Background:
The Wood Group was founded in 1912 by Wood and Davison which the company used for marine technology and ship fix house to services the fishing fleet. In 1970 ‘s oil & A ; gas militias were discovered in the North Sea and presented an ideal chance to change over marine technology experience into technology and support services ( 1 ). During the late 1990s Wood Group Engineering ( North Sea ) became a market leader in the North Sea supplying incorporate technology, operations and care services to BP, Shell, Talisman, Amerada Hess, BG, Enterprise Oil and ChevronTexaco ( 2 ). The company is now a taking independent services supplier for the oil & A ; gas and power coevals markets. Presently the chief focal point of the company is for the environment by set uping the renewable energy services group and spread outing their operations for alternate energy industry.
Wood Group besides known as John Wood Group is energy services supplier. The company is organised into to three divisions:
1. Technology and production installations
2. Industrial gas turbines inspection and repair
3. Production support
In technology field, their expertness extends to upstream, midstream and downstream oil & A ; gas and power coevals markets ( 14 ). Their planetary clients are big incorporate operators, national oil companies & As ; independent operators ( 15 ).
The nucleus strengths of Wood Group are: installation operations & A ; care, field service of pumps, wellsprings and valves clients, procurance & A ; building direction, deepwater topsides, revolving equipments, power solutions, and renewable energy.
Wood Group operates chiefly in Europe and North America. It is headquartered in Aberdeen and employs approximately 29,000 worldwide and operating in 50 states ( 3 ). In 2009 Wood Group recorded grosss of $ 4,927.1 million, the runing income of $ 298.5 million and the net net income of $ 164.2 million ( 5 ).
Wood Group vision is to be a taking planetary energy services supplier ( 4 ). The company planetary repute has been built upon decennaries by offering a wide scope of incorporate services across the plus lifecycle and successfully pull offing the most complex battles for their clients. They systematically seek to supply services and merchandises that are recognised as market-leading ( 4 ) and effort to transcend their clients ‘ outlooks and present superior returns.Wood Group scheme is to accomplish long-run sustainable growing by adding value to their clients ‘ operations with world-leading extremely differentiated merchandises and services ( 4 ).
Stamp
PESTLE analysis describes the macro-environmental factors used for environmental scanning constituents of strategic direction. It can be usage for reexamining a state of affairs, way of a company, a selling proposition, or an thought. The analysis is a utile tool for taking advantage of the chances and cut downing the menaces. It is hard to pull off a concern in an efficient manner if the external administration factors are unknown.
Figure 1: Macro-Economic Environment
Summary of PESTLE:
Political
World energy merchandise markets have been increasing because of the menace of geopolitics instability.
Due to Co2 emanation, authorities has set force per unit area on industry to better and bring forth more sustainable signifier of energy
There are merchandising constabularies with certain states
There are limitation to import and export to certain states
They are restriction making concern with certain states.
Fines for industry that pollutes the environment.
There are authorities revenue enhancements and monetary value controls
Economicss
Alternate high -quality energy engineering increases the company ‘s gross as clients seek for less nursery gas emanations
Companies benefit by bring forthing certain merchandises from developing states due to its cheaper labor cost.
Market is unstable as universe economic system is coming out of a universe recession
Global economic systems are expected to turn within few old ages and energy demand will turn once more.
Social/culture
Recently the state has become more concern about the environment and their position has been more encouraging for renewable energy merchandise.
Life anticipation is relevant to the company ‘s labour force. Company benefit in states with higher life anticipation.
Healthy workplaces for oil and gas industry services are indispensable for long term success.
Technological
Renewable energy engineerings have increase to cut down the dodo fuels. E.g. engineerings such as air current power, tidal moving ridge, hydroelectricity etc.
Governments are now supplying revenue enhancement advantages and other subsidies to accomplish farther competition for alternate energy against oil and gas.
Tonss of research and development have taken topographic point to advance further renewable energy.
Legal
The policy includes strong new safety criterions for offshore boring including presentations of ability to react to future runawaies.
Heavy punishments for safety misdemeanors.
Carbon revenue enhancements i.e. punishments for fouling the environment at a certain degree.
Legislative steps are used in order to coerce concern into acting in a more environmentally sound mode
Different legal policy in different states.
Environmental
Due to concern over the hazard of planetary heating, a figure of states have adopted regulative models to cut down nursery gas emanations
High quality engineering has been researched for better alternate energy public presentation to cut down dodo fuel and cause less pollution to the environment.
