Learning outcomes: Describe the different issues related to environmental scanning, strategy formulation, and strategy implementation in diversified organizations (CLO2) 2. Distinguish between different types and levels of strategy and strategy implementation (CLO4) 3. Communicate issues, results and recommendations coherently, and effectively regarding appropriate strategies for different situations (CLO6) 1. Assignment Questions Consider the same company ‘Saudi Aramco’ that you have already used in assignments 1& 2 and answer the following questions. 1. Evaluate the performance of the main activities of your selected company. What type(s) of criteria do you use to evaluate this

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Learning outcomes: Describe the different issues related to environmental scanning, strategy formulation, and strategy implementation in diversified organizations (CLO2) 2. Distinguish between different types and levels of strategy and strategy implementation (CLO4) 3. Communicate issues, results and recommendations coherently, and effectively regarding appropriate strategies for different situations (CLO6) 1. Assignment Questions Consider the same company ‘Saudi Aramco’ that you have already used in assignments 1& 2 and answer the following questions. 1. Evaluate the performance of the main activities of your selected company. What type(s) of criteria do you use to evaluate this performance? 2. What type(s) of control of employees and production processes is/are used by your selected company? Justify 3. How does the corporation manage the environmental risks? 4. Evaluate the competitive advantage of the corporation. Suggest some recommendations in order to improve it. Answers: Assignment 2: Part 2 of project Learning outcomes: Describe the different issues related to environmental scanning, strategy formulation, and strategy implementation in diversified organizations (CLO2) 2. Explain the contribution of functional, business and corporate strategies in the competitive advantage of the organization. (CLO3) 3. Distinguish between different types and levels of strategy and strategy implementation (CLO4) 4. Communicate issues, results and recommendations coherently, and effectively regarding appropriate strategies for different situations (CLO6) 1. Assignment Questions Consider the same company ‘X’ that you have already used in assignment 1 and answer the following questions 1. Describe the roles of directional, marketing, operations and human resource strategies in the overall well-being of your selected company. 2. Classify the products of your selected company based on the BCG matrix. 3. Describe at least one partnership that your selected corporation has with other company (es). Is it successful? Justify. 4. Describe the structure of your selected company. pg. 1 Answer Q1: In any business setting, a company needs to have a clear plan that will enable it to meet its goals. This plan is referred to as directional strategy. A directional strategy is a vital tool that a company can leverage in order to help the company navigate over the course of its existence (Hoque, 2002). This strategy serves to benefit the company in both calm and difficult times. Saudi Aramco, just like many other business entities also incorporates a directional strategy to help it achieve its goals. This is evidenced by the company having Mission and Vision statements. These are pivotal in providing the company with a sense of direction and purpose. This enables a strategic approach towards conducting business and achieving its goals. Marketing strategies are those plans formulated by a company in order to utilize scarce resources so as to boost its sales (Hoque, 2002). This strategy plays a critical role in giving the company leverage over the competition, providing better utilization of resources, and tending to customer’s needs and preferences. Saudi Aramco utilizes marketing strategies in operations in order to achieve its objectives. This can be seen in a number of ways. The company provides high-quality products in a view to providing customer satisfaction. The company also supports innovation through R& D in order to continuously differentiate itself from the competition. Operational strategies are those strategies tailored to study and integrate effective methods of utilizing scarce company resources (Lewis & Slack, 2014). These strategies are comprised of a blend of corporate-focused and customer-focused strategies. One main area the company is focusing on is in Research and Development into new technologies that will enhance the efficiency of the mining and refinery processes. By continuous improvements, the company is in a position to improve operational efficiency, workflows as well as tremendous reductions in operating costs. Human resource strategies are plans tailored to manage human capital so as to blend this useful asset with the goals of the company. The workforce is one of the most critical determinants of the success or failure of any company. Therefore, it follows that companies try to effectively manage this asset so as to meet their goals. At Saudi Aramco, the company prioritizes the management of its workforce right from recruitment, development, and equipping employees with relevant skills and knowledge to work within the requirements of the company. pg. 2 Answer Q2: The BCG Matrix categorizes business units into four classes which can be placed in two dimensions; market growth and market share (Madsen, 2017). These classes are Stars, Cash Cows, Question Marks, and Dogs. Saudi Aramco has several strategic business units which combined form the core of the company. The company has the following major products: Oil and Gas, Refined Products, Energy, and Petrochemicals. The Star denotes a unit that has a high market growth rate coupled with a high market share. In general, companies are encouraged to invest in the Star as it has the potential to grow the company and improve significantly in the performance of the company. In Saudi Aramco, the Financial Services unit is a star as it has been showing a significant grasp of both market share and market growth rate. This will result in more profits for Saudi