RasGas Company Analysis - Case Study Example

RASGAS COMPANY ANALYSIS Student’s name Course & code Professor’s name University City Date Contents 1.0 Introduction 3 1.1 Scope 3 1.2 Purpose 4 2.0 Literature 4 2.1 Strategic Change 5 2.2 Strategic Leadership 6 2.3 Provision of Strategic Vision 6 2.4 Ability to Identify the Need for Change and New Strategic Response 6 2.4 Strategic Management 9 2.5 Creativity and Innovation in Organization 10 3.0 Strategic Decision 11 3.1 A case study of RasGas 11 3.3 Analysis 15 4.0 Conclusion 18 RasGas Company Analysis 1.0 Introduction RasGas company is globally renowned as one of the leading premier integrated liquefied natural gas (LNG). Located in Qatar, having its headquarters in Doha, RasGas company production activities involve extracting, treating, liquefying and exporting the LNG product globally. The company has an enviable reputation of having a functionality technique and environment that produce safe and reliable products hence transforming the regional available resources into a key component of the global energy mix. The company has a great focus on the continual production of the natural gas because the product is touted as the fuel of the future due to its clean burning nature hence, the company has forecasted on a positive outlook of the higher demand of the product in the near future. 1.1 Scope The main objective is to identify and evaluate the leadership of the strategic change in RasGas company regarding the creativity, innovation, and strategic change. As such, the strategic leadership and management change within RasGas company covers a wider scope through analytic and the process. As such the top organization officials tend to focus on interpreting the expected market and its needs, the identified market needs to be placed in line with the organization strength, the core purpose, competence of the organization and its workforce from the employees. For successful complement implementation of a strategy, an execution needs to closely relate with strategy plan or exceed the strategy plan (Floyd 2014). Human dimension covers a wider scope in leadership and management of strategic change. Innovation and creativity should be involved by all pertinent people of the organization irrespective of the hierarchical management or lean management system positioned in place. As such, the leaders need to embrace collaborative ideologies when constructing the strategic change with all employees and the vital stakeholders for the organization. The involved team needs to focus on the growing knowledge and the skills regarding the strategic thinking. The technique enables the organization to become more proactive on product development, service delivery, and cost effectiveness and have the ability to act faster in the changing market, meeting customers demand and outshining competitors (Avolio 2015). 1.2 Purpose Companies change management aligns with changing environmental aspects purposeful for the success. The technique structures new elements within the organization which might include the releasing of new products, the growth of the company size and improving on the company revenue and resources. As such, through the implementation of the new changes, the company is likely to encounter resistance due to slow adaptation and utilization of the new systems and approaches by the employees. As such, research recommends that when companies realize the reasons for leadership and management strategic change, it is important to put measures incase resistance from employees are manageable (Jackson 2012) 2.0 Literature Currently, companies are operating in an increasingly complex arising environment after which the regular adaptation to the environment change is an imperative. The attempt by the functioning organization to align its mission, goals and the strategies with the external environment is the essence of the intended strategic management which acts as the domain of strategic leadership. Organization change is spearheaded by the strategic change which implies the change in strategy, mission and the vision in the organization (Hofstede 2013). As such, the strategic change within the organization results in other organization changes in technology, structure and the culture functionality of the organization. For an example, for the organization to restructure a new strategy, the leadership team of the organization might focus on modifying the existing department structures, the modes of coordination and division of individual’s responsibilities, changing the known common corporate values and the working methods that contribute towards organization achieving its basic goals. Faced with such situation within corporate world, companies are obliged to focus on its operative capacity and the speed of adaption based on the environment which is often presented as a limiting factor for companies strategy change (Franke 2013). Against a backdrop of increasing globalization, deregulation and the continual rapid pace of the current technological innovation, the primary aspect of management today is the leadership of the organization change. 2.1 Strategic Change Companies need to structure on how to become distinctive and gradual improvement on the ability of service and products to its customers and stakeholders. As such, companies have to continue having explicit strategies and goals so as to realize the new opportunities. As such, organizations require choice, trade-offs, rethink the current operating values, reorient the organization and fit for a successful strategic change. Organization strategic change arises when new CEO is brought into an organization with a mandate of change from the Board of Directors based on the signed agreements between the new CEO and the Board (Javidan 2013). 