Woodside Petroleum: Business Strategies, Criticisms, And Organizational Culture Essay.

Overview of Woodside Petroleum

Question :

Discuss about the Strategic Management ?

One of the most reputed and renowned company in the oil and gas sector belonging to Australia is Woodside Petroleum. It was founded in the year 1954 and the headquarters of the company is located at Woodside Plaza located in Australia (Woodside.com.au, 2016). The company is owned by Royal Dutch Shell and the company is listed on the Australian Securities Exchange (Woodside.com.au, 2016). The operating profit of the company is 26 million US$ in the year 2015. The company has exploration, operations and development of “liquefied natural gas projects” in countries such as Canada, US, New Zealand, Korea, Ireland and others (Woodside.com.au, 2016). This paper would analyze various aspects of this organization including business strategies, criticisms, organizational culture and business environment analysis.

Woodside Petroleum is a worldwide popular oil and gas organization which is considered as one of the largest operator of the oil as well as gas production (Woodside.com.au, 2016). The company has different projects in remote regions of Western Australia such as “North West Shelf and Pluto” projects (Woodside.com.au, 2016). These projects are one of the premium natural gas facilities in the world and have given superior performance in the last 30 years.

The vision of Woodside Petroleum include that the company aspires to become the world leader in the development and distribution of oil and gas (Woodside.com.au, 2016). The mission includes the company strives to deliver the superior return policy to large number of stakeholders (Woodside.com.au, 2016). The strategic direction of the company is aimed at maintaining its market position in Australia by the optimization of assets as well as commercialization of the premium opportunities (Woodside.com.au, 2016). The core values of Woodside Petroleum include respect, integrity, discipline, sustainability, team work and excellence (Woodside.com.au, 2016). There are several competitors of the organization including ROC Oil Co. Ltd, ExxonMobil Australia Pty Ltd and China Petroleum.

The business strategies of the company have evolved through the years. The business strategies of the company have displayed a progressive set of actions that have focussed on the business development of the organization. During the year 1979, the company gained approvals for commencing the “North West Shelf Gas Project” (Woodside.com.au, 2016). The organization has engaged in the business contract of “Liquefied Natural Gas” with eight Japanese firms (Woodside.com.au, 2016). It constantly looks for lucrative firms with which it can make profitable business opportunities. Woodside Petroleum is constantly looking for new exploration sites which would be lucrative options for the organization. This has resulted the organization to locate various condensate fields and oil fields. The company believes in the fact that it is important to discover new oil fields for the purpose of gaining competitive advantage. This drives the company to constantly search and scrutinise new oil fields (Woodside.com.au, 2016). This eagerness of the company has resulted in the discovery of Laverda oil field, Cossack oil field, Hermes oil fields, Laminaria oil field and others.

At the present, the company has adopted a different set of business strategies. It has adopted three core values in their organizational policy such as portfolio growth, leveraging organizational capability and maximising the value of core assets (Woodside.com.au, 2016). The organization has positioned itself with expanding asset base as well as distinctive capabilities that are necessary for organizational success. This has been done by the increased adoption of the latest technologies. The organization has adopted the liquefaction technologies as well as LNG technologies for greater automation in their business processes (Woodside.com.au, 2016). The technology adoption has also resulted in the establishment of the remote operations in the offshore oil projects (Woodside.com.au, 2016). This has reduced the operational costs of the company as well as increased the organization’s maintenance outcome. The company concentrates on the Australian region, Sub-Saharan Africa and the Atlantic regions. It strives to be the reputed “emerging petroleum provinces” (Woodside.com.au, 2016). Woodside Petroleum strives to expand its business operation networks and hence it has created an extensive network of “exploration assets” in locations such as Spain, Peru, Brazil, Ireland and others (Woodside.com.au, 2016).

Business Strategies

The multinational companies have always faced multiple challenges when aiming for business expansions (Kumar et al., 2013). There can be stiff resistance when implementing new organizational policies. The challenges can also be related to the day to day functioning of the organization. The same holds true for Woodside Petroleum. In the past, it was severely criticized for under-performance. The competitors of the company have not performed well and this has proved advantageous to the company. It has failed to revive the quality of their operational procedures and hence it holds the second position in the Australian economy. There are two instances during which the company’s business decisions were severely criticized (Woodside.com.au, 2016).

