The fact that revenue generation in the oil and gas industry relies heavily on the accuracy and reliability of the systems of measurement, it is critical that all companies attain and sustain their optimum performance. The objective of this business plan is to describe the plan of an oil and gas metering Consultancy Company that covers five operational years. The business will be concerned with providing metering solutions to oil and gas companies in theOman and the rest of the Middle East. Metering consultancy hopes to provide oil and gas companies the confidence that their measurement systems have the required designed, are installed properly, tested, operated and managed according to the required levels, requirements of the manufacturer, the contractual agreements entered between the firms and their clients, the national regulations as well as industrial best practices.
The plan to provide metering consultancy to oil and gas companies in the region will be executed by a team of engineers who have years of experience in the industry. The project will also be executed by metering technicians of the company, which will work with the management of the client firms in the coordination of the consultancy services. The proposal in this business plan will be to expand the services of the company to rest of the Middle Eastafter the firm has been in operation in Oman for the last decade. It is considered that the proposal will succeed for the fact that most of the countries in this region have been struggling with adhering to the contractual requirements with their customers while hoping to remain as profitable as possible (Robertson, Chilingarian, and Kumar, 2009, p. 185). Comparatively, those firms that have engaged the metering consultancy services have met with little problems. While there are companies offering similar services in countries such as Saudi Arabia, they have not been effective in addressing the issue (Plunkett, 2008, p. 113). Therefore, the success of this proposal will be founded on the fact that the prospected market will perceive the project as an alternative way of solving their problems. The rewards of the proposal will be two-fold. First, the company stands to benefit economically since an expanded market would mean that the business would maximize its revenues. Secondly, the company hopes to build a strong market existence in the region, which means that it will intensify its competitive advantage. However, the proposal is risked by the fact that entering a new market always means that businesses have to struggle in meeting the start-up costs, developing a strong market reputation, complying with the legal requirements in the host nations among others.
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Products and Services
The company hopes to offer leading industrial guidance that is provided by experienced metering experts. Additionally, the company will provide all types of metering products that companies need to have an assurance that their measuring systems will be working within the minimal levels of uncertainty while giving their management an assurance that they would be meeting the regulatory requirements. The personnel involved in the proposal will use the capabilities of the involved experts that include front-end engineering as well as measurement and design systems that also entailthe basis of functional design specification. Other services that the company will provide include flow measurement, instrument calibrations, and metering support services, the total management of metering systems, the compilation of procedures of maintenance and operations, measurement as well as process system audits in relation to ISO standards among others.
Mission Statement
To provide leading industrial guidance concerning experienced metering consultancy to clients.
Vision Statement
To enable our clients to gain an assurance that they would be operating within the industrial requirements while also operating within levels that will allow them to make profits from their operations.
Aims and Objectives
To attain regional recognition in the metering consultancy industry over the five-year period
To increase the operational effectiveness of the company through improving its profit margin within the same period
Industrial Size, Growth, and Structure
Oman has been carrying out commercial oil production since 1967. In fact, Oman’s oil industry supports the country’s modern infrastructure such as roads, electrical utilities, public education and medical services. Oil firms in the country have begun improving efficiencies due to the current low oil prices. Oman has significant modest oil reserves. Besides, the country has considerable natural gas reserves. Oman has invested significantly in enhanced oil recovery techniques aimed at maximizing its reserves. In the future, Oman anticipates producing a daily output of a million barrels. The petroleum sector in Oman provides the best prospects for United States’ goods and services. Oman’s oil industry has a great potential because it has over 18 trillion cubic meters of proven natural gas reserves. Omanrequires advanced technology such as 3-D seismic analysis to enhance exploration efforts. Now, crude oil is among the most essential and present resources of daily life in the world. The industry is structured in such a way that there are four types of companies that deal with the petroleum products. Specifically, the industry has companies that deal with the exploration of the oil and gas reserves, those that deal with the production of the products, those that refine them, and those, which market them (Devold, 2012, p. 33). It is noteworthy that the oil industry is among the most powerful sectors of the economy of the world since the world produces over four billion tons of oil per year (Chowdhury, 2016, p. 90). Approximately a third of this volume of production comes from the Middle East. The Saudi Arabia is one of the global leaders in the production of oil, and each one of this is responsible for the production of nearly 13 percent of the entire production (Chowdhury, 2016, p. 93). It is also imperative to note that the oil and gas firms of the world are one of the largest companies globally because six of such companies feature in the top ten largest corporations of the world (Chowdhury, 2016, p. 89). The global exploration of the oil and gas reserves has been rising over the years because of a rise in the demand for energy around the world. For such reasons, the revenues that global gas and oil industries have been generating have also been increasing.
