MANAGMENT

Product

Saudi Aramco trades in products such as petrochemicals, oil, and natural gas. As far as petrochemicals are concerned, the company has eight local refineries with a collective crude capacity of 1.8 million bbl/d.

Due to domestic supply shortages, Saudi Aramco faces international pressure to subsidize its local natural gas prices which happen to be among the lowest in the entire Persian Gulf. Saudi Aramco is responsible for determining the official selling price (OSP) depending on the quality of the crude oil and the location of the consumer.

Saudi Aramco’s oil is moved through pipelines, tankers, and ships. Some of the company’s shipping subsidiaries include the Vela International Marine Ltd., and the National Shipping Company of Saudi Arabia also called the Bahri. The major shipping ports include: Port of Ras Tanura in the Persian Gulf with an average handling capacity of almost 3 million bbl/d; Ras al-Juaymah facility; and Yanbu terminal in Red Sea.

The company’s current plan to increase product knowledge and awareness enables the brand to grow as the market learns more about the products, enabling future growth as a hedge against future competition.

People

The term “Saudization” entered Aramco’s vernacular in the years after World War II, when the company launched programs to train Saudi employees as skilled workers and, through company-sponsored university educations, to enable them to assume professional positions. There are approximately 61907 employees in Saudi Aramco.

Process

Saudi Aramco led in technology development and innovation and strengthens its position as an employer of choice. Saudi Aramco has reinforced their preeminent position in oil and gas exploration and production. They integrate the business across the hydrocarbon value chain to create impact.

Physical evidence

Physical evidence comprises of the elements which are incorporated into a service to make it tangible and somewhat measurable. For Saudi Aramco physical evidence is its various refineries and gas plants which continuously contribute to fulfill the customer demand.

4C

Clients

Saudi Aramco has built Global research network for achieving global leadership in energy-related technologies and supporting the creation of a knowledge economy in the Kingdom. Saudi Aramco is discovering new oil and gas field to contribute to the universal need for energy.

Costs

In cost Saudi Aramco has considered their clients by establishing Aramco Services company where they solve different problems of their customers regarding their business.

Communication

People aspire. People create. People achieve. At Saudi Aramco, value and cultivate these basic human attributes. They underscore our fundamental belief that energy is opportunity and they drive to continuously do more with its resources for the benefit of people around the world.

Convenience

In crude oil, Saudi Aramco is the largest single producer in the world: Roughly one out of every 10 barrels of oil anywhere comes from Saudi Aramco.

13. VALUE CHAIN MODEL

SA has only one supplier which is the government or state municipals. As a crude oil supplier, SA’s value chain would be different from others which include Exploration, Production, Transportation, Refining, and Distribution. The chart below provides an overview of some of the policies and initiatives which the Group has integrated into its business activities to effectively address.

Exploration includes using technology to find out the oil resources.

In Production stage, SA brings out oil to the surface using natural and artificial methods.

SA then Transfers the oil to refineries and consumers with tankers, long roads, and pipelines.

In refineries, SA converts crude oil into finished products, such as petroleum, mobile oil, engine oil etc.

Then SA distributes all those refined oil to government who are its consumers. For selling SA’s products, they do not need to promote or advertise the products, as SA sells it only to a fixed customer.

At Upstream level, SA’s expertise is exemplified by facilities such as Khurais.

In today’s environment, there are limited growth opportunities to companies available in the downstream sector. SA believe that large, integrated energy and chemicals companies can build and withstand a dynamic and profitable downstream business that yields returns across the entire hydrocarbon value chain. In 2014, SA has made significant steps toward achieving this goal.

14. TQM-LOYALTY-QUALITY & CONTROLL

TQM

The Total Quality Management of Saudi Aramco consists of more than 61907 qualified, trained and skilled personnel who are drawn from different disciplines that have a bearing on the oil and gas industry. The teams of dedicated professionals include Engineers, Machine Operators, Chemists, Managers, Business Management Experts, Hard workers etc.

Quality

Quality for Saudi Aramco does not depend on the market demand, but depend on their value of corporate citizenship. When people expect quality product, the manufacturer should always provide it. SA has a very good reputation for exploring, producing and refining quality products in competitive price. It is exporting very high quality oil and gases worldwide.

