Pacific Oil-Strategic Plan Pacific Oil Startegic Plan

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)

IMPLEMENTATION PLAN-ORGANIZATIONAL STRATEGY

Pacific Oil should follow the implementation plan discussed in this section. The market drivers for oil industry include innovation, prices and technological developments. In order for Pacific Oil to transit itself into the next year, the company should find out the variables which will create impact on the oil industry. Pacific Oil is committed to attain marginal difference in revenues and profits as a result of increased market share. Pacific Oil should follow the strategy of expanding market share by developing new products which are purely customer focused. Firstly, pacific Oil should introduce gas powered business based on LNG. Additionally, Pacific Oil should focus on the training and development of its employees which can create a marginal difference.

The following implementation plan should be followed by Pacific Oil's management in order to be a market leader in next few months:

Pacific Oil should create an integrated fired power business concentrated on gas. This should be installed in China using liquefied natural gas to meet the demands of new market.

To make the customers aware of the uses of gas as a source of energy. This will increase the demand of output from the newly installed fired power business. This should be done by working in collaboration with the authorities

In order to bring an integrated direction to the project, different elements of LNG plant supply chain should be brought in conjunction with the power plant. This will result in reduced implementation cost (Michael & Jude 2010)

The business strategy of Pacific Oil should positively respond to the changing trend in the LNG industry. This can be done through reduced costs of liquification and regasification. This strategy of cost reduction will give Pacific Oil increased chances of success in the new markets of India and China in LNG related products and services.

Inclusion policy along with diversity training should be derived from the top management of Pacific Oil. This should be implemented on national as well as international level. In oil production and refining, Pacific Oil should target a return on capital employed of minimum 12%. Additionally, pacific Oil should focus on improving the productivity and sales. This will definitely result in increased profits for the company.

Being an environment friendly organization, Pacific Oil should develop a plan to reduce the damages to environment caused by oil exploration, production and refining. Pacific Oil should adopt such techniques which will reduce the increasing global warming along with the green-house effect. Strategy of Energy Star Buildings should be used as a model for reducing the damage to environment. Production of energy/oil requires burning fossil fuels, this result in emission of sulphur dioxide and carbon dioxide. The emission of carbon dioxide results in global warming while the sulphur dioxide is one of the major causes of acid-rain. Both these emissions play a vital role destroying the environment.

Employee training and development should also be the centre of focus for Pacific Oil. The company should invest heavily in employee training and development because employees an extensive training for the installation of new LNG plants.

The board of Directors of pacific Oil is responsible for proper implementation of this plan. BOD is also responsible for assuring that the installation of new plants will be a success and the market for LNG will be increased. (Canales & Natasha 2008)

Although research must continue to better understand these risks and potential consequences, they will continue to take effective action, and cooperative manner with others, so that science and technology expertise with energy-related solutions, both technically and economically feasible.

RISK Management PLAN

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.