Qatar Gas Company-Strategic Management
PORTER’S 5 FORCES ANALYSIS
Porter’s 5 forces is a model that seeks to identify opportunities with potential and risks the oil company may face. This model basically, is comprised of five main factors that mold each industry and identify its strengths and weaknesses. The model can be applied in any economic section so as to identify the opportunities. The model is named after the person who came up with it, Michael E. Porter. The main factors in this model are competition, new entrants in the market, the power of suppliers, power of buyers and threats brought about by substitute products in the market. This essay seeks to analyze the Porter’s 5 forces with Qatar Gas Company as the company of study.Qatar Gas Company is very unique in terms production, size and even reliability. The company produces 14 Liquefied Natural Gas trains and has the capability to produce up to 77 million tons annually. The company is also the leading exporter on natural gas and helium in the world. The oil industry is one of the most successful because most machinery in the world today will require one or the other petroleum product. The market for these oil products is available since only a few countries have oil mining rigs.
Rivalry among Form– High
In every successful industry, there has to be competition from other similar industries. In the oil sector, competition is very intense. There are quite a number of big players in the sector including the Qatar Gas Company. However when there are many players in a sector, the prices may face a fall because there is an overflow of the product in the market forcing it to lose value. The global price for crude oil for example fell by almost 70% in 2014. A number of companies offer huge competition to the Qatar Gas. In 2015 the Royal Dutch Shell had the highest number of annual revenue of 385 billion dollars. However the company’s main competitors include the Apache Corporation. Also, there are high exit barriers, therefor companies tend to stay which increase the rivalry.
NEW ENTRANTS IN THE MARKET- Low
There are a number of factors that affect the new companies entering the oil and gas business. Oil sector requires a lot of capital to enter the sector and start competing effectively. The main advantage that well established companies like the Qatar Gas is that very few companies may have the financial capability to penetrate the oil business. The huge capital needed acts as a barrier to prevent many companies from entering the market and thus being an advantage to the existing companies. Again existing companies may choose to increase their R&D to boost them in new innovative features making it hard for new companies to compete with them because this will require them to spend even more capital.
POWER OF SUPPLIERS – Moderate
In the oil sector, some of the big supplier companies are fully integrated and are actively involved in the whole value chain of the sector, ranging from exploration, transportation, storage and even manufacturing and marketing the products. Such companies have very high capabilities of affecting the oil prices because they are involved in every sector of the oil industry. Such companies include Shell, Chevron and other national oil companies. Qatar Gas also produces oil and transports it to other parts of the world.
POWER OF THE BUYERS –High
The main buyers in the oil sector include oil refineries, distribution companies, traders and even companies. These buyers will mainly focus on the price and the quality of the oil products. The sector has benchmarking bodies which determine the prices these products. The main oil benchmarks include Brent Blend and West Texas Intermediate. This might minimize the buyers’ affect on the prices. However buyers who consume huge amounts of oil like China, Japan and USA have higher bargaining power. This bargaining nevertheless is in terms of quality to be bought and not the price at which they will buy. Qatar Gas has its main buyers in United Kingdom where it supplies almost 20% of LNG through the South Hook LNG terminal.
SUBSTITUTE PRODUCTS IN THE MARKET – Low
There are a number of other products which can substitute oil products effectively, especially in electricity and transport sectors. These include nuclear energy, coal, hydrogen, biofuels and renewable sources like wind and solar energy. Some of these sources do not produce high amounts of hydrocarbons, hence are being adopted because they are not pollutants. However the availability of these products may be very low in most cases, leaving oil as the major product in use.
For any business to be successful, it would be necessary to consider the Porter’s 5 forces before even beginning. They will help in determining the appropriate sector to enter the right entry position This will ensure that the business will stay valid in the sector without being overshadowed by the existing businesses.