Loyalty

Aramco’s core values are based on Integrity, safety, accountability, excellence, and citizenship. SA’s aim is to maximize the impact of its resources. SA’s Motiva, a joint venture with Shell, and supplies fuel to millions of customers in the United States.

Saudi Aramco cares about the expectations and concern of its shareholders, employees, customers, and public at large in its social behavior.

Control

Saudi Aramco’s management believes in effectiveness of a quality system based on the principle of continuous improvement, progress and prevention as per scientific recommended guidelines. The procedure assures consistent high quality, improved safety of the work environment.

14. Brand and Branding

Brand is a distinguishing symbol, mark, logo, name, word, sentence or a combination of these items that companies use to distinguish their product from others in the market.

Saudi Aramco is a well-known brand across the globe and a leader in its industry which is known as the largest integrated global petroleum enterprise in the world and which manages the fourth largest gas reserve. Their slogan speaks volumes about the kind of company it is and the robust industry it operates in, which states that:

“Energy is opportunity.”

15. Box Analysis of Brand Elements

Brand elements are devices, which can be trademarked, that identify and differentiate the brand. In our case with Saudi Aramco the company uses its trade name. It legitimizes the company with its vast reputation while the logo individualizes the products and gives it a sense of identity.

Saudi Aramco can be categorized under Memorable, Meaningful, Transferable, and Protectable brand elements. The reason for such classification is elaborated below:

1. Memorable: To be memorable the brand must be easy to recognize and easy to recall. The roots of Saudi Aramco go back more than seven decades. The logo is well known and has been used for a very long time, ensure to improve recall when people see it on promotional material and at the same its unique design has distinguished it from the competition.

2. Meaningful: Brand should be inherently meaningful to convey information about the nature of the product category, the particular attributes and benefits of a brand, or both. In the coming decades, more and more energy from many different sources will be required to meet the needs of a rapidly advancing world.

3. Transferable: Saudi Aramco is producing petrochemical products, building export refineries and advancing the development of technologies that will result in cleaner fuels designed for the new generation of internal combustion engines.Their global operations and markets are served through subsidiaries, joint-venture and shareholding relationships with other international partners.

4. Protectable: The company is in the industry where legal protection, rules are very important and Saudi Aramco is strictly follow them to ensure their quality services.

16. Brand Dynamic Pyramid

Bonding: Saudi Armco’s position in Brand Dynamic Pyramid is BONDING, because it has started its journey in 1988 as Saudi Armco. It has built a strong bonding with its worldwide customers in last 27 years through its rational performance and emotional attachments.

17. Five M’s of Advertising

The organizations handle their advertising in different ways. A large company will often set up its own advertising department or else hire an ad agency to do the job of preparing advertising programs. In developing a program, marketing managers must always start by identifying the target market and the buyer’s motives. Then they can make the five major decisions in developing an advertising program, known as the five M’s of advertising.

( Message Most important reason for making your workplace safe is not a little )The 5 M’s for Saudi Aramco:

( Measurement - Internal newsletters -Time period statistics (Insurance cost, Legal cost etc) -Performance Appraisal ) ( Mission To ensure “Safety is our # 1 priority”, not just a saying Safety First ) ( Money BDT 10 crore per year )

( Media - TVC -Print Media -Workshops -Social Media -Public Relation )

18. Mass Communication

Advertising Budget & Campaign Cost

Saudi Aramco’s typical advertising budget will take into account all advertising costs. These are:

· Advertising agency commissions cost

· Purchasing all advertising and promotion media, including internet, newspaper, TV etc.

· Outdoor advertising cost

· Collateral material cost (Brochures, mailing pieces, catalogs, etc.)

· Direct Marketing Costs

The company spends over 10 crore BDT annually on all kinds of advertising campaigns, the percentage wise distribution of budget across channels can be summarized as:

Sales Promotion & Budget

Saudi Aramco does not follow any rigorous regime sales promotion or campaign. But they take part on the major trade fairs across the world for brand awareness and the products and services they have at their disposal.

