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Strategic Analysis - Statoil

Strategic Analysis of Statoil

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Strategic Analysis - Statoil

  1. 1. Strategic Analysis Demiris George Trevezas Simon MaurinAurelie Banou Kristi-Monika Kastidou Despina Course: Strategic Management Prof: N.Theriou
  2. 2. Introduction  Evaluate the industry’s background and illustrate efficient and effective solutions in order to accomplish its primary objectives.  Express critical thoughts on our strengths and weaknesses but also to opportunities and threats.  The report is a recommendation of possible and logic actions through scientific and supported evidence.
  3. 3. History  After 1965, licenses were first given from the government to exploit in Norway North Sea.  In 1972 Statoil was created as a state corporation in the city of Stavanger in Norway.  In 1975 becoming net exporter. First subsea oil pipeline and first explorations (the Norpipe line from Ekofisk to Teesside in the United Kingdom).  In 1992, operations for gas in Ireland from British Petroleum (BP)  In 2001, Statoil became a public limited company (privatized) and was listed on Stock exchange. Before it was called Statoil Energy & Retail AS. After changing of name, was renamed Statoil Fuel & Retail ASA (18 May 2010) (transportation fuel, stationary energy, marine fuel, lubricants, chemicals and aviation fuels, it has been closed on 12 July 2012.
  4. 4. VISION According to annual report of 2013, vision refer’s as : ‘’Crossing Energy Frontiers’’ It guides our long term strategy as an upstream- oriented & technology based energy company. Represents both past achievements and the challenges we have to solve, to continue developing our great company.
  5. 5. VISION According to annual report of 2013, vision refer’s as : ‘’Crossing Energy Frontiers’’ It guides our long term strategy as an upstream- oriented & technology based energy company. Represents both past achievements and the challenges we have to solve, to continue developing our great company. Proposed “Provide innovative energy solutions for every humankind activities worldwide.”
  6. 6. MISSION The statement refers as: “Our mission is to accommodate the world energy needs in a responsible manner. We are determined to develop resources responsibly with zero harm to people and environment. This lasting values orients our worldwide operations and delivers profitable growth and prudent redistribution of capital to shareholders”
  7. 7. MISSION The statement refers as: “Our mission is to accommodate the world energy needs in a responsible manner. We are determined to develop resources responsibly with zero harm to people and environment. This lasting values orients our worldwide operations and delivers profitable growth and prudent redistribution of capital to shareholders” Proposed Mission “Statoil is a world leading Energy Company determined to deliver to our customers responsibly oil, gas and petrochemical solutions with zero harm to people and to environment. Our values distinguish us within the global market delivering profitable growth and financial rewards to our shareholders. Innovating technology is the key feature for achieving our everlasting values providing sustainable societies and also is our major advantage worldwide. Finally we believe that the employees reveal the whole image of the company and illustrate a live example of our ethics, that’s why we reward our people on the basis of their performance, giving equal emphasis to delivery and behavior.”
