strategicmanagement- rev 11 feb, 2012
TRANSCRIPT
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
1/77
STRATEGIC MANAGEMENT
1
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
2/77
SESSION ORGANIZATION
Strategy What is strategy Strategic managementWhat do we mean by
it.
ONGC Structure & how it functions. How do we go for Strategic management
Various Approaches with reference to
ONGC
What do we get out of Strategic
management- Benefits
2
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
3/77
STRATEGY
Dictionary meaning
Strategy a plan of action toaccomplish a specific goal
3
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
4/77
Strategy in corporate perspective
"Strategy is the direct ionandscopeof an organisation over thelong-term:which achievesadvantagefor the organisation
through its configuration ofresourceswithin a challengingenv i ronment, to meet the needs ofmarketsand to fulfil stakeholder
expectations.(Johnson and Scholes, ExploringCorporate Strategy)
4
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
5/77
Where is the business trying to get toin the long-term (direction)
Which markets should a businesscompete in and what kind of activities
are involved in such markets?(markets; scope)
How can the business perform betterthan the competition in those markets?
(advantage)?
5
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
6/77
What resources (skills, assets,finance, relationships, technicalcompetence, facilities) are required inorder to be able to compete?
(resources)? What external, environmental factors
affect the businesses' ability tocompete? (environment)?
What are the values and expectationsof those who have power in andaround the business? (stakeholders)
6
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
7/77
PORTERS MODEL FOR BUSINESS STRATEGY
FIVE FORCES
7
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
8/778
8
Corporate-Level Strategy:
What business are we in?Corporation
Business-Level Strategy:
How do we compete?
Exploration Overseas
Business
Diversification
Functional-Level Strategy:
How do we support the business-level
strategy?
Drilling a well R&D HR Info Tech
Levels of Strategies
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
9/77
ONGC BOARD
Chairman & Managing Director
Functional Directors ( Full time) 6
Exploration, Offshore, Onshore, T&FS, HR,
Finance,
Independent Directors - 5
Government Nominees - 2
Special Invitees 1
MD, OVL
9
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
10/77
10
ONGC
Assets(11)
Offshore - 4 Onshore -7 Plants - 3
Basins(7)Institutes - 12
Services - 8
Support - 6
Corporate
Functions - 8
ONGC - Functional Structure
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
11/77
Assets :
Basins (7):
11
Mumbai High,
Neelam Heera,Bassein,EasternOffshore
Offshore
(4)Ankleshwar,
Mehsana,Ahmedabad,Karaikal,Rajamundry,Tripura, Assam
Onshore
(7)Uran, Hazira,C2-C3
Plants
(3)
Western Offshore,
Western Onshore,
Cauvery, KG & PG, MBA
& CBM,
A&AA , Frontier
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
12/77
KDMIPE, GEOPIC,IDT, IOGPT, IEOT,INBIGS, IPSEM,ONGC Academy,SMP, CEWELL,
ONGC Energy Centre
Institutes
(12)Geophysical, Drilling,Logging, WellServices,Engineering,Logistics, Technical,
HSE
Services
(8)
12
HR/ER, Finance, MM,Legal, Medical,Security
Support(6) Planning, E&D,
Infocom, Vigilance,Audit, Marketing,Communications,JV&BD
Corporate
functions
(8)
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
13/77
WHAT IS STRATEGIC MANAGEMENT?
13
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
14/77
STRATEGIC MANAGEMENT
A continuous, iterative process aimed at
keeping an organization as a whole
appropriately matched to its environment.
(Samuel Certo, Strategic management:
concepts &applications)
14
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
15/77
STRATEGIC MANAGEMENT(CONTD.)
Strategic management is keeping thebusiness in tune with management andmarketing forces both outside and inside the
firm.
Management componentfirms operations, financialposition, labour situation, management structure.
Marketing componentfirms marketing strategy( i/cpackaging, advertising, customer service, qualitycontrol etc), outside competition and inside conflicts
between departments 15
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
16/77
HOW TO GO FOR STRATEGIC
MANAGEMENT?
16
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
17/77
5 STEPS TO STRATEGIC MANAGEMENT
Environmental analysis
Establish organizational direction
Strategy formulation
Strategy implementation
Strategic control
17
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
18/77
1- ENVIRONMENTAL ANALYSIS
- Starts with SWOT analysis
Process of examining the organizations
environment to determine:
Strengths (S)
Weaknesses (W)
Opportunities (O)
Threats (T)
18
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
19/77
ENVIRONMENTAL ANALYSIS
Strengths
Positive internal factors that contribute toaccomplishing companys mission, goals,
objectives Weaknesses
Negative internal factors inhibitingaccomplishments
These are controllable factors within organization
19
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
20/77
ENVIRONMENTAL ANALYSIS (CONTD.)
