One of the key issues that is currently being associated with the oil and gas industry of Saudi Arabia is the decrease of oil price. As stated in appendix 1 it can easily be identified that since the 3rd quarter of the year 2020, the global consumption of the crude oil as well as petroleum products has increased drastically then the production of the products (EIA 2022). The decrease in the oil price is going to cause a major problem for the companies that are associated with the oil and gas industry in Saudi Arabia. The supply of the oil products is going to be affected by different geographical factors as well as other factors like the effect of COVID-19. Most of the customers around the world are aware about the negative impact that is being generated by the overconsumption of natural resources and people are looking forward for the utilization of alternative sources which is utilization of energy and electricity. Under this context, it can be stated that the decrease in the oil prices can be associated with the need of the customers in the present scenario and in order to meet the expectations of the customers that are associated with the oil and gas industry. The over consumption of oil is also going to be a major factor for the increase in the cost of oil in the future.
Some of the major competitive advantages that are associated with the company includes the largest oil fields that are associated with it. Some of the oil fields that are enormous in size in the global scenario are associated with the company which leads to the decrease in the cost for it. The scale of production of Saudi Aramco is quite huge in comparison to the other companies that are associated with the oil and gas industry of Saudi Arabia. With large scale production of oil along with the combination of hydrocarbon resources that are associated with it in huge quantity it can be stated that there is an optimum competitive advantage of the company in the Global perspective of the market. The brand image of the company is also optimum in nature and over the years it has been identified that a lot of loyal customers has been gathered by the company which keeps it ahead of its competitors. Diversification of the company in other sectors in the future scenario due to the decrease in the cost of oil also States the fact that the research and development area along with future scenario of the market is easily being utilized by the company in accordance to the current events that are associated with the oil and gas industry. The new investment that are being implemented by the company along with the financial result that has been identified by the company over the years clearly state the fact that with the help of proper management of all the different aspects of the industry it is possible to increase the size of the company as well as increase the profitability of the company without borrowing from the investors of the company. In the year 2018 it has been identified that a total amount of 160 billion US dollars was paid to the government by the company in terms of dividend, royalties and Taxes. The company is known to export the oil products to various number of countries in which the clients of it are associated with. With the wide range of products as well as huge amount of oil that is produced by the company along with the huge number of clients that are associated with it the company enjoys and optimum competitive advantage in the Global Oil and Gas industry.
The megatrends that are associated with the company includes –
The critical success factors that are associated with the identified issue is that other sources of energy need to be identified by the company and contribute positively to the surrounding environment as the customers around the world are aware about the various changes that need to be implemented in the products and services that are being utilized by them and the decrease in the natural Reserve of oil in the global scenario. As stated in Appendix C, contributing positively towards the environment is a very important aspects for a company. The upcoming generation are more focused towards the development of the surrounding environment and living in a greener way rather than living a life is lifestyle and letting the outside environment decay (Cheema and Scrimgeour 2019). The success factors that are associated with the key issue clearly states the fact that the issue is going to be very much prominent in the coming future and there are higher chances that the issue is going to affect the oil and gas industry by quite a huge margin and it can also be identified that there are going to be major challenges that are going to be faced by the Saudi Aramco in terms of maintaining its profit margin and also increasing its market in the future. The company needs to estimate the fact that there are higher chances that customers are going to tend towards the utilization of solar energy, wind energy or electric energy. Identification of different CSR activities by taking into account the interest of the surrounding community and also understanding the current perspective of the market is very much essential for the company to survive in the market in the future.
The survival factors that are associated with the issue includes the identification of the current market trend and identifying the needs of the customers that are associated with the company. In order to survive in the present scenario of the market Saudi Aramco needs to come up with other sources of energy that can be provided to the customers that are associated with it. In order to maintain the expectations of the clients in the global scenario and also to understand the current perspective of the market it is very much important for the company to cope up with the current challenges and come up with new venture that can meet the Expectations of the customers (Al-Mulali, Gholipour and Al-hajj 2020). Providing Clean Energy must be the next step that needs to be undertaken by Saudi Aramco in order to ensure the fact that it acts upon the definite survival factors that are associated with the decrease in the cost of oil in the industry of a Saudi Arabia.
Free option for strategic change that can be implemented by the company for creating competitive advantage are as follows –
The best option that can be selected from the above stated options will be the identification of alternative source of energy that can be provided to the customers of the company. The selection of this option is highly beneficial for the company in terms of understanding the current trend of the industry and also understanding the fact that with the implementation of this process the company will be capable of implementing its corporate social responsibility effectively (Eder et al. 2018). With the implementation of this process, it will also be possible for the company to increase the number of customers and also meet the Expectations of the customers in the international level.
The competitive strategy that can be utilized by the company is to ensure the fact that the new energy source that is going to be introduced by the company in the product portfolio of it must be different from the different other energy sources that are being provided by the competitors of the company in Saudi Arabia (Abdullah and BA?ER 2018). By the implementation of a new energy source it will be possible for the company to implement disruptive innovation in the oil and gas industry of Saudi Arabia and the company will also be capable of ensuring the fact that it meets the Expectations of the customers in the international market and the company will also be capable of ensuring the fact that it is capable of looking at the wider opportunities in terms of protecting the natural resources and protecting the environment with the help of producing cleaner energy. With the implementation of this process the company is not only going to improve the current market position of the company but it is also going to gain a competitive advantage in terms of looking at the wider opportunity that is available in front of it and also selecting the exact option that is going to be agreed upon by the current Global client.
