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Falling Oil Prices and Strategies of Oil Companies

WIPRO Applying Thought OFFENSE OR DEFENSE? OIL ENTERPRISES ARE PICKING SIDES IN THE LOW-PRICE BUSINESS CLIMATE. BUT THE WINNING MOVE MIGHT NOT BE PICKING A SIDE AT ALL. We are well into the latest wave-trough of low oil prices, current slump in the industry due to dropped oil prices) and talks around board rooms invariably centers on what's have identified three typical strategic responses taken by being done to survive the situation. Studies such as one enterprises attempting to survive. And putting these presented in this 2010 Harvard Business Review article responses into an oil and gas industry context, these which looked at periods of economic slump (like the three strategies are: OFFENSIVE Companies perceive compelling opportunities in the dip in oil prices and aggressively invest in new capabilities to grow the business. DEFENSEX Companies elect to “pull back" and ride out the low oil prices by cutting costs, downsizing, and putting a stop to any new investments. ONE-TWO PUNCH Companies balance the first two strategies, taking the offense in the form of strategic investments for future business advantage and taking the defense by re-examining operations and processes to improve efficiencies (thereby cutting costs and increasing productivity). UPSTREAM COMPANIES HAVE ALWAYS TAKEN DEFENSIVE POSITIONS IN THE PAST But in doing so, enterprises understand that they lose their strategic position eventually when the market turns favorable, primarily due to the lack of investments in technologies that enable new levels of efficiencies and profits. THIS TIME IT'S DIFFERENT Companies that took a defensive stance in the past may learn from their errors and not entirely close the door to investments in new technologies and capabilities. They are more likely to follow the combination strategy. DELIVERING A KNOCKOUT A key to one-two-punch success is the IT function. Savvy ClOs can have a positive influence on both "punches." Working with the business units, IT can make substantial inroads in streamlining and bringing in new efficiencies in the field through implementation of analytics and other strategic technologies. At the same time, ClOs with insights into the business and who have good integration with operational organizations can oversee capital projects around leading edge areas like big data to make sure the company is not behind the technological times, when the economic environment turns favorable again. To read more on the blog, click here. DO BUSINESS BETTER www.WIPRO.COM CONSULTING | SYSTEM INTEGRATION | BUSINESS PROCESS SERVICES

Falling Oil Prices and Strategies of Oil Companies

shared by Wipro on Feb 18
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Oil price decline has led Oil & Gas industry to adopt one of the three strategic responses to survival – Offensive, Defensive or One-Two Punch. This state has impacted the capital programs in E&P bu...

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