EY Oil & Gas Company: Business Management and Strategic Analysis

This report provides an in-depth analysis of Ernst & Young (EY) Oil & Gas Company, examining its operations, challenges, and strategic recommendations. It explores EY's role as a global oil and gas service provider, detailing its working processes, market trends, and the importance of human resource management. The report identifies key challenges such as geopolitical instability, technological advancements, corporate social responsibilities, and the need for investment in research and development. It also highlights the benefits EY derives from addressing these challenges, including enhanced corporate social responsibility, environmental protection, technological advancements, and improved research and development. The report concludes with recommendations for the company, including cost-cutting measures, financial risk-sharing, vertical integration, and consolidation strategies to navigate the dynamic oil and gas industry and maintain its competitive edge. The report emphasizes the importance of adaptation and transformation to achieve organizational development and success within the industry.

Running Head: EY Oil & Gas Company
Business Management and
Strategic Management

EY Oil & Gas Company
Table of Contents
Introduction................................................................................................................................2
EY Oilfield service provider......................................................................................................3
Challenges and benefits faced by the Oil Service Provider.......................................................4
Recommendations......................................................................................................................7
Conclusion..................................................................................................................................9
References..................................................................................................................................9
1

EY Oil & Gas Company
Introduction
The motive of the report is to learn about the company dealing in Oil field and the
company selected is Ernst & Young Oil and Gas Company, popularly known as EY. EY is
the oil and gas service provider that works independently. It deals in the global oils which
moreover involves the supply of shale oil and gas. There occurs a variety of challenges in the
market that company has to deal with and move forward to attain success. The company
adopted certain strategies by analyzing the internal and external environment also there were
certainly more recommendations were given to the company to implement them during the
course of circumstances (Mehrotra, 2017).
The report includes the history and working of EY along with the challenges it faces
which include geopolitical, technological, investment in research and corporate social
responsibilities and these challenges must be accepted as the opportunity to derive success
out of it. The recommendations were given that involves the strategies which the company if
adopting could twist the situation another way around. These strategies are cutting of cost,
sharing the financial risk, vertical integration and consolidation of the company.
2

EY Oil & Gas Company
EY Oilfield service provider
EY is the global oil and gas provider which has the capability to connect and develop
the professional network that renders assurance, gives the experienced advice for working in
oil and gas industry and work upon tax and transaction. The company is highly professional
and is a large service provider of oil as it serves many companies, independent refiners, major
integrated corporations and national oil companies. The working of this global oil and gas
service provider is that they predict the upcoming changes and analyze it previously to get
ready when the changes occur and immediately adopt the dynamism and cracking the
opportunity of organizational development. The market trends are assessed and this help
manager to deal with the upcoming changes and implement the required strategies effectively
and efficiently in the business field. It encourages the mobility of global resources, therefore,
adequate human resource management is been followed in EY where the right person is
placed at a right position at the right time on the right pay (EY, 2017a). Competencies of the
person are given priority and the only quantitative increase is not paid importance as
incompetent candidates result in liability of the Company and competent are the real
resources that prove to the asset for the organization and for the success of business liability
should be less and more assets are needed for better investment. The reason for selecting EY
as the oilfield service provider is that it has been ranked first out of all those oil and gas
companies that are been listed in Fortune 1000 which is largest US Corporation that audits 25
oil and gas companies out of those 84 companies that have been listed. EY is the enjoying the
leadership by serving 46 out of 50 global O & G companies of Petroleum Intelligence
Weekly (PIW) 2011. Another aspect that is considered while selecting the oilfield company is
that there is an established international connection of about 10000 and more professionals of
this industry (EY, 2017b). In the present time, the company is facing issues in the growth of
the company as the world is facing the instability and the industry is facing the situation of
downfall. The major challenges that have been noted are geopolitical reasons, regulatory and
technological challenges. It is the technique of EY Oil and Gas Company that it discusses the
issues with the clients so that the opportunity gets created and wider area might be opened to
serve in and global growth is initiated for incorporating transformation. These issues could be
resolved using certain techniques and tricks such as adaptation and transformation of business
models, the assurance is rendered to the stakeholders upon their return on investment.
Technological change is also a major issue and the company solved the challenges by
3