Industries have been utilizing plan to place ways to cut down C by:
pull offing waste more expeditiously, utilizing flying C footmark measurings and researching possible solutions for salvaging energy.
( Description and elaborate information of PESTLE are found in Appendix ( A ). )
SWOT analysis
SWOT analysis bases for strength, failings, chances, and menaces that involves in a concern venture. Strength and failings is the internal environment where as chance and menaces are the external environment. This involves the house ‘s ability to put aims and place the external and internal environments that are desirable or unwanted to accomplish that aim. The perfect result of the SWOT analysis is to understate the failing and maximize the strengths in order to get the better of the menaces and take advantage of external chances.
SWOT Table:
Positive
Negative
Internal Environment
Strength:
Wood Group has established its name due to its being for about hundred old ages. Therefore this gives clients security advantages when covering with the administration ( high trade name acknowledgment ).
Tax advantages have been offered for bring forthing renewable beginning of energy to cut down dodo fuel and the state ‘s pollution.
Wood Group administration is diversified into 50 states shows the company ‘s growing with a strong and experient squad.
Turning operations in the Middle East, Africa and Asia Pacific ( 8 )
Wood Group is a taking independent services supplier for the oil & A ; gas and power coevals markets.
Core strengths of Wood Group are: field service of pumps, deepwater topsides revolving equipments, power solutions, renewable energy and many more.
High quality and accomplishments of its employees
Acquisition of Baker Energy established market leading in the US Gulf of Mexico ; strengthened place in the turning deepwater market and added a farther 500 people in Africa ( 8 ).
Failing:
World recession, volatile fiscal markets and lower oil and gas monetary values contributed to a decrease in planetary E & A ; P outgo of around 15 % in 2009 ( 8 ).
Sing client ‘s spheres, they are still deficient for full optimum cognition.
The merchandise monetary values are excessively high doing fewer clients excessively buy.
Wood Group runing in many states can do confusion and troubles for the undertaking director to organize. Besides the public presentation of Wood Group is greatly influenced by the legislative and political conditions of these states.
External Environment
Opportunity:
Wood Group has been able to run in states such as Iraq which was antecedently excessively hazardous.
Governments provide chance for high quality engineering research for improved alternate energy public presentation.
Industries have been utilizing plans to place ways to cut down C by:
pull offing waste more expeditiously, utilizing flying C footmark measurings and researching possible solutions for salvaging energy.
Increasing demand from clients for sustainable technological
Turning demand for environment betterment, mobility solution, energy direction and control which makes the company more demanding.
Global economic systems are expected to turn within few old ages clip and energy demand will turn once more.
Menace:
Weather can hold important consequence on the production of power such in air current turbine.
Heavy punishments for safety misdemeanors.
Punishments for fouling the environment at a certain degree.
Technology progresss from other energy services supplier.
Competition from international providers.
World recession doing a diminution in incomes has increased the rate of unemployment which has affected the discretional purchasing consumer ‘s behavior which consequences in a negatively impacted of the company ‘s gross revenues.
5 forces analysis
Porter ‘s theoretical account of competitory analysis identifies five forces in an administration ‘s environment that influence the competition. It is normally used tool for competitory environment and its attraction of a market.
Figure 2 – Five forces of analysis ( 12 ) :
Barriers to Entry ( High )
This force describes the degree of entry of other companies to come in this type of industry. If the entry of the company is high so the company would lose it profitableness. Barrier to entry for these type of industry are high due to:
Large entree to the providers and distributers guaranting widespread energy proviso.
High engineering cost
Dominated by major participants
Mature market
Rigorous authorities policy and environment ordinance demands to run in oil & A ; gas and energy services industry.
High capital cost is required to carry through cost leading which is indispensable in energy proviso.
Set-up operations are expensive
The ethical trade name individuality is of import due to the nature of market ( trueness as a barrier ).
Existing participants have close client dealingss.e.g. from a long-run service contacts.
Technological focal point for alternate energy requires high proprietary learn curve.
Competitive Rivalry – ( medium )
This force describes the strength of competition between bing companies ( 6 ). Within the oil & A ; gas and energy services provider the competition competition between bing participants are average because of:
High issue barriers.
Not many major participants in this type of industry.
High capital costs
Companies with similar schemes
High industry growing as alternate energy is indispensable for the long term hereafter of the concern.
Assorted challengers in principle for schemes to put and come in the industry.
