Strategy Yadvendraa Jaipuria Institute of Management Introduction of ONGC It was established in the year 1956 Its Head quarter is in Dehradun The chairman and MD of ONGC is ID: 602445
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Slide1
Case Study on the International Business Expansion Strategy
YadvendraaJaipuria Institute of ManagementSlide2
Introduction of ONGC
It was established in the year 1956.Its Head quarter is in
Dehradun
.
The chairman and MD of ONGC is Mr. Radhey S. Sharma.Its revenue was $24.032 billion in the year 2008.Currently there are 34000 employees.Slide3
Cont…
ONGC is business organization involved in the exploration and production of hydrocarbons in India and abroad.
ONGC is the leader in the upstream petroleum sector and a leading
Navratna
public sector.ONGC set up OVL in 1996 as a wholly owned subsidiary.Slide4
Cont…
It is the
largest
Oil exploration and production (E&P) company in India.
It has market share over 84% in crude oil and gas production.
Around
57 %
petroleum exploration licenses in India for over
588 thousands
of area belongs to ONGC. Slide5
Cont…
It
major products
includes petroleum, crude natural gas, liquefied petroleum gas (LPG), kerosene and petrochemical products
. Slide6
R
eason for Expansion ONGC business
L
icensing Policy Demand of Crude Oil Oil Prices
C
ompetition
Burden
D
ependencySlide7
Licensing Policy:-
by this private sector can also participate in the exploration and production.
Demand of crude oil:-
demand was increasing day by day.
Oil Prices:- The trend of international prices was volatile and rising. Slide8
Competition:-
Domestic competition was increasing.Burden:-
Increasing burden on the country due to the rising oil import bill.
Dependency:- The bottom-line was crude oil prices. Slide9
Major strategic decisions taken…
ONGC changed from a Commission to a company.
ONGC appointed MC
kinsey
as a consultant for complete revamping and restructuring of the organization.ONGC expanded its global operation through its subsidiary OVL.Slide10
Cont…
ONGC bought 71% stake in the MRPL refinery. ONGC decided to acquire equity oil abroad through the endeavors of the OVL.Human resource development.Slide11
Objectives of ONGC…
Doubling reserves to 6 billion tones by 2020.Improving average recovery from 28% to 40%.Tying 20 MMT per annum of equity of hydrocarbon from abroad.Slide12
Internationalization Strategy of ONGC
Carried
out in house studies of various moderate and semi-major, major offshore and onshore fields
.
Came up with about 400 Oil and Gas blocks.
Evaluated
these fields with available
data
Came
up with the priority list for foreign foraySlide13
Combination of marketing entry strategy of:
Joint venture with equity participation in producing oil/gas fields.
Joint venture with equity participation for exploration and development blocks.
Consortium approach, pooling other Indian oil companies, such as IOC Ltd, GAIL, etc.
Operator ship contracts (management contracts)
Turkey engineering Contracts.Slide14
Countries where OVL has its producing assets
Producing assets of OVL :
a. Having 20 percent holding in Sakhalin(Russia)
b. Having 45 percent stake in partnership with British Petroleum. c. Having 25 percent equity in the Greater Nile Oil Project in Sudan.
Slide15
Countries where OVL having discoveries and exploration
OVL assets with discoveries & exploration :
a. Having 100 percent interest in Appraisal & Development in Qatar. b. Having 70 percent interest in Exploration & Appraisal in Egypt.
c. 15 percent interest in Development Phase in Brazil.
d. 20 percent participation interest in Myanmar.
Slide16
OVL Operations
Vietnam
Sudan
Myanmar
Sakhalin-ISlide17
QUESTIONSSlide18
Critically evaluate the reasons influencing ONGC’s international expansion?
Factors influencing expansion -
New exploration licensing policy
Lack of new discoveries
Domestic competitionSlide19
Identify the key factors affecting OVL’s country selection.
Opportunity in the area of oil exploration.Future relationship with the countries.
Size of the other company or its growthSlide20
OVL made use of strategic alliances and joint ventures for its international expansion ventures rather than opting for complete ownership. Do you agree with such a kind of approach?Slide21
Reasons for Joint Ventures and Alliances
Gain Access to a Particular ResourceRisk and Cost Sharing
Learning
Speed to MarketSlide22