Oman Oil Company’s Strategy

Discuss about the Organizational Culture and Leadership in ERP.

Leadership is an important aspect of organizational management and this has relevance in the continuity of organization while maximizing the profitability of the organization. One model organization that shows complex leadership structure and system is Oman Oil Company. The company was established in 1996 though the company was first proposed in 1992. The company is engaged in oil exploration and production, oil refineries, infrastructure development, energy transportation and power generation. Leadership is part of management and depends on the management structure and systems used within the organization. In addition, the management structure plays an important role in the maintenance of organization’s goals or objectives. Some of the key pillars of the organization’s structure and systems include strategy, structure, style, skills, systems, staffs and shared values. The Leadership Value Systems and Structures have immense impacts on the leadership, management, and staffs in general. The oil and gas sectors in Oman has evolved from initial simple management structure to more complex and is expected to move more miles away. There are many issues that are currently affecting the Oman Oil Company as a company within the oil sector or within the country. The paper recommends that there is need to change management structure, apply technologies and develop a more comprehensive sustainable environmental strategy. The main purpose of this report is to explore the leadership and management strategy or structure as applied in the Oman oil company.

Oman Oil Company has a strategy that is grounded on four pillars and these include invest, create, maximize, and unleash. One of the purposes of the company is to invest and develop profitable oil businesses within Oman and around the world. The second pillar is to maximize the value of oil resources within the country. The third pillar entails the creation of meaningful employment opportunity within the country. Finally, the strategy of the company serves to unleash the full potential of professionals and leaders in a bid to develop business talents of many citizens. These pillars are coordinated to form a diversification strategy that focuses on the formation of resource economy and integration value chain and leverage existing asset economy (Howell 2012, pp. 16–17).

The Oman Oil Company has a structure that is mainly coordinated by the board of directors headed by the chairman of the board of directors. The activities of the board are directed to the organization through the chief executive officer that is leading the management of the organization. The organization is divided into functional units, divisional structure and matrix structure making the organization effective in leadership (Lim 2017). Firstly, the organization is divided into various functional units headed by various vice presidents and these include vice president upstream businesses, vice president downstream business, vice president emerging businesses and vice president strategy and performance management. Secondly, divisional structure is also present within Oman Oil Company where the company has Exploration & Production, Refining & Marketing, Base Petrochemicals, Infrastructure, Power, Shipping and Metals / Mining. Thirdly, the organization also has various matrix structure composed of both functional and divisional structures. This structure interconnects board to executive management through chief executive officer and chief audit executive based on functional and divisional structures (Griffin & Ebert 2010, pp. 135–136).

Oman Oil Company’s Structure

The organization has both informal and formal procedures that are based on the hierarchy and departmental. Firstly, the organizational hierarchy offers the formal procedure of management information system. The organization operates independently under the supervision of the board of directors. This implies that the organization has directed information from top management down to local leadership. Secondly, informal procedures composed of various departmental information systems that are mainly localized with the department (Montana & Bruce 2008).

The leadership approach that is used by the organization composed of top-bottom leadership style that is also characterized by portfolio management. The organization directs its communication from the board of management to junior officers through executive management headed by the chief executive management. Based on the portfolio management the leadership approach is channeled through various portfolios spread throughout the country and internationally. Some of the portfolio that has leadership include power, shipping, mining and petrochemicals among others.  The portfolio management leadership style focuses on leadership diversification style (Saxena 2009, p. 30).

One of the strategies used within the organization is maximizing human resources based on competency and readiness of the human capital. In order to do this mandate, the organization has strategies to build and develop, grow leadership talent, identify potential leaders, improve performance and prepare the human resource for any future tasks through skill development. In addition, the organization has put in place the strategy to recruit employees based on their leadership skills and talents.

The organization has a vast array of human resource ranging from the board of directors who are able people within the government and corporate world. Below the board of directors is executive management that is composed of people with the specific managerial field of profession. Some of these fields include finance, legal, management, and engineering among other professions. These staffs are equipped with leadership skills and can demonstrate leadership at the senior management level down to the local technician level.

Oman Oil Company has inspirational values that are grounded in the company’s strategic objectives. Shared values of the company include employment creation, investment opportunities and outdoing imports within the country. One of the key value of the organization revolves around the creation of both employment opportunities and exploitation of local leadership talents. Secondly, the company also major in the diversification of investment opportunity within the oil sector and the country as a whole. Thirdly, the creation of value chain is also a core value of the company that has the objective of outperforming import with the country’s value chain.

