CASE STUDY REPORT: SAUDI ARAMCO

CASE STUDY REPORT: SAUDI ARAMCO
Student Name
Student Id
Course Title:
Course Code:
Course Instructor:
Institution:
Date:
Contents
Question one 2
Question two 4
Question three 6
Question four 8
References 11
Q1: The process of strategic management: Rational (or formal) model
Answer: The Rational (or formal) model of the process of strategic management has six stages in total where the second stage, strategic analysis, contains four steps. The six stages are, identifying strategic objectives, strategic analysis, strategic direction setting, strategic choice, strategic implementation and strategic evaluation.
The model starts with identifying the current vision, mission and strategic objectives of the organization. For a new company, identifying and determining new objectives is the starting point; but for an existing business organization, the starting point is identifying current objectives. Based on the company and type of company, the objectives can be determined every year. However, for most large and moderate scale business organizations, it takes more than one year to implement strategies and get result from them. Identifying the challenges as well as learning their importance is very beneficial before moving towards establishing strategies. This includes the process of identifying or recognizing the key variables (deWit and Meyer, 2010).
It is very crucial to find out the causes for any failure to reach the goal in the existing objectives or operational process. Once the objectives are determined, they need to be analyzed. Theoretically, there have been several methods for strategic analysis, like SWOT analysis which determines the strengths, weaknesses, opportunities and threats of the company to analyze and identify future potential of the company in compare with the current situation. In addition to this, the analysts need to consider environmental factors due to operating process and current resources of the organization. Environmental factors have grown great concern in recent decades around the world and they are even more important for a manufacturing company like Saudi Aramco. Analyzing the resources of the organization will help to determine its future course of action.
The analysis determines the future strategic direction for the company which includes setting new vision, mission and strategic objectives. If current objectives are capable of gaining expected profit, it might be a good idea not changes them entirely. Instead, some new objectives can be added with the existing ones to make the system more profitable and foolproof.
The next step is setting the direction to be followed so as to achieve the strategic objectives. In most cases, the options are multiple and from them, the management should determine the possible best one. After the direction is established, the strategies need to be implemented. At the final stage, the results from the implemented strategies are evaluated to find out if they have been effective enough or the company needs to determine new set of objectives.
Q2: Strategic direction setting: Strategic objectives
Answer: Strategic objectives for a business organization can be stated as statements of vision that describes the goal of the organization, presenting an overarching, inspiring and emotionally driven target. In case of setting up strategic objectives, benchmarks to measure the success of the objectives are important and for missing specification of an objective, it may become useless. The main aim for setting strategic objectives is to receive higher profits. For successful achievement of an objective, these features must be met: progress indicators, specification, appropriate and realistic target and maintaining timeframe.
For example, we can consider the objectives of Saudi Aramco. The strategic objectives of the Saudi Aramco focus on the efficiency of the production as well as developing a better market around the globe. According to Energy Information Administration (2006), it takes about 100 barrels of crude oil to produce 47 barrels of gasoline, which may not be profitable in near future considering the price of the crude oil and for that the company needs to develop new technology that increases oil production. Based on that idea, the company determines its future objectives.
Saudi Aramco is determined to become the most popular and finest oil and petrochemical manufacturing organization in the world. It is also determined to spread its business around the globe and to become the leading organization in energy industry.
In the corporate world, stakeholders have significant importance by the actions of the business operation. Stakeholders are the key groups that keep the business running. In general, the most common stakeholders for different business organizations include government, employees, customers, suppliers, creditors, community, trade union and owners.
As for the stakeholders, the Kingdom of Saudi Arabia wants to assure the financial profits for the country by Saudi Aramco. The affiliates of Saudi Aramco have keen interest in developing stable and leading markets in its represented countries. The objective of OPEC is to keep its shared control in the world petroleum market. The other two major stakeholders, the Vela International Marine Limited ensures oil shipping timeframe and the consumers of oil and natural gas maintains the price of the oil.
StakeholdersSalienceImportanceInfluence and PowerKingdom of Saudi Arabia
DefinitiveTo assure that Aramco still contribute the income for the KingdomHigh power, represents a local authoritySaudi Aramco subsidiaries or af...