Case Study Answers On Woodside Petroleum Company MBA600

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Name of the student
Name of the university
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Executive summary
The main purpose of the report is to evaluate the performance of the business through
identifying several components of the business like organizational strategy, financial
management, performance evaluation and strategic framework. The business functions of the
company have been analyzed with the help of balance score card. The report also includes
recommendations that can be used to enhance organizational efficiency and gain competitive
edge in the market. The company used for the analysis is “Woodside Petroleum Company ”.
Woodside Petroleum Company is a petroleum exploration and production business
established in Australia. Woodside is Australia’s leading private oil and Gas Company, as
well as an oil and gas producer. The company is now publicly traded on the Australian
Securities Exchange (What we do -Woodside Energy, 2022).
By diversifying its products and investing in new technologies can help a company thrive
longer in the industry. The organization must constantly implement expansion strategies in
order to increase performance and get acompetitive edge in the marketplace.
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Table of Contents
Introduction ……………………………………………………………………………………………………………….. 3
Discussion …………………………………………………………………………………………………………………. 3
Summary of organization strategy …………………………………………………………………………….. 3
Organization â€sapproach towards competitive strategy ………………………………………………… 4
Organization â€sapproach towards performance measurement ……………………………………….. 8
Balance score card …………………………………………………………………………………………………. 10
Recommendations for enhancing performance in the future ……………………………………….. 12
Conclusion ……………………………………………………………………………………………………………….. 12
References ……………………………………………………………………………………………………………….. 13
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Introduction
The report is based on examining organizations strategy towards gaining competitive
advantage in the oil and gas industry. The report further demonstrates about the performance
measurement strategies used by the company and how balance score card is used by the
organization for identification of internal perspectives to assists in improving external
outcomes. The report also includes recommendations that can be used by the company for
enhancing its performance in the future. The organization selected for the analysis is
“Woodside Petroleum Company ”.
Woodside Petroleum Company is Australian based petroleum manufacturing and
Exploration Corporation. Woodside is Australia’s leading private focused oil and gas business
and the operator of oil and gas production. The corporation has been listed as public on
Australian Securities Exchange. The company was founded in the year 1954 and is
headquartered in Perth, Western Australia (What we do -Woodside Energy, 2022).
Discussion
Summary of organization strategy
Woodside Petroleum Company â€sstrategy is supported through aportfolio of world-
class resources, industry-leading expertise, and asmart capital allocation approach as well as
focused on sustainable energy solutions (Purpose, strategy & values -Woodside Energy,
2022). Strong LNG dependability, cost discipline, and excellent safety and environmental
performance are all characteristics of Woodside’s capabilities. Its core business sets the stage
for future growth opportunities.
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The company offers appealing portfolio of prospective innovations which can assist
investors and other stakeholders unlock wealth. The company intends to carry out such
activities at right duration of the investment cycle so that itis able to deliver production when
global demand rises.
The company maintains its sustainability and competitive strategy Continual
operational excellence, assets in close vicinity towards growth markets, focus on costs, and
the production of value through technological innovation or varied products are all important
strategies for long-term growth and success (Purpose, strategy & values -Woodside Energy,
2022).
The trading and marketing strategy of the company is mainly build on diverse
customer portfolio and to explore further sales contracts supported with stable domestic gas
and LNG manufacture and complemented by internationally supplied capacities. The main
strategy of the company is focused on climate and sustainability and aims at producing low
carbon energy and involves various projects focused on ammonia and hydrogen and capacity
building (Purpose, strategy & values -Woodside Energy, 2022).
Organization â€sapproach towards competitive strategy
In order to plan and implement acompetitive strategy, itis very vital for acompany to
analyze its competitive environment. It’s important to recognize who the competitors are and
in what way their products, services, and marketing practices affect the business (Bruijl 2018 ).
The management of Woodside Petroleum Company adopts Porter â€sfive force model towards
designing competitive strategy for gaining competitive advantage in the industry.