  8. 8. External Audit  Determine and evaluate the external oil industry’s environment  Five Forces Analysis  CPM Matrix  Determine the Opportunities andThreats  EFE matrix for both Upstream and Downstream sector
  9. 9. Competitive Rivalry (high) Large IOCs & NOCs High exit barriers High competition for new oil fields Threats of new entrants (very low) Huge capital requirements Economies of scale Channels of distribution Access in oil fields Bargaining Power of Buyers (low) Countries(US, EU, India, China) Refineries Major international companies Threat by Substitutes (low) Existent technology oriented towards oil &gas consumption Cost of substitutes Bargaining Power of Suppliers (high) Pipeline constructors, raw material, special equipment suppliers, engineers OPEC Need for strong political connections External Audit Five Forces
  10. 10. Statoil ExxonMobil Shell BP Critical Success Factor Weight Rating Score Rating Score Rating Score Rating Score Advertising 0.15 2 0.3 2 0.3 2 0.3 2 0.3 Product Quality 0.1 4 0.4 4 0.4 4 0.4 4 0.4 Price Competitiveness 0.1 4 0.4 4 0.4 4 0.4 4 0.4 Management 0.06 4 0.24 3 0.18 3 0.18 3 0.18 Financial Position 0.15 2 0.3 4 0.6 3 0.45 3 0.45 Customer Loyalty 0.1 3 0.3 4 0.4 4 0.4 4 0.4 Global Loyalty 0.2 2 0.4 4 0.8 4 0.8 3 0.6 Market Share 0.1 2 0.2 3 0.3 3 0.3 3 0.3 Production Capacity 0.04 2 0.08 4 0.16 3 0.12 3 0.12 Total 1 2.62 3.54 3.35 3.15 External Audit CPM Matrix
  11. 11. EFE MATRIX-UPSTREAM Opportunities Weight Rating Weighted score 1. Annual growth in oil demand 1.3 mb/d for the next 5-10 years. 0.11 3 0.33 2. Global expanding/acquisitions, merges. 0.07 2 0.14 3. Increase in Gas demand by 1% in Europe, 2% n. America & 5% Asia 0.09 3 0.27 4. NGL production from unconventional is anticipated from 1.8 mmbl/d this year to 3.8 mmbl/d by 2020. 0.05 2 0.1 5. Conventional reserves in challenging areas (Artic, far north). 0.05 3 0.15 6. Cross-sector strategic partnerships/investment in renewables (wind, solar, hydro). 0.03 4 0.12 7. Increase in oil and gas production/new large fields after 2015. 0.07 3 0.21 8. NOC-IOC partnerships. 0.07 2 0.14 Threats 1. Energy and climate policies. EU declare a 20% reduction of emissions until 2020. 0.04 4 0.16 2. Unstable political environment in international operations, such as Libya, Egypt and Syria.(Terrorist attack at the In Amenas facility) 0.08 1 0.08 3. Health/safety accidents. 0.03 3 0.09 4. Environmental risks. Exploratory drilling risks. 0.03 3 0.09 6. NOC’s control at about 90% of the world oil proven reserves. 0.06 2 0.12 7. 18% average decrease of oil prices over the last four months. IEA forecasts present an overall decrease of oil prices since 2015. 0.09 1 0.09 8. Government regulations/ bureaucracy. Host-governments tend to increase taxes imposed on foreign companies. 0.05 1 0.05 9. 22% of oil and gas respondents indicate lack of qualified personnel. 0.01 3 0.03 10. High competition among companies. (justification) 0.07 2 0.14 Total Weighted Score 100% 2.25 External Audit EFE Upstream
  12. 12. EFE MATRIX-DOWNSTREAM Opportunities Weight Rating Weighted score 1. Increase in Gas demand by 1% in Europe, 2% n. America & 5% Asia. 0.12 2 0.52 2. Cross-sector strategic partnership/investment in renewables (wind, solar, hydro). 0.06 2 0.12 3. Annual growth in oil demand 1.3 mb/d for the next 5-10 years. 0.09 2 0.12 4. New markets (India, China)/sales exports. 0.1 1 0.3 5. Stable home market/geopolitical stability in Norway. 0.07 2 0.16 6. Norway’s continually growth economy. Annual growth rate 2.8%. 0.08 4 0.18 Threats 1. Energy and climate policies, EU declare a reduction of emissions 20% until 2020. 0.07 4 0.28 2.Unsteable political environment in international operations, such as Libya, Egypt and Syria 0.05 1 0.1 3. Health/safety accidents. 0.05 4 0.2 4. Environmental risks. 0.06 4 0.24 5. High competition among companies. 0.08 1 0.08 6. Renewables gain market share, from 2% to 7% next 15 years. 0.06 2 0.12 7. Fuel economy enhancements of new cars, 23% of full hybrids and 44% mild-hybrid in the next 15 years. 0.06 1 0.06 8. Fluctuation in oil prices. Unstable industry environment. 0.06 1 0.21 Total Weighted Score 100% 2.23 External Audit EFE Downstream