Leadership Approach in Oman Oil Company

The Leadership Value Systems and Structures have an immense effect on the leadership, management, and staffs in general.  Firstly, the leadership value system and structure have both direct and indirect impact on the management. The leadership value system affects the mode of communication within the organization with most communication coming from the top leadership to junior management employees. In addition, the structure offers an opportunity for all managerial employees to exploit their management skills. Secondly, the Leadership Value Systems and Structures instill the talent or potential leadership abilities. This is based on the core value of the organization that focuses on exploiting the talent of the leadership of many citizens.  Thirdly, the Leadership Value Systems and Structures also have an impact on the skill development among employees. This is grounded on the sustainability nature of the organization system and structures. Staffs performance within Oman Oil Company increases as they are also subjected to practical and training skills that impact on their leadership skills (Gomez-Mejia, Balkin & Cardy 2008, p. 19).

The structure of the organization and leadership are different from the structure that is applied within the company’s main competitors such as Orpic (Oman Oil Refineries and Petroleum Industries Company, Oman LNG, and Petroleum Development Oman. Firstly, the company has financial management that is directly overseen by the government of Oman through the Ministry of Oil and Gas (Oman Oil Refineries and Petroleum Industries Company 2013). Unlike oil and gas competitors, the organization has good management that is supervised by the board of directors. Some competitors such as Oman Oil Marketing Company that is partly owned by Oman Oil Company, this competitor has no financial based on the mother company. Oman Oil Company has high leadership and management that consist of a pool of recognized leaders in various fields as compared to the company’s competitors. In contrast, Oman LNG also shares the history with Oman Oil Company since the company was also formed through a royal decree of Sultan Qaboos of Oman. The only difference between Oman LNG and Oman Oil Company is based on the vast capital base that Oman Oil Company enjoys as compared to its competitor (Sinnott 2008, pp 32).

The differences between Oman Oil Company and its competitors have both positive and effects impacts. Firstly, the differences make the company have strong economic implications on the overall performance of the country’s economy. The leadership approach used by the organization makes the organization offers employment opportunity for many citizens. In addition, the organization structure natures the leadership skills for most people and this has a positive impact on the professionalism of various employees. Secondly, on the negative deferential point of the organization, the organization structure of leadership is stiff and poses challenges to their ability. Moreover, the organizational structure hinders the external advisory since the board that supervises the organization’s performance cannot allow external interference. This implies that the organizational style of leadership is traditionally configured that points to an inability to changes (Clark 2007).

Human Resource Management in Oman Oil Company

The oil and gas sectors in Oman has evolved from initial simple structure to more complex and is expected to move more miles away. Firstly, according to Mau and Edmundson (2015), the oil and gas sectors within the country have highly evolved in terms of management from traditional management structure to current complex structure. For instance, the Oman oil company has tried to implement portfolio system as opposed to the initial functional structure. This is due to the adoption of the portfolio management system in most companies within oil sector. In addition, the sustainable management approach offers the best alternative management that can restore the social trust on the company (Oman Oil Refineries and Petroleum Industries Company 2013).

Secondly, the oil and gas sector has technologically evolved as the company management has implemented the modern technologies in exploration and production of oil in the country. Oman Oil Company currently apply solar enhanced oil recovery (EOR), a technology that aims to increase the oil production while minimizing the exploitation of exhausted oil and gas reserves. The sector is, therefore, evolved from mainly using hydraulic fracturing to using solar energy in the extraction of oil and gas. Many companies are still exploring the right technology to use in the production and exploration of oil or gas. Another area that is currently under technological demand the monitoring of production though, much has not been done in terms of technologies.

Thirdly, the oil and gas sectors have also evolved from focusing on profitability to the improvement of leadership skills. The main core value of the organization is to nature human capital and raise good leaders as oppose the initial focus of most sector players that majorly focus on making profits.  This has corporate social responsibility focus and serves to better the society than an individual organization. With increasing focus on good management skills, there is the likelihood that the performance of leaders will improve. Corporate social responsibility offers the company unique opportunity to perform magnificently within the sector in the country and internationally in the near future (Clark 2007).