Industry Market Trends
Four reasons are identifiable as the determinants of the gas and oil industry. The first of such trends is the fact that the global and local demand for energy has been on the rise because of the demographic and social factors such as increased global populations among others (Eikeland, 2015, p. 230). Secondly, the world has been experiencing an increase in the costs of extraction of oil and gas, especially in the Middle East (Chowdhury, 2016, p. 120). It is imperative noting that companies have had to deal with the issues of increased costs of production in the wake of falling global prices for their products (Eikeland, 2015, p. 230). Even while such a factor has been detrimental to the performance of the industry across the world, the Middle Eastern region has continued to step up its production of petroleum and related products thru the con-conventional gas products. These trends therefore indicate that the business proposal in this document would be useful for companies that would like to leverage their minimal resources for a maximized economic output.
Market Segments
The nature of the industry in terms of the companies involved in the process suggests that the proposal targets three types of firms, those that produce the products, those that refining them, and those that market them. The rationale for this market segmentation is the fact that each of them deals in the sale of the products either as finished products or as unrefined. Where the products are sold as unrefined such as after the production process, a need exists that the respective companies measure the volumes of their production and how much they will sell to the refiners. The same process applies to the refining firms that then sell to the retailers. The potential of the Middle East, especially Oman, means that companies will be in need for systems of metering that would ensure both compliance to regulations and profitable operations.
Buyer Behaviors across the Segments
As much as the business proposal targets three market segments, it is understood that the metering consultancy market in the region is fundamentally concentrated within those companies that deal with the exportation of oil and gas products (Bott, 2009, p. 301). For this reason, the smallest companies, those that do not have the capacity to export their products, have not been significant in the market for the products and services in this proposal.
Competitor Analysis
It is noteworthy that the industry has stiff competition, especially from the established companies that have been in existence in the target market. Most of such companies have their origins in the US but have been active in the Oman’s market for a long time (Bott, 2009, p. 33). Therefore, the strength that such competitors have is a strong brand reputation, which is drawn from the fact that clients have been used to their products compared to those of the company in this proposal. The companies also have strong financial resources, which mean that they have the capacity to invest into new projects and diversify their products and services with minimal constraints in their mode of operation. Contrarily, the companies already in existence have only been dealing with the biggest producers of the oil and gas products at the expense of the medium and small-scale ones. The company, therefore, will venture on the neglected market segment, providing metering solutions to them.
SLEPT Analysis
Social Factors
The rate of population growth of the world has been reported as one of the factors that have contributed to the rise in the global demand for oil and gas products. For such reasons, the company stands to benefit from the fact that most companies would want to maximize their profits through efficient metering services.
Legal Factors
Like the US, Oman has strict regulations on foreign companies operating in the nation. The firm needs to be aware of the need to have an inclusive workforce, adhere to anti-trust laws, regulatory mechanisms concerning metering services in the industry, and financial disclosure among others.
Economic Factors
The economic growth of Canada is approximated to be 2.2 percent annually, which means that it has potential for foreign investment (Altman, 2016, p. 63). Additionally the growth of the oil and gas industry over the past years despite the fluctuations in the prices of the products on the global market promises a bright future for the proposed business undertaking.
Political Factors
The firm will have to comply with strict governmental regulations of the host nation in matters such as corruption, fair competition, the protection of consumers, laws governing employment practices, and others.
Technological Factors
The company is required to invest in the latest technologies since such technologies have revolutionized the manner in which companies in the industry operate. Specifically, technological competence is required if the company is to keep the costs of operations as low as possible for it to offer products at the lowest prices to the consumers. Such technologies will be adopted across the supply chain.
Porter’s Five Forces
Competitive rivalry
The company operates in a stiffly competitive industry. In fact, the competition stems from the fact that most of the competitors have been in existence in the country for long, which has allowed them to build a strong market presence. The competitors also have strong financial resource endowment, which means that they have an ability to make the market difficult for others to enter.
Bargaining Power of Customers
The oil and gas industry is affected greatly by the changes in the global prices of oil and gas. For such reasons, the customers have a fundamental impact on the manner in which the oil and gas companies operate. Resultantly, metering consultancy in the same industry relies on the nature of the activities of the customers.
