Oil in Angola and the Sustainability or Challenges Meeting Sustainability of Sonangol - Case Study Example

 Sustainability in global business TITTLE: Oil in Angola and the sustainability or challenges meeting sustainability of Sonangol Introduction Business organizations nowadays are concerned with how to grow in a sustainablemanner. The top management of the organizations is coming up with effective strategies to promote sustainability in their respective organizations. In this report, the research will attempt to analyze and explain Oil in Angola and the sustainability of Sonangol which is among the top oil and gas producing companies in Africa. Company background Sonangol is one of the top oil producing companies in Angola established in the year 1976 by the government. In fact it is the sole concessionaire for oil and gas exploration on both the subsoil and continental shelf of the republic of Angola. The company is responsible for exploration, manufacturing, production, marketing and transportation of hydrocarbons in Angola (Company’s website). The company operates in the most efficient, transparent and safe manner with commitment to environmental protection. The purpose of the company is to promote harmonious development of the republic of Angola and to reinforce sustainable use of hydrocarbon resources. 1.0 Oil in Angola In Africa, Angola is the third largest oil producer after Nigeria and Libya. The country due to it significant growth and good relationship with other oil producing countries joined the Organization of Petroleum Exporting Countries abbreviated OPEC in the year 2007. In reference to the BP Statistical Energy survey in 2012, Angola was able to prove oil reserves of approximately 13.5 billion barrels in the previous year. The country is known for its exploration and production of crude oil which have an API gravity which ranges from 32 to 39.5 degrees and contents of Sulphur of 1.12 percent to 0.14 percent (Newton, 2009). Almost 90 percent of the country’s crude oil is exported to china and the US. Due to rich amount of gas and oil produced by the country, Angola boasts a good economy due to exceptional revenues and foreign income generated by the export of gas and oil products all over the world. Among all African countries, Angola is among the top developing countries and this is proved by the high standards of living in the country and availability of quality social services and institutions.The government of Angola has tough policies and legislation in place that ensures all oil and gas producing companies in the country are utilizing oil resources effectively and efficiently. It ensures that the company practices are both environment and human friendly (Nelson, 2008). This has made all the oil and gas producing companies to develop a competitive sustainability strategy that enables them develop a global competitive advantage. 2.0 Sonangol’s sustainability strategy Sustainability in business is simply a way in which a business organization conducts its business activities with consideration of social and environmental issues. Most global business organizations are using a sustainable strategy in order to assist in preservation and protection of the environment by applying environmental friendly means to produce their goods and services. The organizations also consider the safety and wellbeing of its customers and employees by producing quality goods and services and creation of a good working environment respectively. This has enabled such business organization to generate exceptional income and expand their markets globally due to competent employees possessed and attraction of more and more consumers in the market (Bernice, 2009). The success of Sonangol comes from an effective leadership style that promotes democracy in within the organization. The company is focused with improving the economy of the country as well as ensuring that the country’s environment is safe and well preserved. In its sustainability model, the company mixes four vital concepts in an outstanding way and they include sustainable development, corporate social responsibility, stakeholder theory and corporate accountability theory. Sustainable development in an organization balances the need for good economic performance and with social equity and environmental protection (Nelson, 2008). In Angola, there exists strict legislation that governs all the performance of oil and gas producing companies within the country. Any company that is found going against such legislation is duly punished by the law. In its sustainable development, Sonangol ensures that all their operations are in line with the country’s legislation despite that the company is owned by the government. For example, the company utilizes the natural resources effectively and efficiently with no chance of resource wastage. The company has means in place that ensures all their exploration and production activities does not pollute the environment in any way and in case pollution arises, the company applies corrective measures to protect the environment and residents from harm. Each and every business organization in any country has a corporate social responsibility it has to execute in a professional manner. A corporate social responsibility is simply a duty of a business organization to give back to the community by for example contributing to the methods of reducing pollution in the country, participating in charities or helping needy children have an easy access to educational or health and social care services (Kelly, 2002). Sonangol has been very active in performing its corporate social responsibility since it is part of its sustainability model. The organization participates actively in improving and protecting the environment of the country by applying exploration and production strategies that are environmental friendly. In Angola, Sonangol is one of the sponsors of all Aids and Cancer awareness campaigns. The company makes financial contributions to NGOs and governmental institutions that are fighting Aids, cancer and malaria within the country and globally. The company has plans in place that help assist needy people in the society to access social services by helping in the construction of schools, hospitals, transportation and communication networks in the country. Stakeholder’stheory also plays a part in the sustainable model of Sonagal. Stakeholder theory emphasizes that a business organization can only succeed to achieve its goals and objectives by creating good relationships with its stakeholders. According to the theory most business organizations fail in their quest to realize their missions and visions since along the way they did not establish good relationships with their stakeholders. A stakeholder is simply a party whose activities affect the operations of a business organization and vice versa. The top management