Aramco as well as the potential to acquire other firms in this space, thereby growing the company. Oil and Gas are also a star in Saudi Aramco. The second category in the BCG Matrix is the Cash Cow. This represents a strategic business unit with a low market growth rate but has a higher relative market share. The Refined Products are a cash cow for Saudi Aramco. The company has been shifting to refining crude oil as witnessed by its acquisition and development of refineries. The Question mark denotes those products that grow rapidly, consuming monetary resources but due to low market shares, don’t generate a lot of money. These products require keen analysis as to whether to continue investing in them or to stop. In Saudi Aramco, this product is Energy. The company has ventured into the Energy industry via the Saudi Aramco Energy Ventures SAEV. With many big players in this field, SAEV is an entrant in a capital-intensive field that is yet to generate cash for the company. The Dogs represent those products that have a low market growth rate and low relative market share. In most cases, these products are viewed as useless from an accounting perspective. In general, companies are advised to completely stop investing in such products as a whole. In Saudi Aramco, the dog is represented in the Petrochemicals division and in particular synthetic fiber products. This is since the market of these products have shrunk over the years, leading the company to make losses. With a low market share, this product is definitely a dog. pg. 3 Answer Q3: Saudi Aramco Company operates in various market segments. In its operations, the company has been encountering other entities, some rivals, and some complementing the activities of the company. These include energy companies, engineering companies, equipment manufacturers as well as Research entities. On its website, Saudi Aramco recognizes that no single business entity can succeed on its own. The company opines that partnerships are a great opportunity for companies to be competitive and promote the expansion and growth of companies. One of its notable partnerships is with Total. The partnership was created in the late 2000s. The partnership saw the creation of Saudi Aramco Total Refining and Petrochemical Company known as SATORP (Krane, 2015). Saudi Aramco owns a 62.5% stake while Total owns a 37.5 % stake in the partnership. The partnership has grown to be among the leading refining and petrochemical companies in the world. The partnership draws from the expertise of these two companies. Saudi Aramco brings expertise in mining and processing while Total brings expertise in marketing and retailing. This partnership creates an efficient and technologically advanced platform. SATORP is famous for the production of highquality products which are a result of the high-value-addition that the company makes to crude oil. As of 2018, the partnership saw an increment incapacity to the production of 440, 000 barrels of crude oil daily. In terms of financial success, the partnership has initiated several large-scale projects worth millions of dollars. One of these was a project in building a petrochemical facility that was estimated to cost around $5.5 billion. The partnership is also successful owing to the fact that it has created job opportunities in the Kingdom. It has also been awarding scholarships to students in the community. All these aspects are indicators that the partnership between Saudi Aramco and Total has been growing and continues to succeed with each passing year. The partnership seeks to remain a global player worldwide in oil products and continue to have a positive impact on the social wellbeing of the people of Saudi Arabia. pg. 4 Answer Q4: Saudi Aramco is a Saudi Arabian public company that deals in oil and gas. The company is based in Dhahran. It deals with fuel, chemicals, financial services as well as energy. The company has several functional business areas. The company is structured along with these functional areas, thus making it to be comprised of a functional structure. In this type of organizational structure, the company is structured around function areas such as marketing, communications, technical services, finance, and also human resources (Johnson & Leenders, 2001). In this structuring, Saudi Aramco is divided into smaller groups which include; Corporate Development; Technical Services; Finance, Strategy and Development; Upstream and finally Human Resources and Corporate Services. Each of these functional areas is headed by the Senior Vice President who reports to the Chief Executive Officer and the President of Saudi Aramco. The company also has a board of directors who are tasked with steering the affairs of the company. The board plays a crucial role in providing requisite direction and management as well as developing the strategies of the company. Through this corporate governance, the company is in a position to assess its opportunities and risks owing to the vast pool of experience and expertise coming from the directors. Functional organizational structure provides for more efficiency in terms of operations. This is attributed to the core of this structure; which is to group employees with common skillsets as a functional group. This promotes productivity and specialization which overtime improves efficiency. The structure also provides for accountability as there are clear responsibilities issued to employees. However, this structure falls shorts in the area of communication. The structure is sometimes undermined by a lack of communication between the employees in different functional departments. pg. 5 References Hoque, Z. (2002). Strategic management accounting. Spiro press. Johnson, P. F., & Leenders, M. R. (2001). The supply organizational structure dilemma. Journal of Supply Chain Management, 37(2), 4-11. Krane, J. (2015). A refined approach: Saudi Arabia moves beyond crude. Energy Policy, 82, 99-104. Lewis, M., & Slack, N. (2014). Operations strategy. Pearson Education. Saudi Aramco Company Website https://www.aramco.com/en/news-media/news/2019/high-qualityretail-fuel-network# Accessed April 3, 2021 ________End of Assignment 2 pg. 6 1. Briefly present your