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PART 2
Environmental Analysis
When starting a new business or new division it is important to have an accurate evaluation of environmental factors as it could be the difference between being successful or failure. Having an effective environmental analysis can have a great impact on the strategic plan for the Patterson-UTI Energy, Inc. proposed division. By identifying the threats and opportunities will help us to place emphasis where efforts need to be focused. It is important to look at the outside environmental factors as they can affect the organization. After an environmental analysis has been conducted there are times when tough decisions may have to be made for example if the analysis shows signs of positive factors then this could be an indication of success however if the environmental analysis is overwhelmingly negative then you may have to reconsider you proposal.
External Forces
An external environmental analysis consists of information about the organization industry, looks at the political and social environment and the organization competitors. This analysis will look at the opportunities that PTEN can take advantage of and threats that could impact on the organization. Usually this type of analysis will focus on how the organization can take advantage of opportunities whether to overcome them or find ways to minimize the threats. Patterson-UTI Energy, Inc. does not have control over changes in the external environment. It is therefore important for the organization to perform an external environmental analysis frequently as this can help the organization to maintain a competitive advantage.
The legal and regulatory environment plays a vital role in determining how successful a company will be. The government will impose taxes, enforce federal laws that will protect employees and customers and other regulatory measures that will enhance the growth of the economy. Taxes can place restriction on the operations of Patterson-UTI Energy new division. The possibility exists whereby changes in the environmental regulations may reduce opportunities for the new division. This may include laws that are related to offshore drilling operations.
The competitors of Patterson-UTI Energy, Inc play a crucial role as their behavior can affect the organization’s strategy. Patterson-UTI Energy Inc. has to take in consideration new entrants into the market and acquisition between companies. There are many oil and gas companies however the entry to this industry is high and will deter new entrants. In addition this industry requires large capital hence it is consider a barrier for entry. It is important to note that when changes are made to the organization our competitors will react to our adjusting strategy and make changes. Therefore it is important that Patterson-UTI be ahead of the competition at all times(Hoovers.com, 2016).
The demand for our service is closely associated with general economic growth rates. Therefore if there is an occurrence of negative economic growth it can impact negatively on our division. The fluctuations in currency exchange can also affect the demand for oil or energy. The inability to access debt or political unrest can pose risks to our division(Prnewswire.com, 2016).
Innovation is now being transformed by technology as a result companies are able to test new ideas at speeds. Patterson-UTI Energy, Inc is now able to have a better understanding of their customers’ needs. The automated walking oil rig is equipped with the latest technology and has numerous innovative features which will improve efficiency and more important improve value for their customers.
It is important that Patterson-UTI Energy, Inc utilize and adapt to its external social environment or it will be difficult to be successful. PTEN needs to be aware of the society’s social preference regarding its needs and wants. Therefore the organization plays an important role in this regard
Internal Forces
The internal factors includes factors within the organization that impact the approach and success of an organization. PTEN takes the role of leadership in their company seriously. It is committed in fostering an environment where everyone feel valued and respected. It embraces diversity of people(Reuters, 2016).
The culture in a company is one of the most important internal forces to consider. PTEN feels especially responsible in providing a work environment that not only facilitates work flow, but also encourages innovation, dedication and commitment. The culture of the company is formed by slow integration of certain traditions in the company. It helps people relate with the company as one big family dedicated to working for each other.
The company is dedicated in finding resources that makes them unique from their competition. With each passing day, cutting edge innovation in the field is actualized in the form of new products that catapults the company’s progress far ahead of its competitors. PTEN is dedicated to excellence and the automated walking rig is part of the procedure.
Patterson-UTI Energy is the largest provider of contract drilling services. The company has more than $4.687 billionaccording to the 2016 statistics. It operates within the US and has more than 325 land rigs. The resources of the company has recently doubled, along with a marginal increase in income every year. Patterson-UTI Energy has great potential as it owns more rigs than its competitors. If properly utilized, the resources can triple in a matter of years (Finance.yahoo.com, 2016).
SWOT ANALYSIS
|
Factor |
Strengths |
Weaknesses |
Opportunities |
Threats |
Trends |
|
Technology |
State of the Art land rigs |
Less market share |
We have 325 rigs, that can expand to all major cities in USA |
Competitors’ advances in tech. |
State of the art tech is being developed |
|
Legal/Regulatory |
Regulations will promote customer and employee rights |
It can inhibit growth due to certain regulations |
The regulations help monitor the tax flow, new policies and also create better competitive environment |
Might impose laws that forbid offshore drilling |
Legal obligations currently favor company vision |
|
Economic |
The economic growth is directly linked to the world economy. It fluctuates with the need for oil |
The weakness lies in new methods chalked out for oil drilling. The cost per barrel is increasing. |
Opportunities to help the economy grow depend upon various factors like oil price increase, oil demand and secondly if another oil field is open for business |
The world’s oil boom is gradually declining as the world shifts towards clean energy initiatives. The company will have to reevaluate its strategy |
PTEN has reduced capital expenditures by 300% in the current year |
|
Culture
|
The culture is highly supportive with many long-term traditions that keeps the employees and managers bonded into a healthy family |
The company is a giant with hundreds of employees in many cities all over the US. It does have a healthy environment but it’s a corporate environment |
The company has a vibrant culture with people from diverse backgrounds. Their valuable input helps the company turn more revenue, become more successful and stay a step ahead of their competitors. The communication between the company and the employees are well developed |
No apparent threats yet, as the culture is quite healthy |
The company continues to boast one of the healthiest work environment |
REFERENCES:
Hoovers.com. (2016). !company_name! Names of Competitors. [online] Available at: http://www.hoovers.com/company-information/cs/competition.patterson-uti_energy_inc.59abba17aec6961e.html [Accessed 10 Sep. 2016].
Prnewswire.com. (2016). Patterson-UTI Energy Reports Financial Results for Three Months Ended March 31, 2016. [online] Available at: http://www.prnewswire.com/news-releases/patterson-uti-energy-reports-financial-results-for-three-months-ended-march-31-2016-300258894.html [Accessed 10 Sep. 2016].
