Woodside Petroleum: Corporate Strategies And Environmental Analysis Essay.

Corporate Strategies of Woodside Petroleum

Questions:

1.Research what Strategies has been applied, and how? Why?

2.There have been many Criticisms of the Business Practices that Company has pursued in recent years. Describe two of these Controversies and Outline the Outcomes.

3.Perform an Environmental Analysis for the involvement of the organisation in the Context of the Industry(ies) it Operates in – what are the main Opportunities & threats?

4.Describe the Organisational Culture or leadership Style within the Organisation.

1.Woodside Petroleum Limited is the Australia based petroleum company that is responsible for exploration and production of oil. It is the largest operator in Australia in terms of oil and gas production. It is the largest independent Oil and Gas Company. The Company operates in Australia and other international regions including New Zealand, Korea, Morocco, Ireland, Canada and USA (Woodside.com.au. 2016). The Company has faced many criticisms towards their business strategies in order to gain maximum opportunities of the market. The aim of the paper is to evaluate the business activities of Woodside Petroleum and the major corporate strategies undertaken by the organization. In addition to this, a detailed analysis of the organizational culture and the leadership style of the organization will also be done along with an environmental analysis where the organization operates.

Mission and Vision of the Company:

The vision of the Company is to deliver superior returns to the stakeholders of the Company by becoming a global leader in the world of Oil and Gas supply (Woodside.com.au. 2016).

 The values claimed by the Company are:

• Integrity and respect: The major value of the Company is to function accurately in an honest and fair manner (com.au. 2016).
• Sustainability in work: To work in a sustainable way looking after the community and the environment in mind.
• Teamwork and excellence: To build long-term relationship and excel to achieve great results.

Competitive Advantages:

Woodside Petroleum has been positioned uniquely with reliable asset base and has distinctive capabilities and a strong relationship to develop a strong relationship among the consumers to develop world class projects (Woodside.com.au. 2016). The major competitors of the Company are China Petroleum & Chemical Corporation (Sinopec), ExxonMobil Australia Pty Ltd, ROC Oil Co. Ltd. The Company has access to the world’s richest oil and gas basins, like the Carnarvon Basin (Elijido-Ten and Tjan, 2014). It is the largest producer of LNG. Another important factor that provides competitive advantage to the Company is the expertise design engineering with subsea construction vessels. The pipelines lay barges that increase the reliability of production of oil (Klettner, Clarke and Boersma, 2014).

Strategies Used in the Past:

In 2004, Woodside Petroleum came up with a growth strategy that would make the organisation three times bigger in its size within a decade. The first project that was taken into consideration in order to achieve growth was the development of gas reserves in Pluto field (Tonts and Taylor, 2013). This was proposed to be an offshore processing platform, a subsea structure that was intended to connect major five subseas well with a 180 km long pipeline to the new Gas Processing Plant in Karratha. This was targeted as the most advantageous project that will contribute to the most development and growth of the Oil Company (Tonts and Taylor, 2013).

Current Strategies of the Company:

Recently, the Company has been focusing towards exploring permits offshore Western Australia in the Exmouth Plateau and in the Western Australia to build their Gas volumes and to maximise the value of the assets of Australia (Linnenluecke et al., 2015). In the strategic agreement with BHP Billiton, Woodside Petroleum entered into the agreement to acquire the Scarborough area of BHP Billiton that is located at the offshore of Western Australia.

Controversies Surrounding Woodside Petroleum

2.In 2013, Woodside Petroleum showed its plan for a $45 billion liquefied natural gas project in Western Australia. A floating LNG plant was decided to plant on the onshore. It has been observed that major Global energy companies have invested over $140 billion in the manufacturing of six LNG plants in Australia in just a couple of years (Albrecht and Ellis, 2014). This made Australia to become the largest exporter of gas in the World. However, the investors’ investment showed considerable decline when the cost overran due to huge competition from North America where there was huge supplies of gas that was found tapped from shale.

Strategy of Browse LNG project: It was informed that Woodside Petroleum Ltd mothballed its Browse LNG Project which was estimated to cost, more than US $40 billion. The Company initially planned to go alone for the project but in later time, the Company decided for a joint venture. This project had created a controversy related to the transportation of oil by the oil giant (McKenna, 2013). Official statements released by the oil giant stated that the pipelines set by the Company will not facilitate the Company to decide on disposing the scrap due to simple economic estimations.