2.2 Strategic Leadership Decision made by strategic leader determines the success of the company. As such, the responsibilities are highly focused on top organization managers, middle managers, and low-level managers through monitoring the internal and external environments, imperative actions towards building company resources and capabilities, truck industry, competitive trends, identifying new market opportunities, identifying the possible business threats and continuous development of the organization visions. Company leadership determines the organization near-term performance as well as designing new conditions that will ensure the organization future survival. Through varied research, the concept of leadership and strategic change is determined by the role and the necessary skills among company leaders for the better management of the type of transformation which includes: 2.3 Provision of Strategic Vision Company leaders are expected to develop mental visions for the organization which poses possibility and a contributing desirable situation for the business. The critical part is that the vision needs to express realistic, credibility, and an attractive view of the future of the organization. Contrarily varied researches imply that having the vision is not only the management way of thinking about action while the author attributes towards flexibility, creativity, good judgment in daily life experience and having business knowledge (Anataraman 2013). 2.4 Ability to Identify the Need for Change and New Strategic Response Environment plays a crucial role the survival and growth of the company. The majority of the companies encounter turbulent environment hence challenges arise to predict or influence the changing and complex environment. As such, due to the rising changing environment, it is advisable for the companies not to practice traditional strategy which is deemed to be ineffective, none innovates and the non-creative hence contributing towards the strategic rigidity. The scholars advocate for the companies to develop its capacity to have the ability of changing the context through its available management systems, procedures and the organizational structure (Shamir 2013). As such, the leaders are expected to be creative because the creativity plays an important role regarding the organization quality decision making; having the ability to propose innovation solutions regarding the decision-making process which might include the development of new organization opportunities and the ability to diagnose problems (Dening 2013). Communicate well the limits of the old and new strategy and the merits Organization leaders are expected to explain to staff the merits expected in the strategic change scenario and the need for change. The employees within the organization easily receive genuine information through communication hence the strategy is to guide employees towards choices to be made. Good leadership positions itself when company leaders stimulate the enthusiasm for change in organization functioning through communication. In order to achieve the basic objective, organization leaders need to use simple, accurate, clear, and fascinating and the convincing message for the company officials during communication process (Hymowitz 2012). The below diagram represent a good leadership and management skills facing a strategic change within an organization. As such, the organization tries to meet the customer’s needs and demands with better products and services put the organization as a critical necessity. 2.4 Strategic Management Globalization continues to make the environment much more complex and uncertainty of the future expectations hence make strategic leadership management is more difficult. The benefits of having the strategic management in the organization are its capability of setting decisions and actions that are used towards strategic management change. As such, the company achieves the competitive superior fit towards the operating environment so as to meet the organizational goals (Graetz 2014). Additionally, the strategic management focuses on how to achieve the organization listed visions (Norburn 2014). The leadership of a company through decisions and action were taken determines the achievement within strategic competitiveness and the organization earning above the average returns or the failure to achieve (Miles 2012). Strategic management begins with strategic visions whereby the company expectations in the near future are in place depending on the current environment. As such, it is the vision statements that contributes towards the understanding of the mission statements through culture, purpose, believes and purpose for the organization. The mission statement lays the foundation for the organization scope regarding the operation in products, services, and market terms. Strategic management analyzes either internal or the external environment. For the company to thrive, the strategic leaders must be skilled at managing complexity in external environment. As such, the management strategy change needs to focus on customers concerns, bargaining power between the customer and supplier, various actions being used by competitors, the existing market trend, economic conditions, government policies and technological development. In the internal environment, the strategic management team needs to focus on the current organization market strength, financial position; culture and the structure hence determine the possibility of strategic change. 