Saudi Aramco is the world's largest oil company, with a 25% global market share and 261 billion barrels of oil reserves. It was originally established through partnerships with international oil companies but was nationalized in the 1970s. In recent decades, Saudi Aramco has pursued strategies like global expansion, innovation, and environmental stewardship to address challenges like financial crises, competition, and political instability. Going forward, the company aims to diversify its markets and products to ensure long-term, sustainable growth.

1. S. Aramco (Case Study)

2. CASE SUMMARY
• Saudi Aramco is considered as the largest inshore and offshore oil company all over the
world, ranking top at twenty five percent (25%) of world market share, with 261 billion of
barrels reserves in 2002.
• The company started basically by four pioneering international oil companies (IOCs) in the
US, and the Saudi Arabian government reserved the right to received revenues through
declaration of taxes.
• Influenced by the political and legal issues, just after the Israeli-Arabic war on 1970s, and
some other issues from Iran, Libya, and organization of petroleum exporting countries
(OPEC), Saudi Arabia decided to unilaterally ended the agreement over the four IOCs.
• The Saudi Aramco, in 1975 not only sell now to its partners but to the world by nationalizing
its oil. After learning oil production and exportation to its IOCs partners, S. Aramco decided
to replace foreign management by the Arabs, outsource engineering and management
services, and sell to countries directly.
• With vertical integration strategy, S. Aramco could fulfilled its vision of having a global
presence in the refining and retail sectors.

3. CASE SUMMARY
• The 1997 global financial crisis then impacted all oil companies all over the world.
Reducing oil prices, economic crisis in Asia, warm weather in North America, and
Europe are some of the relative factors. The OPECs decision to increase
production thus reduced the consumer demand and oversupply of oil.
• By this, S. Aramco continue to fall on revenues, thus cut spending on expansion
and upgrade, delay oversea expansions, trimmed 8000 workers, and even offer
early retirement package of employees from 45 years old.

4. CASE SUMMARY
• The national government then decide to open foreign direct investments (FDIs)
again and let foreign countries operate for S. Aramco, thus taking away of the 25
years monopoly.
• They even reduced taxes, open a council for one-stop shop for investors.
• IOCs are worried about entering Saudi but couldn’t face their back on the
opportunity.
• On the other hand, the privatization of S. Aramco is influenced by some factors
particularly concern about security ties with the US, growing exploration of some
countries, the slow growth of GDP during the 1980s.

5. TIME CONTEXT
• Late 2000 to present – just after the Saudi Arabia started
to privatized S. Aramco again.

6. VIEWPOINT
•The management of Saudi Aramco.

7. STATEMENT OF THE PROBLEM
• The lacked integrated management and marketing operations are believed to
be the cause of fall for Saudi Aramco.
• The fact that S. Aramco were recently a state-owned company makes it difficult
to separate company policies from those of the government.
• Such problem later lead them to privatized the company and let foreign
investors shared on the operation.
• The management were challenge to diversify management operation to
maximized the resources particularly the reserves available. Also, marketing
strategy is a prime factor for Aramco to maximized its profit operations, being
only dependent on existing markets.

8. OBJECTIVES
• Identify the key internal and external factors of S.
Aramco.
• Provide a basis for strategy development of S.
Aramco.
• Identify what is the best alternative to be
considered by S. Aramco.

9. AREAS OF CONSIDERATION
• Business Development
---- This factor is important for a world-class company such as
Saudi Aramco as they stand to benefit from their monopoly status in
the oil production and marketing in the Kingdom of Saudi Arabia.
Another factor that may prevent Saudi Aramco from diversifying
and expanding their services is the fact that they hold the world’s
largest oil reserves which are estimated at 260 billion barrels. This
provides Saudi Aramco with the reserve for about 90 years at
average production of 7.9 billion barrels per day.

10. AREAS OF CONSIDERATION
• Innovation
Despite being a monopolistic operation in oil production
and distribution, Saudi Aramco attempts to embrace new
technologies that will improve their oil production methods
and quality of service.

