Managing Operational Improvements

This document provides an overview of the Abu Dhabi National Oil Company (ADNOC) and its operational strategies. It includes a SWOT analysis, key forces of change, and recommendations for improvement. Find study material, solved assignments, and essays on Desklib.

Running Head: MANAGING OPERATIONAL IMPROVEMENTS
Managing Operational Improvements
Name of the Student
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1MANAGING OPERATIONAL IMPROVEMENTS
Table of Contents
Introduction......................................................................................................................................2
Overview of the Company.......................................................................................................2
Key Forces of Change (Porter’s Five Forces).........................................................................3
SWOT Analysis of Adnoc.......................................................................................................5
Resources/ capabilities of ADNOC.........................................................................................7
The Operational Strategies......................................................................................................8
Implementation of the Strategies...........................................................................................10
Creating a learning Culture....................................................................................................11
Recommendations..........................................................................................................................13
Reference.......................................................................................................................................16
Appendix........................................................................................................................................20

2MANAGING OPERATIONAL IMPROVEMENTS
Introduction
Overview of the Company
The ADNOC or the Abu Dhabi National Oil Company is a United Arab based oil
company that is state owned. As per the view of various articles published related to the trade
report of the company, it has been found that the UAE has held the position of seventh largest
reservoirs of the world. It holds 97.8 billion barrels of oil and Abu Dhabi is the center of the oil
reservoirs. In terms of production, it holds the position of world’s 12th largest company of oil and
as an average, it produces 3.1 million barrels each day (Adnoc.ae 2019). The company was
founded in the year 1971 and among key people of the organization, Khalifa bin Zayed Nahyan
who is the Chairman of the Supreme Petroleum Council and Sultan Ahmed Al Jaber who is the
director General and CEO are highly important.
The company provides gas and integrated oil services. It has few of the strongest
subsidiaries which contributes positively in the production of crude oil. natural gas, sour gas,
drilling of oil reservoirs, refining of the crude oil, kerosene, napatha, LPG, granulated sulfur and
many others. The company owns a huge number of gas stations ad also provides energy industry
and engineering education to the colleges (Anderson and Sun 2017). There are 16 subsidiary
companies associated with the company in its upstream, midstream and downstream stages of
production. The company develops both the offshore and onshore gas fields. There are two big
oil refineries of the company named as Umm AL Nar and Ruwais. The natural gas is exported by
the company in the form of Liquified Natural Gas along with the local electricity supplies to the
domestic industries which includes the petrochemical plants (Baines and W. Lightfoot 2013).

3MANAGING OPERATIONAL IMPROVEMENTS
Key Forces of Change (Porter’s Five Forces)
The ADNOC Company deals in the oil and gas industry. Hence, the analysis of the
industry using the Porter’s Five Force framework would clearly reveal the key forces on the
company. The framework of Porter’s Five Force helps to point out that the situation of
competition in an industry completely depends on five major forces. These five forces are threat
of new substitutes, power of the suppliers, rivalry among the firms in the industry, power of the
buyers and threat of new entrants (Bereznoy 2015). The success of a company is determined by
the way it is related to the industry and the way the industry is structured.
Threat of Potential Entrants
Porter suggest that the new entrants might bring new capacity and ideas with them along
with high desire to gain the share of the market. This particular desire, as suggested by Porter
leaves pressure on the prices, costs and the rates of investments which are required to compete in
the market. The threat of new entry similarly depends on two of the most important factors. the
incumbents’ response to the new entry and the level of entry barriers (Bereznoy 2015). The
major barriers of entry in the oil and gas industry are:
 the patents
 the economies of scale
 predatory behavior by cartels
 ownership of the resources
 large capital requirements
 product differentiation and may others.

4MANAGING OPERATIONAL IMPROVEMENTS
One of the most effective driving force is the patents of technology and innovation which
dominate the product differentiation and cost reduction. Taken for example, the introduction of
the advanced technology by the Exxon Mobile was intended to reduce the cost and increase the
production capacity. It enables the company to boost the capacity of production by 5.8 million
barrels of oil and expand the life cycle of the oil and the gas fields. The economic scales do not
block the new entries into the oil industry. However, in the marketing sector, the government
regulations can influence the strategies of the companies. The U.S oil and gas companies use the
strategy of differentiation to sustain in the oil and gas industry. The energy cost, the
differentiation costs, the labor cost, the drilling cost might create hurdles for the new entrants in
the industry. Secondly, it is almost impossible to get the success to the distribution channels in a
short period of time. The government policies on the other hand support the national companies
like ADNOC.
The Power of the Buyers
The buyers are in the stronger side in terms of bargaining power. The buyers have strong
influence on the industry profitability because they are the key people of the industry who can
either make or break the stability of the company. The willingness to spend on the gas and oil
depend on the customers. However, it is also suggested that only the big consumers like Japan,
China, US only can affect the global demand.
The Power of the Suppliers
The suppliers are another key entity in the business of a country who can easily destroy
the returns of the industry by increasing the prices of the raw materials and deteriorating the
quality of the product or services. The suppliers in the oil and gas industry mainly supply the

