Strategic plan and risk management for Pacific Oil

Pacific Oil-Strategic Plan

Pacific Oil Startegic Plan

COMPANY BACKGROUND

Vision

Values

ENVIRONMENTAL SCAN

IMPLEMENTATION PLAN-ORGANIZATIONAL STRATEGY

RISK Management PLAN

Monthly Monitoring

Accountability

Responding of Risk management Process

Evolution of Risk Management

Policies and Procedures

152011 Identified Risks

Risk Disclosure

Pacific Oil-Strategic Plan

This paper presents a strategic plan or Pacific Oil. The paper starts with organizational background consisting of business mission, vision and the corporate values. The nature of the business of Pacific Oil has been clearly identified with some highlights on the business divisions operating in the oil industry. An environmental scan has been performed in order to have a clear insight into the circumstances in which the Pacific Oil is operating. This environmental scan for Pacific Oil is accompanied by a SWOT (Strength, Weakness, Opportunities & Threats) Analysis. Strengths and weaknesses of Pacific Oil relate to internal organizational environment while opportunities and threats relate to external environment of pacific Oil. After environmental scan, the corporate strategies of Pacific Oil have been identified in order to pursue for an implementation plan of the selected strategy. In the end, this strategic plan is accompanied by a Contingency/Risk Management plan for catering risks which Pacific Oil is facing.

COMPANY BACKGROUND

Pacific Oil is a start-up business specializing in delivering cost competitive oil and gas products to various parts of the world. Pacific Oil has a focus of delivering the oil and gas products in Asia, due to emerging demand of oil products in that area. The headquarters of Pacific Oil are located in America, with supporting offices in UK, Germany and Canada. (Melissa & Crittenden 2009) Pacific Oil owns 4 gas stations and couple of commercial and residential properties for rent.

Together with the strategic partners, Pacific Oil's goal is to invest in the development, exploration, refining and operations of the projects related to oil & natural gas, such as a large combined energy power plant users, an integrated supply chain cycle, the receiving terminal, the LNG liquefaction plant, and to the upstream development. Pacific Oil believes that its integrated approach will reduce project implementation time and reduced total cost of the results. The liquefied natural gas will play a strong role in the future of China's energy market; the Pacific Oil will focus on downstream operations in China, and the procurement of natural gas supply from other parts of the world.

The early oil industry suffered from a rapid alternation of booms and busts. Word about high profits enticed newcomers to build refineries or drill for oil, but the rapid increase in production drove prices down, bankrupting many. This process reduced supplies, leading to higher prices and increased profits, encouraging new entries into the industry and, consequently, a repetition of the previous cycle. Today, 24.7% of world energy demand is for the natural gas, and liquefied natural gas account for 5.7% only of this supply. The contribution of liquefied natural gas is only 1.5% of the world energy market transformation, so there is room for growth is huge. Use of natural gas is undergoing a major expansion of the world. Develop a clear use of burning natural gas as fuel, combined cycle power plant has become widely accepted, and encouraged all over the world including China. (Kavasserei and Hegstad 2007)

The Government of China has planned to increase the consumption of oil products and natural gas from 2% per anum to 10% per anum by 2012. This means that there would be an increase in gas requirements from 20m tons in 2009 to about 69m tons by 2012. This can prove to be a major factor contributing in growth of revenues of Pacific Oil, if the company continues to supply oil & gas products at competitive prices.

Mission

We are responsible for providing quality products to our customer on competitive prices and as per the needs and wants of the customers. We are proud to deliver quality and valuable solutions to the customers as well. Our mission repeats us the thought everyday about our direction in which we are heading.

Vision

We are an organization globally recognized for providing a package of innovative products and services along with desired solutions developed by experts & professionals who are committed to society & environment.

Values

Our values are the actions through which we have gained success in the market. They are the real reasons for our success Combined with an integral culture of our team, it is important every day. Our core values are the center of our business every day. Into all these, we do so that they become part of our culture, it is important to our success.

