Strategies can be grouped into three different levels. These include corporate level, business level and functional or departmental level strategies. Strategies help firms to compete and survive in the competitive and sometime volatile markets. It is often argued that corporations do not compete, but it is products that compete. Products are developed by business units. Thus, every corporation should manage its business units and products to make them competitive hence meeting the corporate purposes or objectives (Kozami 2005).
The corporate level defines the issues or duties that the corporation is supposed to perform. For instance, it identifies the goals of the organization, as well as the business types that the organization is required to handle. It also identifies the different methods of organization integration and management. Consequently, the strategy identifies the position in the corporation where the organization should concentrate.
The strategy helps in managing activities and interrelationships in businesses. This strategy helps corporations to create value using their business by managing the portfolio of their business, ensuring effective operations over the long term, developing business units and in some cases, making sure that each business relates well with others in the portfolio (Goold, Alexander & Campbell, 1994). Business level approach is important to a corporation in enhancing the competitiveness of the organization. This is with respect to commodities and services that are offered by the organization. This can be achieved by implementing cost leadership, differentiation and focus. The strategy deals with putting a business in a position to compete with rivals. This calls for demand forecasting and the need to anticipate changes in technologies that should be integrated into the corporation. In this context, I am going to discuss how the two strategies, business unit level and corporate level strategies, are employed in corporations.
Total Company: Oil and Gas Company
The company came into existence after the World War I. This was after the then Prime Minister of France rejected a request of amalgamating with Royal Dutch Shell with a focus on creating an independent oil company in France. Total S. A is a multinational oil and gas company that is based in France. It is one of the six super major oil companies in the world. The business covers the entire oil and gas industry. This comprises of exploring crude oil and natural gas, and the refineries and markets of petroleum products. It also includes trading in international crude oil and related products. For this reason, the company cuts costs that it could have incurred while providing revenue. The Total Company is also a large scale manufacturer of chemicals.
The company is currently having more than 96,000 employees. In addition, the company has established subsidiaries in more than 130 nations. The Total Company’s French origin is an added advantage to the company. In this case, it gives the company an advantage over the oil major companies from the west. This is due to its large reserve and production bases in young and high yield places such as Africa and the Middle East. The company has embraced diversification as it producers fertilizers and petrochemicals. It also makes special chemicals for different markets. Total, which is a French oil company, has employed business unit level strategy in coping up with the competition from its rivals. This includes demand forecasting and anticipating changes in technologies and integrating them in the corporation.
Business level strategy
Total’s competitors include the other international oil majors. They include Exxon Mobil, Conono Phillips, BP, Chevron, the Royal Dutch Shell and Eni S. P. A. (‘International directory of company histories’ 1988). Constraints have been on the rise making access to petroleum resources a hard task as a result of the soaring costs and complications of energy projects. The collapse in oil prices has made oil companies rethink about their investments and scurry to cut costs. In the 1990s, the French oil company negotiated with Saddam Hussein’s government to develop Iraqi oil fields. However, recently, everything changed when the Iraqi officials declared that they preferred American companies to those based in Europe. In this case, the Total Company had no choice but to leave the country. The Total Company still targets to develop its assets around the world. It is aiming at different targets such as Angola deep offshore sites, the Sahara in Libya and the forest of Venezuela.
The Total Company uses the town of Pau in southwestern France as its global research center and a communication hub that links its global operations. Global teams send core samples from the wells for analysis. The laboratory workers or employees use magnetic image technology. The magnetic-image technology is also used within the medical field to look for oil traces in the samples. This global research center is a home to one of the world’s most powerful computers. The computer system breaks a lot of seismic information to provide clues about where the oil deposits can be found. The geologists of Total Company then analyze the data and consult with drill site. This is done using the technology that connects the research center to all platforms globally.
The Total Company, which is a French oil and gas company, ensures that its processes and technologies are enhanced in order to remain competitive. The company has its own predictive maintenance systems, forecasting and analysis systems, trading and risk management systems. All these are employed to help the company maintain its competitiveness. Oils produce and less as they mature.
Corporate level strategy
The Total Company has employed this strategy, which helps corporations to create value using their business by managing the portfolio of their business. This is also achieved by ensuring effective operations over the long term and developing business units. In some cases, it includes ensuring that businesses have good relations with others in the industry. The corporate level strategy is concerned with the whole organization. It scrutinizes the activities which organizations carry out. From the analysis, it becomes easy to decide on the strategy to be adopted by the organization.