5MANAGING OPERATIONAL IMPROVEMENTS
materials, equipment, pipeline service and others. With the growth of the oil producing
companies all over the world, the number of suppliers have also increased. Hence, the power of
suppliers in this industry is comparatively lower than other industries.
Threat of Substitute Products and Services
The substitutes are the similar products available in the market that can equally solve the
purpose of a particular product or service with maximum benefits to the customers. It is known
that the oil and gas are the major source of energy to the world. It has also to be noted that oil
and gas are the cheaper source of other expensive fuels. Coal can be considered as one of the
potential substitutes but each country does not have sufficient coal resources. Other substitutes
like the wind energy, natural gas, solar energy and the thermal energy are the expensive forms of
energy and not easily accessible. However, the oil and the gas companies must not underestimate
the capacity of these substitute in the market.
The Rivalry among the Players in the Industry
The market rivalry is common in all industries. Rivalry happens when the companies put
their effort on excelling over their competitors and gain the competitive edge. In the oil and gas
industry, the competitive environment consists of the key players in the market with strong
power ad huge market share. Another aspect of rivalry in the market is in terms of deficiency of
product differentiation and high fixed storage cost. The United Arab Emirates is such a country
which is full of the oil and gas suppliers. The competitors of ADNOC are Saudi Aramco, Hunt
Oil and many others.

6MANAGING OPERATIONAL IMPROVEMENTS
SWOT Analysis of Adnoc
Strengths – The company has strong brand portfolio that has been built through the past years.
This company has invested on establishing the brand name incredibly. This brand name might
become highly important for the company to expand further. The performance of the company
has been superb in the market and the company has acquired the expertise to enter a new market.
In the product development aspect, the company has also created records. It experiences good
returns on the capital expenditure (Olcay et al.2013). Therefore, it is a successful company in
executing new projects and subsequently generate good returns on expenditures by establishing
new revenue streams. The company has also experienced higher levels of customer satisfaction.
There is considerable customer base the company has created and the loyalty of the customers
can support ADNOC in the long run.
Weakness
The higher levels of employee attrition are one of the biggest weakness of the company.
The company needs to spend a lot on the training and development of the employees. There are
few product gaps too in the product range of the company. The absence of this choice of product
can leave space for a new competitor in the market. The company is not fond to be highly
successful in integrating the firms with diverse work culture. It is less active in merging firms
with different cultures of work(Patel et al. 2014). The company needs to focus more on
forecasting the product demands which might increase the number of missed opportunities as
compared to the competitors. It need to navigate the industry sphere of technologies which can
help the company to expand to different geographies. Hence, the ADNOC company must invest
money in advanced technologies in order to provide the company a better future.

7MANAGING OPERATIONAL IMPROVEMENTS
Opportunities
New trends in the behavior of the consumers can open new opportunities for the ADNOC
company. It offers huge opportunities for the organization to establish diversity and new streams
into new categories of product too. The lower inflation rates can bring for the company more
stability in the market. The new taxation policies might also help established companies like
ADNOC to increase their businesses. When the company will adopt new technologies, the range
of opportunities for the company will become vaster and it will become facilitated with the
ability to discover other markets too (Olcay et al.2013). The adoption of new technologies will
facilitate the company to respond to differentiated pricing strategies in the new market. It can
also increase its customer base from the online channels. The online channels of the company
can work as the source of expanding its contacts and reach their products to different segments of
customers around the globe.
Threats
The new development in the technologies can prove to be a serious threat to the company
in the industry. The rise in the pay level of China can initiate serious pressure on the profitability
of the ADNOC company. The changing consumer behavior can also pose as a serious threat to
the company. There is no such regular supply of the innovative products in the company.
Moreover, the supply of the new type of products are also not regular in the company (Patel et al.
2014). The company can also become subject to the lawsuits because there are various
regulations regarding the standards of product fluctuations in the market. There is often a little
shortage of skilled workforce in the global market which represent itself as a threat to the steady
growth of the company in the oil and gas industry. Hence, these threats need to be addressed by
the company properly