The first instance which proved to be troublesome for the company was when the Mauritian leader Ely Ould Mohamed Vall announced that the contracts made with Woodside Petroleum. The issue began when Woodside Petroleum agreed to pay US$600 million for developing the “Chinguetti Offshore Oil Project” in Mauritania (Aguilera et al., 2012). The Mauritanian government has claimed that Woodside Petroleum has signed the agreement beyond the legal framework. The company was accused of bribery and corruption when entering into the trade agreements. The organization was unable to portray ethical business practices when dealing with foreign government. The Australian Federal Police accused Woodside Petroleum of corruption as well as bribery, which was reported by the Sunday Morning Herald (Woodside.com.au, 2016). The BBC News reported the company performed outside the legal purview which caused great trouble for the organization.

The second instance when Woodside Petroleum faced severe public criticism was when it made deceptive public comments (Sridhar and Jone, 2013). The criticism was done by the industry entity- “Australian Conservation Foundation”. The Foundation accused the company by stating that the company made unnecessary exaggeration in the public which did not match with the statements given to the investors and other stakeholders. The different statements made by the company in the public were contradictory and this caused huge trouble to the company. Theprimary aim of the company was to gain “free carbon permits” and this was the primary reasons for the deceptive statements, as claimed by the Conservation Foundation (Woodside.com.au, 2016). In the year 2009, the Australian Conservation Foundationlodges an official complaintagainst Woodside Petroleum. The federal consumer affairs were also involved for taking suitable action against the company.

The company has faced criticisms from the customers, external stakeholders, legal institutions, industry experts and others. This caused negative brand image of the company. The legal proceedings and the controversy have impacted the reputation of the company. It has also caused major financial loss of the company.

The external as well as internal business environment of Woodside Petroleum needsto be analyzed for understanding the strategic business position in the oil and gas industry. The four analytical tools are used for this purpose such as PESTEL analysis, SWOT analysis, internal environment analysis and specific environment analysis.

Political factors

The oil as well as gas industry is influenced by the different political factors such as political instability, government regulations and geopolitical conflicts (North et al., 2014).

Organizational Culture

Economic factors

There is close relationship with the oil prices and value of US dollar that affect the pricing regulation of the company. The central value influences the dollar value which is an important factor in the pricing strategy of the oil and gas products (North et al., 2014). The factors such as “shadow banking system”, global economic crisis and recession also play a major role in shaping the business policies of Woodside Petroleum (Azar, 2015).

Social factors

There has been an increase in the awareness of the environment friendly fuels, increased awareness of the natural gas products and decreasing dependence on the fossil fuels (Stigka, Paravantis and Mihalakakou, 2014). These factors influence the manufacturing and the distribution of the oil as well as gas organizations.

Technological factors

There are some advanced technological factors which affect the oil and gas industry such as 3D printers, remote inspection, imaging technologies, data mapping and autonomous vehicles.

Environmental factors

The environmental factors such as heavier fuels usage, oil spills and refined petroleum spills affect the human as well as animal life to a great extent (Doerffer, 2013). The oil and gas pipelines have affected the natural water bodies such as rivers, oceans and cropland.

Legal factors

The legal framework involves the gas regulations, oil regulations and the natural gas regulations that determine the nature of the business policies of the company (North et al., 2014). It is also important to put emphasis on the intellectual property rights.

The customers have displayed an increased consumption pattern for the oil as well as gas products (Clark, Horner and Harto, 2013). There has been an increase in the related industries that rely on the oil and gas products for making their manufacturing products. The functioning of this industry is being affected by partners, customers, unions, and competitors. The industry relies heavily on the supply chain process and hence the companies design their policies accordingly.

The internal business environment of Woodside Petroleum comprises of different entities such as process, employees, operations and the management. The aim of the process is to increase the production of the firm so that there is increased profitability of the firm (Sholarin and Awange, 2015). The operation process comprises of the division of labor and optimum utilization of the organizational resources (Sholarin and Awange, 2015). The managers strive to enhance the productivity of the employees thereby leading to the success of the organization. The primary purpose of the management function is the amalgamation of the major job roles in the organization by focusing on team work.

The SWOT analysis of the firm is depicted as below-

                                                                            Fig: SWOT analysis of Woodside Petroleum

                                                                                         Source: Created by author

The organizational culture of Woodside Petroleum comprises of the respect, integrity, discipline, sustainability and excellence (Woodside.com.au, 2016). The company believes in these core values and tries to implement them in the organization. The organizational culture of the company makes it sure that the quality of the internal environment is fair, honest and open (Bayzakova, 2014). The company also makes it a point to motivate the employees so that they can stick together for a longer duration. This in turn increases the productivity of the employees and this is beneficial from an organizational point of view.