EY Oil & Gas Company
creating and then exploiting out the emerging and growing technology. The company
believes in the adaptation of changes and acing it wisely to figure out opportunity within it or
at least selects those methods that do not lead to the situation of loss or causes failure.
Another cause for selecting Ernst & Young Oil and Gas Company is that it is also an
advisory consulting which comprises of global teams comprising of professionals who have
got the expertization and this experience of expert help the employees in achieving the target
and meet the objectives of the company. The tagline of company depicts the vision which
states “building a better working world” (Eye advisory, 2017).
Challenges and benefits faced by the Oil Service
Provider
In recent times the oil and gas industry faces the numerous challenges and the sharp
downturn of its times. The changes taking place are unpredictable and company needs to get
prepared to handle such sudden changes that could reverse the situation. These changes could
either turn out to be in favor of the company or it could turn the situation another way around.
The transformation has been taking place and Oil and Gas Company is preparing for adopting
the new environment and incorporating the changes that could take place. The challenges that
arise in the EY Oil & Gas service provider are as under:
 Geopolitical challenges: The geopolitics is that method where foreign
policies are been learned and explained. The international behavior in context
to politics has been explained using the geographical variable. The
geopolitical areas involve the climate, demographics, psychographic, natural
resources and other sciences that are been applied and evaluated (Lopez,
2015). In London the West relationship has been paid high importance,
connection with Russian has been developed which is the future of NATO, the
Syrian civil war has been supported and refugees from there were entertained
as guests which resulted in rising population which directly affects the
employability. The environmental degradation and depletion of natural
resources are becoming the emerging issues which need to be tackled at the
earlier notice as it has turned out to be the global issues (Boccaletti, 2017).
 Technological challenges: Technological challenges are the most prominent
changes that take place in every era and the companies have to co-op up with
4

EY Oil & Gas Company
these. In EY Oil and Gas Company there is an immense need to adopt the
technological changes to process the Shale oil and gas. The challenge is that
the IT has become advanced and competitor firms are rapidly adhering to
these challenges and getting ahead (EY, 2017c). In order to maintain the
position in market EY also needs to become resistant to these challenges along
with maintaining the environmental perspective. With the introduction of
advanced technology many things become quick enough but loss to
employment is likely to arise, also the expertization in the technological area
have to be there so that in case any discrepancies occur than the person is able
to handle the situation and make the required corrections on the immediate
aspect (EY, 2017d).
 Corporate social responsibilities: This depicts the responsibility of the
company towards society and the cultural norms have to be followed. CSR
must concern about the health and safety measures of the employees and
provide the compensation in case any circumstances occur. For the oilfields,
the reliable partnership should be developed and it is highly connected with
the human life and safety thus public-private partnership need to be adopted so
that the quality and legal checks are made and for that cross-sector and
government support is needed (EY, 2017e).
 Investing in R& D: For the development of business, research is the
important element. It renders the information about the internal and external
business environment which helps in moving forward and taking the wise step
of the organizational development and making the company resistant to
change by preparing the employees prior to the occurring changes. To
organize adequate R&D high cost gets incurred and if it is not adopted than
competitors might go ahead. R&D also led towards the innovation and coming
up with the advanced technology which requires high investment so that
prosperity could be gained. The major challenge that arises is tough
competition in the market as all the competitors have their own research
method and accordingly the planning takes place and the efficient one could
move a level up and become the trendsetter (Intelligent HQ, 2017).
Benefits to the company
5

EY Oil & Gas Company
On fighting with the above-mentioned challenges and other issues a lot
more could be learned and adjusted meanwhile. While cooperating with these
issues successfully many beneficial things get to happen all along. Some of the
benefits are listed as under:
 When the corporate social responsibility have been emphasized it resulted in
the high employment of women candidate as the equal treatment has been
given high importance and this helps in increasing the efficiency and
improvement in the society have been initiated. The right culture within the
company got created which lead to the success of the organization
(McCalmont et al, 2017).
 When the environment cares the environment pays back the benefit. The
environmental protection has been focussed which lead to the generation of
environment-friendly gases which is likely to create the USP in Oil & Gas
sector. One of its examples is emergence and treatment of shale gas which is a
natural gas and does not incur any costs and supports the environment to go
green and flourish carrying its uniqueness (Partridge et al, 2017).
 Through the technological up gradation high scrutinization is been focussed
over and fair dealing has started to take place which means that bribery and
corruption was stopped to the extent in the oil and gas industry that is likely to
reduce the prices of shale oil and gas which is at last beneficial for company as
well as the customer and healthy relationship is developed thereby
encouraging the customer loyalty (Rui, Peng, Ling, Chang, Chen & Zhou,
2017).
 On incorporating the better research and development the company’s progress
boosts up and upcoming challenges are analyzed so that previous planning
could be made and dynamism could easily be adopted. When appropriate
research has been made it benefits the company as the employees were
initially given the training to adopt the predictable and unpredictable
situations. They are prepared for the uncertainties that might occur and figure
out opportunities within them so that new areas get developed and company
attains the wider scope for development (Bergli & Falk, 2017).
 Investments in the oil and gas industry are highly beneficial. There are
countries like Canada that invests in the stock of oil and gas. The mutual fund
6

