Steeple Analysis of the Energy Industry - SOCO International - Case Study Example

Steeple Analysis,SWOT Analysis, Balance scorecard and Rich picture Steeple analysis of the energy industry Theenergy industry is multidisciplinary in the way it operates. This industry is a key driver to the economies of the nations that have oil and gas as natural resource endowment. It demands a diverse set of human skills, technology and mechanical capabilities. In the recent times, there has been a surge of demand of products from the energy industry. The available resources are unable to cope with this demand effectively. The companies operating in this industry have to explore remote areas in search for additional resources. In steeple analysis, the issues of concern are political, economical, socio-cultural, environmental, legal and ethical (Cadle et al, 2010, p. 27). In an analysis of the energy industry, it is critical to understand how each of the above issues impact on the industry. This analysis identifies the external factors that impact on the energy industry. Political factors have an effect on the energy industry. This is because political stability creates conducive environment for exploitation of oil and gas. Further, determination, and formulation of policies governing the energy industry is political. Therefore, politics play a vital role in the energy industry. Politics concerning the energy industry haled to conflicts in most countries that have oil reserves. This makes the industry sensitive issue concerning exploitation oil when mishandled they negatively impact on the energy industry. The political issues surrounding the energy industry get fueled by the economic benefits of oil and gas. The economic factors affecting the energy industry are double facet (Cadle et al, 2010, p. 56). The first facet is the cost of exploiting and processing energy. The energy industry is capital intensive and requires a high investment. The other economic face is the financial gain that countries reap from the energy industry. The nations endowed with oil resource have their economy dependent on oil. However, due to inequity in resource distribution it is only a segment of the population that enjoys the benefit of this resource. The demand for energy is rising due to increase in the world population, and growth of countries’ economies (Hoffmann 2008, p. 26). This has led to an increase in oil prices. The increase in demand makes the oil companies seek to increase the supply. This has led to advance technology in the mining of oil. Moreover, the companies explore the new site for potential oil deposits. Technological advancement in this industry has become critical for efficient operation and meeting of market demand. In the expansion of the energy industry, environmental considerations are necessary. The energy industry contributes to pollution of the environment through emission of carbon dioxide. Nations are now sensitive towards environment sustainability (Newlands and Hooper 2009, p. 134). This touches on the energy industry as they have to process their product in an environment friendly way and offer environment friendly products. The environmental sensitive product processing is costly and has a net effect of increasing the cost of energy. The consumer of energy bears the high cost. This has an impact on the consumer’s socio-cultural environment. This is because the consumer of energy has to bear the high cost or reduce consumption of the energy product. This brings a dilemma between the government which has to care for the welfare of the people, and sustainable environment. Further the legal procedure in the energy industry impact on the industry. This is because there are lots of regulations that the industry has to comply. Despite the challenges that are facing the energy industry it is one of the vital drivers of achieving industrialization. This is because virtually all machines use one form of energy or another. The depletion of non-renewable sources of energy is an issue of concern (Hoffmann 2008, p. 39). However, with technological advancement we can slow the consumption of these energies, and develop the renewable sources of energy. Developing the renewable sources of energy which are environmental friendly will solve the problem of energy and environmental contamination. Rich picture of SOCO International. The rich picture of the SOCO international shows the problems and challenges that the company is facing. It illustrates the centralized mode of management of this organization. The headquarters of this organization make the major decisions. Further it illustrates the four subsidiaries of the company. The communication channels for the organization are upward and downward. Rich picture of SOCO international SWOT Analysis of SOCO International SOCO international has to have a plan and marketing strategy for its products. An analysis of the organizations strength helps in being able to optimize on the opportunities available using the strength. Every successful business has to know the threats that the business is facing. It is through this knowledge that a business deals positively with the challenges. Acknowledging of an organization weakness is the first step towards finding a solution to the weakness. However, for an organization to accept their weakness they have to know that these weaknesses exist (Manwani 2008, p. 84). A SWOT analysis of SOCO international will help to understand this organization and it survival in the competitive energy industry. The diagram below is a SWOT chart that will assist in the analysis of SOCO Company by answering the questions in the table. SOCO international is an organization that deals in exploration and production of oil and gas. The organization has its headquarters in London. It operates through subsidiaries which are in Congo, Vietnam and Cabinda. It has an interest in exploration of potential oil reservoirs in South East Asia and Africa. This company has been successful in the energy industry. Since its inception in 1991, it has been able to operate profitably. The strength of this organization is in proper management. It is run by a board of directors who make major decisions for the organization. The board constitute of people who have the organizations interest at heart, and are adept at management. The