High shift cost
Menace of replacement – ( low )
Menace of replacement exists if there are alternate merchandises with a lower monetary value for better public presentation parametric quantities for the same intent. This would cut down the demand for a peculiar merchandise and hence would be a menace to consumers exchanging to options.
Menace of replacement is low because there is deficiency of alternate renewable energy within industry and merely big industry can afford these renewable energy merchandises.
Menace of replacement would be high if a company provides the latest engineering and specialised services.
The menace would be high if a company sells the merchandise at a cheaper cost.
Dickering power of purchasers – ( low )
Dickering power of clients find how much clients can enforce force per unit area on borders and volumes. The purchasers for energy service industry Hunt for first-class quality merchandise but with lower monetary values and for a better contract term. Bargaining of power for these industries is low because:
The trade name trueness is high
Handiness of replacements is low
Buyer inducements is high in footings of energy supplier buy-backs and revenue enhancement interruptions
Buyers volume are low
Low bargaining force of purchasers
Low snap
Switch overing to alternate merchandise is hard
Dickering power of providers – ( high )
Bargaining of provider is the input required in order to supply the goods. The dickering power of providers is high because:
The market is dominated by few big providers
The shift cost are high
There is non much replacement for supplying field service of pumps, wellsprings, revolving equipments, power solutions, and renewable energy etc.
( Description and elaborate information of five force analysis are found in Appendix ( B ) )
The Value Chain
Figure 3 – Value concatenation with illustrations ( 13 ) :
The value concatenation describes the primary and support activities and exams the development of competitory advantage of the concern. The value concatenation was created by Michael Porter which has been used as powerful analysis tool for strategic planning of an administration since 1980. It is a great tool to better the company ‘s public presentation. Net income border is based on how the value concatenation is managed. The purpose of the value concatenation is to make a value that maximises the cost supplying the merchandise or services, therefore bring forthing net income border.
The value concatenation administration activities are split into three chief elements – primary activities, support activities and border. Primary activities are those that straight related with making and developing a merchandise. This activity may be critical in developing a competitory advantage for illustration logistic activities are critical for a supplier of distribution services. Support activities are non direct related to the merchandise but provide necessary efficiency and effectivity of the house.
Primary activities
Inbound logistic:
Since Wood Group is a taking independent services supplier, it uses its prima economic systems and market place as chief bargaining powers to carry through low costs from its providers. Oil and gas subdivision for Wood Group, the industry plans to bring forth maximal efficiency in its extraction procedure. Inbound logistic activities for oil & A ; gas subdivision are comprised of an oil oilers, series of grapevines and conveyance of the extracted petroleum oil to refinement workss. Wood Group effectual and efficient logistics operations are by utilizing low cost of rough oil transit. This gives the company cost advantage and increasing their net income border.
Operation:
Wood Group has many operation activities since it ‘s the company divided into three chief divisions. They provide scalable, incorporate operation & A ; care resources around the universe, including oil and gas field ( 14 ). Refining is the operating activity for technology sector that mainly involves downstream of oil & A ; gas. Other operation activities include: maintenance/overhaul of compressors, pumps, marine operations, mechanical, revolving equipment, instrumentality & A ; electrical alterations.
Overall, the Wood Group benefited from a robust public presentation from their production support related activities ( Production Facilities, Electric Submersible Pumps ) offset by decreased volumes and borders in development related concerns ( 8 ).
Outbound logistic:
Wood Group maintains a leading for independent technology supplier for grapevines and subsea developments due to its efficient and effectual outbound logistics. Their repute is built upon strong proficient excellence and efficient undertaking bringing ( 10 ). For this ground, they have gained longer term-relationship with their clients.
Gross saless and selling:
Wood Group has excelled in gross revenues due to its increasing sustainability and more environmentally friendly energy. They have been utilizing plans to place ways to cut down C by ( 9 ) :
Measuring work patterns and procedures that could adversely impact the environment
Pull offing waste more expeditiously
Flying C footmark measuring and decrease enterprises
These ways to cut down C has promoted the Wood Group gross revenues as they offer less inauspicious to the environment comparison to other companies.
Wood Group engineering progresss have discouraged their rival ‘s clients. They offer wave systems, air current turbines and other renewable energy undertaking engineerings to maximize the handiness of energy. Besides new oil and gas developments will be progressively focused on harsher environments – deeper H2O, subsea, north-polar parts and oil littorals ( 8 ). With their high differentiated merchandises and services in these countries, they are in good place to profit with their planetary clients.