EY Oil & Gas Company
owners and pension plan holders are also there who invest in this stuff as the
fluctuating rates of oil and gas benefits the people (Cameron, 2016).
 Through this industry, even the government stays in the beneficial position as
they get billions of taxes in the dollar which makes the currency stronger and
increases the value of money. Even the natives are in a positive position as
they gain royalty on the supply of oil and gas stock, the citizens will attain the
financial assistance through this industry and the country will thereby flourish
and invest this amount in those projects that lead the country towards the path
of development (Werner, Inkpen & Moffett, 2016).
Recommendations
The strategy adopted by EY is that it helps the clients in solving out their problems
through the decision making. They strengthen the internal capacity of the business and
increase efficiency to deal with uncertainties. The challenges that business faced is anemic
growth that takes place in the target market. Also due to the increasing competition, the
margin erosion is taking place. In order to generate the efficiencies, the competitiveness has
to be increased. Other client challenges that are likely to appear are external and internal
challenges that involve competitors, changing expectations of customers and other global
market challenges that are to be appearing in the near future. The internal challenges are the
leadership issues, strategic approach to the organizational affairs and they are the factors that
initiate the internal efficiency of the organization (EY, 2017f). The EY Oil & Gas Company
has the innovative approach which focuses on inventing the strategies to deal with the
adverse situation and derive out something fruitful out of it. Another approach carried by the
company is solving out the complex problems that have appeared in the company and
figuring out the appropriate solutions after analyzing and evaluating the circumstances. The
approach is to convert strategies into the action. The third approach that EY carried is the
transformation of business in which the execution of strategy is been supported and values of
the organization are unlocked (Bresciani & Brinkman, 2016).
In order to enhance the position and market value, there are certainly more strategies that if
adopted will result in the successful and developed outcomes. These outcomes are elucidated
as under:
7

EY Oil & Gas Company
 Cutting of cost: In order to achieve the high sales and prove the point of profit
maximisation the company has raised the prices of oil and gas. The high cost cut the
revenue of profit as it does not suit the pocket of normal citizens. For gaining the
development and expansion in the nation there is a need to cut down the cost so that
revenue generation could be encouraged. Also, many other opportunities rise up when
the cost-cutting takes place. The cost could be maintained by launching another
scheme along with it so that dual aspect get fulfilled i.e. launch is been made and the
cost of the previous service has been shortened down so that expansion along with
positioning gets created (Hoffman, 2017).
 Vertical Integration: To simplify and creating ease in the management of contracting
the collaboration or joint venture could be adopted. In collaboration, the risks and
responsibilities are mixed up and also get divided. Collaboration also helps in raising
the lot more opportunity and varieties of ideas get generated and strong consumer
base is established which ensures a better supply of products and increase in a number
of buyers. The position of the company becomes strong enough to sustain in the
competitive environment and fight with the rivalry in a healthy manner (Ghouri,
2016).
 Sharing financial risk: In order to share the financial risk for the sake of gaining the
future reward, the revenue model has been created. This new model has been raised
upon the OFSE sector which involves the contracts based on performance. The
financing projects are undertaken which combines all the equipment and services. The
equipment and instruments are used in the exchange for the equity. The Oil and Gas
Company renders flexibility to its operators by lowering down the base of cost when
the struggling period is running (Mimir, 2016).
 Consolidation: The consolidated strategy could also be adopted in Ernst & Yong the
merger and acquisition are considered to be the part of the consolidated business
where similar nature of business are grouped up and different ideas on equivalent base
are noted down. The researcher quotes that if the prices of oil are stabilized than there
are high chances that consolidation will take place. In a merger the cost saving is done
as the companies get combined and the liability to an extent is shared thus company
could afford to lower down the prices of Oil and Gas and this might lead to increased
sales and profit and establishment of a stable position in the market (Pearl –Martinez
& Stephens, 2016).
8