  13. 13. Internal Audit  Examine company’s value chain  Determine and evaluate firms’ strengths and weaknesses  IFE Matrix-Upstream & Downstream
  14. 14. ```` IFE -Upstream IFE MATRIX-UPSTREAM Strengths Weight Rating Weighted score 1. Ranked No1 in 2014 of the world’s most sustainable energy companies. (flaring, CO2 reduce emissions) 0.04 4 0.16 2. 2nd in gas supplies in Europe. 0.06 3 0.18 3. Gas reserves close to EU. 0.06 4 0.24 4. New entry in offshore renewable energy. (Wind farms Shenghan shoal, UK). 0.03 3 0.09 5. Financial total assets increased from 784.4 bnNOK to 885.6 bnNOK in 2013. 0.02 3 0.06 6. Current ratio is higher compared with competitors. (justify) 0.03 4 0.12 7. Statoil expect to invest around USD 20 billion on average per year 2014- 2016 Maintain ROCE. 0.03 3 0.09 8. Equity production for 2014 is estimated to grow for 2%. 0.04 3 0.12 9. Expect 50 wells to be complete in 2014 with expenditure USD 35 billion. 0.03 3 0.09 10. Innovative technology upstream driven company. (justify) 0.04 4 0.16 11. Strong network of transportation pipelines in Norway region and N. Dakota. 0.01 4 0.04 12. Best exploration results in the industry, in 2013. Added 1.25 billion of barrels of oil equivalent. 0.05 4 0.2 13. Norway’s continually growth economy. Annual growth rate 2.8%. 0.01 4 0.04 14. Liquidity. Balance sheet. Long term objectives. 0.03 3 0.09 Weaknesses 1. Financial Net income decrease 39.2 2013 from 69.5 to 2012. 0.04 2 0.08 2. Oil and gas production (mboe/day) decreased, 1.940 in 2013 from 2004 in 2014. 0.03 2 0.06 3. LNG imported in Europe fell at 23%. 0.08 1 0.08 4. 52% increase of long term debt. 0.02 2 0.04 6. A net loss of 4.8 bn NOK to the end of September, compared with net income the same period last year. 0.03 2 0.06 7. Political, social and economic instability in regions where Statoil operates, N. Africa, Russia, Mid. East. 0.05 2 0.1 8. Lack of effective regulations and legislation in operational regions. Corruption. 0.03 2 0.06 9. Host governments tend to increase taxes imposed on foreign companies. 0.03 2 0.06 10. Intense competition with other players in the market which are more resourceful in terms of finances, and operations may erode its market share. 0.08 1 0.08 11. 63% of oil production in Norway’s region. Old fields. 0.05 1 0.05 12. High dependence in EU market. 0.06 2 0.12 Total Weighted Score 100% 2.49
  15. 15. ```` IFE MATRIX-DOWNSTREAM Strengths Weight Rating Weighted score 1. 2nd in gas supplies in Europe. 0.14 4 0.56 2. Gas reserves close to EU. 0.12 3 0.36 3. Financial total assets increased from 784.4 bnNOK to 885.6 bnNOK in 2013 0.06 3 0.18 4. Current ratio is higher compared with competitors. 0.06 4 0.24 5. Statoil expect to invest around USD 20 billion on average per year 2014-2016 Maintain ROCE 0.07 3 0.21 6. Strong network of transportation pipelines in Norway region. 0.04 3 0.12 7. Norway’s continually growth economy. Annual growth rate 2.8%. 0.05 3 0.15 Weaknesses 1. Financial Net income decrease 39.2 2013 from 69.5 to 2012. 0.06 2 0.12 2. LNG imported in Europe fell at 23%. 0.1 2 0.2 3. 52% increase of long term dept. 0.06 1 0.06 4. Lack of effective regulations and legislation in operational regions. 0.06 1 0.06 5. Small Europe market share in retail sector. Concentration most in Russia and Scandinavian countries. 0.03 2 0.06 6. Political, social and economic instability in regions where Statoil operates, N. Africa, Russia, Mid. East. 0.1 1 0.1 7. A net loss of NOK 4.8 bn to the end of September, compared with net income the same period last year. 0.05 1 0.05 Total Weighted Score 100% 2.47 IFE -Downstream