Porter â€sfive force model is astrategic management tool that helps in examining the
industry from five different perspectives. The five elements of Porter â€s five forces are
discussed below:
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Threat of new entrants: The threat for new players is very low in the market. The foremost
reason behind this is that establishing apetroleum corporation requires huge investment and
other resources. Apart from this, new players will also to compete with existing established
firms including public corporations (Fellows, 2022). The main challenge that can be
problematic for new players is global and geo-political tensions among oil rich nations.
Another risk in this area is the fluctuations in the oil prices which makes very difficult for the
new player to enter the market.
Bargaining power of buyer: The regulation of price of petroleum products are in hands of
oil producers like Woodside Petroleum. This leaves little space for the buyers to bargain the
price. A little change in the price of oil necessitates the change in oil price all across the globe.
Also, change in pricing structure of crude oil enhances the price of gasoline which impacts
the customers on global scale (Clemente, 2022). They are bound to pay the price charged by
the producers. Hence, bargaining power is less for buyers.
Bargaining power of supplier: The main suppliers are corporations that are involved in the
extraction of crude oil from the oil fields. They have moderate power as government can
exert some power on the trading choices.
Threat of substitutes: The transportation industry is mainly dependent on use of gasoline for
running their vehicle. The introduction of electric vehicle has brought revolution in the
transport industry, but it is very expensive and cannot be affordable by everyone. The
switching cost from gasoline vehicle to electric vehicle is very low (Cleary 2016 ). Hence,
there is no threat of substitutes in this sector.
Competitive rivalry: Woodside Petroleum Company faces tough competition in the industry
due to the presence of strong competitors like Imperial oil, CGG, Tamaska oil and gas,
Carnarvon petroleum and Samson oil and gas. Due to high competition, the revenue margin is
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mainly tough to sustain because all the players have to match their price as per competition
(Woodside Petroleum competitors 2022 ). Another factor that results in intense rivalry is
gaining access to oil deposits.
Figure: Porter â€sfive force model
Source: (Bruijl 2018 )
As soon as the industry analysis is completed, itis time to implement astrategy that is
beneficial for gaining competitive edge in the industry. As per the Porter â€sGeneric strategy,
there are three strategies that could be implemented by any company namely focus, cost
leadership and differentiation.
According to the annual report of Woodside Petroleum, the company adopts focus
strategy for competitive edge. The focus strategy is constructed on the selection of asmall
competitive landscape within acertain industry (Islami, Mustafa and Topuzovska Latkovikj
2020 ). The manufacturer selects an industry segment or group of segments and customized its
method to serve them at the expense of others. The main focus of the company is to perform
as alow-cost and high margin manufacturer in the industry (Annual report 2016). There are
various types of products that are produced by petroleum companies. However, Woodside
Petroleum only focuses on gas and oil and the main focused areas of the company are
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Myanmar, Canada, Australia and Senegal (Annual report 2016). Hence, Woodside’s strategy
is to deliver world-class LNG programs to encounter growing demand and supply of abigger
and more multifaceted marketplace.
Throughout the world, it supplies strategic players, main gas and power utilities,
trading companies, and industrial and mining purchasers. It supplies crude oil, condensate,
LPG, and pipeline natural gas in addition to LNG (Evans 2020 ). Company is also
investigating the usage of LNG as alower-emissions and cost-effective substitute energy for
industrial transportation and isolated power generation in order to build new markets. It is
continuing to assess options to engage progressively along the LNG value chain in global
markets, with aspecial emphasis on Asian countries near its LNG supply.
Figure: Main focus areas
Source: (Annual report 2016 )
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Organization â€sapproach towards performance measurement
The performance measurement of the company can be done through examining return
on investment, financial stability, cash flow and capital management. The effectiveness of the
above mentioned strategy can be measured through financial analysis of the company. This
can be done through conducting an analysis or examining important financial statement of the
company including balance sheet, and other information.