Service:
Wood Group supply worldwide services such as field service of pumps, fix & A ; inspection and repair of turbines, high velocity revolving equipment, and installation operations ( 17 ). Wood Group extremely distinction merchandise, services and leading had increased an importance topographic point on client ‘s service.
As antecedently mentioned, Wood Group set uping the renewable energy services group and holding a dependable undertaking deliver service has increased the client ‘s attending.
Support activities
Human resource direction
For Wood Group safety comes foremost and it is of import to keep a healthy workplace to forestall accidents. For legion old ages, Wood Group has demonstrated high criterions for safety, wellness and environment.
Wood Group has improved its services by cut downing it injures in the concern by ( 9 ):
Guaranting their forces are decently inducted and trained
Bettering plus unity and procedure safety to extenuate the major jeopardies
Guaranting proper security and exigency response programs are in topographic point and tested
Wood Group aims to better the quality of occupational wellness direction by ( 9 ) :
keeping a healthy workplace
commanding more efficaciously the wellness hazards originating from our activities
advancing the benefit of healthy life styles for our employees via runs and wellness carnivals
There are besides plans to cut down C which was antecedently mentioned in gross revenues and selling activities.
Firm Infrastructure
Firm substructure involves an of import function in the fight of the company. In oil and gas subdivision of Wood Group, the company ‘s huge supply and distribution logistics web is a premier illustration of the substructure lowering costs for Wood Group. Wood Group seeks least dearly-won oil & A ; gas field to maintain its cost low. They find easy extractible oil & A ; gas Fieldss and operates their low cost and efficient extraction operations.
Technology development
The engineering development activity is an of import support activity for Wood Group. Wood Group invests a batch of research and development that is able to bring forth high efficiency for renewable energy and dropping the pollutions to the environment. The company might non able to do net income due to high engineering cost, so by puting in research and development can besides bring forth new engineerings to do their operation cost effectual.
Wood Group has introduced a Scansafe engineering to assist protection from their IT section. Scansafe provides web security to guarantee safe and productive environment for concerns. ScanSafe solutions maintain malware off corporate webs and let concerns to command and procure the usage of the Web ( 19 ). Harmonizing to the IT substructure director of Wood Group, Scansafe ‘s engineering has been 100 percent effectual and made important cost nest eggs in utilizing ScanSafe and has found the solution to be more effectual than the security theoretical account they had in topographic point antecedently ( 19 ).
Procurement
Since Wood Group operates in 50 states, sometimes staffs and undertaking directors need to go into different states. Wood Group provides the going staffs travel disbursals, impermanent offices, hotel and even strategic consulting.
Decision
From the SWOT and PESTLE analysis it shows Wood Group is in strong place as they are successful in many facets and as an energy service supplier they offer solution to maximize the handiness of renewable energy. Since the universe is running out of fossil fuels, the universe ‘s state needs alternate energy to power growing and cut downing the nursery gasses of the environment. Wood Group has been utilizing many plans to maximum in its wellness, safety and environmental. For these companies, authorities has backed such company by supplying revenue enhancement advantages as it could work out many of the energy jobs that are face today.
The company has established its name and operates in many states which provide clients security advantages when covering with the organisation. However, a company runing in many states can do troubles and confusion for the undertaking director to cover within the organisation. Some states like Russia and China that Wood Group employs have different policies could take to jobs to make certain concern. This facet could be a possible failing within the company. Besides Wood Group has reduced its gross in 2009 compared to old old ages due to the universe recession. This has do a lessening on the employment which has affected the discretional purchasing consumer ‘s behavior which consequences in a negatively impacted of the company ‘s gross revenues. However, it is expected the energy demand to turn once more and convey Wood Group gross back up once more.
Low menace of entry indicates merely major participants within these industries can afford to be in this type of industry and new participants find it hard to come in chiefly due to high capital cost, rigorous authorities policy and environment ordinance demands. This indicates the competition within this type of industry is friendly. Low menace of replacement shows Wood Group merchandises are alone and other companies do n’t hold much alternate engineering to offer at a cheaper monetary value. There are moderate competitions within this type of industry, but Wood Group is in strong place as it has its engineering progresss and offers first-class proficient and project bringing. Wood Group has many core strengths such as field service of pumps, installation operation & A ; care, revolving equipments, power solution and renewable energy ( 10 ). They besides use strong research and development to do their operation cost effectual to keep with its taking participant. Wood Group high differentiated merchandises and services have benefited their planetary clients. As a consequence the analysis of the value concatenation and 5 forces has besides shown Wood Group is in good place for oil & A ; gas service industry.
