10 slides due to 12 hours
Running head: FINANCIAL OPERATIONS STRATEGIC OPERATIONS 1
FINANCIAL OPERATIONS STRATEGIC OPERATIONS 4
Hello Deeran:
Thanks for submitting your Strategic Analysis report for the Sinopec Group. You presented a very good report and analysis of this company’s strategic approach to gain and retain competitive advantage. Excellent mention of the company’s challenges to penetrate international markets. The financial analysis is good and the graph supports the assessment.
The recommendations for improvement:
· There is a statement in the financial analysis that contradicts the graph trend. See comment embedded.
· Some APA formatting corrections
Financial Operations Strategic Analysis
Deeran Anderson
University Of Phoenix
STR/581: Strategic Planning & Implementation
Roberto Cordero
January 11, 2021
Financial Operations Strategic Analysis Comment by Cordero:
The establishment of the Sinopec Group in 2000 was triggered by the need to create a leading brand in the China oil industry that would also become a global leader. The Sinopec Group to attain this great mission has been dealing in different products and services. The sole purpose of diversifying products and services is to target as many clients in the Chinese and global market as possible a mission that has only been partially attained (China Sinopec, 2020). It is believed that the reason why the Sinopec Group does not feature in the top league is due to different challenges like immense competition from other global competing brands among many other production factors. These challenges have affected the manner in which the Sinopec Group operates financially since in most cases, the company does not manage to attain financial goals set on an annual basis. For instance, in 2016, the company has a target of $300million but only managed to attain $275million; in 2017, the company had a shortfall of $9million and $7.5million shortfall in 2018. A greater challenge was recorded in 2019 as the overall performance almost equally to the 2018 performance which means that the company recorded little to no progress in financial performance. Comment by Cordero: Good comment Deeran. Competing in the global marketplace is like multiplying competition elements by 10-fold factor. In every country, there will be competitors to fight against. Comment by Cordero: The graph inserted here shows steady growth. What is the difference?
Current financial plans Comment by Cordero: With the exception of prepositions and conjunctions, all first letters in the first and second-level headings are capitalized.
Currently, the company has a number of financial plans being used to attain company goals and objectives. Some of these plans are;
a. Production and exploration
The company ensures that production and exploration incurs lowest cost possible in order to retain competitive prices for the end products in the market. The company has massive pieces of land that have proven to be oil rich and these are the areas where plants have been established for drilling purposes (Alano, 2019). There are also other locations where the drilled oil is transferred through pipes for refining before it can be sold to the consumers. Within a month, the company manages to produce approximately 40million barrels of gas and oil, 22million barrels of crude oil, and 98million cubic feet of natural gas.
From the above information, it is evident that the Sinopec Group is exploring much less than what the market demands. This can be said to be the reason why the company is struggling since some unserved clients are compelled to seek alternative options from the competitors. To resolve the problem, the company ought to review its production and exploration financial plan where the system would be expanded to accommodate higher production on a daily basis. By so doing, the company would be able to serve more clients diligently. Comment by Cordero: Good observation Deeran. This could be understood as a weakness as well as a threat in the company’s situational analysis.
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The financial plan is highly recommendable because investing in the production and processing processes helps in making sure that there are always ready products for the clients. This is a move that would upgrade consumer’s levels of reliability on the company and even other clients that currently deal with Sinopec Group competitors would perceive Sinopec as a perfect option. The more reason is that Sinopec Group is known for its quality products and affordable prices which mean having a reliable production, refining, and supply system would go a long way in boosting the financial status of the company.
b. Stakes
Currently, the company has a great financial plan of increasing the number of stakes in the China and New York Stock Exchange markets. The overall intention is to increase the number of investors and the collected amounts are used in the expansion of the business especially in new oil rich areas (China Sinopec, 2020). This plan has been useful to the company as it has helped in the establishment of different drilling and refining plants in African and Asian countries. It is also a plan that has helped meeting increasing oil and gas global market demand.
Nevertheless, despite the fact that the stakes selling in the stock exchange market has helped in increasing the amount of operating capital for the company, it is recommendable that the company should also target other stock exchanges (Yuan, Qin, & Zhao, 2017). The company can also seek other expansion strategies for instance mergers and acquisition with companies in the same line of operation in order to ease the expansion of the target market.
Sustainable competitive advantage strategies Comment by Cordero: With the exception of prepositions and conjunctions, all first letters in the first and second-level headings are capitalized.
It is important for the Sinopec Group to attain a sustainable competitive advantage that would sustain or keep the company afloat in the oil and gas global industry (Yuan, Qin, & Zhao, 2017). This is more so because the world’s oil and gas sector is increasingly becoming competitive and failure to take action can be disastrous for the company considering its currently financially struggling status. For starters, the company should improve on its energy model which is currently in use since there are a lot of hitches and have contributed to the struggling status of the company (Alano, 2019). To resolve the problem, the company requires reviewing its model such that all the products drilled and refined are accounted for and that only the highest quality products gets to the storage ready for supply. Having a model through which accountability will be promoted, the company shall be able to sell all the drilled products and also use the same model to identify weaknesses while working on them to increase strengths.
Fluctuation of prices is yet another major challenge for the company and dealing with this great threat can go along way increasing its competitive edge. Through upgrading the energy model to supersede those of competing brands, the company would be able to ensure that all factors that hike cost of production are eliminated (Yuan, Qin, & Zhao, 2017). By so doing, the company will be able to maintain a relatively low cost of production which would not be negatively harm in the case prices keeps on going up and down unexpectedly.
The plan
The company first needs to put up a team of professionals incharge of designing the new energy model that will be used in the entire company across all states of operation to promote uniformity. With the plan in place, the team to provide a budget to the company finance team to be analyzed by the executive team for discussion and approval. It is after the model has been approved, the implementation process should commence after which evaluation process should be undertaken to ensure that the model is working effectively. Any necessary change can be implemented to ensure that the new model serves the purpose and that the company not only has an efficient and reliable model through which the drilling, refining, and supply of the products is done but also eliminate any form of waste thereby utilizing available resources to the maximum.
References Comment by Cordero: List the references in the next page (separate)
Alano, J. (2019). Foreign Case Study Report: China Petroleum & Chemical Corporation (Sinopec Corp.) (Doctoral dissertation, University of the Philippines Diliman).
China Sinopec. (, 2020). https://www.sinopecgroup.com/group/en/
Yuan, Z., Qin, W., & Zhao, J. (2017). Smart manufacturing for the oil refining and petrochemical industry. Engineering, 3(2), 179-182.
Sinopec Group Financial Performance 2016 2017 2018 2019 2020 3 3.6 4.5 4.8 5.3