2.5 Creativity and Innovation in Organization Organization growth and development is not easily achieved without additional innovation and creative thinking (Chakravorti 2015). The innovation and creativity focus on product and services from the company hence the firms become much more glamorous. As such the strategic change is usually regarded as an engine driving growth and development of an organization. The approach enables the company to have a winning performance in comparison to the similar organization through the competition on quality and not prices, the denomination of the market niche, having a competitive strength through financial and operating controls (Butler 2014). Additionally, organizations employing new strategies, the organizations are likely to achieve a completive advantage through acts of innovation. The innovatory process towards the creation of economic based organization that contributes towards new products and services offered by other operating suppliers regarding the production and marketing strategic plan (Drucker 2012). Companies having best-strategized leadership are more likely to make imperative strategic changes as a top priority towards the organization through creativity and innovation. Varied researches indicate the current environment pose all organization to engage in competitive activities purposefully to be distinct among the organizations. As such the organization focus on new products and services hence, organizations are regarded as critical necessity. Organizations that lack leadership techniques regarding management strategic change encounter the possibility of not surviving in the market environment. As such leadership within an organization tends to be continuously creative and innovative to remain relevant to the market and continuous tapping of new customers and retain loyal customers. 3.0 Strategic Decision Studies conducted indicated that top leaders within organizations have a strong influence on the corporations profitability achieved (Scherer 2013). Additionally, if the employees pose commitments and their satisfactions within the organization, the staff members are likely to indicate the possibility of being motivated to engage in creative thinking and innovation practices hence realizing the organization objectives (Simon 2012). 3.1 A case study of RasGas Being one of the world’s premier liquefied natural gas companies, RasGas has gained an enormous reputation for its reliability to supply of liquefied natural gas that is safe to use. The company has steadily moved from being a regional provider of liquefied natural gas to providing for various countries across the world. Established in 2001, RasGas is a joint company managed by the two companies Qatar Petroleum and ExxonMobil RasGas Incorporated, which merged (Al-Thani, 2002). Located in Qatar, RasGas oversees the management of seven liquefied natural gas trains. LNG is the company’s chief product. It is exported to overseas, and the production capacity amounts to an approximate of 37 million tons a year. RasGas additionally manages the operation of two gas production facilities, shipping contracts, and two helium production facilities. The company has made Qatar the largest exporter of liquid helium through it facilities that produce to a capacity of 1.96 Bscf per year. RasGas has strategically positioned itself for growth and development, engaging in practices that have made it a global provider thus contributing to the strong economic development of Qatar as a country. Among the countries that RasGas provides to are those located in Asia, Europe, and the Americas. Its reputation as a reliable liquefied natural gas company has led to the trust of energy companies in other regions in it. RasGas has promoted its nation by providing employment for individuals in the country and for other nationals from various countries. Apart from simply operating in energy production, the company engages in Corporate Social Responsibility that covers for the community, health, education and the environment. These pillars of responsibilities are aligned to the Qatar Vision for the year 2030 thus reflecting the strategic direction of RasGas Company for the future. This connection with the society of Qatar provides RasGas an opportunity for a structured framework for its corporate activities with the citizens within the regions in which it operates and outside. The vision of RasGas is to be a world-class supplier of global energy that strives for excellence. The mission involves the development, production, and sale of hydrocarbons. The mission further emphasizes on the production and development of these hydrocarbons in a safe and responsible manner, taking enough care to observe the welfare of the Qatar people and resources. Additionally, RasGas focuses on the satisfaction of its customers, both global and regional and strives to maximize its shareholder value. Production and delivery of products in a safe way that is reliable to a platform of customers across the globe has been the winning proposition of RasGas. The values that RasGas stresses on are people, safety, integrity, excellence and general interest. People are essential in any organization, given their skill, input and the creativity to the organization (Pettigrew, 2014). They additionally portray the image of the organization. RasGas is thus keen to listen to its employees as they are central o the success of the company. The concept of safety has in recent times become of global importance due to the rise of human rights awareness and institutions overseeing the implementation of these rights (Haufler, 2013). Safety in itself is not limited to human beings only. The environment needs to be protected and everything in it especially the natural resources. The company assets also need safety. RasGas thus withholds high standards