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Resources/ capabilities of ADNOC
The strongest capability of the company is the production of crude oil along with raw gas
which it condensates from various key locations. It includes the well-established field and the
newly constructed artificial islands. The company manages a good number of gas and oil assets
starting with Satah, Lower Zakum, Upper Zakum , Umm Shaif and Umm Ai Dalkh fields. Their
operations cross the areas of Zirku Island, Das Island, six of the artificial islands and the Arzanah
island. There are four super complexes off the shore. The crude oil that is extracted from the
fileds are transferred to the Zirku island and the Das island for storage, processing and export for
future. The present production of ADNOC is almost 3 million barrels each day. The company
also provides a good range of storage, operational and processing services The company is
committed to the female empowerment and promotes gender diversity. As of now, the team is
dedicated to the inclusion of more than 900 women. The field optimization projects of the
company are also on the way of increasing the sustainability. The company is aimed at
increasing the daily capacity of oi production to 1.6 million barrels per day by the year 2018.
The Operational Strategies
Operational strategies refer to those strategies that help in providing advanced results and
services for any company (Baines and Lightfoot 2013). These operational strategies can be
inculcated in the three levels of strategy.
Corporate Operations Strategy:
One of the most important corporate operations strategy points towards the idea of
integration. Firstly, vertical and horizontal integration strategy will allow ADNOC to encompass
and integrate the similar enterprises and the various stages involved in the production process.

9MANAGING OPERATIONAL IMPROVEMENTS
This can enhance the over-all production and revenue generated by ADNOC. In addition to this,
it can allow ADNOC to reach to the global consumers by supplying crude oil and other forms of
fuel under one label (Bereznoy 2015). Secondly, in order to satiate the needs of the consumers,
ADNOC also needs to include diversification and innovation. Corporate Strategy also demands
for product diversification. With the rise in environmental concerns, it is essential to establish
refineries that produce renewable petroleum products (Olcay et al. 2013). ADNOC can diversify
its products by endeavoring to produce renewable petroleum products.
Business Operations Strategy:
One of the most important Business strategies available for companies such as ADNOC
is to incorporate the idea of cost leadership. Cost Leadership can assist in adding to the financial
performance of business enterprises (Teeratansirikool et al. 2013). By exercising the cost
leadership, ADNOC can establish a competitive advantage over other firms by projecting itself
as the company that manufactures renewable products at a comparatively cheaper rate. This can
assist in garnering the required support and success.
Functional Strategy:
This strategy encompasses the broad and comprehensive aspects of products, market as
well as the various processes involved in the development and operational strategy (Matt, Hess
and Benlian 2015). One of the most important functional operations strategy that is available for
ADNOC is accentuating the supply and distribution chain of the company. ADNOC is one of the
most important providers of fuel to majority of the consumers. It has a strong distribution
channel (Adnoc.ae, 2019). Despite the strength and reach of ADNOC, it needs to increase the

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supply chain to enhance the revenue and create awareness about its manufactured product. It is
extremely crucial to increase the supply chain to accentuate the efficiency of the company.
In addition to this, the increase in the suppliers will also result in greater benefits because
the supplies will also increase in an equal proportion. Further, improving and increasing the
distribution channel will accentuate the distribution of products to consumers throughout the
nation. Enhanced distribution and supply chain will lead to greater distribution of the innovative
renewable products. It has been seen that the service stations of ADNOC are distributed only in a
few areas comprising the central areas (ADNOC Distribution, 2019). There is an intrinsic need
for the company to supply fuels into the interiors by improving the supply channel and
establishing service stations that provide renewable petroleum. In addition to this, ADNOC also
needs to revamp the existing supply chains by considering the negative effects on nature and
society. Therefore, a functional operational strategy is needed to inculcate the renewable supply
chain (Ahmad, De Brito and Tavasszy 2015).
Implementation of the Strategies
The implementation of the strategies is equally important as the formation of strategy. It
is the case with every organization to focus on the application of the strategy in the operational
aspect of the company. The Thee Cs process of implementing the operational strategies at the
three levels like corporate business and functional can be adopted by the ADNOC company. The
three Cs asks to clarify the strategy, communicate the strategy cascade the strategy.
Clarify the Strategy
Most of the times, the strategies are defined as something which is limited to the
executive and higher board level. This is quite unfortunate that people usually do not understand