The SWOT analysis is consolidated points from our conducted interviews and distributed surveys to the representative sample of employees we targeted in the Learning and Development Department. Find below summarized table and points.Strengths
There are several strengths for the department, mainly because of the already well established excellent reputation for the Qatar gas company which benefited the company as a whole and the department as well. The main source of the department strength is behind the manpower that driven it’s success. All employees in L&D agreed that the source of power in L&D is the people, the skills they own, the way they behave, their commitment, and the background and experience they have. We have collected other strengths and observe others which can be summaries in below;
- Employee commitment to work: it is very obverse from the level of attendance and the deliverable from the team members. Employees are committed to excellence by high performance and hard work which provide constant excellency service level for overall company
- Processes are available & Automated: most of the main processes are automated in the system and available for the customers in the company intranet. Refer to the system section from more details.
- Diversity : Diversity of the employees enables for easier intercommunication and quality decisions because of exchanging expertise, experience and opinions from different backgrounds . Enables easier intercommunication and quality decisions . It is not only different nationality and genders, or generation it is different background and knowledge.
- Broad experience in all teams: people come from different background, different thinking style, and different rules and tasks which provide them with the required skills and experience to innovate and give more to L&D. There are staff joined the department from IT background which will support the department to avoid full reliance on IT department.
- Strong identity & Marketing the department activities
- Teamwork & Supporting, Excellent support and commitment from operations department which makes carrying day to day tasks much easier, faster and comfortable
- Policy and procedure: Rewards and benefits system & Flexible timing. Flexible timing offered by the department where productivity is measured by quality of work rather than other factors such as excessively strict attendance policy. Rewards and benefits system ensures fairness to all employees
- Designated Focal point dedicated to designated people to ensure higher quality services
- Focal point dedicated to designated people to ensure higher quality services
- Staff with IT background to avoid full reliance on IT department enables business continuity for the department.
Weaknesses are internal challenges that the organization faces or limitations to achieve the mission and goals of the company. The learning and development department of Qatar Gas faces several weaknesses. The department of Learning and Development Department of Qatargas have several weaknesses that are faced by the employees of the department and have been even stated by them. Those weaknesses must be addressed to ensure full transparency, honesty and overall effectiveness running of the department. Those weaknesses are as follow:
- Lack of coaching skills: The head and leads doesn’t have coaching skills that can used to train employees for the department so that they can effectively carry their own tasks.
- Lack of working distribution: The department severely lack working distribution as few employees are working very hard while the other employees don’t have much work to do so.
- Requirement of restructure to be more effective and efficient: Moreover, the Learning and Development Department of Qatar Gas experiences other weakness which is that there is a requirement by the department to be restructured so that the department can be more effective and efficient.
- Not accepting the changes: The other weakness of the department is that due to lack of flexibility and trait to change by the department, they resist change and makes them more unorganized. The employees are resilient to change and aren’t welcoming which makes the whole department unorganized.
- Not organized: after the merging, its expected that the procedures are not fully in place and there will be a bit of chaos within the department in terms of aligning objectives and responsibilities.
- Lack of Internet access to get required to access university: the department lacks technological advancement which is the basic requirement by the company as they don’t have access to the website and internet which creates significance problem for the department. Sometimes, when they have internet access, it is very slow and disrupting all the time which makes it very difficult to carry their role of learning and development.
- Website and Internet is very slow: considering the weaknesses of the department, these must be timely addressed to efficiently running of the department so to address
- Considering the weaknesses of the department, these must be timely addressed to efficiently running of the department so to address the weakness, L&D should align the new department into one culture & drive consistency across all divisions and team members. Increase the awareness and and emphasize learning the new processes. Hence, the department should clearly observe the weakness that they are facing and steps shall be taken to overcome these as it will impact the whole organization in the long run.
- New Skills need to be marketed: It’s agreed that what makes the department strong is the verity of skills among the divisions, but those skills at the same time are not marketed well to the customers. As a service provider department, there should be more visibility on the objective of the work and the ability of the staff. For this they all agree that the (Learning Expo) which is held annually is in away marketing the department objectives, but still not showing the comprehensive existing talents.
- Employees skills to be utilized: L&D department is rich with diversed employees in which they are talented with multiple set of skills. Those skills are the asset of the department and they should be fully maximized and utilized to the overall benefit. It the responsibility of line managers and lead to help explore those skills and maximize their resources.