EY Oil & Gas Company
Conclusion
Hence, from the report, it is derived that Ernst & Young is well-established Oil & Gas
Company which is originated in the UK. It follows the standardized selling supply of Oil &
Gas within the nation and also across the countries. In attaining the heights and achieving the
goal there appeared many obstacles that need to be crossed wisely and collecting the
experience out of it. The challenges faced by EY has been elucidated within the report, these
challenges are a geopolitical challenge, technological issues, following corporate social
responsibility and investment in R&D. After these challenges certain recommendations have
been given to improvise the situation or opting for certain strategies that could prove out to be
better, these recommendations involve cost-cutting, vertical integration, sharing the financial
risk and the consolidation.
References
Bergli, S. and Falk, K., 2017, July. Cause and Impact Analysis of Cost and Schedule
Overruns in Subsea Oil and Gas Projects–A Supplier's Perspective. In INCOSE International
Symposium (Vol. 27, No. 1, pp. 309-321).
Boccaletti. G., 2017, The geopolitics of environmental challenges, viewed on 23rd October
2017, < https://www.project-syndicate.org/commentary/environment-economic-and-
geopolitical-challenges-by-giulio-boccaletti-2017-03?barrier=accessreg>.
Bresciani. G & Brinkman. M., 2016, Five strategies to transform the oil and gas supply
chain, viewed on 23rd October 2017, < https://www.mckinsey.com/industries/oil-and-gas/our-
insights/five-strategies-to-transform-the-oil-and-gas-supply-chain>.
Cameron, P.D., 2016. Investment Cycles and the Rule of Law in the International Oil and
Gas Industry: Some Reflections on Changing Investor-State Relationships. Hous. J. Int'l
L., 38, p.755.
EY, 2017a, Review of the UK oilfield services industry, viewed on 23rd October 2017,
<http://www.ey.com/Publication/vwLUAssets/EY-review-of-the-UK-oilfield-services-
industry-January-2017/$FILE/EY-Review-of-the-UK-oilfield-services-industry-January-
2017.pdf>.
9

EY Oil & Gas Company
EY, 2017b, EY strategy: value through differentiation, viewed on 23rd October 2017,
<http://www.ey.com/Publication/vwLUAssets/EY-Strategy/$FILE/EY-
Strategy_brochure.pdf>.
EY, 2017c, Fueling your future in a global economy, viewed on 23rd October 2017,
<http://www.ey.com/gl/en/industries/oil---gas>.
EY, 2017d, Diversity boosts performance in oil & gas, viewed on 23rd October 2017,
<http://www.ey.com/gl/en/industries/oil---gas/ey-diversity-boosts-performance-in-oil-and-
gas>.
EY, 2017e, Transforming the value chain, viewed on 23rd October 2017,
<http://www.ey.com/gl/en/industries/oil---gas/ey-oilfield-services-consolidation>.
EY, 2017f, EY strategy: value through differentiation, viewed on 23rd October 2017,
<http://www.ey.com/Publication/vwLUAssets/EY-Strategy/$FILE/EY-
Strategy_brochure.pdf>.
EY Advisory, 2017, Why EY advisory & consulting services, viewed on 23rd October 2017,
<https://www.eyadvisory.co.jp/en/about-us/>.
Ghouri. S., 2016, The oil industry needs to change its strategy and fast, viewed on 23rd
October 2017, < https://oilprice.com/Energy/Energy-General/The-Oil-Industry-Needs-To-
Change-Its-Strategy-And-Fast.html>.
Hoffman, S., 2017. Step Therapy: Legal and Ethical Implications of a Cost-Cutting Measure.
Intelligent HQ, 2017, Top 10 challenges in oil and gas industry, viewed on 23rd October
2017, < https://www.intelligenthq.com/latest-news/top-10-challenges-in-oil-and-gas-
industry-in-2012/>.
Lopez. J., 2015, The world’s greatest geopolitical challenges, viewed on 23rd October 2017,
< https://gwtoday.gwu.edu/world%E2%80%99s-greatest-geopolitical-challenges>.
McCalmont, J.P., Hastings, A., McNamara, N.P., Richter, G.M., Robson, P., Donnison, I.S.
and Clifton‐Brown, J., 2017. Environmental costs and benefits of growing Miscanthus for
bioenergy in the UK. GCB Bioenergy, 9(3), pp.489-507.
10

EY Oil & Gas Company
Mehrotra, A., 2017. Issues and Challenges in Development of Efficient Gas Market.
In Natural Gas Markets in India (pp. 197-215). Springer Singapore.
Mimir, Y., 2016. On International Consumption Risk Sharing, Financial Integration and
Financial Development. Emerging Markets Finance and Trade, 52(5), pp.1241-1258.
Partridge, T., Thomas, M., Harthorn, B.H., Pidgeon, N., Hasell, A., Stevenson, L. and Enders,
C., 2017. Seeing futures now: Emergent US and UK views on shale development, climate
change and energy systems. Global Environmental Change, 42, pp.1-12.
Pearl-Martinez, R. and Stephens, J.C., 2016. Toward a gender diverse workforce in the
renewable energy transition. Sustainability: Science, Practice, & Policy, 12(1).
Rui, Z., Peng, F., Ling, K., Chang, H., Chen, G. and Zhou, X., 2017. Investigation into the
performance of oil and gas projects. Journal of Natural Gas Science and Engineering, 38,
pp.12-20.
Scott. M., 2014, Challenges for oil & gas, viewed on 23rd October 2017,
<https://www.raconteur.net/sustainability/challenges-for-oil-gas>.
Werner, S., Inkpen, A. and Moffett, M.H., 2016. Managing Human Resources in the Oil &
Gas Industry. PennWell Books.
11