National University of Management A case study on Strategic management TOTAL Company. National university of management, london. Case study focuses on Company history, products and services, customers, Strategic goal, vision, mission and values.
National University of Management A case study on Strategic management TOTAL Company. National university of management, london. Case study focuses on Company history, products and services, customers, Strategic goal, vision, mission and values.
National University of Management A case study on Strategic management TOTAL Company. National university of management, london. Case study focuses on Company history, products and services, customers, Strategic goal, vision, mission and values.
Group members: 1. Ky Sophan 2. Khun Linna 3. Pheng Chheanghong 4. Vong Rada 5. Lao Sophorn 6. Ouk Chandaravuth 7. Touch Chamrong 8. Sim Pheak 9. So Sokfai
July 2014
A case Study on Strategic Management
TOTAL Company
Table of Contents I. General Overview of the Company ................................................................... 3 Company history ............................................................................................ 3 Major products and services ............................................................................ 3 Customers ..................................................................................................... 3 Strategic goal, vision, mission and values .......................................................... 3 Current corporate and business strategy ........................................................... 4 Major facing problems..................................................................................... 4 II. Environmental Analysis ................................................................................. 4 1) External Environment ................................................................................. 4 2) Internal Environment .................................................................................. 5 3) Construction of Matrixes: ............................................................................ 5 3.1. External Factors Evaluation Matrix (EFE Matrix) ........................................ 5 3.2. Internal Factor Evaluation Matrix (IFE Matrix) ........................................... 6 3.3. Internal and External Matrix (IE Matrix) ................................................... 6 3.4. Strategic Position Action Evaluation Matrix (SPACE Matrix) ......................... 7 3.5. SWOT Matrix ........................................................................................ 8 III. Conclusion and Recommendation ................................................................ 9 Conclusion ..................................................................................................... 9 Recommendation ......................................................................................... 10 Reference .................................................................................................... 10 Appendix ..................................................................................................... 10
TOTAL Company A case Study on Strategic Analysis
I. General Overview of the Company Company history
TOTAL S.A., a French socit anonyme (limited company) incorporated on March 28, 1924, together with its subsidiaries and affiliates, is the fifth largest publicly-traded integrated international oil and gas company in the world 1 .
With operations in more than 130 countries, TOTAL has activities in every sector of the oil industry: including in the upstream (oil and gas exploration, development and production, liquefied natural gas) and downstream (refining, petrochemicals, specialty chemicals, the trading and shipping of crude oil and petroleum products, marketing). In addition, TOTAL operates in the power generation and renewable energy sectors and has equity stakes in coal mines.
Major products and services Oil and gas (Petrol, fluid, natural gas) Specialty chemicals (Rubber) Renewable energies (Solar, biomass) Trading and Transportation Marketing and Service Stations 2
Vision: Total's strategic vision, which combines performance and responsibility in an integrated business model, coincides with rising energy demand and new environmental challenges.
Mission: To responsibly enable as many people as possible to access energy on a continent where demand is constantly growing by focusing on three basic cornerstones: Ethics Safety Corporate social responsibility (CSR)
1 Registration document 2013, Total S.A 2 http://www.total.com/en/energies-expertise/oil-gas
Current corporate and business strategy
TOTALs activities lie at the heart of the two biggest challenges facing the world now and in future: energy supply and environmental protection. The Groups responsibility as an energy producer is to provide optimum management of these twin imperatives.
TOTALs strategy, the implementation of which is based on a model for sustainable growth combining the acceptability of operations with a profitable investment program, aims at: - expanding hydrocarbon exploration and production activities and strengthening its worldwide position as one of the global leaders in the natural gas and LNG markets; - progressively expanding energy solutions and developing new energies to complement oil and gas; - adapting its refining and petrochemical base to market changes, focusing on a small number of large, competitive platforms and maximizing the advantages of integration; - developing its petroleum product marketing business, in particular in Africa, Asia and the Middle East, while maintaining the competitiveness of its operations in mature areas; and - pursuing research and development to develop clean sources of energy, contributing to the moderation of the demand for energy, and participating in the effort against climate change. Major facing problems
Totals Controversies are as the following:
TOTAL met some challenges in operating in some countries such as Malta, Myanmar, Italia, Iraq, Iran. Those challenges are bribe commission from bidding and tenders, secure contract, II. Environmental Analysis 1) External Environment
List of opportunities: - Increasing fuel/oil price - Increasing natural gas market - More oil well discoveries - Expand export market - Increasing mobility of labor, capital and technology - Demand shifts for renewable energy
List of threats:
- Government regulations - High Competition - Hybrid cars replacing petrol and diesel cars - Depletion of natural energy resources. - Disruption in gas supply - OPEC restrictions.