  16. 16. Strategy Formulation  Determine Key Opportunities,Threats, Strengths and Weaknesses  SWOT Analysis  Internal – External Matrix  Grand Strategy Matrix  Simplified Methodology  QSPM –Quantitative Strategic Planning Matrix
  17. 17. Strengths  2nd in gas supply in Europe.  Added 1.25 bbr of oil equivalent.  Current ratio is higher than competitors.  Gas reserves close to E.U.  Innovative technology in upstream.  Expect to complete 50 wells in 2014. Weaknesses  LNG imported in Europe fell at 23%.  Political instability in regions where operates  High dependence in EU market.  Financial net income decrease 39.2 bnNOK from 69.5 bnNOK in 2012.  Intense competition with other more powerful players. Opportunities  Annual growth in oil demand 1.3brd every year.  Increase gas demand, 1% Europe, 2% N. America, 5% Asia.  New large fields after 2015.  NOC-IOC partnerships.  Increase liquidity. Threats  Unstable political environment in operational regions.  E.U. policies to decrease CO2 emissions.  Decrease in oil prices in 2015.  Environmental risks/exploration drilling risks.  NOC s control at about 90% of the world oil proven reserves INTERNALEXTERNAL HELPFULL HARMFULL SWOT Strategy Formulation
  18. 18. Strengths 1. 2nd in gas supply in Europe. 2. Added 1.25 bbr of oil equivalent. 3. Current ratio is higher than competitors. 4. Gas reserves close to E.U. 5. Innovative technology in upstream. 6. Expect to complete 50 wells in 2014. 7. New entry in offshore renewable energy. Weaknesses 1. Political instability in regions where operates 2. High dependence in EU market (upstream). 3. Financial net income decrease 39.2 bnNOK from 69.5 bnNOK in 2012. 4. Intense competition with other more powerful players. 5. Small downstream market share in EU and Asia. Opportunities 1. Annual growth in oil demand 1.3brd every year. 2. Increase gas demand, 1% Europe, 2% N.America, 5% Asia. 3. New large fields after 2015,Artic, far north. 4. NOC-IOC partnerships. 5. Increase liquidity. SO Strategies  Increase gas exports in Europe through agreements EU members. (S1, O2).  Invest in R&D in renewable technology. (S7, O5) WO Strategies  Invest in expanding pipeline network in EU. (W2, O5)  Expand retail network in Asia. (W2, W5, O2)  Partnerships with strong NOCs. (W4, O4) Threats 1. Unstable political environment in operational regions. 2. E.U. policies to decrease CO2 emissions. 3. Decrease in oil prices in 2015. 4. Environmental risks/exploration drilling risks. 5. LNG imported in Europe fell at 23%. 6. NOC’s control at about 90% of the world oil proven reserves ST Strategies  Invest in R&D for new sustainable environmental technologies (upstream). (S3, S7,T2,T4)  Invest in new environmentally friendly technologies. (S3,T2) WT strategies  Expand retail network in Asia. ( W2,W5,T5) Strategy Formulation
  19. 19. I IV VII VIII V IX VI II III THE IFETOTAL WEIGHTED SCORES THE EFE TOTAL WEIGHTED SCORE High 3.0 to 4.0 Medium 2.0 to 2.99 Low 1.0 to 1.9 Strong 3.0 to 4.0 Average 2.0 to 2.99 Weak 1.0 to 1.99 (2.47, 2.23) Strategy Formulation IE Matrix - Downstream
  20. 20. I IV VII VIII V IX VI II III THE IFETOTAL WEIGHTED SCORES THE EFE TOTAL WEIGHTE D SCORE High 3.0 to 4.0 Medium 2.0 to 2.99 Low 1.0 to 1.9 Strong 3.0 to 4.0 Average 2.0 to 2.99 Weak 1.0 to 1.99 (2.49, 2.25) IE Matrix - Upstream Strategy Formulation
  21. 21. I IV VII VIII V IX VI II III THE IFETOTAL WEIGHTED SCORES THE EFE TOTAL WEIGHTE D SCORE High 3.0 to 4.0 Medium 2.0 to 2.99 Low 1.0 to 1.9 Strong 3.0 to 4.0 Average 2.0 to 2.99 Weak 1.0 to 1.99 (2.49, 2.25) IE Matrix - Upstream Strategy Formulation Hold & Maintain • Market penetration • Product Development
