298.
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Skjærseth, J. B. and Skodvin, T., 2018. Climate change and the oil industry: Common problem,
varying strategies.
Welford R. Corporate environmental management 1: systems and strategies. Routledge; 2016
Sep 17.
delivering business performance. International Journal of Production Economics. 171. pp.241-
249.
Online
Top 10 challenges in oil & gas industry. 2012. [Online]. Available through :<
https://www.intelligenthq.com/latest-news/top-10-challenges-in-oil-and-gas-industry-in-
2012/ >.
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APPENDIX
PESTLE ANALYSIS MODEL
SWOT ANALYSIS MODEL
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