The new energy source that is going to be introduced by the company in the market must be conducted by the help of optimum marketing strategies which is not only going to create a better content than the previous contents of the company and share the content on the social platform which is going to be a part of the major digital marketing strategy of the company (Ederington et al. 2019). The digital marketing strategy of the company is going to be based on the Expectations of the customers and also to ensure defect that the customers are aware about the new product and service that is going to be introduced by the company in the market. The competitive advantage that is going to be gained by the company in this perspective will be highly beneficial for it in terms of looking at the future Expectations of the market and also to improve the profit margin of the company keeping in mind that the price of oil is going down in the future. This opportunity is going to be like a new business venture for the company which is going to be highly beneficial in terms of meeting the Expectations of the market.
The following are the future business risk that can be faced by the company –
The following are the recommended strategies that is going to mitigate the future business risk that is associated with the competitive identified strategy –
The strategic change that can be selected by the company in terms of its competitive strategy improving the marketing strategy of the company by the utilization of social media and social media influencers. Strategic change of the company will also be ensuring the fact providing other energy sources to the customers must be in accordance to the competitive pricing strategy (Kho, Gillespie and Martin-Khan 2020). The risk that can be faced by the company in terms of the strategic change is that the employees that are associated with the company might not be happy with the strategic change in the system. In order to avoid the problem of the employees it will be a viable option for the company to hold meetings in which a proper clarification of the strategic advantage of the company will be identified with the implementation of the new change in the system.
The released Change management strategies that can be applied by the company in this context will be the utilization of Kurt Lewin’s Change management model. With the help of this model the company will be on freezing the operations that are currently associated with it and bring about change in the system and then very freezing the new strategic change in the system.
Reference List
Abdullah, A.Ç.I.K. and BA?ER, S.Ö., 2018. The effects of fast decline in crude oil prices on the tanker market in the short run. Dokuz Eylül Üniversitesi Denizcilik Fakültesi Dergisi, 10(1), pp.61-82.
Al-Mulali, U., Gholipour, H.F. and Al-hajj, E., 2020. The nonlinear effects of oil prices on tourism arrivals in Malaysia. Current Issues in Tourism, 23(8), pp.942-946.
Cardona-Arenas, C.D. and Serna-Gómez, H.M., 2020. COVID-19 and oil prices: Effects on the Colombian peso exchange rate. Available at SSRN 3567942.
Cheema, M.A. and Scrimgeour, F., 2019. Oil prices and stock market anomalies. Energy Economics, 83, pp.578-587.
Eder, L.V., Provornaya, I.V., Filimonova, I.V., Kozhevin, V.D. and Komarova, A.V., 2018. World energy market in the conditions of low oil prices, the role of renewable energy sources. Energy Procedia, 153, pp.112-117.
Ederington, L.H., Fernando, C.S., Hoelscher, S.A., Lee, T.K. and Linn, S.C., 2019. A review of the evidence on the relation between crude oil prices and petroleum product prices. Journal of Commodity Markets, 13, pp.1-15.
EIA, Eia forecasts crude oil prices will decline during 2022. EIA forecasts crude oil prices will decline during 2022 – Today in Energy – U.S. Energy Information Administration (EIA). Available at: https://www.eia.gov/todayinenergy/detail.php?id=50396#:~:text=We%20expect%20that%20the%20price,%2462%2Fb%20in%20December%202022. [Accessed March 12, 2022].
Ghazouani, T., 2021. Impact of FDI inflow, crude oil prices, and economic growth on CO2 emission in Tunisia: Symmetric and asymmetric analysis through ARDL and NARDL approach. Environmental Economics, 12(1), p.1.
Istiak, K. and Alam, M.R., 2019. Oil prices, policy uncertainty and asymmetries in inflation expectations. Journal of Economic Studies.
Kho, J., Gillespie, N. and Martin-Khan, M., 2020. A systematic scoping review of change management practices used for telemedicine service implementations. BMC health services research, 20(1), pp.1-16.
Mukhtarov, S., Aliyev, S. and Zeynalov, J., 2020. The effect of oil prices on macroeconomic variables: evidence from Azerbaijan. International Journal of Energy Economics and Policy, 10(1), pp.72-80.
mint. 2022. The world will get half its power from wind, solar by 2050. [online] Available at: <https://www.livemint.com/industry/energy/the-world-will-get-half-its-power-from-wind-solar-by-2050-1560887567333.html> [Accessed 6 April 2022].
PWC. 2022. The World in 2050. [online] Available at: <https://www.pwc.com/gx/en/research-insights/economy/the-world-in-2050.html#:~:text=As%20a%20result%2C%20six%20of,fall%20below%2010%25%20by%202050> [Accessed 6 April 2022].
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