of Sonagal has strategies in place that enables it establish good relationships with its customers, employees, suppliers, competitors and the state. Sonangol produces quality oil and gas product that meet the needs of their consumers fully who in return stay loyal to the company hence creating a good relationship with customers. The management of the company ensures that all the services it outsources are paid for in the specified time in order to create good relationships with its suppliers. In the company, good systems exist to promote the welfare of all the organization’s employees (Newton, 2009). The remuneration system of the company is reviewed from time to time so as to ensure all employees are well compensated to meet their needs fully. A good working environment exists in the organization to protect employees from any harm as they perform their duties and the good reward system motivates employees to perform exceptionally well. The democratic leadership styles implemented I Sonagal enables the organization to establish good relationship with its employees. Sonangol creates a good relationship with its competitors by using competing strategies that are fair in the market. The organization also abides to the legislation of the country such as the oil exploration and production law, equality law, non-discriminatory lawand the human rights Act. The last part in the sustainable model of Sonagal is the corporate accountability. The company is accountable to its stakeholders in terms of its outputs. In the end of each financial year, Sonangol has to report to shareholders and the public, its environmental, social and economic performance. This corporate accountability makes the organization to be very careful in all its activities. The organization ensures that is has strategies in place that are effective I enabling it generate good revenuesfrom its sales so that it can be able to report improved financial gains each year (Nelson, 20080. The management of the company ensures that the strategies are not only money driven but also considers the safety of the environment andthe public. This makes Sonagal to execute its corporate social responsibility exceptionally well so as to fill in the corporate social responsibility in its annual report appropriately and truly. 3.0 Challenges to sustainability development in Sonangol Climate change- The changing climate in a country affects the sustainability developments of business organizations in such countries.Sonangol aims to satisfy the needs of its consumer fully and generate good revenues from sales as one of its sustainable objectives. Oil and gas exploration and production becomes difficult during rainy seasons (Kelly, 2002). Due to the increasing demand of gas and oil products globally, business has to go on as usual in Sonangol. Working under rainy conditions makes employees of the country to underperform and absenteeism is high during rainy season.This creates difficulties to the sustainability strategy of the organization since the company’s production is less than demand and the organization may be tempted to use unethical ways to meet demand of its oil and gas products. Poor infrastructure networks- Although Angola is developing significantly, infrastructure remains a tough challenge in the country. The roads and communication networks in different parts of the country are very poor. Due to poor roads, the heavy trucks transporting the oil and gas products of Sonagal causes air pollution and traffic jams in roads. Due to the weight of the trucks and loads carried, roads in the country keep on being destroyed and his possess a threat to the sustainability development of Sonagal. Lack of creativity and innovation- For a business organization to be able to grow and expand its operations and markets sustainably, creativity and innovation needs to exist in the organization. The top management needs to work hand in hand with its employees to come up with efficient and effective ways of carrying out the business activities of the organization (Lehman, Ramsey and David, 2000). Sonangol faces a challenge to its sustainable development due to lack of enough creativity and innovation in the organization.It becomes difficult for the organization to come up with new and effective ways of exploring and producing gas and oil in an environmental friendly manner. Incompetent employees- In most African countries, business organizations go for cheap labor. This makes the organizations to have a small possibility of possessing competent employees who will contribute significantly to the sustainable growth of the business organizations (McLaughlin, 2008). Sonangol has incompetent employees in their oil and gas field who rely solely on directives from the leaders of the organization. Since employees play a huge part in the sustainable development of a business organization, it becomes difficult for Sonagal to implement is sustainability strategy effectively due to less skilled employees. Conclusion Business organizations that have suitability strategies find it easier to achieve their goals and objectives than those lacking. Sustainability strategy enables a business organization to focus not only in making profits but also on the preservation and protection of the environment. It enables business organizations to produce quality products and services and in the process attract a large number of customers. Sonangol has developed a good reputation over those years it has been in operation due to its sustainable strategy. The organization produces quality gas and oil products that meet needs of consumers fully and in the process making exceptional sales that result to generation of high revenues. Recommendation For all the operations of Sonangol which is a state owned company to flow smoothly in order to enhance the possibility of exceptional sustainable development, the government of Angola should improve the state of its roads and communication networks. The management of the company should also ensure it has effective recruitment and selection strategies to enable the organization acquirecompetent employees. The employees should be given training opportunities frequently to improve their skills in order to facilitate successful implementation of the company’s sustainability strategy. References Bernice. K., 2009.Effectiveness of Sustainability strategies, UK. Sage: London Kelly. P., 2002. Organizational growth: Developing a sustainable strategy. The business Journal.75, pp. 117-135 Lehman. F., Ramsey.B. and David.S., 2000.Performance in oil and gas companies.3rdedn. London: Longman. McLaughlin. E., 2008.Strategies of sustainable growth. Sage: London Nelson.T., 2008.The handbook of oil companies’ performance.2nd edition.Cullompton: Willan publishing Newton. K., 2009.Analysis of oil companies’ performance in Africa, UK. Sage: London www.sonagal.com Read More