ENVIRONMENTAL SCAN

Competition in oil market is very intense. The oil marketing and refining companies are struggling very hard to cater to the increasing prices of oil globally. Shell group and British Petroleum are two major players in the oil market of United States. They both are very well organized and they give some hard times to minor players in oil market like Pacific Oil. Overall, the oil and oil refining industry have a very bright outlook for increased revenues and profits in the next few years. Due to many economic uncertainties, many industries are triggered with clouds of decreased revenues and profits. In 2010, the global oil industry along with utilities industry represents a market of $2.3 trillions. (Jolene 2009)

The two sides of the global economy are dumped into recession and set off a disastrous inflation. Consequently, oil prices directly affect the economy of the world. Many countries are looking for an alternative energy source. For example, in 2003 dollars of oil at 38 dollars -55/barrel, the major OECD economies, the annual average of about 3.5% based on the real GDP growth. The main reaction is psychological. Sharp and rapid, large-scale oil prices (that is the 'oil shock') always affect the financial and business confidence in the so-called 'crisis' made at least a few months, the number of stock market value of the inevitable sharp compression.

High oil prices hurt economic growth is much more important - over time - more than the reality of global macroeconomic adjustment, high oil prices and energy prices.

The market segments of Pacific Oil are very competitive and are subject to a long list of government regulations. Due to increased trend of mergers and acquisitions, there are changes in the markets shares and prices of oil in the market. In order to cater the changing market share and price, Pacific Oil needs more resources to spend on labor and materials. The costs of materials and the labor are affected by the inflation over recent years. There is an impact on the prices of Pacific Oil's products and services due to extremely competitive oil market. The trends of increased prices are expected to continue in long-run as the demand of oil from the developing countries are expected to increase due to lack of oil exploration in these countries and infrastructure developments. Pacific Oil should continue to invest in developing new products and services catering customer needs and wants so as to gain a bigger market share. Pacific Oil will definitely invest in upgrading of machinery and equipment and attracting capital ventures in order to capture the oil market. (Michael & Jude 2010)

Human well-being and use of energy has an unpredictable link. It is a fact that the company discovering and making oil available to world at competitive prices will lead the market. Energy use from oil, natural gas and coal will improve prosperity and growth over the last couple of years.

Pacific Oil has estimated that the growth of energy demand is directly linked to the economic prosperity and there would be a 3% rise in economic growth annually through 2020. The demand of energy is expected to grow slowly at the rate of 2% per anum. This generally will reflect advanced technology, energy conservation and efficiency of the oil companies. Pacific Oil has a capacity to expand its operations to other parts of the world to increase the market share by catering to the growing energy demand globally.

It has been estimated that 60% of the energy demand of the world would be catered by natural gas and oil supply, over the next twenty years. Oil industry is taking advantage of increased technological advances resulting in decreased cost of oil exploration and supply. Similarly, the quality, performance, efficiency and the cumulated value of oil and gas products is expected to add to the value of this resource for the world economy.

During the era of fast-paced economic growth i.e. 1975-1990, Pacific Oil has applied major proportions of its resources to the supply of oil and gas. Pacific Oil was able to gain the markets shares of global oil market due to its concentration on competitive prices and the demand of oil. Pacific has focused on supplying oil to developing nations because there was increased demand of oil from these nations. The increasing demand of oil from China and India is a sign of opportunity for pacific Oil to increase the market share and revenues so as to invest more in technological developments. In both these countries, the demand of natural gas and oil is currently running at the rate of more than 10%. This trend can help Pacific oil to develop new market and increase the company revenues. Some of the major characteristics of oil industry are as follows:

Increased trends of mergers and acquisitions in oil market are resulting in oil giants

Technological advances

Increasing trends of deregulation and privatization in oil industry

Instability of the industry

Pressures of oil demand for larger economies and developing economies

Due to technological advances, new competitive forces are now in place for the oil companies

Newly introduced products aligning with customer needs and wants

The global trade of oil accounts for 53% which is 10% of the world-trade. This percentage is more than any other traded commodity percentage

The importance of oil is increasing for military, diplomatic and industrial needs (Robert 2009)

SWOT Analysis

Strengths

Pacific Oil is one of the growing oil companies with excellent production and supply capacity.

Pacific Oil is also a top supplier of base-stocks which is used for manufacturing of motor oil. Additionally, Pacific is a leader in marketing lubricants as well.

High quality is the logo of Pacific Oil. Customers searching for quality generally chose Pacific Oil.