Ways in which the oil and gas sector have to evolve is totally different from most Oman oil company competitors at the national and international. Firstly, application of modern management by the company makes the company competitive within the oil sector of the country and within the regional oil sector. Strong corporate social responsibility and portfolio management approach makes the company be a good industry player since most companies within Oman are still behind in terms of managerial skills. For instance, a close competitor Orpic focus on the environment as compared to Oman Oil Company that focuses on building strong leadership skills. In addition, on corporate social responsibility, Oman Oil Company focuses on the provision of employment to many citizens while also exploiting talent. Orpic, on the other hand, focuses on building talents of young citizens through sports activities. Globally, implementation of the portfolio and corporate social responsibility approach makes the company be competitive since the structure is currently embraced by many companies within the oil and gas sector (Van, Hogan & Kaiser 2008, pp 182–196).

Shared Values of Oman Oil Company

On the technological evolution, Oman Oil Company is far ahead of its major competitors in the sector. The massive development of Solar Enhanced Oil Recovery (EOR) does not match any company within the oil and gas sector of Oman. According to Zaccaro, Gulick, and Khare (2008, pp. 13–29), Solar Enhanced Oil Recovery (EOR) developed by the company will be the largest solar plant in international oil and gas industry. This increases the competitiveness of the company locally and internationally. In addition, application of solar enhanced oil recovery (EOR) and the development of GlassPoint Solar plant make the company relevant globally since most companies are encouraged to apply techniques that are environmentally friendly. This implies that the plant will use sun rays to produce steam that is used at EOR.

Differences between Oman Oil Company and other competitors have positive and negative points and are felt at different levels. Firstly, the difference in terms of technological application makes the positive deviation about the organization. The extent to which the organization applies technologies explains the ability of the organization to compete for both at the national level and globally. The management differences are traits that show the capability of the organization to diversify its portfolios and focus on human capital output. Secondly, the extent to which the organization focuses on talents can reduce the professionalism as the most emphasis is placed on the talent than a profession. Moreover, the company management can sometimes prove strict as the board of directors may reduce the ability of company adapt to changes in the market. There are many different changes that are taking place with the oil and gas sector and these changes are a recipe for those organizations that are embracing them (Zaccaro, Gulick & Khare 2008, pp. 13–29).

What kinds of changes are taking place in your sector and what do you believe the most successful organizations are doing to embrace the changes required to deliver continued success?

There are many different changes that are occurring within the oil and gas sector. One fundamental change that is embraced by many oil companies is advanced technology. Many successful companies are currently applying technologies that are based on computer-automated systems. Development of computer systems to control most portfolios of the organization is contributing to the success of most organizations since these organizations are able to monitor the movement of products within the value chain using a computerized system.  Globalization of most companies is driving these organizations to use advanced technology to facilitate most oil and gas transactions from any place globally. In addition, these technological changes facilitate the shipment of oil products throughout the world (Sami 2010, pp 34-36).

Impact of Leadership Value Systems and Structures

Improved communication is another change that is also facilitating the success of many organizations. The organizational structure used within the Oman Oil Company make the communication difficult and this need retard the success of the organization. Most organization are currently embracing modern technologies in communication and this has the potential of improving the organizational leadership. Organizational communication is one factor that has increased the information system and this is good for future growth of the organization. Moreover, current information communication technology has transformed the oil and gas sector with many technologies monitoring the performance of all employees and departments (Hackman & Johnson 2009).

The Oman Oil Company is still trailing behind many leading oil and gas companies within the sector internationally. This is based on the difference in approach taken by the organization to address the technological changes. For instance, the organization focuses on technologies that improve the environment through solar energy as compared to those technologies that improve communication and monitoring. Development of EOR make the company be on the verge of becoming technologically capable as compared to others though, this still has the potential of improving beyond other key oil and gas players.  Secondly, the organization is lagging behind in application of communication technology owing to the traditional communication method that is used within the organization. Some efforts that been shown by the organization include good marketing strategy that applies communication technologies. The current marketing strategy of the organization combines traditional organizational communications and current technologies (Oman Oil Company 2012).

There are many issues that are currently affecting the Oman Oil Company as a company within the oil sector or within the country. Firstly, shortage of labor skills is one of the issues that affect most companies within the oil and gas sector of Oman. Lack of specialized oil engineering employees is driving the organization to retain the few employees present without necessary motivation. Human capital is currently coupled with low oil prices that cause the company to employ few workers leading to low manpower and high workload. Labor issues have been biting within the region with many companies looking for skilled labor within the oil and gas industry. Oman Oil Company, for instance, has been trying to develop those strategies that train its employees to raise their skill. Furthermore, the company has been retaining employees in a bid to reduce those employees moving to other companies with the oil and gas industry (Oman Oil Compan 2013).  

