The Abu Dhabi Company for Onshore Oil Operations (ADCO) was formed on 8th October, 1948. It operates on the shore as well as the in the coastal shallow water of the Abu Dhabi. The company is also responsible for operations in a concession area of approximately 21,000 square kilometers. The main produce of the company mainly comes from the five oil fields namely:
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· Bu Hasa.
The above mentioned oil fields are linked together through a pipeline of more than four hundred and fifty kilometers. The storage and shipping facility is located at Jebel, Dhanna, which also allows the tankers to load crude oil for many markets around the globe. A sixth field is also there which was discovered later in 1993. The core values at ADCO are honesty and integrity, the development of its employees, providing a proper communication channel among employees, team work, accountability and excellence in performance. The Vision of ADCO is to become an integral contributor to Abu Dhabi’s growing future through the utilization of its resources.
It is important for the organization to implement certain strategies so that it can survive in the market and to give a tough time to its competitor. As mentioned in (ADCO) (2008)
Strategies are also important for ADCO in a manner, that the business’s profit is dependent upon how appropriately these particular strategies are communicated to the employees in order to achieve the organizational objective.
At this time, the company has a set of five strategies which are mentioned underneath.
· Continuously achieving the highest standards of HSE performance in the industry.
· Developing technical capability and leadership competency to manage an increasingly complex business.
· Effectively evaluating and executing optimum reservoir development and management strategies to maximize recovery while minimizing cost.
·Adopting and executing proven technologies and strategies that enable the most efficient field development.
·Ensuring the integrity of our facilities on a cost effective basis to optimize system availability.
These strategies are said to be helpful for the company in achieving its objectives for 2020.
Page 2 ADCO Global Strategy Essay
The strategy that is followed in the operations department is to develop a competence from the technological and leadership aspect so that the company can meet the requirements of theincreasing complexity of business. All the departments are strategically aligned towards the organization’s strategy in a way that all department are working towards the common objective of ADCO which is to be the most integral contributor in the development of Abu Dhabi, therefore, each department makes sure that all the processes are being carried out as per the standards set by the organization. In addition to this, if people have any problem at any stage, they are free to talk about the problem with the management and have a detailed discussion on the issue and for further guidance in order to resolve the problem.
The Strategy School
Utpal B. (2010) says the strategy school that ADCO is currently using is ‘Operational Excellence.’ It is helpful for the organization in a manner that it will create:
· Optimized supply chain networks.
· A fully standardized and controlled system of operations and decision making.
· High speed transactions.
· A culture where operational efficiency is awarded the most.
· An aggressive rivalry.
· Ways to constant improvement and quality management.
To bring about an enormous integration in the decision making system at a cross functional level is the main objective of this change. (Cross functional includes from the strategic level to all the way down to the operational level). By placing aspects of sub-surface, engineering, drilling and operations under a single ‘Asset Manager’ with shared objectives, improved decision making, shortened cycle times and cross functional synergies should be achievable. The implementation of these strategies will address production and reservoir management challenges first. The projects are phased and prioritized based on business case, availability of smart enablers and potential for early gains.
SWOT Analysis of ADCO
Strengths: Strengths include growing demand of oil as well as the government decisions. The demand for oil has been increasing drastically; especially the products like petroleum and diesel are the major demands around the globe. This increasing demand will lead to increasing profits.
As far as the government decisions are concerned, they have allowed to increases the prices of oil up to 10% which will give self-sufficiency to the company to have the power of increasing prices in their hands.
Weaknesses: ADCO’s weakness may lie in danger to the health and safety of its employees. Because most of the work is done outside and in pipelines, it has the vulnerability to affect the health of employees which will ultimately lead to a reduction in the human capital of the organization.
Opportunities: ADCO has the opportunity of discovering more oil fields which will be fruitful for the organization. In future the current ADCO ‘functional’ agreed processes and criteria could be augmented at an IAG level and may include: maximum usage of existing facilities, infrastructure and wells, and optimization of operational philosophy. The intended ultimate result would be an optimized ADCO portfolio consisting of individually optimized IAG portfolios resulting in improved efficiency, greater value and ultimate recovery.
Threats: Competition is a major threat to the company as most of the oil producing companies has the origin from either Saudi Arabia or UAE. Therefore, the company has to work on its technology more often in order to do an aggressive rivalry and to maintain their existence in the industry.
Katriza V (2009) stated that the oil industry is changing on a rapid pace. On every single day the demand for oil had rose from that of the previous day and the organizations operating in the oil industry have to make sure that these demands are fulfilled or not. Increasing oil prices is also an issue in this industry; apparently there seems to be no such measures that can be taken to reduce oil price. In addition to this, the technological advancements have also geared up the pace of competition between rivals. Another core issue is the systematic damage caused to people and nature in the manufacturing and processing of petroleum products.
People are aware of the harmful effects that oil industry is responsible for. An example of it is the massive damage caused to the marine life by the huge oil spill in the Mexican Gulf. ADCO has designed its current strategies according to the requirements of the industry; ADCO has to comply with the health and safety measures in order to continue its operation. In addition to this, ADCO has signed environmental safety pacts to ensure that the nature is not affected by its produce. In a nutshell, ADCO has taken every possible measure so that it can survive in the oil market and can continue to work towards its goal of improving the future of Abu Dhabi.
Significance and Complexity of Culture in the International Market
Aparna Layer (2009). The significance and complexity of culture in international trade effects organizations in many ways. The work practices in the western part of the world are way too much different from those that prevail in the Arabic countries. ADCO will be facing those cultural issues in the globalization of its operations. In addition to this, the countries that have a high rate of discrimination on the basis of race or ethnicity will be difficult to approach, as they impose entry barriers on companies belonging to other regions of the world. For instance, the people of Russia are very racist; the discrimination rate is so high that sometimes people risk their lives. In order to address this issue the organization have to plan strategies that can allow them to enter those countries. Another problem will be the bargaining over oil prices. A few countries have high power distances and this may not allow ADCO to easily negotiate with the government on oil imports
Future of the Organization
The future of ADCO is very bright because the organization has planned the code of conduct very appropriately. All the strategies are designed accordingly and the work done by the employees is up to the mark. In (ADCO) (2010) as the timeline shows the continued process of growth and development inside as well as outside in the fields of the organization, it is most probably expected that ADCO will becoming one of the largest oil exporting companies in the world. Adding up to this, the rapid completion of different complex business projects is a sign of success to the company. ADCO will also be serving approximately 75% of oil needs of UAE and will also have an increased percentage in meeting the global demands of oil.See More on Culture, Organization