The Significance of Business Level and Corporate Level Strategies for Eni SpA Business Success - Case Study Example

Business-Level and Corporate-Level Strategies Business-Level and Corporate-Level Strategies Business level and corporate level strategies are important for any organization with the objective of being competitive. The world of business has changed dramatically in the last decade, with more businesses and companies in practically any sector. This is the same case in the petroleum industry, in which Eni SpA is a major stakeholder. The number of organizations dealing in the petroleum industry has increased exponentially over the last decade. Eni SpA had to come up with a competitive business level and corporate level strategies to remain afloat. This company employed slow, fast and standard market cycles in different markets to be more competitive. This paper will discuss the business level and corporate level strategies Eni SpA used to remain competitive in the ever-changing petroleum industry. Business Level Strategy Business level strategy is a set of commitments and actions a company takes to provide good value to customers thereby gaining a good reputation (Ireland, Hoskisson and Hitt, 2011). This may include establishing niches and product improvement to add value to already existing products and services. A successful business level strategy has to consider the five Ws; where, who, when, what and how v. At first, the organization has to determine its clients, the goods and services the client needs, how to deliver the best products and services and the competitors’ price for the same products and services (Ireland, Hoskisson and Hitt, 2011). Eni SpA’s business level strategy is fair pricing and consistency of products. In that regard, Eni had to invest in exploration of oil resources across the world (Maloney, 2012). This would allow Eni to provide petroleum products to its customers throughout. The company was successful in getting some oil reserves in Kazakhstan, Libya and Congo. The oil field Eni SpA struck in Kazakhstan is probably the largest old field the company has ever struck (Maloney, 2012). However, the numbers of oil fields are dwindling by the day. As such, the success rate of getting a good and productive oil field is challenging. With that knowledge, Eni had to acquire oil companies in other countries. This would guarantee Eni’s ability to meet the customers’ demands and expectations (Maloney, 2012). Eni SpA has also focused on the changes in the market dynamics as a business level strategy. In this case, Eni SpA determines whether there are any risks to the business environment in the future (Maloney, 2012). Currently, Eni SpA noted the shift from fossil fuels is gaining momentum. This is likely to affect the petroleum industry significantly in the near future Lund, 2009). In that regard, Eni SpA is looking for ways to remain in business. The company has thought of diversifying its products. For example, the company started producing chemicals from the petroleum. However, this sector posted huge losses. Lund (2009) proposes that Eni focuses on the renewable energy sector rather than petrochemicals early. Eni SpA uses many competitive strategies to remain better compared to the competitors. One of the strategies is the slow cycle market (Hoskisson et al, 2012). Under this strategy, a business needs to have unique capabilities, which competitors do not have. Looking at Eni SpA, the company has many resources distributed across the world. The resources and investments Eni has can be matched by only a few companies in the world today. This guarantees Eni a competitive edge with the ability to produce high quality and unique products and services to the clients. The slow cycle competitive strategy works perfectly well for Eni because it is almost irreproducible (Hitt et al, 2008). Another competitive strategy Eni uses is the fast cycle market strategy. In this strategy, the company focuses on inexpensive and reproducible strategies (Hitt et al, 2008). Therefore, the competitors are at liberty to copy any strategy and Eni can also copy strategies from other organizations. For the fast cycle, competitive strategy to work, any organization has to be very quick in producing and delivering products and services to the clients (Hitt et al, 2008). The many resources and assets Eni has across the world make it possible to produce practically anything within a short period of time, and transport to the customers. These resources and assets allow Eni to cut on transportation costs and deliver products very fast. In addition, Eni is able to respond to any issues raised by the customers fast enough (Maloney, 2012). A business level strategy is incomplete without proper investment in the human resources department and Eni knew this well. The company invested wisely in the human resources department. Eni replaced the previous Chief Executive Officer with renowned investment strategists Mr. Scaroni. The executive board knew that Scaroni was very valuable and would invest wisely in the human resources (Eni, 2013a). True to that fact, Mr. Scaroni looked for the best and experienced professionals in the petroleum industry. Investment in the human resources would allow Eni SpA to be more competitive in exploration, mining and transport of oil and natural gas (Eni, 2013a). Corporate Level Strategy Corporate strategy is a set of initiatives a business takes considering the company resources and the internal and external environment to be successful in a local or international market (Campbell, Goold and Alexander, 2013). Corporate strategy revolves around a business goals and objectives and the plan to achieve those goals. In addition, the business has to put in place the resources