2) Internal Environment
List of strengths: - Strong corporate governance - Strong corporate culture and management - Strong on human resource, multi-cultural nations, there are 99,000 employees in over 130 countries (include 31% of women) 3
- Strong corporate branding and marketing - Financial strengths: Revenues EUR189,5 Billion; Net debt to Equity Ratio: 0.23 (2011), 0.22 (2012), 0.23 (2013); ROE: 19% (2011), 18%(2012), 15% (2013) 4
- Standard of operation and environment: ISO14001 5
- Operation and marketing in more than 130 counties with 15,551 service stations 6
- 5 th ranked international oil company - Research and development investment $7.1 Billions - Involve more in corporate social responsibility 7
List of weaknesses: - Sale decreased 5.23% in 2013, ROE decreased at 16.67% in 2013 8
- Total number of sites operated by the Group decreased from 867 to 858 9
3) Construction of Matrixes: 3.1. External Factors Evaluation Matrix (EFE Matrix)
Key External Factors Weight Rating Weighted score Opportunities Increasing fuel/oil price 0.05 2 0.10 Increasing natural gas market 0.10 3 0.30 More oil well discoveries 0.05 2 0.10 Expand export market 0.10 3 0.30 Increasing mobility of labor, capital and technology 0.06 3 0.18 Demand shifts for renewable energy 0.05 1 0.05 Threats
Government regulations 0.10 3 0.30 High Competition 0.20 3 0.60 Hybrid cars replacing petrol and diesel cars 0.05 1 0.05 Depletion of natural energy resources 0.10 3 0.30 Disruption in gas supply 0.04 3 0.12
3 Total at a Glance 2013, TOTAL 4 http://csr-analysts.total.com/key-indicators/economic 5 http://csr-analysts.total.com/key-indicators/environmental 6 Total at a Glance 2013 7 CSR Report 2013, Total company 8 http://csr-analysts.total.com/key-indicators/economic 9 http://csr-analysts.total.com/key-indicators/environmental OPEC restrictions 0.10 3 0.30 Total Score 1.00 2.70
Key Internal Factors Weight Rating Weighted score Strengths Strong corporate governance 0.08 4 0.32 Strong corporate culture and management 0.08 4 0.32 Strong on human resource, multi-cultural nations, there are 99,000 employees in over 130 countries (include 31% of women) 0.09 4 0.36 Strong corporate branding and marketing 0.09 4 0.36 Financial strengths: Revenues EUR189,5 Billion; Net debt to Equity Ratio: 0.23 (2011), 0.22 (2012), 0.23 (2013); ROE: 19% (2011), 18%(2012), 15% (2013) 0.10 4 0.40 Standard of operation and environment: ISO14001 0.09 3 0.27 Operation and marketing in more than 130 counties with 15,551 service stations 0.10 3 0.30 5th ranked international oil company 0.10 3 0.30 Research and development investment $7.1 Billions 0.10 3 0.30 Involve more in corporate social responsibility 0.05 3 0.15 - Weaknesses Sale decreased 5.23% in 2013, ROE decreased at 16.67% in 2013 0.08 3 0.24 Total number of sites operated by the Group decreased from 867 to 858 0.04 3 0.12 Total Score 1.00 3.44
3.3. Internal and External Matrix (IE Matrix)
EFE = 2.70 IFE = 3.44 E F E
3
2
1 IFE 4 3 2 1 I
II III IV
V VI VII
VIII IX
3.4. Strategic Position Action Evaluation Matrix (SPACE Matrix)
Strategic Position Rating
Financial strength (FA) + Financial strengths: Revenues: 189,542 (2013), 200,061 (2012), 184,693 (2011) 6 Decreased in ROE by 22% in 2013 4 Decreased in ROA by 21% in 2013 4 Earnings per share decreased by 21% in 2013. 3 Total assets growth rate: 1% (2013), 5% (2012) 5 Liquidity: Current ratio: 1.37 (2013), 1.38 (2012), 1.36 (2011) Quick ratio: 0.33 (2013), 0.32 (2012), 0.30 (2011) Debt to equity: 1.32( 2013), 1.36 (2012), 1.40 (2011) 4 Decreased in growth rate by (0.05) in 2013 4 Average scores 4.28 Environmental Stability (ES) - Productions disruptions due to political crisis -2 Low bargaining power -1 Technological change from fuel to renewable energy -3 Barriers to entry -1 Competitive pressure -2 Product demand -1 The fluctuation of oil price affects business environment -3 The economic environment is unstable especially in under developing countries. -3 Natural disasters -3 Average scores -2.11 Competitive Advantage (CA) - Market share among the largest marketers in Western Europe, No. 1 marketer in Africa 10