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that if all the members of the organization are not completely associated with a particular
strategy, they are not made familiar with the strategy, they might face difficulty in supporting its
implementation. Hence, the company too needs to clarify in such a way that the team members
really feel at one with the strategy (Yang, Kitchen and Bacouel-Jentjens 2017). First of all, the
current scenario of the market needs to be clarified. Secondly, the need for the implementation of
the strategy also needs to be explained along with the positive outcomes that the strategy might
bring. Lastly, how the strategies or modifications are going to be implemented in different levels
such as the corporate level, business level and the functional level has to be conveyed to the
team. It will enhance their knowledge regarding the topic and facilitate collaboration.
Communicate the Strategy
The second C of strategy implementation is probably the most important among the three
Cs. The power of communicating properly to the members of the organization is more than
anything. The change has to be communicated in the department because everyone will be
affected by the strategy (Khatri and Srivastava 2016). The communication of the strategy
through mails, blogs, postcasts and department meeting are helpful ways to interact with the
employees.
Cascade the Strategy
The strategy of ‘what’ an organization does is more important than ‘how’ an organization
does it. The equal involvement of the managers is important. The cascading strategy is the
platform where almost half the work is done. It can be conducted by holding the team meetings,
coaching, customer meetings and process improvement (Huang et al. 2016). Having researched

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the market trends and improving on the basis of those researches, the company might experience
tremendous difference in the competitive industry.
Creating a learning Culture
A learning culture is an organizational conventions collection, practices and values which
encourage the employees to develop competence and knowledge. An organization with a well –
built learning culture facilitates continuous learning and spreads a learning experience
throughout the organization for betterment in future (Imran and Tanveer 2015). The development
of the learning culture helps to increase the efficiency of the organization, multiplied the
productivity, increases the employee satisfaction and decreases the rates of employee turnover. A
heightened knowledge culture emphasizes on the increase of adaptability to change for the
workers (Hill 2017). The ADNOC company can easily create the learning culture by the help of
training initiatives. They can conduct the establishment of learning culture in the following ways:
Rewarding Continuous learning
The company can enhance the learning culture by enticing the employees with formal
rewards. Short-term performance and rewards based on those results can become enemy to the
learning experience. The company can create an environment of critical thinking while
challenging the speaking up with confidence are encouraged (Ghasemi, Taimouri and Sayadi
2017). The companies can spread this type of environment when they will try to do something
innovative and different.
Giving constructive Feedback
The recognition of the strengths in the employees along with the weaknesses are equally
important. The identification of the follies in an employee welcomes improvement and without

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improvement on the existing processes, there is no progression. The purpose of feedback should
not be to embarrass someone or to bully his/ her drawback (Ghaffari et al. 2017). Its purpose
must be to show that person how to improve on their inabilities and do better in future.
Leading by example
In order to increase the curiosity of the employees in the team and unlock the urge for
knowledge, the leader has to be enthusiastic enough. The behavior of the leader impacts on the
entire workforce. The employees follow their leader. Hence, the leader has to lead in a manner
that the employees pose the leader as their ideal for inspiration (De Propris 2016). The autocratic
leadership style is the most unfruitful in the context of learning culture and participative
leadership should be focused on.
Recommendations
Therefore, it is recommended that the company must put a considerable amount of money
on the employee and leadership development in order to receive the desired outcome. The
ADNOC company is aimed at attaining in-performance improvement or the development of
capability. It comes under the ADNOC 2030 strategy and there are subsequent constraints too in
achieving the objectives. The articulation of the vision and mission statement to the members of
the various departments would help the company to actualize its strategy. The primary aim of
this initiative is to achieve the operational excellence in order to generate maximum value for the
entire group of ADNOC.
It is supposed that the strategy will improve the reliability, safety and compliance having
streamlined the operations, risk factors and the costs too. The company can establish an
Operational Excellence program which will include the leading indicators along with the

