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Implementing Statoil’s Ambition to Action management model
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Presentation for Statoil ASA case study

Presentation for Statoil ASA case study

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Presentation for Statoil ASA case study

  1. 1. “Crossing energy frontiers”
  2. 2. Founded 14 June 1972 Headquarters Stavanger, Norway Key people Helge Lund (CEO), Svein Rennemo (Chair) Products Petroleum Natural gas Petrochemicals Electrical power
  3. 3. 25% Norway’s Gross Domestic Product Statoil Other 67%10% 6% 9% 8% Distribution of Shareholders (2013) Norwegian Private Owners Norwegian State UK US Rest of Europe Rest of World 70% 10% 6% 14% Distribution of Proven Reserves Norway Eurasia Africa Americas
  4. 4. “Imagine we’re on a journey. Our vision tells us where we are heading. It reminds us what we’re aiming to achieve. It brings us together. It motivates us and drives change. Our vision tells the story of a trusted pioneer: Crossing energy frontiers.” Existing: “We strive to generate and serve a guide for people who seek to cross new borders. We are crossing energy frontiers, providing a sustainable well-being for future generations. Proposed:
  5. 5. “Our mission is the reason why we exist as a company. It’s why we go to work every day. It’s what we have to do to achieve our vision: To accommodate the world’s energy needs in a responsible manner, we apply technology and create innovative business solutions. Our approach is founded in a values-based performance culture, a belief in cooperation and a striving for continuous operational improvement.” Existing:
  6. 6. Our mission is to keep a strong position within the global energy market, concurrently incorporating our values and ethical codes. We are considered to be the pioneers on the Norwegian continental shelf and contribute significantly to the global market. The innovative technology we use epitomizes our philosophy for cost effective and environmentally-friendly operations. We shed light on issues which are important for the company’s future, concerning both financial stability and social awareness. Our company strives to ensure safe operations that protect people, environment and material assets. We emphasize on the psychosocial aspects of the working environment and promote the well-being of all our employees. Statoil thrives to be the global leader in energy supply, crossing frontiers while visualizing a sustainability, concerning the environment protection for the future generations. Proposed:
  7. 7. Do we answer todays challenges? Company Revenue Headquarters Exxon Mobil 496,255 United States Royal Dutch Shell 484,489 Netherlands BP 386,463 United Kingdom Sinopec 375,214 China China National Petroleum Corporation 352,338 China Chevron Corporation 245,621 United States Conoco Phillips 237,272 United States Total 231,580 France Gazprom 157,830 Russia Eni 153,676 Italy Petrobras 145,915 Brazil GDF Suez 126,076 France Pemex 125,344 Mexico Valero Energy 125,095 United States PDVSA 124,754 Venezuela Statoil 119,561 Norway JX Holdings 119,258 Japan Lukoil 111,433 Russia Petronas 97,355 Malaysia Indian Oil 86,016 India
  8. 8. Rivalry Barriers Suppliers Substitutes Buyers
  9. 9. Competitive Profile Matrix Statoil BP Chevron Total SA Critical Success factors Weight Rating Score Rating Score Rating Score Rating Score Brand Name 0.12 2 0.24 4 0.48 3 0.36 3 0.36 Sustainability 0.13 3 0.39 2 0.26 2 0.26 3 0.39 Frequency of accidents 0.05 2 0.10 1 0.05 3 0.15 3 0.15 Global expansion 0.12 2 0.24 4 0.48 3 0.36 3 0.36 Market Share 0.18 2 0.36 3 0.54 3 0.54 2 0.36 Technology 0.16 1 0.16 4 0.64 3 0.48 4 0.64 Acquisition / Partnership 0.15 3 0.45 3 0.45 2 0.30 2 0.30 Total 1 1.94 2.90 2.45 2.56 How competitive are we?
  10. 10. Key external factors Weight Rating Weighted Score Opportunities Growing population in emerging economies 0.13 1 0.13 ''Gina Krog'' offshore oil field development 0.06 4 0.24 Increase in gas demand 0.08 3 0.24 Other forms of energy 0.05 4 0.20 Acreage on the Norwegian continental shelf 0.07 3 0.21 Partnership with U.K and Germany 0.05 3 0.15 Planned oil terminal at Veidnes making Northern Norway a strong petroleum margin 0.04 2 0.08 Easy access to capital market due to Brand name 0.02 2 0.04 Threats Fishery and environmental organizations 0.06 1 0.06 Tight fiscal conditions 0.11 1 0.11 Rival competition 0.03 3 0.09 Instability in oil prices 0.11 3 0.33 Delayed projects in Arctic Barrel sea 0.05 2 0.10 Global social instability 0.07 1 0.07 Total 1.00 2,05 How is our macro-environment?
  11. 11. Liquidity / Financial Health 2010 2011 2012 2013 Current Ratio 1.09 1.16 1.12 1.43 Quick Ratio 0.87 0.92 0.93 1.22 Financial Leverage 2.93 2.76 2.46 2.49  Ratio < 1 company unable to pay  Leverage is the amount of debt used to finance a firm's assets CONCLUSION 1. Current & Quick Ratio increased – easy to pay back its liabilities. 2. Financial Leverage stable – good position in transactions - a continues investment.