Bargaining Power of Suppliers
The company manages its own supply chain from manufacturing to distribution, which means that suppliers are not a significant external force in its operations.
Threat of substitute products or services
The company faces stiff competition from the bigger and more established ones, which means that the threat of substitute products is high.
Threat of new entry
The industry is capital intensive, which means that most start-up companies have difficulties in entering the market.
The medium and small-scale organizations dealing in the oil and gas export business in Oman across the three identified types of companies in the industry will be the target market for the products and services in this proposal. The company has an advantage over competitors for the fact that it has been dealing with businesses of this nature. As such, the company is able to provide evidence-based practices in relation to the nature of the companies. While the rest of the companies have more years of existence in the target market, they do not have a reputation of dealing with the medium. The proposal, therefore, will improve the efficiency of metering of the client firms and enable the company realize net sales volume of $1 billion over the five-year period covered by the proposal.
Marketing Strategy
Product
The company will offer customized services to its clients. This will make the company the consultancy services provider of choice. Clients prefer unique services tailored to meet their specific needs. Therefore, the company will ensure that the services will be top notch.
Price
The company will strive to be a price leader in the market since this strategy presents the best opportunity of entering the market. For such reasons, the company will offer the best quality services and products at the lowest prices in comparison to the competitors.
Distribution
The products and services will be distributed from official company retail stores that will be established in the oil producing regions of the target market such as Duqmand others. Such locations will ensure that clients have an easy accessibility to the products and services. In addition, the products will be delivered to the clients’ premises upon request to do so, which will improve their convenience.
Promotion
The company will also display its products at the annual trade show organized for the industry in the host nation, which will serve as the promotional medium for the products. This will ensure that the company’s products reach a wide range of prospective clients.
Launch Strategy
The business will adopt a four-step launch strategy for its products and services. The first one will be to conduct a market analysis, which will identify the different aspects of the target market such as the demographics, economic factors, and others (Teece, 2010, p. 175). The second step will be to establish a contact list of the potential clients through the lean startup methodology. The third procedure will be researching the trends in the market to identify what factors could determine the existence of the company before embarking on the last process, a strong social media campaign.
Sales Tactics
The business will use social media in developing its brand because of the popularity of this mode of product promotion in the recent past. Specifically, the business will post referral links to users on social media and reward those people that will invite their friends to like the different social media pages and channels of the company. This way, the company will manage to deal with the strong competitive pressure from the dominant companies in the market and reduce the costs of promotion. The users or social media will then be redirected to the firm’s website, which will then allow the clients to view the different products and services on sale and allow them to place orders if they wish (Teece, 2010, p. 178). Those who do not wish to do so will have an opportunity of contacting the firm’s head office for inquiries. The company will also promote its products through the local print, audio, and visual mass media. Therefore, the business hopes to grow rapidly because of the strong marketing strategies adopted.
Brand Development
The company will carry out various advertising campaigns aimed at creating awareness about its brand. This will be done across various channels to ensure that many prospective clients are reached. However, the company will emphasize the use of newspapers and oil and energy industry magazines. This will ensure that the right audience is reached. The company will utilize integrated marketing communication to ensure that a uniform brand message is communicated across all the channels. This will improve brand visibility and reliability.
Competitive Reaction
The company will employ intense advertising as a reactionary tactic for competition. The company will not use pricing as a reactionary tactic because it seeks to become a price leader. As such, the firm will anchor on quality and tailor-made services.
Product Market Development
Through constant communication, the company will obtain important client feedback that will be used in improving the quality and the range of products offered by the company. The company will expand its market through expansion.
Growth Potential
Given the potential of Oman’s oil industry, the growth of the organization is assured. This is because more firms are likely to enter into the industry. As more players join the industry, the demand for consultancy services in the sector is likely to increase. .
Operation Plan
The company will carry out a service process. The business will run on a franchise business model in which it will be responsible for the sale of its products directly to clients. For this reason, the company will be in charge of its supply chain, which will allow it to control the flow of its business (Teece, 2010, p.180). The products will be obtained from Oman in which the headquarters of the company are established because of the high operational costs that are associated with startup businesses in new countries that may wish to start their own manufacturing systems. The company will also collaborate with sales agencies, which will be critical in brokering deals with clients on behalf of the firm.
