16-10-2012, 12:50 PM
ONGC India: In Search of a New Growth Strategy
ONGC India.docx (Size: 24.07 KB / Downloads: 65)
Problem identification:
If ONGC should continue with its diversification plans (forays into refining, retailing, and global markets) or stick to its vision of becoming a leader in E&P activities
Alternative:
1. ONGC continues with its plan of diversification into different forays starting from crude cycle, the refining cycle, and the product cycle (Risk Hedging)
2. ONGC stands still in achieving heights with its core competency, E&P activities
Recommendation:
I would recommend ONGC to continue its diversification itself into various energy portfolios. Considering that the Exploration and Production activity involves a lot of risk, it becomes important for an upstream company to undertake vertical integration as a business strategy.
The following are the advantages of integration in Energy Business
1. Focus on domestic and international oil and gas exploration and production business activities
2. Provide value linkages in other sectors of energy business
3. Create growth opportunities and maximize shareholder value
Implementation/action plan:
1. Should leverage competitive advantage by achieving excellence in R&D and Technology (more efficient central library)
2. For its employees : Imbibe high standards of business ethics and organizational values, Foster a culture of trust, openness and mutual concern to make working a stimulating and challenging experience for its employees.
Considering ONGC is an NOC, and stands first for socio economic benefit, it should establish certain policies do give it a straight cut competitive advantage:
1. The right of first refusal on any onshore oil and gas rights, interests, or assets offered for sale in India;
2. The right to ask ONGC to enter into direct negotiations with the government for rights to any unlicensed oil and gas acreage in India without a competitive tender process; and
3. The right to acquire those rights from NG KMG.