needed to achieve the goals set (Ireland, Hoskisson and Hitt, 2011). Any business must have a clear corporate strategy with all the factors in place to succeed in any market. Eni is one company that believes in a clear corporate strategy. The company understands that there is no way it would be successful and profitable without a simple clear yet achievable corporate strategy. Eni’s major corporate strategy is to be the leading producer and distributor of petroleum products in the world. The company has put many strategies and resources in place to succeed in its corporate strategy (Eni, 2013a). Eni has been working extra hard to ensure it is the leading producer and distributor of petroleum products. In this regard, Eni invested a lot of money in exploration and infrastructure, including pipes and machinery (Eni, 2013a). In fact, about one third of the company’s budget in 2008 was for exploration alone (Maloney, 2012). The company has some of the longest petroleum pipeline networks in the world. This has enabled Eni to strike a number of high yielding oil fields in Kazakhstan, Libya, Turkemekhstan and Congo (Maloney, 2012). Eni invests can invest in any country as long as there is oil, which is the major product the company looks for. Eni’s investment in politically unstable countries raised many questions, but Eni decided to continue with such investments. After all, the company’s investments help many people in the war torn countries (Maloney, 2012). Eni realized that the current situation in the petroleum industry, of the low number of oil fields could interfere with its corporate strategy. The company sought to invest in other oil producing countries through mergers, acquisitions and joint ventures and partnerships (Eni, 2013b). Eni acquired and partnered with oil producing companies in Russia, Congo, Algeria, Egypt and Mozambique as a result. Although the company invested billions of dollars in these projects, it was guaranteed continuous production of oil. This would make it easy for the company to compete with other petroleum products, even with few numbers of own oil fields (Maloney, 2012). One of the things Eni does to succeed in the international markets is to understand the different countries’ regulation and licensing mechanisms. Different countries have varying requirements and conditions for licensing (Eni, 2013a). These conditions and requirements must come into play for proper preparation and investment. Eni prefers to have close relationships with the governments of the countries it invests in. That way, the company gets first hand information on any changes in terms and conditions, making it easy for Eni to address the changes faster. In addition, Eni SpA must have close relationships with governments because most countries, government own shares in the petroleum industry companies (Eni, 2013c). In addition, Eni always gives back to the society. The company believes in sustainability and ethical corporate social responsibility (Eni, 2013d). In that regard, the company plays a major role in protecting and conserving natural resources in the countries it operates in. Eni considers the communities where it builds its oil mining and transportation infrastructure. The company believes that there should be no interference with the natural habitat (Busco et al, 2013). If there has to be interference with the natural environment, then it should be minimal and sustainable. Furthermore, Eni believes in proper disposal of the waste generated during the construction of mines, the transport infrastructure and the by-products of the petroleum industry (Eni, 2013e). The company can guarantee sustainability by following these simple, yet challenging to attain corporate objectives. Conclusion Business level and corporate level strategies are important for the success of a business. Managers and owners of businesses should know what each of these strategies entails, and how they can be achieved. In addition, it should put the necessary resources in place to achieve the objectives of these two strategies. Eni SpA has successfully put in place business level and corporate level strategies which have made the company successful and profitable. Although the company invested billions of dollars to make these strategies work, they were surely worth it. Eni SpA has succeeded in the petroleum industry and posting good profits year after year, even with the increased awareness of other sources of energy. Looking at the Eni case scenario, it is evident that clear cut business level and corporate level strategies lead to success. These businesses and corporate level strategies allowed Eni SpA to remain competitive with the ability to respond to market needs faster and ensuring innovation. Companies looking to succeed in the petroleum industry and other sectors of the economies must follow the Eni SpA example to succeed. References Busco, C. et al. (2013). Integrated Reporting: Concepts and Cases that Redefine Corporate Accountability. New York: Springer. Campbell, A., Goold, M & Alexander, M. (2013). Corporate-level strategy: creating value in the multibusiness company. Hoboken: John Wiley& Sons. Eni. (2013a). Eni and Rosneft Sign Declaration on Protection of the Environment and Biodiversity for their oil&gas activities in Russia. Retrieved from http://www.eni.com/en_IT/media/press-releases/2013/06/2013-06-21-rosnef-russia2.shtml Eni. (2013b). Eni International Resources. Retrieved from http://www.eni.com/en_IT/work-with-us/jobs-at-eni/eni-international-resources/eni-international-resources.shtml Eni. (2013c). Eni SpA: Fact Book 2012. Retrieved from http://www.eni.com/en_IT/attachments/publications/reports/reports-2012/fact-book-2012-eng.pdf Eni. (2013d). 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