Weaknesses

Pacific Oil is not covering the whole world, which is one of its major weaknesses.

Pacific oil is currently unable to meet the increasing demand of India and China.

Pacific Oil does not have enough safety precautions for workers working at their plants

Opportunities

As a new player in the market, Pacific Oil has the opportunity to create a positive perception in the minds of customers by offering highest quality at reasonable prices

India and China can be potential markets for Pacific Oil

Stable increase in oil price gathered with continual increase in demand of oil is a greater opportunity for pacific Oil

Potential advanced refining techniques are also an opportunity for Pacific Oil to meet the increasing oil and gas demand globally.

Threat

Global warming greenhouse gases emission are potential threats for Pacific Oil. Both these can reduce the oil demand globally (Canales & Natasha 2008)

Monthly Monitoring

It will be the overall responsibility of Board of Directors to monitor and manage the risks facing the Pacific Oil. The risks will be identified and evaluated by the Key Risk indicators. These risks will be treated on monthly basis and will form part of the financial & operational management report which generally includes EHS, financial, operational and the external environmental scan report. The communication of risks in this report will be in the form of a narrative commentary mentioning the probability of occurrence these risks. This will clearly highlight the probability of occurrence as well as the intensity of the risks identified for a particular period. Additionally, this will clearly highlight the progress of risk mitigation stating whether the mitigation of risks has been attained, it is in progress or risk mitigation has crossed limits and requires immediate and frequent action. This will act as a self-working risk management system in which the probable risks will be identified and evaluated along with the status of risk mitigation. This will be analyzed in the light of circumstances in the external environment in which Pacific Oil will be operating.

Accountability

The accountability of the risks associated with the operations of Pacific Oil will be nominated to its Board of Directors. This approach of nominating Board of Directors accountable for keys risks of the company will be aligned with the business model of Pacific Oil. This business model of pacific Oil coordinates and integrates production, finance, legal decision making, exploration and corporate governance.

Responding of Risk management Process

The response of the risk management process is the key to success for any organization. The newly developed risk management process of Pacific Oil has the characteristic of responding instantly to the risk, if and when occurred. According to this risk management plan, Pacific Oil will react quickly and key actions needed will be implemented as soon as possible. This extra-ordinary feature of Pacific Oil's risk management plan will guarantee that the company will not take time in taking actions against risks arising from the operations in the market.

Evolution of Risk Management

Pacific Oil will establish dedicated project teams to manage major developments in India and China which will serve as new markets for the company. As part of that process project milestones will be established covering EHS, cost, schedule and technical aspects of the development. At each stage detailed risk analysis is completed with inputs from partners as appropriate. Plans to mitigate these risks are developed by the project teams and reviewed by the Board of Directors.

On an ongoing basis the risk and contingency management team will produce a comprehensive monthly report that will provide a detailed summary of progress being made in meeting key project milestones. Key execution risks will be identified along with the mitigation actions being implemented to manage these risks. Through this process risk identification, mitigation and monitoring are completed as part of the day-to-day management of these operations. As risks are effectively mitigated they will be replaced with emerging risks.

The report will be distributed to senior management, partners and the Ghanaian government and also forms part of the Pacific Oil's monthly operational and financial report for the Pacific Oil Board.

Policies and Procedures

There are detailed Policies, procedures, SOPs, systems and processes for meeting the demands of risk management arising within Pacific Oil. These include the Pacific Oil's business practices, human resources and EHS policies and systems, supply chain management, crisis management plans and ISO14001 environmental management system certification group code.

2011 Identified Risks

The probable identified risks of 2011 for Pacific Oil are as follows:

Risk of execution in newly entered markets of India & China; and Risk of exploration related to a very active program of 2011 in India & China LNG plants.

Risk Disclosure

There are several risks in the areas of financial, external, operational and strategic management for pacific Oil. It has been decided that, there would be no particular time period for reviewing risks. The management will make sure that the risk review process will continue throughout the year without any disruption. Pacific Oil will synthesize this year's report, adjusting and improving these responsibilities with the Board of Directors, the Pacific Oil's Key Performance Indicators and related policies and systems of risk disclosure.

Thus this risk management plan will be implemented as soon as pacific Oil starts operations in India & China.