Halliburton's Success Story - Essay Example

? Halliburton Halliburton is among the leading oilfield services provider in the world. The firm provides construction and engineering services to the energy industry, infrastructure companies, and government entities around the world. The firm operates in over 70 countries across the world. With headquarters in Houston, Texas, the company has an employee base of 51,000 workers (Griffin, 2007). To determine the position and performance of the company in the industry, below is a SWOT analysis, which includes the strengths, weaknesses, opportunities, and threats that the company faces in its market of operation. SWOT Analysis Strengths As earlier mentioned, Halliburton is among the leading players in the oilfield services provider in the world. This gives the firm a strong market position and a considerable market share. Moreover, the company shows strong financial performance as far as their financial reports and statements are concerned. The company offers diverse services and products, thus has a diverse stream of revenue. Due to its early establishment and expansion to over 70 countries, the company has a strong manufacturing capability, as well as an established research and development department capable of carrying out comprehensive research on oilfield related concerns (Data Monitor, 2008). Weaknesses Among the most significant weaknesses of the company are litigation issues. In recent years, Halliburton has seen several lawsuits regarding its performance and other work related issues (Data Monitor, 2008). The latest of these charges that Kellogg, Brown, and Root, a subsidiary of Halliburton, refused to pay over $20 million for food and other work carried out by Morris Corporation and Kuwait Company for Process Plant Construction and Contracting (Bruno and Valette, 2001). This, among other charges, may effectively paint a bad company image to the company. Another weakness of the company is the subjection to criminal investigations, and the impairment of gas and oil properties. Opportunities Due to its strong establishment and financial prowess, the company has numerous opportunities for expansion, including acquisitions. Moreover, North America has an ever-increasing demand for natural gas. This, combined with the positive outlook for the gas and oil sector, provides the company with opportunities for growth and expansion. The company recently opened a second corporate headquarters in United Arabs Emirates, which is a successful move considering that UAE is among the leading oil exporters in the world (Halliburton, 2007). Threats The company is among the leaders, thus all competition is directed towards the company. In addition, the recent financial downturn and slow economic growth in the European Union and the US may adversely affect the operation of the company. Lastly, environmental regulations are becoming stricter globally, thus affecting the company’s operation (Bateman and Snell, 2007). Competitive Business-level Strategies Halliburton has grown in leaps and bounds to top the oilfield service industry and maintain its competitiveness despite significant challenges. The company employed several strategies and streamlined their operations to reflect their objectives. The most evident business-level strategy is setting up business in the area of experience and knowledge. Experience and knowledge in the business area is very crucial to the success of a business startup. Indeed, most businesses fail in their initial year of operation due to the limited knowledge and experience of the proprietor. The founder of the company, Erle Palmer Halliburton, has considerable experience and expertise in the oilfield industry before venturing to start a company (Griffin, 2007). His greatest asset was not capital, but experience and knowledge. In addition, the company was unyielding to initial rejection. In all industries, companies face rejection in their initial years of operation. Indeed, all successful businesses experience such occurrences. In essence, the market is often hard to break due to the existing companies. Nonetheless, a company must not be discouraged. Initially, Halliburton faced rejection in Burkburnett, but the company moved on to Oklahoma where it became successful. Another strategy employed by the company is the provision of quality products and services to capture a large and consistent patronage. In the early stages of the venture, Halliburton offered quality services and products to its customer base, thus rising demand for its services. For a company to experience monumental success and subsequent expansion, it must strive to offer quality products and services (Bateman and Snell, 2007). This enables the company to build trust and confidence among the customers. The integral strategy for all businesses is to identify the competitive advantage in the industry of operation. It is important for a business to assess the business environment comprehensively and determine the special abilities or skills that create higher value products and services more efficiently and effectively. Such an assessment enables the company to develop and utilize the abilities and skills more, and enable the company to remain competitive and satisfy the needs of the customers. Halliburton discovered that its competitive advantage was the ability to develop specialized equipments and process that reduce cost (Halliburton, 2007). This made the company indispensable in the oil service industry. In most industries, competitive advantage results from product and service differentiation, a key element of Halliburton. Another business-level strategy employed by Halliburton is legal protection of work, or patenting. Regardless of eth field of operation, it is important to protect the software, books, invention, and other intellectual property through legal documentation. Patents allow businesses and companies to make money on inventions, as it gives the patent holder the sole right to produce the items for a specified number of years before other people are allowed (Data Monitor, 2008). The management of Halliburton made a smart move by patenting the inventions of the company. This enabled the firm to enjoy income for a considerable time by providing oil well cementing services, either by direct hire of their services or through renting out their patented equipments to other companies. Either way, the company realizes some revenues. The last and most fundamental business-level strategy employed by Halliburton is the investment in research and development. Regardless of the industry, a company must posses some unique capabilities and characteristics that enable it to remain competitive and command a considerable market segment. The products, services, systems, and processes of the company must be difficult to duplicate (Halliburton, 2007). To achieve this, a company requires a well-funded research and development department. Indeed, an organized and efficient research and development department should be a priority to all companies that desire to remain on top of their industry, as it is the pivot point of entrepreneurial success. The dominance and success of Halliburton in the oilfield service industry is attributable to the success of its research and development unit, which receives considerable funding. As the company grew, the department made groundbreaking innovations in developing processes and equipments that increased the demand for the company’s services and products (Bruno and Valette, 2001). To date, the company still enjoys revenues from these innovations. References Bateman, T., and Snell, S. (2007). Management: leading and collaborating in a competitive world (7th ed.). New York: McGraw-Hill. Bruno, K., and Valette, J. (2001). Cheney & Halliburton:Going Where the Oil Is. The Multinational Monitor, Vol. 22(5). Data Monitor. (2008, November 2008). Halliburton Company SWOT ANALYSIS. Retrieved on May 26, 2012, from www.datamonitor.com Griffin, W. (2007). Principles of Management, Student Achievement Series. Boston: Houghton Mifflin Company. Halliburton. (2007). Halliburton. Retrieved on May 26, 2012, from http://www.halliburton.com/Default.aspx?navid=338&pageid=713 Read More