of operation in order to protect its people, its assets and the environment. The third value insisted upon by RasGas is integrity. Integrity involves the upholding of honesty and strong moral principles and uprightness (Bauman, 2013). Integrity is very important in any given organization as it increases the trust of the customers in the organization thus ultimately making them loyal (Sánchez- Apellániz et al., 2013). Given its observance on ethics, RasGas has helped build the trust of its employees. They, in turn, portray a very positive image to clientele and stakeholders. The company strives to achieve excellence in every aspect of its operation and give its vision; excellence has to be upheld to make the company world class. The last value focused on by the company is general interest. All the employees, the management, and the shareholders share a common interest in ensuring that the company is run successfully. The production of gas naturally involves processes that emit poisonous green house gases to the environment (Srinivas, 2016). The battle for environmental safety is steadfast globally given the extreme effects being experienced due to global warming. Most companies have been legally required to ensure that their operations do not harm the environment to ensure sustainability. RasGas has committed to the environment through implementing a management system that is comprehensive and which controls the health, safety, and welfare of people, property and the environment. One such process that RasGas implement is the use of vapor recovery systems which emissions that are flared and vented. Additionally, the use acid gas injection reduces the emissions of gasses such as sulfur dioxide and carbon dioxide. One current practice being strategically implemented is the sustainable approach to management and operational activities in a company. RasGas Company applies a sustainable approach to its planning strategies and operational activities. The pillars that help meet this approach are the improvement of performance, making strong relationships, ensuring the integrity and practicing sustainability. Through improving productivity and performance, resources are well utilized, and waste is reduced. Continuous processes with standards of operations that are dutifully followed lead to profitability and provide a competitive edge for the organization. Environmental impact is equally reduced due to the management of waste. The effect is such that there are more social and economic benefits. Strong relationships make the foundation and management of organizations easier. All stakeholders of an organization need to communicate and trust each other. This kind of rapport reduces friction, helps members to address mutual needs and thus support sustainable development. Integrity in RasGas is carried out through maintaining standards that are high in all operations and conducting their business with honesty. The integration of sustainable practices furthermore is provided for through accountability and implementation of goals that meet the requirement of the social, economic and environmental standards. The next section analyzes various companies and their leadership and management of strategic change. 3.3 Analysis Strategic change encompasses a bigger plan in a company where the objectives and the vision of the company may need to be changed (Hill et al., 2014). Given its progress and effective management of practices, RasGas boasts of being an international company providing quality and reliable services to its customers. Global forces, however, have various effects on the way in which businesses operate. Given the nature of liquefied natural gas, the operation is basically global as it is linked with tension that is geopolitical in nature, global warming and global recession (Bradshaw, 2013). The influence is great on the LNG industry players thus calling for their impact and strategic approaches to deal with the situation. The location of energy reserves often brings about political debates due to battles to control the regions and thus profit from the energy resources (Kubicek, 2013). There has been a continuous political risk with situations such as the sharing of energy reserves. Iran, for instance, shares its reserves with Qatar. Iran has complicated the situation through the positioning of its nuclear program at the very base of the gas reserve. One result of this program is that most employees working at the gas reserves in Qatar have resulted in quitting work. The absence of an adequate workforce is bound to influence the operations of the company. RasGas as a company may not be in a position to amicably discuss with Iran on the disadvantages of having a nuclear program on a base with constant human presence. The changes that can be implemented include automating the processes at the reserve to sustain human life. Global concern on the emission of green house gasses has additionally led to the changes in operations and use of certain raw products to develop hydrocarbon (Srinivas, 2016). RasGas had earlier changed some of its processes to provide cleaner fuel and protect the environment. One of the processes that RasGas company implements is the use of vapor recovery systems which emissions that are flared and vented. Additionally, the use acid gas injection reduces the emissions of gasses such as sulfur dioxide and carbon dioxide. These strategic changes engineered by the management of the company has helped RasGas maintain its reputation as a reliable company providing safe liquefied natural gas. The company needs further operational changes to provide completely clean fuel and protect the environment. The status of the world’s economy is mercurial