Schlumberger is one of the largest supplier of technology in reservoir characterization, drilling, manufacture and handling to the oil and gas industry. The company employees more than one lakh people who represent over hundred and forty nationalities and has it wings in over 85 countries. Schlumberger is known in the industry for its widespread range of product and services starting from exploration through production and integrated pore to pipeline solution for hydrocarbon recovery that enhance reservoir enactment. Schlumberger is sitting on a huge pile of money and made approximately $ 27.81 Bn from its continuing operations in FY 16. Schlumberger has a rich experience of Eighty years in pioneering technology and innovation, service and global expertise (Slb.com, 2017).
In the following sections, Schlumberger’s strategic choices will be shown during the period 2014-17, it will also be interesting to look at those strategic choices with a lens to analyze and identify the reasoning behind them. It will also be interesting to see the benefits and the challenges faced by Schlumberger during the period 2014-17, and also will mention some recommendation for Schlumberger. The reason for choosing the period 2014-17 is simply because , oil companies had to face a lot of trouble due to falling oil prices and the rising costs. Hence, this period is definitely the most suited one, for analyzing the strategic choices made by Oil and gas producer companies.
Schlumberger is the leading producer of oil and gas in the world, with an experience of 80 plus years in the industry, presence in 85 countries, a workforce of 100,000 people and workforce diversity of 140 nationalities, the company has sure made its name in the market. Schlumberger was a result of Schlumberger brothers, who opened their first office in the year 1920 at rue Fabert in Paris. The Brothers then started with their geophysical surveys in Serbia, Canada, Belgian Congo, The USA and Romania in the year 1923. In the year 1927, the first electrical resistivity well log in Pechelbronn, France was recorded. The year 1930-36 was an era of technological development for Schlumberger, with introducing continuous –recording hand recorder to Spontaneous Potential (SP) log, Developing single-galvanometer automatic recorder for logging in the field and finally to introduce the sample tracker tool in the 40’s. The company headquarter was moved to Houston in the year 1940, owing to Geopolitical reasons. In the year 1946-47, the first ever offshore rig was deployed in Gulf of Mexico. The era of 50’s for Schlumberger can be known as the era of new technology and strategic acquisitions. The company has introduced Laterolog system to focus on currents into thin rock layers which is beyond the borehole and at the same time launched its own magazine. The technical review. The year 1952 saw Schlumberger buying 50% of Forex drilling Rig Company in order to boost its drilling propositions. 1956 saw the company going for acquisition of a US testing and production company to boost its R&D efforts. The era of 60’s, 70’s and 80’s saw Schlumberger growth exponentially, from reaching out from ocean depths to moon, exploiting the fruits of the exploration boom in the 70’s, to conducting a global research drive looking for suitable places to rig oil. It was the year 1990 when the company started building its revolutionary products. Some of the popular ones were optimal fluid analyzer, modular formation dynamics tester, combinable magnetic tool & ClearFRAC non polymer & damage free fracturing liquid. These products have relevancy till date in the company and have proved extremely beneficial in the success and growth of the company (Vallejo et al., 2015).
The era of 2000-2009 saw Schlumberger building on its core strength, it showed commitment of the company towards its essential energy industry tools and services. This was evident by noticing the company moved its headquarters from Houston to New York in the year 2006, in order to consolidate the presence of company in the civic that was contributory in the development. It also reinforced its seismic offering, Geco-Prakla was combined with western geophysical in 2000 to create westernGeco, owned jointly by Schlumberger and Baker Hughes. Acquisitions like Sema PLC, a UK based IT consultancy, Phoenix, a Scottish based submersible pump technologies company and Sensa fiber optic temperature sensing solution was also acquired by Schlumberger. Hence, it is evident that the company was focused on doing its horizontal and vertical integration (Yusuf et al., 2014). They were also serious about the expansion and getting a strong hold position in the oil and gas industry. The reason for choosing Schlumberger is its rich background history and its persistent efforts in reaching to the top and making a mark for itself.
The outlook here (2014-17) shows the specialty of the company and what has been happening in all these years and how the company has been performing in the challenging oil field industry and lastly these are the reasons behind choosing this industry for the assignment.
It can be easily said that the oil and gas industry has taken quite an international approach in its behavior and attitude, and the years ahead suggests to do the almost the same, which is going to generate the high levels of inter-dependence and connectivity. Leading the world to be a safe place for it (Martin, 2014).