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performance system of the organization. The company can also build and maintain spare
production flexibility and capacity in order to manage the volatility in the market. It should
develop a holistic and world class practices such as operating efficiency across the team. The
communication and implementation of the operational planning model throughout the industry in
order to leverage better opportunities to reduce the downtime. The asset integrity assurance
framework is a suitable framework for designing, technically integrating and assuring the asset
replacement in order to maximize the economic life of the asset.
The process safety management that the company is trying to implement in its
operational aspect can be facilitated by the incorporation of Quality management and Preventive
Quality Control programs. The ADNOC company must focus on the improvement of the
operating efficiency for leveraging the technology deployment having applied the best practices
of the industry. The clarification of the purpose of the strategy implementation should be done
properly. The details about the strategy and how it can improve the condition of the company
and help it to stand firmly in the industry should be communicated to the team and the members.
The ADNOC company is further recommended to incorporate the idea of cost leadership.
Cost Leadership can support in maximizing the financial performance of the largest Oil and Gas
supplier. The exercise of cost leadership can establish the ADNOC company to gain the
competitive advantage over other firms by projecting itself as the company that manufactures
renewable products at a comparatively cheaper rate. This can assist in garnering the required
support and success. The company is suggested to prepare their leaders who are the upholders of
the future of the organization. The leaders are the people who prepare the employees to sustain
the strategic or operational change in the organization. They also prepare the team to respond
positively to something that is being done for the betterment of the company.

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The training programs must be arranged and conducted to elaborate the skills and
competencies required to address the strategies which are being implemented in the ADNOC
company. They must be educated about the safety program the company is projecting on and
why the employee support as well as the support of other stakeholders are required. On the other
hand, the creation of the learning culture through the conduction of the training programs would
uplift the company to get hold of new and advanced technologies.
The incorporation of modern technologies in the operational process of the company can
easily drive it towards quick success as it will align itself with the current trends of the market.
The market adoption is a strong competency of the ADNOC company which can be pushed one
step ahead by this strategy. The supply chain is a major factor and the company can focus on
making it more sustainable, cost –friendly and safety-concerned.

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Reference
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Appendix
SWOT Analysis
Strength- It is a successful company in
executing new projects and subsequently
generate good returns on expenditures by
establishing new revenue streams. The
company has also experienced higher levels
of customer satisfaction. There is
considerable customer base the company has
created and the loyalty of the customers can
support ADNOC in the long run.
Weaknesses- The company needs to focus
more on forecasting the product demands
which might increase the number of missed
opportunities as compared to the competitors.
It need to navigate the industry sphere of
technologies which can help the company to
expand to different geographies. Hence, the
ADNOC company must invest money in
advanced technologies in order to provide the
company a better future.
Opportunities - The adoption of new
technologies will facilitate the company to
respond to differentiated pricing strategies in
the new market. It can also increase its
customer base from the online channels. The
online channels of the company can work as
the source of expanding its contacts and reach
their products to different segments of
customers around the globe.
Threats - The company can also become
subject to the lawsuits because there are
various regulations regarding the standards of
product fluctuations in the market. There is
often a little shortage of skilled workforce in
the global market which represent itself as a
threat to the steady growth of the company in
the oil and gas industry. Hence, these threats
need to be addressed by the company properly

21MANAGING OPERATIONAL IMPROVEMENTS
Porters’ Five Force Analysis
Threat of New
Entrants
The power of
Buyers
The power of
suppliers
Threat of
Substitutes
Threat of Rivals
Porter suggest
that the new
entrants might
bring new
capacity and
ideas with them
along with high
desire to gain the
share of the
market. This
particular desire,
as suggested by
Porter leaves
pressure on the
prices, costs and
the rates of
The buyers are
in the stronger
side in terms of
bargaining
power. The
buyers have
strong influence
on the industry
profitability
because they are
the key people
of the industry
who can either
make or break
the stability of
The suppliers are
another key
entity in the
business of a
country who can
easily destroy
the returns of the
industry by
increasing the
prices of the raw
materials and
deteriorating the
quality of the
product or
services. The
suppliers in the
The substitutes
are the similar
products
available in the
market that can
equally solve the
purpose of a
particular
product or
service with
maximum
benefits to the
customers. It is
known that the
oil and gas are
the major source
The market
rivalry is
common in all
industries.
Rivalry happens
when the
companies put
their effort on
excelling over
their competitors
and gain the
competitive
edge. In the oil
and gas industry,
the competitive
environment

22MANAGING OPERATIONAL IMPROVEMENTS
investments
which are
required to
compete in the
market. The
threat of new
entry similarly
depends on two
of the most
important
factors. the
incumbents’
response to the
new entry and
the level of entry
barriers
the company. oil and gas
industry mainly
supply the
materials,
equipment,
pipeline service
and others.
of energy to the
world. It has also
to be noted that
oil and gas are
the cheaper
source of other
expensive fuels.
consists of the
key players in
the market with
strong power ad
huge market
share.