Primarily it was underlined that that the Company would focus on its plan regarding development of the Brose LNG project but when decision related to the dispose of the scrap, the project was driven by certain commercial reasons. It was clear that the complete process will require employment of more people that will automatically increase the cost (Clements et al., 2014). Therefore, the Company wanted to avoid bearing of the extra charges. This was definitely a controversial strategy undertaken by the company.

Growth strategy resulted in environmental issues: Keeping the market scenario of the existing oil & gas companies in the market, Woodside Petroleum designed their organisational strategy to expand its operation and focus on more extraction techniques. With the increase of rate of employees, all LNG projects in Australia became costly (Hernandez, 2014). Woodside Petroleum was found to struggle with the increasing resistance from the eco friendly nature of business operation that strongly opposed the plans of the Browse LNG. It was highlighted that the Company did not show any indication to look for any kind of solution considering the transportation of gas and petroleum.

Huge risks were analysed by experts, but in spite of the risks and environmental harm, the project was not stopped and it covered social, economic and in fact indigenous impact on the particular region. This was the most controversial strategy that the Company had to face in its life time operation.

An analysis of the internal and the external environment of operation of Woodside Petroleum will be carried on by the means of PESTLE and SWOT analysis of the Company.

Factors	Analysis
Political	The Company is responsible for paying taxes and other charges levied on the oil and gas companies of Australia. Government of the country provides the necessary goods and services that are required for the industry (Hernandez, 2014).
Economic	Economy of a country is largely depended on the availability of petroleum in the particular region. Presence of petroleum influences the supply and the demand of petroleum products in the country. 10% of the demand of petroleum of the country is fulfilled by the Company (Dissanayake, Xia. and Wu, 2015).
Socio-economic	The skilled and professional workers working in this sector get good wages and relaxing working hours. The demand of petroleum products is high to meet the living standard of the country. Therefore, there remained high chances of a good market share for the Company.
Technological	Latest technology used in the transportation and generation of oil and other petroleum products have leveraged the business activities of the Company. Improved technology has helped in the manufacturing of pipelines and better roads that facilitated transportation and exploration of oil from its target sources.
Legal	International organizations and Government bodies like EU, NATO, ASEAN and other major bodies interfere in the regulations of the flow of oil from a region to other (Graham, 2013). Therefore, the Company has to abide by the regulations of these bodies.
Environmental	The geographical location of the country has great influence on the presence of oil that influences the activity of the Country. This has facilitated the Company to generate more oil and other petroleum products. In addition to this, the region

Fig: PESTLE analysis of Woodside Petroleum

(Source: As created by the author)

Strength	Weaknesses
§  The Company is at a leading position in Australia and thus, secure a sustainable and secure competitive position (Mcdonald Smith, 2016). §  It is the most active exploration company in Australia that can drag out petroleum from Australia’s deep water provinces.	§  The Company has faced a number of legal issues for the acquisition of land for the browse of natural gas (Thompson, McDonald and Moullakis, 2016). §  Protests were organised against the Company when the proposal of construction of gas complex at the James Price Point was proposed.
Opportunities	Threats
§  The Company has better opportunities for developing innovation and technological capabilities. §  Woodside Petroleum has the capabilities of becoming the global leader in the production of LNG (Thompson, McDonald and Moullakis, 2016).	§  Increasing production and employment cost can lead to expensive situation for the Company (Mcdonald Smith, 2016). §  Australia experiences a range of disasters like bushfire, floods and severe storm and cyclone that can hit the production and exploration of oil and other products.

Fig: SWOT analysis of Woodside Petroleum

(Source: As created by the author)

With the detailed analysis of the internal and external environment of the Company, it can be said that the Company has better opportunities in its domestic front. It has been observed that the Company has been operating in major other regions of the World as well. It has faced good competition in the market but with a number of competitive advantages, the Company has managed to grab a good market share (Dissanayake, Xia and Wu, 2015). Although, factors like increased cost of labour and other expenses has lead to decline of the profit margin but there are opportunities in term of coming up with better innovative means to get the supply of oil and its products from the various available sources in Australia.