Comparison with Competitors

Secondly, there are limited specific policies that control exploration and production of gas which is a major focus of the company. The main focus of the government of Oman in the oil and gas sector is gas specifically hydrocarbons. The government relay on those policies set by the exploration and production sharing agreement (EPSA) though is further negotiated by the Ministry of Oil and Gas (MOG).  In addition, the government has not developed the necessary policies to control the exploration and production of gas as a way of controlling and regulating sector players. This is also affecting not only Oman Oil Company but also its competitors within the oil and gas sector of Oman. This leaves the His Majesty the Sultan an oversight authority to regulate the sector within the country (Mau & Edmundson 2015).

Low oil prices are other issues that are currently affecting the organization and the sector as a whole. The current low market prices are one cause of unemployment within the sector as companies strive to reduce employees as a way to increase the profitability. Crude oil prices in the Gulf have dropped in the recent past has cause crisis in the oil sector leading to marketing issues of various companies. High oil demand under low market prices is a real issue in the oil sector. Moreover, the low prices within the gulf oil market are causing conflict with the industry with most key oil players blaming Saudi Arabia as the main cause of the market crisis.

There are many different strategies that can be implemented by the company to put the company on a path to future sustainable success. Firstly, the organization needs to develop a more comprehensive sustainable market and environmental strategize. The organization needs to develop good marketing strategies that consider the prevailing marketing condition and advanced technologies. A sustainable marketing strategy considers the key players, environmental approach and above all the corporate social responsibility. In addition, marketing strategies that create fair marketing environment characterized with more emphasis on sustainable practices. For example, a good marketing strategy in current society will focus on consumers that profit and this should also be developed in a way that ensures that the company does not interfere with its own profitability (Valdiney, Taciano & Valeschka 2014, pp 41-47).

Secondly, environmental sustainability strategies need to be developed with the main focus on creating favorable environmental protection practices. For instance, environmental strategies need to concentrate on reducing environmental pollution, environmental degradation, and restoration of the environmental sanity. Most companies throughout the world try to implement sustainable environmental strategies with minimal pollution to the environment. The company through this initiative aim to reduce the environmental pollution yet there are minimal strategies to improve the environment. In addition, the company needs to come up with a strategic plan on ways to monitor environmental pollution and with the aim of reducing pollutants further. Application of technologies in the current oil industry has the potential of monitoring and the amount of hydrocarbon entering the atmosphere (Weiling & Kwok 2008, pp 208-218).

Evolution of Oil and Gas Sectors in Oman

Technological development is one of the most important sustainable development paths leading to the success of companies operating in the contemporary market. The current company can hardly survive without implementation of technologies characterized by sustainable management practices. One of the technological development that has been developed and implemented in the organization is EOR that uses solar energy in the extraction of oil or gases. This show how technology can be used in the extraction of oil while at the same protecting the environment. More need to be applied in business as oil extraction and refining produces environmental pollutants. These pollutants need to be controlled using modern technology in a sustainable management practice (Gerry 2016).

Conclusion

In conclusion, Oman Oil Company as a major player in the oil or gas sector of the economy of Oman as a country.  The company has a complex but traditional managerial system and structure that is coupled with some issues.  The organizational structure and system have an impact on the leadership of the organization though there is still a lot to be done to improve on the key issues that the organization is currently facing. The oil and gas sector has highly evolved in terms of technologies that are used in the oil exploration and production. Some of the efforts that need to be added include more advanced technology, sustainable management, and sustainable marketing strategies. These areas of improvement will help the company remain on the path to success in sustainable management practices. 

In the view of all the company’s management and leadership structures and systems, then there are some recommended management practices that the organization need implement. Firstly, the company need to remain focus on technological improvement especially those technologies that aim to monitor and prevent pollution, monitors production, enhance communication and improves the environmental sustainability. Secondly, the Oman oil company need to redevelop leadership structure that is more flexible and conforms to current management practices. Thirdly, the organization needs to develop more comprehensive sustainable management practices that focus on both marketing and environment as a whole. This sustainable management practice needs also to factor in the current marketing conditions and trends in environmental protections. Finally, the organization needs to diversifies its products outside the country to ensure that its presence is felt in other parts of the world where it has minimal presence. For instance, the company lack international oil shipping strategy that need to be developed as this has potential of yielding more revenue to the company and the country in general. 

References

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