selected company (name, industry, nationality, location, size, activities, products…) Answer Q1: As a Saudi citizen, the first company that will cross my mind is the Saudi Aramco Co. Aramco is one of the famous and huge companies in KSA that work in oil and its resource field. The headquarters is located in Dhahran Also, it is the world’s biggest oil producer and the world’s second-largest proven crude oil reserves. It produces more than 270 billion barrels. Over the decades, Aramco has discovered the Kingdom’s geology and built an integrated network of oil and gas production and oil processing facilities. Some of its products are Naphtha, Gasoline, Crude Oil / Condensate Middle distillates, Fuel oil, and Sulfur. one of the important info regarding Aramco’s Energy exports, Crude Oil: Aramco data was announced that at 2,799,000,000.000 Barrels in 2016. \ 2. Determine the opportunities, threats, strengths and weaknesses of your selected company by completing the SWOT matrix in the answer sheet Answer Q2: Opportunities 1-Generating some alternative energy methods to support industries. Threats 3- Long-term global slump due to economic up and down or crisis. 2- High oil products demand from the 2- Threats that could the competitors do by developed nations. providing the competitive products in good price and qualified distribution channels. Strengths 3- Saudi Aramco has an established well known and strong brand name Weaknesses 3- Dropped in the sales of oil products by any up reasons. worldwide. 2-Reducing the production due to low demand 2- the great investment in local and global high- for some products. profile projects. 3-Some cultures start to go with zero carbon environment. 3- Issuing the shares to the public. 3. Does your selected company have social responsibility? If yes, discuss its impact on competitive advantage of the corporation. Answer Q3: Social responsibility is an important part of every leading and successful company. It shows how the organization includes its members are working in the best interests of their community and society. nowadays, social responsibility is known as a very prominent part of every organization to focus on due to the changes and improvement in the modern social and managing norms and it comes from an effective way to keep the sustainability of the organization. In 2008 Aramco has established (Ithraa) the first modern center of culture and learning, HM King Abdullah has set the foundation stone for the (Ithraa) King Abdulaziz Center for World Culture. Ithraa is one of many examples of many different social responsibilities project and incentives that owned by Aramco. The purpose of it is to evaluate knowledge and encouraging innovation among the families and specially the youths. Ithraa was based on successful human potentials and how they could inspire creativity. Simply human is the most important energy source that they focused on. The vision was building a unique cultural institution that care about diffrenet cultural exchange and schooling. The important question is how exactly this type of social responsibility can bring the benefits and effective effects the Saudi community? well King Abdulaziz has previously secure that and by working to achieve a long-term vison he insisted in the agreement that happened between Saudi and Standard Oil Company of California to including and provide opportunities that support Saudi citizens, and this was a very great evolution of far achieving the vision at that time. Ithraa has been under light as it encourages innovation in all its many different aspects and in its provided programs as science, technology and engineering. As well as they keep providing a daring way of thinking and keep igniting the students and learners’ natural desire to explore more and learn. 4. Based on the figure 4.3 (Ch4-slide no 18) and the textbook text relative to Porter’s Five forces of competition framework, assess the power of the buyers, suppliers and substitutes of your chosen company. How formidable are the barriers to entry and how intense is the rivalry among existing firms? Answer Q4: By looking at Porter’s Five Forces: 1- Bargaining power of buyers: Oil companies or Aramco has strong to medium bargaining power to use against the other competitors, as its face only a specific and small competition. Usually, most oil companies have enough power to control the prices in the market. However, we can’t hide the powerful ability that major buyers have to play with the prices or even the benefits (services or products) they could get out of the market whether increase it or decrease it. 2- Bargaining power of suppliers: We can see that no differentiation as Saudi Aramco is doing monopoly in KSA where owning and supply to itself. They don’t face any danger where they are no substitutes to compete inside the country. 3- Threats of new entrants: New entrants in the oil industry are not a challenge even if they bring some benefits inside the oil industry in Saudi Arabia. We can see clearly that Aramco is financially independent where they have full support from the government of Saudi Arabia. Also, they have a huge amount of investment in many different sides more than the oil industry besides they own their distribution channels and the high standard resources. 4- Threats of substitutes (Products or services): The tendency to get substitutes is not expected or we can say it’s very minimum. Also, Aramco has competitive prices that they are evaluating and review regularly and has a high level of quality in services and products. 5- Rivalries among other firms: Has a well-known and strong brand identity that controls the cost by controlling the production. Also, Aramco has no barriers to entry to any market. 5. What is the competitive strategy used by your selected company? Justify. Answer Q5: Due to Saudi Aramco has one of the world’s largest oil fields, this is can be a competitive strategy as leads to control the price or be an effective member of worldwide oil prices. In specific if we took a look at the huge production variety and resource width, we would see a great competitive strategy and advantage. _____________ …
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