Environmental Analysis of Woodside Petroleum

Woodside petroleum believes in carrying out integrity in their organization. Their aim is to create a perfect organisational climate that attracts and retains the best people in the organisation. The aim of the Company is to equip the business sustainably and profitably in order to achieve its growth ambitions. Reading Sholarin and Awange, (2015), it has been observed that the Organisation has been focusing on executing a cultural change in the organisation to contribute towards aggressive change in their organisational climate. In order to enhance the leadership quality and achieve an outstanding business performance Woodside Petroleum invested in building the leadership capability of its top 600 leaders and assisting leaders to assist others at work that everyone can perform the best as per their capability (Clements et al., 2014).

The managers at Woodside are able to manage staffs of over 3, 300 but in order to meet the supply of the labour they have to contract more than 25, 000 labour on a contractual basis (Dissanayake, Xia and Wu, 2015). Therefore, the leaders need to manage this huge number of participants in the organisational activity to optimise the resources needed for the production and extraction of oil & gas. The leaders are active enough to achieve the audacious strategy of the need of the development to achieve the laid strategy of the organisation (Thompson, McDonald and Moullakis, 2016). At the same time, the HR and the management team is also capable and helpful enough to support the organisational development and fulfil the strategies set to meet the challenges of the contemporary market.

Conclusion:

With the detailed analysis carried on the organisational activities of Woodside Petroleum it can be said that the Company has been operating in Australia as a major driver of Oil & Gas. The Organisation has come up with a number of strategies to contribute towards the growth of the organisation. However, it has been found that the Company has faced with a number of criticisms as well while formulating its strategies. If the organisational culture and structure is considered, it has to be said that Woodside Petroleum focuses largely on its leadership activities and this is the reason that has enabled the employees with greater efficiencies. By the end, it has to be said that the internal and external factors are also favourable for the Company to prosper in the near future.

Reference

Albrecht, G. and Ellis, N., 2014. The Ethics of Resource Extraction and Processing: Two Western Australian Case Studies. In Resource Curse or Cure? (pp. 43-57). Springer Berlin Heidelberg.

Clements, K.W., Si, J. and Simpson, T., 2014. A Guide to Information on Australian Resource Projects. Australian Economic Review, 47(4), pp.563-573.

Dissanayake, N., Xia, B. and Wu, P., 2015. Measuring Sustainability Performance Within the Australian Energy Industry. In Proceedings of the 19th International Symposium on Advancement of Construction Management and Real Estate (pp. 135-143). Springer Berlin Heidelberg.

Elijido-Ten, E.O. and Tjan, Y., 2014. Sustainability Balanced Scorecard Disclosures and Corporate Commitment to Sustainability: An Australian Study. Issues in Social & Environmental Accounting, 8(4).

Graham, A., 2013. Western Australia. National Environmental Law Review, (3), p.26.

Hernandez, J.A., 2014. Are oil and gas stocks from the Australian market riskier than coal and uranium stocks? Dependence risk analysis and portfolio optimization. Energy Economics, 45, pp.528-536.

Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability: Empirical insights into the development, leadership and implementation of responsible business strategy. Journal of Business Ethics, 122(1), pp.145-165.

Linnenluecke, M.K., Meath, C., Rekker, S., Sidhu, B.K. and Smith, T., 2015. Divestment from fossil fuel companies: Confluence between policy and strategic viewpoints. Australian Journal of Management, 40(3), pp.478-487.

Mcdonald Smith, A. 2016. Woodside Petroleum CEO warns on spot LNG market risks. [online] Financial Review. Available at: https://www.afr.com/business/energy/gas/woodside-petroleum-ceo-warns-on-spot-lng-market-risks-20161124-gswtkn [Accessed 24 Dec. 2016].

McKenna, M., 2013. Western Australia: The Wilderness Society of WA (Inc) v Minister for Environment [2013] WASC 307. National Environmental Law Review, (3), p.39.

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

Thompson, S., McDonald, A. and Moullakis, J. 2016. Market keeps watching brief on Shell's Woodside stake. [online] Financial Review. Available at: https://www.afr.com/street-talk/market-keeps-watching-brief-on-shells-stake-in-woodside-petroleum-20161129-gt0c5g [Accessed 24 Dec. 2016].

Tonts, M. and Taylor, M., 2013. The shifting geography of corporate headquarters in Australia: a longitudinal analysis. Regional Studies, 47(9), pp.1507-1522.

Woodside.com.au. 2016. Woodside Energy | Home. [online] Available at: https://www.woodside.com.au/Pages/home.aspx [Accessed 24 Dec. 2016].