Introduction
In this competitive marketing world the international companies are day by day increasing their share rates through their efficiencies and also by applying the strategies they are gaining their profits in more effective ways. Like this preface, Saudi Aramco company which is the world’s largest oil production house that too depends on the competitive strategies and functionalities, through which still today it is one of the successful by finances and productions.
Discussion and analysis
Task 1
Background
The one and only, the largest oil producer in the world, Saudi Aramco is also officially known as the Saudi Arabian oil company which is mainly a state-owned and currently residing in Saudi Arabia’s Dhahran. It produces the Gasoline, Diesel, crude oil, sulfur and many other fuels. As it deals with oil production, thus becoming the most profitable company in the world which is quite natural to be possible. Even it has ellipse largest companies like tech giants Apple, Alphabet’s Google and etc. It is the largest global oil company based on the revenue. It even doubled its profits during the time of pandemic as its lucrative year being powered by high demand for oil when the countries and the governments started removing the pandemic times restrictions and also reopened the economics. Aramco’s net income increased to $110 billion by 124% during the time of 2021 which is very high and impressive with respect to the 2020’s $49 billion.
Due to this profitability each and every year Saudi Aramco, each and every in the land of Saudi and also in the world market is facing their competitive marketing which is quite normal for the big international countries. So its governing marketing scenarios by dealing with the competitions regarding the industry are as follows:
Porter’s five forces analysis:
Competitiveness:
For this case the competitors of other companies with the Saudi Aramco oil company is basically high, as in the competitive marketing scenarios it has strong rivals for example the “Group DANONE”, “Unilever” and etc. Though Saudi Aramco is running fast and well in this last 150 years of race by pacing out others, it would be rather fool to consider that it won’t face such a clash with other profitable companies that are building their world increasingly nowadays (Ahmed et al, 2018). Even if one looks into the share of the world according to the production of million barrels of oil per day it has been observed that United states is at the high position taking the 20% share with 10.88 million barrels per day where, Saudi Arabia is belonging to the second position with 11%, with 10.84 million barrels per day, only 0.04 million barrels less than the USA, and it is share rate is fundamentally equals to the Russia’s production which is 11% as well. It is absolutely visible that the competition is very high, even it is having a competitive fight with the United Arab Emirates, Iran and Kuwait keeping 4% according to the 2021.
Figure 1: the Porter’s Five Forces Analysis
(Source: https://static.semrush.com/blog/uploads/media/63/42/634256ac748c65132e8e9b05974f574e/1-EN-6-market-analysis-steps-6.png)
Threat of New Entrants:
Saudi Aramco has no cost advantage, switching cost for their customers but it works on huge investment and expects no relations. Not only from the oil production but also from Saudi Aramco is facing the theta of new entrants on the basis of the consumer food industry as well (Alenazy, 2022). But for this case the threat is mildly low as it can be explained as the few entrants can prosper in this type of industries as there is always a need to have an understanding on the need of customer which generally requires time but the current rivals are basically aware and has hugely progressed maintaining the commitment of the consumer over their products with the flow of time (Blazquez et al, 2020). Thus with its big network of circulating in the world with a great reputed image has lead its threats on this matter get diminished at many meters.
Bargaining Power of Supplies:
In this matter Saudi Aramco Oil Company owes a great share of market by requiring a huge array of supply chains. In the reaction, for its suppliers Saudi Aramco seems to get worried as it generally likes to maintain a long term relationship (Euchi et al, 2018). It basically doesn’t have a supplier issues as it has no supplier concentration and also have differentiation of inputs. Another reason si absence fo substitute as a inputs for the company.
Bargaining Power of Buyers:
Saudi Aramco always makes sure to satisfy its consumers. This has basically left the company to become one of the faithful organizing businesses in its purchaser’s eye. So generally its risks are very high to maintain that satisfaction always (Fattouh, 2021). It can also be seen as low challenging as Aramco has a big brand identity and also it does not have price sensitivity and also there is an unavailability of the substitute.
Threats of Substitutes:
It is very low as depletion oil reserve is continuously increasing as for hunting for the substitutes like the bio fuels, solar power etc. But due to the advancement in technology is to yet to happen for those sources which can be utilized to make a complete substitute in the petro products (Hadj et al, 2020). The substitution is inevitable though for the long run.
