Assignment 1: Part 1 of project
Environmental scanning & strategy formulation
1. Briefly present your selected company (name, industry, nationality, location, size, activities,
products…) (Max 200 words).
Saudi Aramco is an oil company in Saudi Arabia that deals with products such as petroleum
and natural gas. It operates in the oil and petroleum industry. It has the second-largest oil
reserves in the world. The reserves have approximately 270 billion barrels, with each having
a volume of 4.3 * 1010 m3. The company produces oil that contributes largely to the total
production in the world. The company is majorly involved in exploration activities with a
significant proportion of its workforce, including geologists and geophysicists. The company
started exploration in 1982. Most of its operational activities take place in a research center. It
used supercomputers to process exploration data. Its supercomputing system has a large
storage capacity that supports the processing of large bits of exploration data. Besides, it
refines oil and petroleum products after its merger with Samarec. The company has a refining
capacity that consists of almost 5.4 million barrels that are refined every day. In the recent
past, the firm has focused on integrating its refining activities into domestic petrochemical
facilities. Also, the company also ships refined, crude, and natural gas to different nations all
over the world. It carries out the shipping of its products in collaboration with subsidiary
firms such as Bahri.
2. Determine the opportunities, threats, strengths and weaknesses of your selected company by
completing the SWOT matrix below. (1 mark)
1.New exploration sites have been
1. A high demand for oil and petroleum products
discovered in other areas around;
therefore, reducing its exploration
2.Operational transparency will promote optimal
valuation of the company,
2.There has been so much emphasis on
3.Political tensions in the Middle East
threaten its operations.
1.It has a large capacity for producing and
1.It depends highly on profitability.
2.Transparency and effective corporate
2.It has massive marketing capabilities
3.It has advanced technology that promotes its
4.It has low production costs per oil barrel.
2. Does your selected company have social responsibility? If yes, discuss its impact on
competitive advantage of the corporation. (Max 400 words) (1 mark)
Aramco has a social responsibility and has launched numerous initiatives globally and
domestically. For instance, it launched a corporate social responsibility (CSR) program that
aimed at supporting energy creativity in China. The project aimed at promoting the
production of clean energy and sustainable development (Saudi Aramco, 2017). The CSR is
among the initiatives that have impacted positively on the company’s competitive advantage.
It has helped create a strong brand loyalty since it emphasizes on community engagement in
its production activities. Besides, it has helped create a positive corporate image for the
company since the community is likely to have a good perception of the firm. Emphasis on
energy innovation has helped the company connect persons with different ideas on how oil
and petroleum resources can be utilized to reduce the emission of pollutants into the
environment. Notably, its CSR offers the company opportunities to meet a lot of people who
help reinforce its brand awareness strategies. In the end, the company has succeeded in
creating a perception among the public that it is sensitive to issues such as global warming
and pollution affecting society.
Moreover, its CSR enables it to create positive relationships with the community and
other stakeholders. The company has been at the forefront of helping provide solutions to issues
affecting society. Giving back to the community enables the company to create a good
reputation for itself that is likely to translate into increased sales. Besides, the company benefits
from cost savings since it has managed to reduce its emission and waste volume (Al-Najjar,
2016). The firm has been able to save a lot from proper waste management. Also, CSR has
been able to comply with laws governing the production of oil as well as consumer regulatory
compliance. Therefore, it has been able to establish a positive relationship with domestic
authorizes. As a result, it has been able to avoid costs associated with lawsuits and fines
imposed as a result of a violation of regulatory compliance. In this regard, it has managed to
maintain high standards of ethicality and morality as part of their moral obligation. A good
reputation is also crucial since it has enabled the company to penetrate into global markets.
Lastly, it has enabled the firm to attract the best talents; therefore, increasing its productivity.
3. Based on the figure 4.3 (Ch4-slide no 18) and the textbook text relative to Porter’s Five forces
of competition framework, assess the power of the buyers, suppliers and substitutes of your
chosen company. How formidable are the barriers to entry and how intense is the rivalry
among existing firms? ( 2 marks)
The company is affected less by buyer power since the prices are determined majorly by fiscal
and monetary policies such as inflation, interest rates, and Gross Domestic Product (GDP).
Besides, it is not easy to move from supplier to another due to the limited number of oil
producers. The company is affected adversely by supplier power since they have significant
bargaining power when it comes to determining the prices of petroleum products. Besides, the
firm is less affected by substitute products since it is difficult to replicate oil and petroleum
commodities. The industry has as strong barriers to entry based on high capital investment and
technological requirements for production.
4. What is the competitive strategy used by your selected company? Justify. (0.5 mark)
The company has a competitive advantage due to its ability to produce and refine oil at lower
costs. It has technologies that enable them to maximize their productivity while reducing
costs. In this regard, the company stays ahead in the competition by offering products at
relatively low prices. The results are increased sales and profit margins.
Al-Najjar, J. F. (2016). Social responsibility and its impacts on competitive advantage: An
applied study on Jordanian telecommunication companies. International Journal of
Business and Social Science, 7(2), 114-125.
Saudi Aramco. (2017). Aramco Asia launches CSR program to support energy innovation
in China. Retrieved from https://www.saudiaramco.com/en/news-media/news/2017/aramcoasia-launches-csr-program-to-support-energy-innovation-in
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