Schlumberger quantified the benefits to the activities they are involved in and gave multiple effects in instance with benefits to the economy and raise GDP by their gains. Total benefits of Schlumberger as oil industry in relation to economy are being estimated $1.2 trillion in gross product every year. In terms of employment, company has more than 9.3 million permanent jobs in the United States (Halsey, 2016). Both ways the activity in oil service providing represents nearly 7% of the United States economy. The benefits of the industry has been doubled in the past 10 years. The contribution of the company cannot be exaggerated much as it does to overall economy. By providing hundreds of thousands jobs to the workforce in their industry which revives the manufacturing industry in United States. It also provides or supports many indirect jobs too in the field of engineering, accounting, communications, and safety and most importantly the environmental management. There are businesses namely vehicle leasing, electronic manufacturing etc. and their success depend upon then the oil industry activity and the communities around. It can be said that Schlumberger benefitting employment, economy and other businesses (Hawdon, 2017).
The economic benefits provided by Schlumberger to the nation’s economy is far outstrip its earning. It has created spur in the economy by providing thousands of jobs in the years of its growth. In the past year this industry has delivered, if roughly estimated equivalent to 60 percent of the government package to the US economy. The benefits in taxes and royalties has also seen a rise, company pays billions of dollars as taxes to government of US and by another way collect royalties which benefits financially to the economy (Munasib, 2015). These taxes and royalties paid by the company to government help in paying the services provided by government named as health care, education and infrastructure which ultimately benefit people living in US. The investment made in this industry by way of mutual funds and other funds results into higher profits and also it supports other businesses and job in the economy (Dholakia et al., 2015).
Schlumberger represents more than one lakh employees in over hundred and forty nationalities. It operates in more than Eighty five countries all over which generates $27.81 billion revenue from their continuing operations. Employees work directly for the industry from coast to coast and helped bringing energy to the consumers. The fields where company provides employments are direct and indirect, as Schlumberger is one of the technological innovators who provide oil operators upgraded technology in order to help them increase their production and recovery from the resources which are nonrenewable by working efficiently with a less impact on environment (Colgan, 2017). So the requirement of engineers are on a high scale but other fields including accounting, law, and communication. It has created a base for many fields in the economy (Noreng, 2016).
Schlumberger has given benefits to other industries as well they are petroleum based industries, vehicle leasing industries and electronic based industries. Though environmentalists claim that solar and wind energy are best to save environment but they lack in producing power as required 24 hours a day. Whereas oil can produce power which goes to home all day long, additionally the mature technology has been developed which gives a higher reliability to the source. Being a top most oil service provider Schlumberger, has been competitive in years and provide oil services to not only in the home country but international that ultimately increases the exports of the country. The exportation has decreased the reliability for oil needs on foreign countries and saves a lot for the US economy (Bergh et al., 2014).
To enhance the competitive advantage at an international level, a company needs to form strategic options to execute the same in order to achieve goals. Schlumberger which is known to be a leading supplier and trader of oil and plays a major role in the complex supply chain of oil to all over the world in an effective and efficient manner (Frynas, 2015). They are striving to bring together the optimization of products and the supply flows in and out of the company’s assets. The activities which are associated with the risk management are also merged into one single function. The supply entails and the trading activities which encompasses oil and oil products thus creating a clear division between the company and the competitors by considering the whole structure and scale of the company (Alizadeh et al., 2016). Another choice made by the company is market penetration, the growth strategy in which they focus on sale of their existing products in the existing market. They mainly focus on the maintenance of the existing products and operations to increase their market share by combining the strategies of pricing, advertising and the sales promotion. They believe in securing the growth and dominate the market by doing so. The restructuring of mature market by applying few aggressive campaigns of promotion with an intention to eliminate the competitors. The diversification, product development and market development are other strategies adopted by Schlumberger to mark their success and improves economy too (Analoui, 2015).
Though company has all the processes, up-to-date technology and an expertise in project management which is necessary for E and P well construction. Schlumberger can provide benefits to their operators simply by managing project in the coordination of its products and services for a single or multiple-rig projects. There are high degree of scope in coordination and project management. The coordination in services will help company to take overall responsibility for operations they deal in. An another recommendation can be given to the company in order to improve their strategic direction would be integration of their services management, drilling services and projects and deliver the integrated multidiscipline services. This step of integration will lead to improve operational efficiency of projects by managing and coordinating company’s and third party products and services.
Conclusion
A leading provider of technology, oil and gas services, Schlumberger who supplies varied range of products and services and represents over 140 nationalities in more than Eighty five countries by employing approximately one lakh people who work for the exploration by producing and integrating pore-to-pipeline solutions. The challenges faced by the industry in US and all over the world where they use to export are mentioned and how they deal with the same. The benefits they have given to the economy are numerous. The strategies they have adopted in relation to increase their growth prospects and market share.
References
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