11. AREAS OF CONSIDERATION
• Globalization
---the company operates in more than 70 nations all over the world and employs over
54,000 people.
---The company’s major foreign affiliates are refining and marketing companies located
in key markets, such as China, Japan, United States, and the Republic of Korea. Operating
on a global scale makes Saudi Aramco the only energy company that serves the three
major markets, such as Asia, North America, and Europe.
---S. Aramco is the most reliable supplier of petroleum energy, as they can increase the
output at any given day in order to offset the increasing demand for oil, especially from
key industrial markets.

12. AREAS OF CONSIDERATION
• Globalization
---In the future, the expansion into growing markets in Asia becomes key success
factors for Saudi Aramco. This will be achieved due to the surging demand from this
region, and especially from countries like China and India. Since all machines in the
factories need fuel to run, they become the energy drain that consumes oil and its
derivatives (high speed diesel) in large quantities. That explains the fact why the U.S.
has become one of the world’s largest oil consumers.

13. AREAS OF CONSIDERATION
• ENVIRONMENTAL CONCERNS
---Environmental issues in the oil industry pose a great problem as they may cause a severe
damage to the environment.
---Saudi Aramco should strive to be a company that shows its commitment toward
preservation of the environment and contribution to the environmental improvement.
---An example of a large-scale environmental damage caused by an oil company includes
the Deepwater Horizon oil spill that occurred on April 20, 2010. There was an explosion in
the deepwater of the Gulf of Mexico, which caused billions of dollars of damage. Another
example the Exxon Valdez oil spill from in the sea of Alaska that took place on March 24,
1989.

14. AREAS OF CONSIDERATION
• FIERCE COMPETITION
---The world is going through an economization phase whereby people are constantly
looking for cheaper products of the same quality.
---In the oil and gas industry, especially in refinery, distribution, and marketing aspects,
competition is tough, as multinational oil companies target the same markets in Asia,
Europe, and North America.
---Petroleum Intelligence Weekly’s Top 10 ranks Saudi Aramco as the best petroleum
company followed closely by the NIO (Iran), ExxonMobil (USA), PDV (Venezuela), and BP
(United Kingdom).

15. ALTERNATIVE COURSES OF ACTION
External Opportunities
1. Better management of product lines
2. Globalization
3. Environmental concerns
External Threats
1. Fierce competition
2. War and terrorist attacks impact
Internal Strengths
1. Business Development
2. Innovation
3. Global Operation
4. Corporate Social Responsibility
S-O Strategies
 Run CSR program to invest in the
development of petroleum technology
 Utilize the strong brand of Saudi Aramco to
win foreign markets, especially in North
America, Europe, and Asia
S-T Strategies
 Launch a new marketing campaign that
focuses on innovation to position Saudi
Aramco as a leading innovative petroleum
company
 Expand into foreign markets to be less
dependent on particular markets
Internal Weaknesses
1. Oversize Corporate Structure
2. Sales and Marketing
W-O Strategies
 Expand the business of Saudi Aramco to
make the costs per employee lower and
increase the revenue per employee
 Introduce several derivative products that
solve customers’ needs
W-T Strategies
 Produce oil in the most efficient cost
structure
 Increase efficiency of production by an
average of 40%

16. RECOMMENDATION
• For the company to fulfilled its vision, one has to be certain that
strategies, either for long term or short term, will all be directing to
where the company really wanted to be. To make it possible, S.
Aramco must establish a goal oriented strategy. Saudi Aramco must
further its reach by expanding its foreign markets, to not only
depending on the existing markets. CSR programs allow the company
to build better branding and secure areas of operation to host
countries. Research and development is very important to Aramco,
this will address the objectives of producing derivative products that
meet customer needs, produce oil in the most efficient method, and
even increase its efficiency rate.

17. CONCLUSION
• Saudi Aramco is one of the most important petroleum companies in the world. As the main
contractor for oil exploration in the Kingdom of Saudi Arabia, they hold the largest oil reserves
that could secure exploration for the next 90 years at 7.9 million barrel per day.
• However, as the petroleum product is not renewable, Saudi Aramco needs to prepare the future
revenue generator. In this case, Saudi Aramco has since then getting used into engagement with
international ventures either by exploration and distribution.
• In addition, this situation also requires Saudi Aramco to establish product road map and
business strategy to become the measure of the corporation’s sustainable development amidst
their strong position as the world’s leader in oil production.

18. Big