As per the annual report, 2021 was the best year for the Woodside Petroleum as it
reported net profit of about $1983 million after taxation and economic net profit after taxation
of $1,620 million. The major factor for enhanced sales and revenue was increased market
pricing. Because of the favourable market conditions, third-party trading activity increased
significantly.
Figure: Financial information of Woodside Petroleum
Source: (Annual report 2022)
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Company has its debt near-term maturities responsibly and strategically to maintain
its mortgage expenses down. It liquidated a$700 million credit in the first half of 2021, and
also remortgaged $400 million in pledged deposit and savings facilities during the year. The
gearing ratio has fallen from 24.4 percent at the end of 2020 to 21.9 percent as aconsequence
of the Group’s better equity position as aresult of the 2021 profit, and itis still within its goal
range of 15-35 percent (Annual report 2022).
Furthermore, to safeguard against negative pricing uncertainty, the company reviews
the correct balance of hedging on a constant schedule. The Board of directors approved
hedging of up to 50% of oil-linked risk from generated hydrocarbons in any one year in
December 2021, in expectation of the merger.
Woodside has a Tier 1 asset portfolio which offers the platform for fresh growth
prospects. Its rigorous capital management strategy includes a thorough evaluation of
opportunities, portfolio results, and return on capital, all while ensuring reliable and safe
activities (Annual report 2022). The capital management of the corporation provides
autonomy to get the most value out of the opportunities portfolio. For securing a string
financial position, italso considers various climatic and macro-economic conditions.
Following are some of the main strategies of capital management adopted by
Woodside, through which its performance can be measured:
ï‚· They manage infrastructure investment demands, project execution risk, and
long-term value through participatory interest management.
ï‚· Hedging is used to safeguard the balance sheet from commodity cycles (Annual
report 2022).
ï‚· For debt management it makes sure that the company has affordable access to
high quality bond markets to fund business expansion plans.
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ï‚· To guarantee that its stakeholders are appropriately rewarded, with the use
of shareholder returns. Its dividend policy is to pay at least 50% of net earnings
after taxes, eliminating non-recurring expenses (Annual report 2022).
ï‚· Targeted spending management to guarantee cautious and financial services
system allocation to sustain core operations and expansion prospects.
Balance score card
Balance score card is a performance management tool which is mainly applied by
business for identifying internal capabilities as well as their possible outcomes. There are four
elements in abalance score card namely: financial, customer, internal business process and
learning and growth (Koesomowidjojo 2017 ).
Below is the balance score card of Woodside petroleum:
Figure: Balance score card
Source: (Koesomowidjojo 2017 )
Customer perspective  Everything the company does revolve around the customer. It is capable of
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meeting its customers â€demands through mixture of short, medium and
long term contracts. Because of the quality and pricing of the products, it
has succeeded in gaining loyalty of its customers on global scale.
 The company has two major customer segments that are responsible for 15
per cent and 13 percent of its external revenue. The main customers include
Pluto, Wheatstone and North West Shelf (Annual report 2020).
Financial perspective ï‚· Woodside reported anet profit after taxation (NPAT) of US$1,983 million
for the full year. Productivity was 91.1 MMboe, with $3,792 million in
operating cash flow. The board of directors announced afinal dividend of
105 cents per share (cps), raising the total interim dividend for the year to
135 cps (Woodside Full-Year 2021 Results 2022 ).
Internal process ï‚· It has merged with BHP â€spetroleum industry
ï‚· Ultimate investment choices for the Scarborough and Pluto Train 2projects
have been reached (Woodside Full-Year 2021 Results 2022 ).
ï‚· In January 2022, the sale of Pluto Train 2was completed.
ï‚· Succeeded in delivering yearly production of 91.1 MMboe.
ï‚· It maintains robust LNG liability
ï‚· Its goal is to get Pluto’s water management system up and running.