The company will control its operations from its headquarters in Oman. The company will lay down strategies aimed at delivering its services seamlessly in Oman. Based on the potential of the Middle East as a market, the company will make inroads into the larger market.
With regards to scalability, the company will set out regional offices that will be able to serve the clients in their locality. The company will be able effectively handle any challenges that come along with expansion.
ManagementTeam and Company Structure
The project manager will be the overall person in charge of the project and they will ensure that it sticks to its objectives and deliver within the specified time. The project manager will work in collaboration with their project team (Leach, 2014, p. 41). It should be understood that project management involves the coordination of different activities, which means that it requires the involvement of different types of people based on their talents and professional expertise (Leach, 2014, p. 43). It means, therefore, that the project team members will deal with the respective duties of the project as specified in the preceding sections of this plan. The third group of personnel required for the execution of this project will be the functional managers. The functional managers will have the role of ensuring that the different tasks of the project are assigned to the right personnel. Such groups of individuals, therefore, will drive the attainment of the different project milestones as directed by the project manager. Lastly, the plan will require an intervention from the upper management of the firm, which will oversee official matters such as financing among others (Leach, 2014, p. 45). The business structure will adopt the top-to-bottom management approach in which the top management team will be the overall project leaders. The project manager will be second in command followed by the functional managers and lastly the project team members. It is realized that the company does not have efficient project management skills, which is why a need exists for the management to hire a project manager that will be in charge of dealing the execution of the proposal. For example, the project manager will have the task of ensuring that the technical elements of the project are addressed accordingly.
Organization Structure
The Director will be at top of the organization’s leadership. The chief accountant, chief finance officer, human resource manager comprise the top management. All the decisions regarding the company will be made by the top managers and they will be ultimately ratified by the director.
Resources
The company has an experience of more than a decade in the metering consultancy business of the oil and gas industry. For such reasons, the staff is capable of handling all the issues raised within the products and services section. Specifically, the company boasts of a team of engineers, metering and systems managers, and other staff with the required experience in dealing with the issues at hand. The production capacity of the company is vested in the fact that it has a system engineering line that deals in the products proposed in this document. The production system boasts of a state-of-the art technology, which includes reverse engineering technologies, green production, and other modern technologies that are to the required standards of 21st century manufacturing (Newbold, 2008, p. 69). The staff and the operational facilities of the company will enable it to operate smoothly within the already competitive industry.
Financial Projections
The business expects to improve its volume of income from its operations in the target market. Specifically, the company should realize a net income of $100 million over the five operational years. It means that the average growth in revenues of the company will be 20 percent annually ($2 million each year). The increase in the income of the company should be accompanied by an increase in the cash flow. The company should be able to minimize the operational expenses over the same period while increasing the trading revenues, which suggests that the cash flow will be increasing. Specifically, the cash flow should be able to grow by the same rate as that of the volume of sales. The company should be able to grow its assets to over $20 million and reduce its liabilities to less than $4 million. The working capital of the company, therefore, is projected to be 25%. The profit margin of the institution of the company should also grow to 25% during the same period. It is also anticipated that the firm will increase its rate of stock turnover because of the efficiencies in operations. The projected financial statement and balance sheet are found in the appendix.
Risks and Strategic Options
The proposed project in this document faces the risk of failure in its the execution for the fact that the company does not have a strong comprehension of the industrial landscape of Canada. As much as there will be substantial levels of market research into the project, it should be understood that such market analyses might fail to deliver the correct statistics. Therefore, the fact that the business does not have enough experience in project management suggests that it might experience problems in the execution stage of the process, which might cause the project to be terminated altogether. In the event that the project makes it through the execution stage, it is feared that it might go beyond the budgeted expenses that will result because of a failure of the project management team to stick to the objectives (Leach, 2014, p. 67). Such budget overruns could also result from increased costs of materials that would result from the forces of inflation.
The project management team will adopt short-term achievement measurement metrics that will give a picture of the direction of the entire process. In this case, the milestones will act as the risk monitoring metrics, which means that failed milestones would suggest the possibilities of occurrence of the projected risks and vice versa. In the event of the adverse outcome, the team should communicate amongst each department to determine the causes of such failures and then seek the recovery strategies. The critical success factors of the project will include a successful establishment of the company into the Canadian market through having a formidable client following from the extant population and an increase in the profit margin, the company assets, the revenue income, and the cash flow figures within the first year of existence in the new market.
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