Opportunities
Positive external factors that company can useor exploit to achieve its missions
Threats Negative external factors inhibiting ability of the
company to achieve desired objectivesaccomplishments
These are largely beyond control of a company
20
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
21/77
SWOT ANALYSIS - ONGC
21
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
22/77
SWOT ANALYSIS - ONGC
22
STRENGTHS:
Dominant Indian Leadership
Most valuable Public SectorEnterprise
Large proved reserves &geographic diversification
Excellent oil & gasInfrastructure
Efficient and professional
management team. Applied R&D for E& P
activities
Adequate resources andcapital to invest.
WEAKNESSES:
Declining production frommature fields
Procedural Constraints
Product Pricing Security of personnel &
property especially crude oil
Limited autonomy foroverseas ventures
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
23/77
SWOT ANALYSIS ONGC(CONTD)
23
OPPORTUNITY:
Growth in overseas market(OVL)
Incremental recovery fromproducing assets
Unexplored domesticacreages
Alternative energy sources CBM, Shale, Wind energyetc
THREATS:
Growing Competition
Crude price volatility Govt. policies, regulatoryframe work etc
Aging assets &Infrastructure
Geopolitics
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
24/77
ENVIRONMENTAL ANALYSIS (CONTD.)
- After SWOT, Environmental Analysis carried out at threelevels:
General environment - Factors related to firms location(country level) to be seen in broader perspective
Social characteristics of society like literacy rate
Economic how resources are distributed
Political related to govt. affairs
Legal legislation for environment, worker safety
Technical technology scenario 24
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
25/77
ENVIRONMENTAL ANALYSIS (CONTD.)
Operating environment Factors havingimmediate impact on the firms operations andprofitability
International Related to international
implications of organizations operation
Supplier who provide resources for organization
Labour who perform organizational tasks
Competition with whom business must compete
Customer who buy goods & services 25
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
26/77
ENVIRONMENTAL ANALYSIS (CONTD.)
Internal environment Factors having immediate and specificimplications for managing the organization.
Organizationalwhat is companys organizational
structure
Marketing marketing strategies employed by company
Financial financial status of company
Personnel Personnel policies of company
Production production targets & methodology followed to
achieve them.
26
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
27/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
28/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
29/77
29
To be global leader inintegrated energy businessthrough sustainable growth,
knowledge excellence andexemplary governance
practices
Visionstatement
of ONGC
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
30/77
30
-Doubling reserves(i.e. accreting 6 billion
tonnes of O+OEG) by2020.
-Improving averagerecovery from 28 percent to 40 per cent by2020.
ONGCStrategicVision -
2020
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
31/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
32/77
32
Unit Excellent V.Good Good Fair Poor
MOU
Target
2012-
13
MOU
Target
2011-
12
i) Crude Production MMT 28.03 27.54 26.16 24.79 23.41 27.54 27
ii) Gas Production BCM 26.245 25.731 24.444 23.158 21.871 25.731 25.5
iii)
Value Added
Products KTON 3500 3410 3240 3069 2899 3410 3358
iv)
Reserve Accretion -
3 P MMToe 84.5 83 78.85 74.7 70.55 83 78.5
2 P
MMToe
58.32 57.23 54.37 51.51 48.65 57.23 54.5
MOU 2012-13PERFORMANCE EVALUATION TARGETS & CRITERIA
Mi i St t t f ONGC
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
33/77
33
World
Class
Dedicated to excellence by leveraging competitive advantages in R&Dand technology with involved people.
Imbibe high standards of business ethics and organizational values. Abiding commitment to safety, health and environment to enrich quality of
community life.
Foster a culture of trust, openness and mutual concern to make working astimulating and challenging experience for our people.
Strive for customer delight through quality products and services.
IntegratedEnergy
Business
Focus on domestic and international oil and gas explorationand production business opportunities
Provide value linkages in other sectors of energy business.
Create growth opportunities and maximize shareholder value.
DominantIndian
Leadership
Retain dominant position in Indian petroleum sector and enhance India'senergy availability.
Mission Statement of ONGC
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
34/77
34
ONGC - Objectives
Optimize exploration & production of hydrocarbons.
Self-reliance in technology.
Promoting indigenous efforts in oil and gas related
equipments, material and services.