company has been making high profits, which attract investors. Thus, the company has sufficient funds to invest in exploration of potential oil deposits. The company should use its monetary might to its advantage. The company participation in the stock exchange gives it credibility. This assists in marketing of their products and rising of finances. SOCO international has not expanded its level of employment. The organization has a limited human labor. This slows down the rate of expansion of the business. Further, the organization is facing opposing from environmentalist in its expansion program. This is a weakness because it tarnishes the image of the organization, making the organization seem like it is not sensitive to environment sustainability. This is seen in the move by the company to explore oil in Congo forest. The depletion of oil deposit is a threat to this company. This is because it is dealing in oil and gas which are non-renewable resources. The evolving policies in the energy industry are threatening the profit margins of the organization. This is because the policies require the use of costly modes of energy processing (Bowhill 2008, p. 38). The energy will be environmental friendly but will raise the cost of production. Competition from other oil companies especially the multinational companies is also a threat. The energy industry holds a potential to make high profits (Manwani 2008, p. 72). It is this opportunity that the company should optimize. There are many growing economies that will lead to high demand of oil and gas. This means that the market for oil products is expanding. Further, increase in population leads to an increase in the use of automobiles. Thus, the consumption of oil products will remain high. The time lag between developments of alternative sources of energy gives this company a period in which to enjoy high profits. The SOCO Company should be able to employ their strength in taking of the opportunities available in the energy industry. Further, the company can overcome the threats and weakness by being lucrative in the business (Manktelow 2005, p. 96). SOCO as a company has to comply with the regulations and policies set for the energy industry. This will help to avoid litigation case that could have a damaging effect on the operation, and expansion of the business. Balance scorecard of SOCO international Simple balance scorecard SOCO Company needs to have a Balance scorecard. This is because it is a valuable tool for management in setting of strategy. It is through this that the organizations clarify their vision and a way to achieve the company’s objective. The Balance scorecard helps in providing feedback for the internal process of a business. Further, through the Balance scorecard a business can measure external outcomes. The value of SOCO as a company is dependent on its ability to innovate. The energy industry is dynamic. Therefore, for this company to cope with this changing environment it must be able to learn new technologies. The company should improve the management and the skills of the human labor line with market demand. In this case, SOCO should adopt processing methods that reduce toxic emission to the atmosphere, thus, reduce pollution of the environment. It is the presence of customers that sustain SOCO international. This is because it is a business that involves selling of products. Thus, customer satisfaction is vital for the business process (Newlands and Hooper 2009, p. 188). The vision of the company is to be the market leader in satisfying of customers. This will increase the market segment of the company and the profit levels will surge. The balance scorecard through customer feedback helps to ensure that the quality of services and goods the company is offering meet consumer needs. The business process is responsible for consumer satisfaction, and that of investors. SOCO Company works toward supplying of quality products. The internal processing of the products enables this to be possible. In taking care of the employees, their motivation levels remain high, and the outcome of their work is excellent (Manktelow 2005, p. 102). This, in turn, leads to contentment of the customer. The business operates in a profitable way making the investors feel the worth of their investment. It is through this operation that SOCO Company has been able to attract financial investment in their business. The balance scorecard analysis of the customer, learning, financial perspective and business process, is imperative in the achieving of an organizations goal (Bowhill 2008, p. 22). The success of SOCO Company can be seen to arise from proper implementation of the organization’s goals. This is possible when there is proper coordination in an organization. The business process has to be in line with the financial perspective of the business, and at the same time have a consumer orientation. This way all the participants towards an organizations success benefit. Conclusion SOCO Company improves its performance by doing the above analysis. This is because they are able to understand the larger context of the energy industry in which they operate. In addition, through a SWOT and Balance Scorecard analysis the organization can make internal adjustment increase their profits. An organizational evaluation of the external environment helps the management in making decisions on organization expansion program (Newlands and Hooper 2009, p. 236). Bibliography Cadle, J., Paul, D., & Turner, P 2010, Business analysis techniques: 72 essential tools for success. London, British Computer Society. Manwani, S. 2008, IT-enabled business change: successful management. Swindon, British Computer Society. Cadle, J., Paul, D., & Yeates, D 2010, Business analysis. London, British Computer Society. Hitt, M. A., Ireland, R. D., & Hoskisson, R. E 2011, Strategic management: competitiveness & globalization. Concepts.Mason, OH, South-Western Cengage Learning. Manktelow, J 2005, Mind tools essential skills for an excellent career. Swindon, Mind Tools. Analoui, F., & Karami, A 2003, Strategic management in small and medium enterprises. London [u.a.], Thomson. Newlands, D. J., & Hooper, M. J 2009, The global business handbook: the eight dimensions of international management. 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