Distinctive Approach of Eni Energy Company to Sustainable Value Creation

Eni Company is considered to be the sixth largest energy company in the universe. Presently it is actively operating in over 90 countries with approximately 7800 employees.

The major objective of this report is to come up with an innovative proposal which can facilitate the development of a project like the Eni Company. In the recent past, Eni Energy Company has witnessed the evolution of corporate reporting as a result of the expansion of its operation (Adrian, 2017, p. 234).

The analysis is mainly focused on the distinctive approach of the company to the sustainable value creation. According to the International Integrated Reporting Council, an integrated report is a brief communication on the organisation’s governance, strategy, prospect and performance in relation to its external environment which results into the creation of short-term, medium and long-term values. The financial providers to the organisations in most cases are seen as the primary users of the integrated report and due to that the integrated report should be designed in such a way to benefit all the stakeholders in the company who include the customers, employees, suppliers, local communities, business partners, policy makers and the regulators who have interests in the organisation’s ability to create more values over a long period of time (Bhattacharyya, 2015, p. z23). The main goal of the integrated report is to enhance the stewardship and accountability concerning the wide basis of the six categories of capital and promotes a clear understanding of their interrelationships. The integrated report is designed in such a way that it can support the integrated decision making, actions and thinking which is aimed at the creation of the sustainable values for stakeholders.

According to the objectives which were to be achieved this report contains the following sections; Approach to Sustainable Value Creation, Business Model, Competitive Environment and Strategy, Integrated Risk Management and Process, Connectivity of Information, findings and conclusion of the entire structure of the report (Bullock, 2012, p. 102).

Integrating sustainability into any company requires a very systematic view that considers the universal perspective, various elements of the system and their interactions value networks. The analysis provides a view and can be used to inform the changes which are regarding the company business model.

In this case, the term ‘network’ refers to a group of more than three companies which are either self-initiated or which are contracted and are connected in such a way that it can facilitate the achievement of the company’s goals. The process of interpretation of sustainability in the network of companies lacks a systemic approach. For the companies to focus on the improvement of environmental aspects and the social aspects to develop the code of conducts (Caraghiaur, 2012, p. 205). The business model below shows how sustainability can be integrated into the company.

Integrated Reporting Process for Eni Energy Company

Company sustainability refers to the means which a company uses to achieve high levels of economic growth. Also to enhance the company reputation via the distinctive approach which facilitates the external development of the company by promoting the respect for the environment and individuals in general through the creation of opportunities for businesses and the local communities (Cohen, 2015, p. 67).

It is well known that when the reporting processes are not focused on the capital efficiency, there are high chances that some potential sources of values are likely to remain hidden. Due to the traditional measure of performance such as the return on investment and the working capital are not only considered as financially essential but also as a reflection of how efficient the company is.

Many companies are currently struggling with environmental impacts, material security and depletion of resources.Most of them are seeking improved and new ways of operatingin order to improve the company performance and also boost the ability of the company to transit into the low-carbon (Couto, 2017, p. 56).

Companies are putting  effort in maintaining and attracting employees who they believe can work according to what the company does and fit easily with the culture of the company. Most employers are faced with a great challenge in finding the right people who have to work within all levels of the organisation. From the studies which have been carried out in many European companies, it was found out that the main challenges which the companies are facing were related to the quality of the employees (Facility, 2013, p. 211).

Sustainability can be a significant differentiator for the company in retaining and attracting the right employees.The employees of the company are considered to be the main drivers of the company sustainability because most them have a clear understanding of how the company operates. 

Many companies which are concerned with the agenda of sustainability have discovered that the attitude of the public is changing in regards to the issue of sustainability. In many countries, there is a large shift of focus by the public towards the issues of sustainability. Regulatory changes are forcing most companies to work with the most appropriate management process in the area of reporting. Many nations are impressing on significant visibility and transparency on the sustainability. The company will need to have appropriate internal processes to look after the management issues that might have ignored the past.

Sustainability Integration into Eni Energy Company’s Business Model

The best companies are characterised by the ability to drive performance in the short term while balancing with the organisation vision in that where the company is moving to and what it needs to achieve. The ability to see this perspective from sustainability brings about the need of balancing the long-term objectives with the short-term objectives with the main aim of achieving company sustainability (Hawkey, 2014, p. 45).

While aiming at developing and maintaining in-house competences the abilities and know-how of the people of Eni are enhanced. Eni Energy Company is greatly focusing on developing and adopting its modern technologies and ways on how to maintain the in-house competencies. In exploration. It just means the process of decision making results in focusing the attention on the best opportunity for exploration (Wüstenhagen, 2016, p. 32).

A business model is used to pursue sustainable values of any given company or business organisations which are focused on the strategic guidelines and assets which are distributed along the entire value chain. The business model is associated with the activities which are conducted in a framework of rigorous and clear governance rules which comply with the highest ethical standards which have an integrated corporate risk management system. The continuous interaction of all the stakeholders and the six distinctive drivers, i.e. cooperation, integration, innovation, inclusiveness, responsibility and excellence. The business model is illustrated below. 

