Managing Operational Improvements

Running Head: MANAGING OPERATIONAL IMPROVEMENTS
Managing Operational Improvements
Name of the Student
Name of the University
Author Note

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

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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).

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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.

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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

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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.