ï‚· Aims at initiating Xena 2project implementation (Annual report 2021)
Learning & growth  Woodside provides effective training opportunity to its employees through
its “energy e-learning suite ”.It provides various learning packages like
mental health awareness, HSE contracts, safety elements, risk factors, PSM
improvement, golden rules of safety, quality awareness and more (Energy
e-Learning Suite 2022 ).
 The main aim is to develop and retain best talent
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Recommendations for enhancing performance in the future
For boosting performance and gain competitive edge in the industry, the company
must constantly implement expansion methods. Likewise, the personnel management should
be effective in order to have dedicated employees who stay up to date on the industry and the
competition in order to offer the best solution. It must also define medium and long-term
strategic growth goals which are more equivalent to the established majors. Since it has been
proved that corporate strategies have a massive effect on a company’s success, this would
assist the company in increasing their productivity (Handscomb, Sharabura and Woxholth
2016 ). Woodside Oil firm should devote more resources towards market expansion and
diversification so these factors have been shown to have the greatest effect on organizational
performance.
Furthermore, Woodside should also explore opportunities for producing more
products like kerosene and other. This will help the company in gaining more profitability,
trade and customers. Also, itshould invest in more advanced technologies that can assist itin
gaining more profit in the market.
Conclusion
The above discussion examines Woodside petroleum which is arenowned name in
the Australian oil and Gas Company. The report involves analysis about its strategy which it
adopts to gain competitive advantage in the market and over its competitors. It is evident
from the results that it holds a string market position because of its strategies and capital
management. However, in order to maintain this growth, it needs to constantly innovate and
diversify its strategic perspective. The company could achieve asubstantial competitive edge
in the market in the coming years by following the above recommendations.
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References
Annual Report (2016) Woodside.com.au. 2022. [online] Available at:
[Accessed 20 May 2022].
Annual Report (2021) Woodside.com.au. 2022. [online] Available at:
[Accessed
20 May 2022].
Annual Report Woodside.com.au. 2022. [online] Available at:
[Accessed
20 May 2022].
Bruijl, G.H.T., 2018. The relevance of Porter’s five forces in today’s innovative and changing
business environment. Available at SSRN 3192207 .
Cleary, P., 2016. Poles apart: Comparative resource sector governance in Australia and
Norway. Australian Journal of Political Science ,51 (1), pp.150-162.
Clemente, J., 2022. Three Reasons Oil Will Continue to Run the World .[online] Forbes.
Available at: [Accessed 20 May 2022].
Epigroup. 2022. Woodside Energy e-Learning Suite – Epigroup .[online] Available at:
[Accessed 20 May
2022].
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Evans, D., 2020. Sunset at East Timor â€s Greater Sunrise LNG after Woodside write-
down. Energy Voice .
Fellows, U., 2022. International Politics Is Always A Risk For Oil Companies, But Business
Conditions May Matter More . [online] Forbes. Available at:
[Accessed
20 May 2022].
Handscomb, C., Sharabura, S. and Woxholth, J., 2016. The oil and gas organization of the
future. McKinsey & Company report. Available at.
Islami, X., Mustafa, N. and Topuzovska Latkovikj, M., 2020. Linking Porter â€s generic
strategies to firm performance. Future Business Journal ,6(1), pp.1-15.
Koesomowidjojo, S.R., 2017. Balance scorecard .Raih Asa Sukses.32-49.
Woodside Full-Year 2021 Results Woodside.com.au. 2022. [online] Available at:
[Accessed 20 May 2022].
Woodside Petroleum competitors 2022. [online] Available at: [Accessed 20 May 2022].
Woodside. 2022. Purpose, strategy & values – Woodside Energy .[online] Available at:
[Accessed 20 May
2022].
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Woodside. 2022. What we do – Woodside Energy . [online] Available at:
[Accessed 20 May 2022].
Woodside.com.au. 2022. [online] Available at: [Accessed 20 May 2022].