Now the oldest continuously published cultural magazine in the Arab world, Saudi Aramco’s bimonthly is also among the best known. At the time of its founding, Arabic publications were hard to find in the kingdom, and Al-Qafilah usually published stories related to Saudi Arabia and the Gulf region. Later, prominent writers began contributing articles, making it the international medium for discussion and inspiration it is today.

Events & Experiences/Sponsors

Saudi Aramco employs various events and sponsorship opportunities to comply with its core value and increase its brand identity:

· Saudi Aramco College Continuation Sponsorship Programme: This is a scholarship program for high-calibre Saudi students currently pursuing a bachelor’s degree in the United Kingdom.

· Saudi Aramco offer career development program to the various students who are on assignment in North America for educational development.

· The College Degree Program for Non-Employees is a highly selective scholarship program for Saudi male and female high school graduates.

Public Relation/Government Lobbying

Public Relations are the engine for all official Saudi Aramco corporate communications. Saudi Aramco Comprise highly creative, business astute individuals – writers, editors, graphic designers, event management specialists, videographers, digital and social media practitioners, communications strategy specialists, media relations and crisis communications officers - they oversee the production of the weekly newspapers, international magazines and other publications such as the Annual Review. As well as producing many company related videos, the department looks after our corporate Internet site and employee intranet site.

Corporate Social Responsibility

A company of the magnitude of Saudi Aramco does not only think about making money but also indulges a lot of effort and commitment towards the society and people. Some are really noteworthy like the program launched by the CEO and Chairman like investing on the education and shifting a lot of focus on kindergarten where kids are nurtured.

Another similar kind of program is the Mawhiba Summer Gifted Program which is for children in high school which includes self awareness programs and building engineering and math skills.

19. Marketing budget

Marketing budget is an estimated projection of cost required to promote a business’s products or services. A marketing budget will typically include all promotional, production cost including marketing communication costs as well. Marketing is an economy’s arbitrator between productive capacity and consumer demand. Although marketing may be considered a passive function, it is instrumental in laying the groundwork for effective distribution. An efficient distribution and channel system and all the attendant middlemen match production capacity and resources with consumer needs, wants and purchasing power.

20. Pricing Strategies

Crude-oil trading prices were set by a handful of major oil producers until March 30, 1983, when the New York Mercantile Exchange (NYMEX) began trading crude oil on its commodities market. After that, oil prices depended much more on minute-by-minute transactions for both “spot prices”—oil for immediate delivery—and “futures,” or oil to be delivered in a month or more. In 1986, Saudi Arabia linked its oil price to the spot market. Today, Saudi oil prices are tied to spot markets in the United States, Dubai and Oman, and to Brent futures in Europe. (The Organization of Petroleum Exporting Countries [OPEC] sets production quotas, not prices.)

21. Break Even Analysis

The Chief Financial Officer (CFO) William Weideman forecasts that they can reach the cash-flow break-even within five years & additionally benefit from marketing fees and licensing royalties.

22. Recommendations

The following recommendations can be draw for the further development of the Saudi Aramco -

· Saudi Aramco should always provide emphasis on customer demand. It should always satisfy the dealers demand and arrange product availability.

· It should always pay heed to the dealers’ growth rate, take initiatives to recover gap and always monitor their activities.

· Saudi Aramco should restructure its sales system. It can restructure through employing more SOs, day to day sales and delivery system, enrich end-user activists activities, frequent market visit, better communication with distribution.

· Its general sales procedures like taking order, preparing invoice, categorization of invoice, preparing rout plan, lining products for loading, final check and loading of vehicles should be fast customer oriented.

23. Conclusion

The petroleum market is very much competitive although Saudi Aramco holds the major market share. But the growth rates of the competitors and expansions of company’s product to rural continent are great challenges for Saudi Aramco. It’s true that Saudi Aramco is very prominent in the market because of its high quality products, better customer response, variety of products, competitive price rate etc.

The world’s need for energy is growing, but so too is our ability to meet that demand. Saudi Aramco’s strategic direction is closely linked with the needs and aspirations of the Kingdom of Saudi Arabia, and is summarized in the company’s Corporate Strategic Direction; to deliver maximum financial contribution to the enterprise and to promote development of the local economy of the Kingdom of Saudi Arabia.

24. Reference