-1 Product quality -2 Product life cycle -1 Customer loyalty, more than 3 million customers stop by TOTALs retail outlets every day. 11
-1 Technological advantage High tech for industry -1 Control over supply chain and distribution operation over 130 countries worldwide. -1 Average scores -1.17 Industry Strength (IS) + Low threat of substitutes 6 Growth potential 5 Profit potential 5 Financial stability 5 Technological know-how 4 Resource utilization 4 Capital intensify 5 Ease of entry into market 6
10 Registration document 2013, TOTAL S.A 11 Total at a Glance 2013, Total S.A Average scores 5.00
X axis: CA + IS = -1.17 + 5.00 = 3.83 Y axis: FA + ES = 4.28 2.11 = 2.17
3.5. SWOT Matrix
S
S1. Strong corporate governance S2. Strong corporate culture and management S3. Strong on human resource, multi- cultural nations, there are 99,000 employees in over 130 countries (include 31% of women) S4. Strong corporate branding and marketing S5. Financial strengths: Revenues EUR189,5 Billion; Net debt to Equity Ratio: 0.23 (2011), 0.22 (2012), 0.23 (2013); ROE: 19% (2011), 18%(2012), 15% (2013) S6. Standard of operation and environment: ISO14001 W
W1. Total number of sites operated by the Group decreased from 867 to 858 W2. Sale decreased 5.23% in 2013, ROE decreased at 16.67% in 2013
FA Conservative +6 Aggressive +5 +4 +3 +2 CA +1 IS -6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6 -2 -3 -4 -5 Defensive -6 Competitive ES S7. Operation and marketing in more than 130 counties with 15,551 service stations S8. 5th ranked international oil company S9. Research and development investment $7.1 Billions S10. Involve more in corporate social responsibility
Opportunities
O1. Increasing fuel/oil price 02. Increasing natural gas market. 03. Increasing mobility of labor, capital and technology. 0.4 More oil well discoveries 0.5 Expand export market 0.6 Demand shifts for renewable energy
SO
S01. Expand Market distribution Channels to other target countries. S02. Increase renewable energies to global market. (Solar or Bio). S03. Increase chemical plant worldwide.
WO
W01. Developing new strategies for sale and Marketing.
T
T1. OPEC restrictions T2. Disruption in gas supply T3. Depletion of natural energy resources T4. Hybrid cars replacing petrol and diesel cars T5. High Competition Government regulations
ST
ST1. Research and develop new technology for Hybrid car , ST2. Promote alternative energy
WT
WT1. Develop strategic alliance with stakeholders (Government and OPEC.
III. Conclusion and Recommendation Conclusion
Recommendation
Reference 2013 Activity Report, Total Corporate Foundation
Appendix
Chapter Responsible Closing Date I. General Overview of the company Company history Major products and services Customers Strategic goal, vision, mission and values Current corporate and business strategy Major facing problems
Khun Linna Seam Pheak 30 Jun 2014 II. Environmental Analysis 1) External Environment Economic Environment Political and Legal Environment Social and Cultural Environment Technological Environment Ecological Environment Government Agencies Labor Supply Creditors
Vong Rada Chheang Hong 30 Jun 2014 2) Internal Environment Corporate Culture Human Resource Management Marketing Management Accounting/Finance Research and Development Operation/Production Management Information System Ky Sophan Chandaravuth 30 Jun 2014 3) Construction of: - External Factors Evaluation Matrix (EFE Matrix) - Internal Factor Evaluation Matrix (IFE Matrix) Lao Sophorn Sok Fai
30 Jun 2014 - Internal and External Matrix (IE Matrix) - Strategic Position Action Evaluation Matrix (SPACE Matrix) - SWOT Matrix III. Conclusion and Recommendation Conclusion Recommendation Reference Appendix Ky Sophan