Integration of all the activities which were along the energy supply chain is a source of significant synergies for facing market challenges and ensuring that a competitive advantage is achieved.

Innovation is one of the key elements which are used for assessing the modern energy resources, improving recovery from the efficiency and subsoil which ensures that there is respect for the natural resources.

Excellence must be observed in the operations which are used to run the organisation which makes use of the best practices, advanced technology, safety system and quality systems to ensure that there is full respect for the environment and the community.

Responsibility. There are very high levels of commitments to the transparency in the governance of the company. The fight for human respect and fight against corruption is very effective contributors to the development of communities and societies.

From the annual report, it was found out that the Eni Energy Company has designed its strategies of growth along the guidelines which are discussed below.

Ensuring that it was to strengthen its competitive position in the core areas.

Eni’s Strategies for Growth

Consolidating and establishing a strategic partnership with the major countries.

Focusing on increasing the volumes of operated production. This will enable Eni Energy Company to be able to deliver on time scheduled, cost budgets and also enable it to better manage the technical risk (Huhtinen, 2017, p. 45). 

After the business model has been illustrated the analysis of the external and internal strategies of the company follows. The integrated report identifies some industrial problems and also describes the actions and initiatives which a company or any business organisation need to implement.

Competitive strategies refer to the company’s short-term strategies and long-term strategies which are aimed at gaining the market shares against its competitors. Any company or business organisation’s internal operating systems must be very flexible to give room to the changes which are taking place in the external environment (Larsson, 2012, p. 47).

External; a company or business organisation external environment usually consists of opportunities and threats. The threats refer to the situations that could negatively influence the profits and sales.External opportunities refer to the circumstances or events that would positively influence the sales of the company.

Internal; the internal strategies can be a source of competitive strength or weakness. For example in the case of a small business which in most cases cannot be in apposition to compete with their large competitors regarding the cost (Mankins, 2017, p. 63).The large businesses are usually known to be having negotiating power with the supplies.

Considerations; the Porter’s five force model is a very useful framework tool which can be used to come up with another project like the Eni company. The five –forces model are usually used as the bargaining power for most customers, the bargaining power of suppliers, changing the consumer preference, the threat of new competitors and the competitive rivalry in the market. The term bargaining power refers to the ability to influence the prices which are received or paid. Changing the preference of customers and introducing new competitors can greatly affect the profits and sales, while the very competitive market usually limits the ability of the company to increase the margins or raise prices (Martina, 2015, p. 456).

The risk management is well known as one of the major elements of effective administration of companies. In a complex and dynamic environment, companies require the capacity to understand, recognise, capitalise and accommodate the new opportunities and challenges. The improved decision making, better results and better allocation of resources can be attributed to the effective risk management (Pigneur, 2011, p. 421).

External and Internal Strategies of Eni Energy Company

For the purpose of coming up with another project like the Eni company, risk management is very crucial in that it involves a systematic approach  which enables the company to come up with the best course of action under some uncertainty  by understanding, identifying, assessing, making decision and communicating the risk issues  as a very crucial component of good management. Risk management does not mean that the risk will be avoided in case of the potential threats. Rather the risk management will equip the organisation to be able to make decisions which are informed by understanding the nature of the risk which enables them to ultimately respond to the change by mitigating the threat and enabling the company to capitalize on the opportunities (Pigneur, 2011, p. 233).

Integrated risk management. The risk management cannot be practised effectively alone as a result of that; the integrated risk management usually promotes continuous, systematic and proactive process to manage, understand and communicate the risks from the organisation wide perspective in a consistent and cohesive manner.

The section of the risk management usually comes after the strategies to enable the reader to get a clear understanding of the ability which the company has to manage the main risks which are related to the strategies and goal achievements. 

In relation with the elements, contents and the principles which are included in the International Integrated Reporting Council framework all the sections which are included in this report are operationalised to the principles of connectivity of the information this is an attempt to show how the sustainability can be embedded within the individual company (Webb, 2015, p. 426).

Conclusion.

In conclusion, having the main objective is to come up with innovative proposals which can facilitate the development of a similar project like Eni Company. By having a clear understanding of the company’s distinct approach to the sustainable value creation, it was much easier to come up with other ways through which the sustainability can be created (Zysman, 2016, p. 34)

Some of the innovative proposals which were given include; operating resources efficiency, retaining and attracting the best people, Government actions and Public forums which will drive the sustainability, Balancing short- and long-term objectives and to Maintain and Develop In-house Competences.

Competitive Environment and Strategy were well analysed. Both the internal and external strategies for Eni Company were well understood before coming up with some proposals which were to facilitate future development of a similar project. The risk management of the company was deeply understood, and the proposals which were given were to be of great importance in facilitating the development of a similar project like the Eni Company which is currently considered to be the sixth largest energy company in the world.  

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