Analysis:
Saudi Aramco Oil Company normally attracts the regional customers through its low expenses deals with the regional items which normally keeps its first location in the worldwide market. It has numerous regional rivalries as it is maintaining its business in nearly 198 countries.
SWOT analysis of Saudi Aramco Oil Company:
Figure 2: SWOT analysis
(Source: Self-made on draw.io)
Strength:
Since its has the largest capacity in the world of producing the great amount of oil and refining materials this company has been helped by the factors of serving its customers which is a large audience sector in the market by the utilization of its product.
It also uses the latest technologies to produce and manage its products which help the company to make efficiency in bits process and also get more production than the amount of investment.
The previous porter five forces explains the rate of share in the marker with respect to its produced barrel which is due to the lower price system in its cost production of a barrel of Aramco which is one of the lowest in all over the world. Thus this works as an advantage being in the low-cost environment.
Weakness:
The weaknesses of Saudi Aramaco within in the country of Saudi and also in its branches around the world states appears as there is a visibility of high dependency of the company in one and only one product that is the crude oil. As it gives the company its high profits but then also if this continues in near future the company may face some of the problems.
In Saudi Arabia there is a presence huge disadvantage regarding the corporate governance and also its transparency which not only effect the country’s own company’s production but also the whole world’s branches. Another weakness is it has increased the costs of skilled manpower and mining cost for refining crude oil is pushing up the costs of innovation.
Opportunities:
Saudi Aramco’s opportunities comes with the growth of global economy as due to the uprising of the demand of energy in all over the world the dependency for fuel increases in every conglomerates where mechanical production goes on. Thus it’s a big opportunity. Again Saudi’s IPOs releasing will pose a sheer help to the company’s valuation (Hertog, 2019). This will definitely ensure big financial and transparent operations for the company.
Threats:
The threats for Saudi in the competitive market in the land of Saudi can be pointed as the when there is an exploration of new sets of products in the share market of the world then the share of Saudi Aramco can be seen to get decreased.
Even if the renewable, recycled products and sources of conventional energy increases then the company may definitely face the large back as it is not producing the eco-friendly products.
Task 2
Evaluation of competitive strategy
The competitive strategy of the Saudi Aramco in international business marketing can be described with the mentioning of Ansoff matrix. This matrix system is being applied on global expansion which includes penetration in market, development of the market, development of the product and also the diversification of the product.
Figure 3: The Ansoff matrix for Saudi Aramco Oil Company
(Source: https://www.slidegeeks.com/pics/dgm/l/a/Ansoff_Matrix_For_Market_Penetration_And_Development_Ppt_PowerPoint_Presentation_File_Themes_PDF_Slide_1-.jpg)
For market penetration Saudi Aramco has increased their sales touch points, dealer network improvement lifetime value of customers etc (PARK, 2020). For the development of the market involves the creation for the new market and channels for the promotion and sales of new sets of products by the Aramco which involves the international marketing scene by making new approaches in the domestic markets through typing up with the complimentary companies to make a way for driving sales for the current products (Weijermars and Moeller, 2020). For the product development Aramco adding new characteristics in their products as new features and the diversification of the product can increase a new opportunity for the Aramco in the adjacent industry and many others complex differential based industries.
Figure 4: The GE MCkinsey model
(Source: https://i.pinimg.com/originals/1d/67/ce/1d67ce427fb8505b12fc01b4fc51d87d.png)
Another aspect for the competitive marketing strategy can be evaluated with the access go GE MCkinsey model which says that the business unit strength is directly proportional with the industry attractiveness which simply includes the grow, hold and harvest factors. Saudi Aracom is growing more on its business background but its vitals will go down if it doesn’t hold it or hold its little functionality to make some new innovation and regeneration in its company’s structure in all over the world (Rabbani, 2020). Harvesting many forms of markets through harvesting its products and sharing on the market will make them need some different strategies and functionalities.