resulting to a great financial risk to the LNG companies, given that they are comprehensively global in nature (Goldthau, 2012). Based on the status of the world’s economy, the demand and supply of liquefied natural gas are directly influenced. The stages in the economy affect the pricing in the industry and can bring them very low resulting in abrupt losses and complications in company plans (Goldthau, 2012). RasGas has adopted a strategy where they enter into long term contracts with their customers. This has largely coated the crises that follow such changes in pricing. The strategy is additionally being adopted by other companies in Qatar. This particular approach provides cash flows that are stable and make it easier to predict business. The LNG industry requires intensive use of capital and technology (Kubicek, 2013). These high costs have been of great help in limiting competition since suppliers are few. The invention of technology that would make the process cheaper is, however, a threat to these companies. RasGas and other companies may require more research and development to deal with the threat of new entry form other companies due to such inventions. Despite the fact that the threat is low due to the intensiveness of skill and running of the organization, there remains increasing competition from current players like Nigeria and Australia and new players like Saudi Arabia. The factors in play require a strategic change in leadership and management of RasGas and other LNG companies in Qatar. The adoption of a focused approach to markets like India and China is likely to use less effort with higher pricing. One strategy that RasGas could use is the creation of a marketing team consisting of professionals who would help the company understand its markets thus serve them more effectively. There is a need to increase the product portfolio of the company by developing and processing other products such as liquefied petroleum gas (He, 2014). Other markets such as the Asian market substantially use rich gas. The production of this gas, therefore, is bound to gain loyalty from this particular market. Lowering of prices always attracts customers thus gas companies can utilize this strategy to gain market entry in new locations. Despite their advantages, the strategies used also pose certain risks and needed to be carefully considered. A cost leadership strategy, for instance, may be at the expense of other factors that are equally or more important in the organization thus creating a negative compromise (Benn et al., 2014). The company may lose its focus in such as pursuit and end up making extreme losses. Product differentiation strategies do bring about sales and more profit (Simons, 2013). The downside, however, could mean that competitors copy the same product that has been differentiated and successfully see it through thus making the company that pioneered it lose out. Given the nature of the industry and its products, differentiation may also not act as effective as the customers might fail to see the uniqueness in the differentiated product. If it is avoidable, gas companies should refrain from using this particular strategy. The focus strategy is additionally more suitable to a smaller market scale. The nature of the liquefied natural gas companies is large scale, and the use of the focus strategy may prove to be risky. The struggle between adopting to change, implementing new solutions and managing the risk created by the implemented plans is a continuous challenge faced by managers of gas companies. There is no existence of one simple solution that could balance all processes and operations and make the running of the organization smooth. The strategic change brings about confusion if not managed in a proper way. The constant changes in the political, economic, social, environmental and technological fields show that management needs foresight with leadership that is intellectual enough to navigate through dynamic environments. 4.0 Conclusion A company is naturally bound to face various kinds of changes in their life cycle. These changes could either be internal or influenced by external forces. Strategic change has so far proven to be the most suitable approach with manageable risk towards dealing with instability. The continuous shifting of an organization’s objectives and vision for greater results helps to manage effectively change. Globalization is ever increasing; there is heightened deregulation and dynamic development of technological innovations which subsequently task the leadership of any organization with the duty to provide for changes in the firm. An examination into the role of leadership shows that it constitutes the most imperative starting point for the pointing out of factors that are important in institutionalizing change. When the workers lower in management’s hierarchy view the morale of the leadership in implementing the change, they too find it easy to follow in the same direction. The case study showed that RasGas has a value of common interest where all the stakeholders, including the employees, work towards achieving the same company goals. An initiative form the leadership is easily carried out thus making implementation of strategies easier. The company has been able to handle change effectively despite global forces and still continues to implement new processes and procedures that would benefit it. Strategic change comes along with its challenges. 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Srinivas, R.K. and Murali, R 2016, ‘Performance and Emission Analysis of Gasoline Blended Hydrogen Gas Fuel Engine’, International Journal of Applied Engineering Research, Vol. 11, no. 4, pp.2658-2662. Read More