Assist in conservation of hydrocarbons, more efficient use of
energy and development of alternative sources of energy.
Develop scientifically oriented and technically competent
human resource through motivation and training.
Observe 100% safety in work.
Environmental protection.
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
35/77
3- STRATEGY FORMULATION
Strategy to be in line with mission &
objectives.
To know the Current status of organization.
How it is performing at present.
Address identified Internal as well as
external critical environmental factors.
Formulation of strategy aimed to achieve
organizational objectives more effectively
assessing likely influencing factors during
im lementation sta e 35
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
36/77
FACTORS TO BE KEPT IN MIND DURING FORMULATION
36
Cultural Issues:
Organization structure, culture
Change Resistance:Reluctance for new concepts
Conflict Management:
Inter department clash of interests.
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
37/77
4 - STRATEGY IMPLEMENTATION
Various Approaches:At organizational level
Organizational change approach
Collaborative approach Cultural approach
At department level Commander approach
37
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
38/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
39/77
COLLABORATIVE APPROACH
Top management involves senior functional managers, divisional
heads, business unit general managers to help develop and committo a good set of goals and strategies.
Group wisdom is the goal
Improves quality and timeliness of information in view of involvementof operations personnel.
Improves chances of effective implementation in view of
collaborative approach
Contributing managers have different points of view and goals. If
not handled properly by top management, may, sometimes, result
in poor strategy.
39
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
40/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
41/77
COMMANDER APPROACH
For strategy implementation in smaller area e.g a section,
group or department
Manager in charge develops strategy for his business
area .
Manager in charge is basically the thinker/planner and
gets the plan executed through younger managers good
at quantitative & objective.
41
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
42/77
BENEFITS OF STRATEGIC
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
43/77
BENEFITS OF STRATEGIC
MANAGEMENT (GREENLEY)1. Helps in Identification of Opportunities
2. Enhances Objective view of management problems
3. Helps in Improved coordination & control
4. Minimizes adverse conditions & changes
5. Helps in taking Decisions that better support objectives
6. Helps in Effective allocation of time & resources
7. Improves Internal communication among personnel8. Helps in Integration of individual behaviors
9. Helps to Clarify individual responsibilities
10. Encourage forward thinking 43
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
44/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
45/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
46/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
47/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
48/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
49/77
49
Organizational strategies (in context ofrequirement)- Examples:
Geographic expansion
Diversification
Acquisition
Market penetration
Hiring and Retrenchment
Joint venture
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
50/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
51/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
52/77
122,76
9
150,18
5
FY'1
1
FY'1
2
22,45
6
28,144
FY'1
1
FY'1
2
114,53
1
135,26
6
FY'1
1
FY'1
2
Turnove
r
PAT Net Worth
` Crore
22
%
25
%
18
%
GROUP FINANCIALS FY12
52
Highest-ever Turnover; up 22% Highest-ever PAT; up 25% Highest-ever Net worth; up18%
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
53/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
54/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
55/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
56/77
Subsidy sharing (`
Crore)
Impact on PAT (`
Crore)
2,6904,104
11,95
8
17,02
5
22,00
0
28,22
6
11,55
4
24,89
2
44,466
25,535
FY04 FY05 FY06 FY07 FY08 FY09 FY10FY11
FY'12
1,5962,553
7,21
0
10,33
3
13,24
1
15,79
8
6,55
1
14,24
7
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11FY'12
UNDER-RECOVERY
56
Highest-ever subsidy sharing: ` 44,466Crore; up 79%
Total subsidy up toFY12:
` 1,66,915 Crore
Total impact on PAT up toFY12:
` 97,064 Crore
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
57/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
58/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
59/77
Transcendin
g
Boundaries
30 projects
in15 countries
10
producing5
discovered14
exploration1
pipeline59
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
60/77
MEDIUM TERM
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
61/77
MEDIUM-TERM
61
Exploratio
n Conversion of nomination PELs toMLs.
Development/
Re-development
Development of 37 fields through 13projects Rolling re-development of major fields.
Unconvention
al
& alternates
CBM, UCG, Shale gas andalternates.
Integratio
n
Commissioning of on going projectsOPaL, OMPL, OTPC, SEZs.
EXPLORATION
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
62/77
EXPLORATION
62
Expeditious conversion of nomination PetroleumExploration Licenses (PEL) to Mining Lease (ML)
28
nominatio
n
exploratio
n
acreages
Validity of nomination blocks to expireby FY14.