Criticisms

The director of the company Michael A Chaney has displayed significant leadership capabilities (Woodside.com.au, 2016). He is a democratic leader who strives to gain consensus through the process of participation. The person has involved his subordinates in the decision-making process of the organization. Mr. Chaney tries to give equal importance to the contribution of his team and their viewpoints are considered while formulating important decisions (Woodside.com.au, 2016). It is true that he takes into account the verdict of his employees, however, he takes the final decisions. He is also engaged in the delegation of authority to his subordinates. This is done after determining the best person for carrying out the specific job roles.

Ms. Sarah Ryan have displayed more than 15 years of experience in the oil and gas sector (Woodside.com.au, 2016). She has displayed facilitative leadership. Her leadership style is people centered and she strives to develop an organizational culture that would facilitate goal achievement. She focusses on fostering team work in the organization along with enriching workplace culture. She also emphasizes on the change management process in the organization and has displayed effective leadership on these matters.

“Michigan Studies of Leadership” has been followed for designing the leadership structure of the organization (Sholarin and Awange, 2015). This group of studies have helped the company to identify the principles of the different leadership styles which would be best suited to the organization. This would increase the organizational productivity as well as increase the motivation of the employees. The organizational leaders focus more on the human resources aspect of the organization. It values its employees and tries to create an enriching organizational culture. The senior leaders demonstrate participative leadership in the organization.

Conclusion

Woodside Petroleum is a reputed organization in the oil and gas sector which has implemented good organizational policies. The senior leaders of the company have displayed democratic leadership as well as facilitative leadership which has given due importance to the employees of the organization. The company has also faced several criticisms in the recent past which has also impacted the brand image of the organization. The internal environment as well as external environment analysis is done with the help of several tools such as PESTEL, SWOT and others. The analysis of the macro environment as well as internal environment would help the company in formulating efficient operation policies. The organizational culture of the company is enriching and it provides excellent human resources policies. This report would broaden the understanding of the organizational policies of Woodside Petroleum.

References

Aguilera, R.F., Eggert, R.G., CC, G.L. and Tilton, J.E., 2012. Is Depletion Likely to Create Significant Scarcities of Future Petroleum Resources?. In Non-Renewable Resource Issues (pp. 45-82). Springer Netherlands.

Azar, S., 2015. The Relation of the US Dollar with Oil Prices, Gold Prices, and the US Stock Market. Research in World Economy, 6(1).

Bayzakova, A., 2014. The Uncertain Future of Australian LNG Projects: The Use of Scenario Building in Strategic Management.

Clark, C.E., Horner, R.M. and Harto, C.B., 2013. Life cycle water consumption for shale gas and conventional natural gas. Environmental science & technology, 47(20), pp.11829-11836.

Doerffer, J.W., 2013. Oil spill response in the marine environment. Elsevier.

Kumar, V., Sharma, A., Shah, R. and Rajan, B., 2013. Establishing profitable customer loyalty for multinational companies in the emerging economies: a conceptual framework. Journal of International Marketing, 21(1), pp.57-80.

North, D.W., Stern, P.C., Webler, T. and Field, P., 2014. Public and stakeholder participation for managing and reducing the risks of shale gas development. Environmental science & technology, 48(15), pp.8388-8396.

Sholarin, E.A. and Awange, J.L., 2015. Broad Framework for Environmental Project Management. In Environmental Project Management (pp. 93-107). Springer International Publishing.

Sridhar, K. and Jones, G., 2013. The three fundamental criticisms of the Triple Bottom Line approach: An empirical study to link sustainability reports in companies based in the Asia-Pacific region and TBL shortcomings. Asian Journal of Business Ethics, 2(1), pp.91-111.

Stigka, E.K., Paravantis, J.A. and Mihalakakou, G.K., 2014. Social acceptance of renewable energy sources: A review of contingent valuation applications. Renewable and Sustainable Energy Reviews, 32, pp.100-106.

Woodside.com.au, 2016. Woodside Energy | Home. [online] Woodside.com.au. Available at: <https://www.woodside.com.au> [Accessed 10 Dec. 2016].