- Innovation: They all saw the merger as a new good opportunity for them which added to the existing strengths, new skills, ideas, and people are joining, learning and innovation is being maximized. Specially with the management willingness and acceptance and continuous support.
- Communication: Enhancing the overall communication within the department in specific and across the company in general will provide a great opportunity to increase the overall satisfactory level of the employees which will be projected in the sustainability report later.
- Access to require data: with the new skills joined the department the department is now in a good shape to take control over the IT system and the HR data that need to be managed by the department such as national data and employee training and development. As the coordinator of national new joiner data, they department has no direct access to the SAP system to manage or retrieve those data. They are fully depending on HR on this. They are depending on the data received and validate them against their manual data base which wastes time and opens a door for error and loss of data. This gives the team an opportunity to get a direct access to the data as the owner of it, at least to view and not maintain as some HR data received are not matching or align the department databases this give a good justification to obtain that access.
- Centralization of data source: The data source can be SAP system which is used by both companies before and Qatargas after the merge. Giving access to employees will help extract the needed data and the team can eliminate all the manual excel versions. There is also an opportunity to enhance the database, so management can rely more on those data
- Create feedback process: To ensure a continence improvement and learning process.
- Create department job aid or manual/ L&D community: Create the culture of knowledge sharing, support the delegation process & market the department activities. To understand how the new business processes work. using Cisco Jabber to make query management and team interaction quicker and more efficient.
- Budget & Financial: Outsourcing can be reduced with the new skills joined. This is not all; the in-house training and development depend can be increased as well. There are some certified instructors joining L&D after the merger, this will also have helped on the cost optimization and to increase the use of the employee’s skills. The learning programs are also an area of improvement, RG used to have a designed leadership program that is certified and strong which will add a lot to the leadership development program.
- Expertise: The merger has brought new skill, knowledge and experience. the department id now full of expertise in deferent areas such as IT, analysis and strategic. All those skills need to be market across the company groups so they can utilize the people of learning and development and believe of them.
This might introduce new opportunity to the department such as Qatarization strategy and planning that HR now is involving the Qatarization Division is as they have the needed staff and skills to carry on this exercise. The diversity is another opportunity that L&D can benefit from, there are different gender, nationality and background joined the department. Involving those in the enhancements of the internal processes can help the department a lot.
- Automation: Automate and optimize more of the system and processes to have more efficient processes and maximize the skill sets of the employees by eliminating time consuming processes
- System: System and process map and the templates can be user reporting. used in Ragas and Qatargas. build sustainable world class processes. “Biggest trend is mobile learning which I believe we need to step into to keep our L&D department ready for the current generation moving into QG and for the future.” Noor, Quote from interview
- New customers’ needs: as new employees joined, there will be more demand on training courses and team building, also CBT and other training materials. T&E should be ready to provide training program, enhanced and find certified programs to offer. Also, T&E will be able to reduce cost by offering In-house and shareholders free cost training. Other requirement; Multimedia methods, training catalogue, guidance material, subject matter experts, service desk, events, business support (QPRs) invest on this area.
- Encourage regular meetings between HR and L&D: Strengthen the relationships and communication between both parties for the mutual benefits
- There is an opportunity to increase the niches of L&D by investing more in people.
- Recovery during absent: Even with those skilled people, there are some tasks that can only performed by one individual. There is a threat that during the absent of that employee that there will be no one to carry and deliver that task in the same level. Our suggested solution is to have some rotation between the department’s division and the same team. This will allow the knowledge sharing and unified the understanding of the tasks. Employees will then be able to link the different tasks of the department to their own or to the department objectives. At the same time documentation is always the best. We need to ensure that every task documented in an easy way, so anyone can follow the document and perform the same. Those solutions might be easy for the administrative works, but we cannot ignore that fact for unique skills such as analytics will require more such as training to reach the same level as the primary user.