Task 3
Challenges
The challenges that have been discussed above is saying that failing to implement new products other than crude oil, failing to create eco-friendly product, and also the increment of cost for innovation, through the increment of cost for mining and refining the crude oil and the manpower skill is slowly killing the company from its heart. It is an advantage, as in the global market crude oil is in high demand that Aramco is supplying through great satisfaction of customers but also it is failing its base whenever there is a question of renewable energy sources arises. Aramco Oil Company, in order to increase the rate of manpower skill for more profitability, it has accidentally increased the rates for supplying the innovative approaches in the world market which is taking huge costs.
Market entry strategy
Saudi Aracom Oil Company believes in global integration with several other markets around the world. It always embraces the signs of strategies to attract several partners globally. This thing increases its marketing effect in a beneficial way (Shamirov, 2022). Recently they are engaging themselves in strategizing and identifying many different types of initiatives like the long term supplies, engaging in research and development of high quality of chemicals to give more concentrations on other types of fuel products other than crude oil (Taha, 2018). Aramco is more of making the stronger size downstream business with the conjunctions of outside the country and also it is on the way of double refining the capacity of expanding the chemicals in a more renewable way by creating new types of technologies.
Strategic Recommendations
It should focus on the customer’s demands through product availability around the world scale. Taking order, preparing invoices, preparing route plan etc for the customers should be fast in orientation by this company.
It should’ve restructured and rephrased its sales system through initiating more of SOs, day to day sales, delivery systems with the distribution etc in the international marketing scenarios.
It should take incentives to recover the gap in the marketing structures and also pay heed to the dealer’s growth rate in the international market.
The approach for making an aim to create renewable energy source which is a biggest disadvantage for Saudi Aramco as many organizations in the world are now looking for this advancement thus this step is a much needed steps for Aramco.
Conclusion
In this report, through the SWOT, Porter’s five forces, challenges, strategic implementations for Saudi Aramco as the name of international company is discussed. These scenarios as a mentioned aspects shows that the company can face and definitely face the problems, challenges in its beneficial marketing sectors but still after many problems, using the proper marketing strategies and recommending prospects around the world, Saudi Aramco can and has gained its profits every time.
Reference List
Journals
Ahmed, J.U., Sultana, H. and Khan, M.M., 2018. Saudi Aramco: A blend between profit and politics. FIIB Business Review, 7(2), pp.88-99.
Alenazy, A.A.K., 2022. Exploring Antecedents and Outcomes of Corporate Social Responsibility in Saudi Arabia (Doctoral dissertation, La Trobe).
Blazquez, J., Hunt, L.C., Manzano Gonzalez, B. and Pierru, A., 2020. The value of saving oil in Saudi Arabia. Economics of Energy and Environmental Policy.
Euchi, J., Omri, A. and Al-Tit, A., 2018. The pillars of economic diversification in Saudi Arabia. World Review of Science, Technology and Sustainable Development, 14(4), pp.330-343.
Fattouh, B., 2021. Saudi oil policy: Continuity and change in the era of the energy transition (No. 81). OIES Paper: WPM.
Hadj, T., Omri, A. and Al-Tit, A., 2020. Mediation role of responsible innovation between CSR strategy and competitive advantage: Empirical evidence for the case of Saudi Arabia enterprises. Management Science Letters, 10(4), pp.747-762.
Hertog, S., 2019. In the spotlight: demands on Saudi Aramco are increasing. In Oxford Energy Forum (No. 118, pp. 42-46).
PARK, Y.E., 2020. Saudi Aramco’s Global Expansion Strategy: Evidence from Korea. Journal of Distribution Science, 18(5), pp.71-81.
Rabbani, M.R., 2020. The competitive structure and strategic positioning of commercial banks in Saudi Arabia. International Journal on Emerging Technologies, 11(3), pp.43-46.
Shamirov, A.A., 2022. ISSUES OF USE OF THE IPO MECHANISM IN THE INVESTMENT ACTIVITIES OF JOINT STOCK COMPANIES. Thematics Journal of Business Management, 5(1).
Taha, T.M.A.M., 2018. Competitive Analysis of the Global Oil and Gas Industry using Porters Five Forces Model.
Weijermars, R. and Moeller, J., 2020. Saudi Aramco Privatization in Perspective: Financial Analysis and Future Implications. Journal of Finance and Economics, 8(4), pp.161-170.