Provide example of one Saudi Company and analyze two examples ✓ Solved

Provide example of one Saudi Company and analyze two examples of organizational strategies and operating plans for this example.

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In this analysis, we will explore Saudi Aramco, the world's leading oil producer and one of the largest companies globally by revenue. By examining its organizational strategies and operating plans, we can understand how Saudi Aramco maintains its leadership position in the global energy market.

Overview of Saudi Aramco

Founded in 1933, Saudi Aramco (officially known as the Saudi Arabian Oil Company) is a state-owned enterprise responsible for the exploration, production, and marketing of oil and gas in Saudi Arabia. The company has become synonymous with the country's wealth and economic stability, serving as a linchpin for the Kingdom's financial and energy sectors.

Organizational Strategy 1: Diversification

One of the primary strategies employed by Saudi Aramco is diversification. Originally focused entirely on oil extraction, the company has expanded its operations to include various related sectors. These include petrochemicals, refining, distribution, and renewable energy. Diversification helps mitigate risks associated with fluctuating oil prices and market demand.

For instance, in 2017, Saudi Aramco launched a $20 billion investment into petrochemical projects with a focus on expanding its downstream operations. This proactive move not only positions the company favorably amidst changing energy demands but also ensures long-term revenue stability and growth (Al-Fadhli, 2018).

Organizational Strategy 2: Technological Innovation

Another critical strategy is the heavy investment in technological innovation. Saudi Aramco has recognized that to sustain its competitive edge, it needs to adopt cutting-edge technologies that enhance operational efficiency and reduce environmental impact. Investments in new technologies include artificial intelligence, digitalization of operations, and research into carbon capture and storage.

This is evidenced by their establishment of the Dhahran Techno Valley, a hub designed to foster research and development in various engineering and technology fields. This facility symbolizes Aramco's commitment to integrating innovative solutions across its operations, contributing to a resilient operational framework (Saudi Aramco, 2020).

Operating Plans

Saudi Aramco's operating plans align closely with its overarching strategies. A significant aspect of their operational framework is the use of advanced data analytics to optimize extraction methods and maximize production output while minimizing costs. Saudi Aramco utilizes real-time data analysis to monitor and manage production rates and improve efficiency.

Additionally, their long-term plans include significant investments in sustainable energy solutions. By 2030, Saudi Aramco aims to increase its renewable energy capacity significantly, aligning with Saudi Vision 2030, which seeks to diversify the economy and reduce reliance on oil (Saudi Vision 2030, 2016). This alignment ensures that the company remains adaptive and responsive to global energy needs, reinforcing its market leadership.

Conclusion

In conclusion, Saudi Aramco's organizational strategies of diversification and technological innovation, paired with its robust operating plans focused on efficiency and sustainability, have established it as a resilient leader in the global energy sector. As the company navigates through dynamic market conditions and increasing calls for sustainable practices, its proactive strategies position it favorably for continued growth and influence in the energy landscape.

References

  • Al-Fadhli, A. (2018). Saudi Aramco: an overview of its diversification strategy. Journal of Oil and Gas Business, 5(1), 12-25.

  • Saudi Aramco. (2020). Annual Review 2019. Retrieved from https://www.aramco.com/en/investors/annual-review

  • Saudi Vision 2030. (2016). Vision 2030. Retrieved from https://www.vision2030.gov.sa/

  • Gonzalez, S. (2019). The economic impact of Saudi Aramco on the Saudi economy. Middle East Economic Review, 6(2), 34-45.

  • OECD. (2020). Oil Supply and Demand: Saudi Arabia's role in the global market. Energy Insights. Paris: OECD Publishing.

  • World Bank. (2019). Global Economic Prospects: Weak Investment in Uncertain Times. Washington, DC: The World Bank.

  • Hamdan, A. (2021). Saudi Arabia's position in the global energy transition. Energy Policy, 150, 112-121.

  • El-Baz, F. (2021). Risks and opportunities in the oil market: A focus on Saudi Aramco. International Journal of Energy Economics and Policy, 11(3), 191-200.

  • Khan, A. (2022). Advancements in oil extraction technologies: A case study from Saudi Aramco. Journal of Petroleum Science and Engineering, 202, 107543.

  • Barakat, A. (2017). The importance of technology in the energy sector: The case of Saudi Aramco. Journal of Energy Resources Technology, 139(1), 011401.