  12. 12. Growth 2011 2012 2013 Total Revenues 670.0 722.0 637.4 Net Operating Income 211.8 206.6 155.5 Net Income 78.4 69.5 39.2 25% 75% Net Income Taxes
  13. 13. Year 2013 73% 27% Norway International 54% 46% Net Operation Income Expenses
  14. 14. Year 2013 2% 98% Net Operating Income Expenses
  15. 15. Year 2013 88% 8% 3% 1% Upstream Downstream Fuel & Retail Other
  16. 16. Key Internal Factors Weight Rating W. Score Strengths • Strong safety culture 0.02 3 0.06 • Established and growing international position 0.08 3 0.24 • Financial distress due to government support 0.06 4 0.24 • Funds from operations over the year of NOK120 billion–130 billion. 0.05 3 0.15 • Manageable short-term debt of NOK17 billion 0.03 3 0.09 • Profitability measures among the highest in its peer group 0.08 3 0.24 • Develops and operates subsea technologies in order to increase production and recovery 0.08 4 0.32 • Industry leader in seismic imaging and interpretation 0.05 4 0.20 • Ability to build on competitive advantages and stimulates innovation 0.04 3 0.12 • Internationally recognized R&D results 0.06 3 0.18 • Reliable natural gas supplier with a strong position 0.07 3 0.21 • e-learning program on business ethics and anti-corruption compliance 0.01 3 0.03 Weaknesses • High capital expenditure and resulting weak free cash generation 0.07 2 0.14 • Limited vertical integration in manufacturing, meaning refining and marketing. 0.06 1 0.06 • Persistent negative discretionary cash flow and weak free operating cash flow 0.05 2 0.10 • Group's modest leverage. 0.07 2 0.14 • Low reserve-replacement rate, averaging only about 86% organically over the past three years 0.05 1 0.05 • Exposure to volatile and capital-intensive exploration and production sector, with near-term risk of falling oil prices. 0.07 2 0.14 Total 1 2,71
  17. 17. Key Internal Factors Weight Rating W. Score Strengths • Strong safety culture 0.02 3 0.06 • Established and growing international position 0.08 3 0.24 • Financial distress due to government support 0.06 4 0.24 • Funds from operations over the year of NOK120 billion–130 billion. 0.05 3 0.15 • Manageable short-term debt of NOK17 billion 0.03 3 0.09 • Profitability measures among the highest in its peer group 0.08 3 0.24 • Develops and operates subsea technologies in order to increase production and recovery 0.08 4 0.32 • Industry leader in seismic imaging and interpretation 0.05 4 0.20 • Ability to build on competitive advantages and stimulates innovation 0.04 3 0.12 • Internationally recognized R&D results 0.06 3 0.18 • Reliable natural gas supplier with a strong position 0.07 3 0.21 • e-learning program on business ethics and anti-corruption compliance 0.01 3 0.03 Weaknesses • High capital expenditure and resulting weak free cash generation 0.07 2 0.14 • Limited vertical integration in manufacturing, meaning refining and marketing. 0.06 1 0.06 • Persistent negative discretionary cash flow and weak free operating cash flow 0.05 2 0.10 • Group's modest leverage. 0.07 2 0.14 • Low reserve-replacement rate, averaging only about 86% organically over the past three years 0.05 1 0.05 • Exposure to volatile and capital-intensive exploration and production sector, with near-term risk of falling oil prices. 0.07 2 0.14 Total 1 2,71
  18. 18. Strengths- S Weaknesses - W Opportunities-O SO- Strategies WO-Strategies Threats-T ST- Strategies WT-Strategies  Matching Strengths, Weaknesses, Opportunities & Threats in order to form strategies  Market Penetration /Market Development  Partnerships  Related diversification  Divestiture
  19. 19. RAPID MARKET GROWTH SLOW MARKET GROWTH STRONGCOMPETITIVEPOSITION WEAKCOMPETITIVEPOSITION  Annual decrease in sales → slow market growth  Statoil ASA is considered to be in strong competitive position  Proposed Strategies: 1. Joint Ventures 2. Related Diversification
  20. 20.  Based on two dimensions: IFE & EFE Scores  Company belongs to V division → Hold & Maintain Strategies  Proposed Strategy: Market Penetration
  21. 21. Proposed Strategic Options Internal – External (IE) Matrix SWOT Matrix Grant Strategy Matrix Market Penetration x x x Market development x Product development Horizontal integration Related diversification x x Unrelated diversification Divestiture x  List proposed strategies from the results of the matching techniques (SWOT, GSM, IE Matrix)
  22. 22. Existing Strategy:  Upstream-oriented  Merger, acquisition and partnership activities  Long-term strategy Proposed Strategy:  Market Penetration – Development  Related Diversification through Partnerships  Emerging Trend in Unconventional Sources  Geographical Expansion/ Entrance in new, challenging market  Increase of gas demand in emerging economies
  23. 23. Team Members: F. Zachopoulos S. Kosteroglou S. Kyriakidis E. Michailidi A. Mitsis

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