  22. 22. The Grand Strategy Matrix Weak Competitive Position Strong Competitive Position Rapid Market Growth Slow Market Growth 5%
  23. 23. The Grand Strategy Matrix Weak Competitive Position Strong Competitive Position Rapid Market Growth Slow Market Growth 5%  Market Development  Market Penetration  Horizontal Integration  Divestiture/Liquidation
  24. 24. Proposed Strategic Options Internal- External Matrix SWOT Matrix Grand Strategy Matrix Invest in R&D in renewable technology. X Expand retail network in Asia. X X X Partnerships with strong NOCs X X X Divestiture/Liquidation X Expand pipeline network in EU. X X X Unrelated Market Penetration/Small tools & accessories X Strategy Formulation Simplified Methodology
  25. 25. Proposed Strategic Options Internal- External Matrix SWOT Matrix Grand Strategy Matrix Invest in R&D in renewable technology. X Expand retail network in Asia. X X X Partnerships with strong NOCs X X X Divestiture/Liquidation X Expand pipeline network in EU. X X X Unrelated Diversification/Small tools & accessories X Strategy Formulation Simplified Methodology  Brand name closely connect with heavy machinery, working efficiently in extreme situations, reliability.  High annual growth compared with other markets. (10,6 % )  Spread worldwide the firms brand name and reputation by products more widely used.
  26. 26. Strategic Alternatives Expand Retail Network in Asia Expand Pipeline Network in EU Key Factors Weight AS TAS AS TAS Opportunities 1 Annual growth in oil Demand 0.10 4 0.4 2 0.2 2 Increasing Gas Demand 5% in Asia 0.07 4 0.28 1 0.07 3 New Markets (India China) 0.11 4 0.44 1 0.11 4 Cross-sector strategic partnerships 0.04 2 0.08 1 0.04 Threats 1 High Competition among companies 0.10 2 0.2 2 0.2 2 Unstable political environment in host countries 0.07 1 0.07 1 0.07 3 Strict energy policies in EU about emissions 0.04 3 0.12 1 0.04 4 NOCs control the 90% of proven reserves 0.05 1 0.05 2 0.05 QSPM
  27. 27. Strategic Alternatives Expand Retail Network in Asia Expand Pipeline Network in EU Key Factors Weight AS TAS AS TAS 1 Strengths 2 Gas reserves close to EU 0.07 1 0.07 4 0.28 3 Expect 50 wells to be completed in 2014 0.04 2 0.08 3 0.12 4 Liquidity/Higher current ratio from competitors 0.05 3 0.15 2 0.01 5 Innovative technology in Upstream sector 0.04 1 0.04 3 0.12 Weaknesses 1 LNG imported in EU fell at 23% 0.05 3 0.15 1 0.05 2 52% increase of long-term debt. 0.06 1 0.06 1 0.06 3 High dependence in Europe market 0.06 3 0.18 2 0.12 4 Small EU market share in retails 0.05 1 0.05 3 0.15 TOTAL 1 2.42 1.83 QSPM
  28. 28. Conclusions
  29. 29. Conclusions Statoil seems capable to compete and operate effectively in each of their business segments and improve its current position.
  30. 30. Conclusions Statoil seems capable to compete and operate effectively in each of their business segments and improve its current position. Main Proposed strategy
  31. 31. Conclusions Statoil seems capable to compete and operate effectively in each of their business segments and improve its current position. Main Proposed strategy
  32. 32. Conclusions Statoil seems capable to compete and operate effectively in each of their business segments and improve its current position. Main Proposed strategy Expand retail network in Asia
  33. 33. Conclusions Take advantage of a promising market Enlarge the downstream sector . A sector with high profitability in which Statoil is weak. Statoil seems capable to compete and operate effectively in each of their business segments and improve its current position. Main Proposed strategy Expand retail network in Asia Sales Downstream 81%
  34. 34. Conclusions The unprecedented strategy Penetrate in “Small tools and accessories” market
  35. 35. Thank you for your attention!
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Strategic Analysis of Statoil

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