Through the company’s refining and chemical activities, the company processes crude oil and natural gas to make products for sale. The company has embraced innovation and investment policies for its success. Fertilizer, and specialty chemicals such as adhesives, paints, and inks are manufactured by the company. In the year 2011, the specialty chemicals posted revenue increased by 9% compared to 2010.
The Total Oil Company has and will continue to make partnerships with different institutions globally especially in places where it has its branches. The company has built networks in Africa including South Africa, Kenya and Sierra Leone, where it has donated scholarships in support of education and research. France’s Total and Exxon Mobil Corporation agreed to exchange interests in a range of assets on the Norwegian Continental Shelf in October 2012. The exchange was meant to help the firm to focus on few but large assets.
Analysis of Competitive environment
Oil is one of the most traded commodities in the whole world. This is clearly evidenced by the three top petroleum firms being among the list of the world’s 10 largest firms by capitalization. Constraints have been on the rise making access to petroleum resources a hard task as a result of the soaring costs and complications of energy projects. The collapsing of oil prices has made oil companies rethink of their investments and scurry to cut costs. In the competitive environment, I will compare the Total Company, which is a French oil company, with the Royal Dutch Shell Company. The Shell Group is the world largest oil company in terms of revenue.
The Total Oil Company has over one hundred branches in different nations with smaller assets. On the other hand, the Shell Group has 90 branches in different nations worldwide with larger assets. The Shell Group has partnerships with other organizations on a 50-50 joint ventures. The Royal Dutch Shell is likely to be successful in the long term. The Shell Group is more concerned with doing the best to protect, maintain and extend the competitive advantage in the pursuit of oil field across the globe. The Total Company is not left out because it is currently applying almost the same strategies that the Shell Group is using. The Total Company should focus on fewer larger assets, and this will make it successful. Another thing, it should merge with international oil companies to ease its operations while opening new stations in new firms. This can also help it get permission to invest in foreign countries without discrimination.
Slow cycle and fast cycle markets
There are three conditions in competitive markets. These include fast cycle markets, slow cycle markets, and standard cycle markets. In the fast cycle markets, companies rely on innovations as engines for their growth. Companies competing in the first cycle markets are primarily concerned with how to gain new competitive advantages. In slow cycle markets, companies concentrate on protecting, maintaining, and prolonging competitive advantage. In the case about the Royal Dutch Shell and the Total Oil Company, my choice of the successful company differs with the fast cycle markets. In this case, the Royal Dutch Shell is the largest in the whole world and should be concentrating on protecting, maintaining and prolonging competitive advantage to remain in that position. It has to do its best to remain on the lead. The other competitors, including the Total Company should focus on what and how the Shell Group runs its operations. In this case, there is a high possibility that the Total Oil Company will match with the fast cycle markets because it is striving to enhance its growth. Therefore, it will try to think of strategies that are perceived to be more powerful than those used by the Shell Group (Hitt, Ireland & Hoskisson, 2007).
All strategies are very vital to the success of the organization. If wisely applied, companies can yield a lot or the operations can run efficiently and effectively leading to success. Without the strategies, all firms, especially the international ones, cannot make any prosperous step in emerging to be successful. Strategies help firms to compete and survive. Products are developed by business units. Corporations should manage their business units and products to be competitive so as to achieve goals set by the management.
Competition can make a weak business to fail. It affects businesses from different aspects such as technology, customer service, promotions, and culture among others. One cannot compare a company that uses advanced technology to the one that still uses traditional systems. Consequently, if an organization provides attractive services and advertises itself well, it is most likely that it can do much better than the one that does not use any of those strategies. A competitive environment is important to both the businessmen and the consumers because it enhances technological advances hence improving both the quality of goods and performance of firms or corporations.
Oil companies are among the leading companies worldwide. Currently, the Royal Dutch Shell is the leading oil company in the world. The Total Company is not faring badly in the world market. It controls the oil and gas industry in totality. The company has invested in exploring and producing crude oil and related products. The company also generates power and engage in the transport business. Apart from this, the company markets petroleum products. It also engages in the trade of crude oil and the related products at the international level. For this reason, the companies reduce the cost that they could have incurred while carrying out their activities. These companies employ all the three strategies while running their operations in order to succeed.
Goold, M., Alexander, M., & Campbell, A. (1994). Corporate-level strategy: Creating value in the multibusiness company. New York: J. Wiley.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2007). Strategic management: Competitiveness and globalization : concepts. Mason, OH [etc.: South-Western.
International directory of company histories. (1988). Chicago, Ill: St. James Press.
Kozami, A. (2005). Business policy and strategic management. New-Delhi: McGraw-Hill Published.