- Homogenous & unity: The merger brought some opportunities and threats at the same time, we can see that there are some employees already demotivated due to the decrease on the salary grade, position or change on job. Also, the resistant of accepting the change. Everything can impact the homogenous and the unity of the teams and the department. Moral issues need to be controlled and all need to understand the department / organization is now one and no longer two different units (RG/QG).
- Organization Structure: there are some advantages and disadvantages of the current organization structure. Beside the specialization of each team and the focus that the current organization structure offer, it also creates mini small teams and isolate each group of people. It prevents the team work and the communication across all team members. Disconnects could occur with HR functions and outputs.
- New thing to understand: as each company were performing things in different ways, communicating those new processes and get used to it create a risk of following the old processes. Also, communicating those changes to the new joiner from the legacy RG will take some time. The department need to ensure that there is only one way to do thing and this can be gain through the procedures and user guide. If the customers are not served well, this might impact on the reputation of the department.
- Issue with the systems and data: there are some issues existing in the current systems and databases which might make employees and management not believing in the systems and data L&D manage and provide.
- Demotivation, Job satisfactory & Turnover: Qatargas is currently in a very competitive market, with the merger the job satisfactory level decreased and the level of turnover increased.
- Resistance & unhealthy competition: Lack of willingness to change that impacts the unity.
- Shutdown division/ department: The threat is that QP will take the management of scholars and this might reduce jobs or eliminate the division/department. In relation to the threat, the team feel the link between their tasks and the Human Resources tasks. Taking care of employees and their development is manpower and HR things. Learning and Development Qatarization division is focusing on Nationals only with a specific target which is the new joiner nationals only which can be taken by the Human resources team. In addition to that the Qatarization Plan and Strategy is managed by the manpower- workforce planning and the recruitment which make more sense to move the national mobilization and recruitment to them and centralize the process. In addition, there are other internal threat between the divisions such us Education and development and the Competencies development and performance management. Both team are operating the same in a specialized area such as technical and behavioral development planning and design which can be handled by the education and training team instead of the CDPM division. Plus, to this, there are an external threat which is QP as a mother of the company they are planning to manage the undergraduate and trainee’s technician program, so this will eliminate some tasks from QNDD. Future merger or cuts just to save money that can impact department deliverables.
|The diversity of the employees enables for easier intercommunication and quality decisions||12%||4||0.40|
|Rewards and benefits system||14%||4||0.48|
|Excellent support and commitment from operations||6%||3||0.12|
|Employees are committed to excellence by high performance and hard work||10%||4||0.32|
|Flexible timing offered by the department||5%||3||0.12|
|Focal point dedicated to designated people to ensure higher quality services||7%||3||0.15|
|Staff with IT background to avoid full reliance on IT department||5%||3||0.12|
|Multiple sources of data||10%||1||0.10|
|No control over database||15%||2||0.30|
|Division and department site not up to date||8%||2||0.16|
|No feedback process||4%||1||0.04|
|Internet is very slow||4%||1||0.04|
|Major weakness (1) Minor weakness (2) Major strength (3) Minor strength (4)|
|TOTAL WEIGHTED SCORE||100%||2.35|
External Factor Evaluation Matrix (EFE)
|Key External Factors||Weight||Rating||Score|
|Connections & relationships||0.12||3||0.36|
|Uncertainty of Qatar’s Economy||0.2||1||0.2|
Based on the score of the EFE, L&D is below the average score of 2.5
Competitive Profile Matrix (CPM)
|Key Factors||weight||L&D||HR Department||HR Manpower|
|Data Source and Access||0.10||1||0.10||4||0.40||3||0.30|
The analysis of the Competitive Profile Matrix (CPM) show L&D key internal competitors and compare them using the critical success factors. (Refer to Appendix [E] for the success factors details)
Above CPM compares three departments under Human Capital Group. The overall CPM score for L&D Department is 2.65 which is slightly above average. The major weakness L&D face is the Data Source Access, which delay and impact the quality of the services they provide. The Communication skills and Coaching Skills are other factors weaken L&D position comparing to the other department. However, overcome those weaknesses with the current level of experience is not a challenge for L&D. We are suggestion below focus areas to improve L&D