Expeditious exploration & Presently 340 mining leases (30,758Sq.Km)
Field Development
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
63/77
Field Development
Projects Presently 13 projects under implementation to monetize 37fields
C-
SeriesB-22
Cluster
B-193
ClusterNorth Tapti
D-1
(additional)Cluster-
7BHE & BH-35WO-16-
ClusterSB-14
fieldB-127
Cluster
B-46
Cluster
G-1 & GS-
15C-22, C-24, C-39-1, C-39-
A
B-22A, BS-13A, B-
149A
B-193A, B-23AA, B-127A,B- 178A, B-179A
North Tapti
D-1
B-192-1, B-192,5, B-
192-8,WO-24
BHE & BH-35WO-5, WO-15, WO-16, B-
119/12
1SB-
14
B-127, B-157, B-
55-5
B-46, B-48, B-105, B-
188
G-1 & GS-
15
Monetizing>280mtoe
reserves
Investment:
> ` 31,000
Crore
Production:
Oil : ~ 40
MMT Gas : ~
64 BCM
Starting from FY13 all
the fields to be on stream
by 2014
C-26cluster
C-26, C-23, B-12-1 63
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
64/77
CB
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
65/77
Operating in 4 blocks FDP submitted for all the blocks Current incidental production
8,000- 10,000 scmd from Jhariablock
Farm-in opportunities for fasterexploitation of CBM resources
Planned investment = ` 5,000Crore
Production to increase to 6mmscmd
in 10 years
CB
MIncidental CBM production commenced in
2010
65
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
66/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
67/77
VL
PP2030
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
68/77
VLSeeking new horizons
Aspirations
Fold production growth in E&P
Fold growth in Revenue & EBITDA
Fold growth in Market cap
Shaping moves to be launched
Fold growth in international E&P
production
PP2030
68
VL
PP2030
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
69/77
VLSeeking new horizons
1. Grow overseas E&P to source 60
mmtoe/year of O+OEG by 2030
2. Secure alliance for new resource
types
PP2030
69
3. Unlock 450+ mmtoe from domestic
YTF (yet-to-find) reserves
4. Accelerate 300-400 mmtoe of
(re)- developments
5. Build non-E&P business to 30% of
group
revenue
Shaping
Move
s
VL
SHAPING MOVE-1
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
70/77
VLSeeking new horizons
Grow overseas E&P to source 60 mmtoe/year of O+OEG by
2030
SHAPING MOVE 1
70
5 Global activity hubs
All resource types of
interest
Conventional
Shale
oil/gas Heavy
oil
LNG, mid-stream &
other ventures also
on tar et
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
71/77
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
72/77
VL
SHAPING MOVE-4
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
73/77
Seeking new horizons
Accelerate 300-400 mmtoe of (re)-
developments
SHAPING MOVE 4
73
Yet-to-develop discoveries &
future redevelopment of
existing fields to add morethan 300 mmtoe of
production by 2030.
10 fields identified for priority
accelerated development.
A rigorous stage gate
process for project
evaluation and monitoring.
VL
SHAPING MOVE 5
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
74/77
Seeking new horizons
Build non-E&P business to 30% of group
revenue
SHAPING MOVE-5
74
Investments willinclude: Further expansion in
petrochemicals at MRPL
LNG re-gasification,
Commercialization of stranded
gas Capacity in alternative
energy Solar, wind,
Nuclear, etc.
ONGC to selectively investin the non-E&P sector,
leveraging integration
benefits from its existing
portfolio and its balance
sheet for competitiveadvantage.
VL
PP2030
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
75/77
Seeking new horizons
1. Strengthen OVL processes &
technical
systems
2. Continued regulatory engagement
on prices & policy
PP2030
75
3. Strengthen staffing & capabilities in
focus areas
4. Improve services delivery under
new operating model
5. Align R&D with 2030 technology
priorities
Supportin
g
Initiatives
VL
PP2030
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
76/77
Seeking new
horizons
PP2030
76
1. Sustained production growth 4-5%
2. > 130 mmtoe production in 2030
(50% international)
3. 1,300 mmtoe proved
reserves
4. 6.5 GW alternate energy, 9
MMTPA LNG
5. Full downstream value capture in
petrochemicals
ONGC
2030
VL
PP2030
-
7/28/2019 StrategicManagement- Rev 11 Feb, 2012
77/77
Seeking new horizons
Investment > ` 11,00,000 Crore during 2013-
2030
11,00,000
2,65,000
PP2030
`Crore
51 00 IX
22,70
0
PP-
2030
74,00
0
170,00
0
X
XI
Plan
XI1
Plan