Overall from these analyses together shows Wood Group is in a strong concern place and it ‘s successful in many of its division. Wood Group is the universe ‘s prima solution-independent technology and direction services supplier for subsea developments and grapevines ( 10 ). Their repute is built upon strong proficient excellence and efficient undertaking bringing ( 10 ). In 2009 Wood Group recorded grosss of $ 4,927.1 million, the runing income of $ 298.5 million and the net net income of $ 164.2 million ( 5 ). High figure of the net net income shows the company is in first-class concern place.
Appendix ( A ) -PESTLE
Political
For supplying energy resources, the oil and gas services industry must follow both local and federal authorities ordinances. There are possible countenances and mulcts which could be set by assorted authoritiess.
Wood Group runing in a globalised environment with industries around the Earth ( operates in 50 states globally in continents such as Australia, Europe, Middle East and the U.S. ). Since it is runing in assorted states, its public presentation is greatly influenced by the legislative and political conditions of these states.
Their operations can adversely impact by political or ordinance developments are:
Access restrictions – Assorted states have limitation to export and import for certain merchandises. Besides legion states limit entree to their oil & A ; gas and other resources.
Fines – There could be possible countenances and mulcts by the authoritiess if they do n’t follow their legal process. Government wants to do certain their merchandise is environmentally friendly.
Restrictions on making concern -A As a British company, Wood Group is capable to Torahs forbiding British industry from making concern with peculiar states. Wood Group concern has been strained with states like Iran as they have been sanctioned.
Regulatory -A Even in states with strong legal systems where Wood Group does concern, they remain open to alterations in jurisprudence that could adversely impact their consequences, such as authorities royalty rates or additions in revenue enhancements ; monetary value controls ; or other Torahs that increase their cost of conformity.
Economicss
Economic factors are of concern to Wood Group because they are likely to act upon monetary values, demand, costs, and net incomes. One of the most important factors on the economic system is the planetary oil market monetary values that are chiefly influenced by demand and supply forces. Price force per unit area increases if there is a supply deficit. This may be due to factors such as ( 7 ):
Unplanned refinery deficit
Unexpected demand additions
Grapevine jobs
Company ‘s gross will increase if they provide good quality beginnings of alternate energy as authorities seeks environmentally free energy beginning. Market is unstable as universe economic system is coming out of a universe recession and lower oil and gas monetary values contributed to a decrease in planetary E & A ; P outgo of around 15 % in 2009 ( 8 ). However planetary economic systems are expected to turn within few old ages clip and energy demand will turn once more.
Social/cultural
The company involves in many states where population age, wellness and attitude vary. By placing differences and similarities in civilization to derive a better apprehension of the civilization issues related to the industry. Recently the state had become more concern about the environment and their position has been more encouraging for renewable energy merchandise.
Health and safety are one of the chief ends of Wood Group ‘s concern rules. Achieving and keeping high criterions of public presentation in wellness and safety involves an built-in function in the sustainability of their long-run repute and success. As wellness is portion of Wood Group ‘s vision, their end is to better the quality of occupational wellness direction by ( 9 ):
Keeping a healthy workplace
Controling more efficaciously the wellness hazards originating from their activities
Promoting the benefit of healthy life styles for their employees via runs and wellness carnivals
Life anticipation is relevant to the company ‘s labour force. In developed states their life anticipation are high and hence the work force labor would be greater comparison to the developing states.
Technological
Renewable energy engineerings have been increase to cut down the dodo fuels. Governments are now supplying revenue enhancement advantages and other subsidies to accomplish farther competition for alternate energy against oil and gas. They besides promote research for new engineerings to increase alternate energy beginnings and cut down the cost. Wood Group delivers solutions to maximize the handiness of wave energy systems, air current turbines, and other renewable energy undertakings. Wood Group is spread outing its range into the renewable energy industry and offers a dynamic set of specialized proficient consultancy services to run into the demands of their planetary clients.
Wood Group is the universe ‘s prima solution-independent technology and direction services supplier for subsea developments and grapevines ( 10 ). Their repute is built upon strong proficient excellence and efficient undertaking bringing ( 10 ). Wood Group are technologies leaders in legion countries such as cryogenic grapevines, remote feeling, grapevine stabilization and flow confidence.
Legal
Mixtures of authorities policies and statute laws have a direct impact on the public presentation of Wood Group. Employees of Wood Group based in states like Russia and China have different policies to the local regulations.
National authoritiess are concern with the environmental issues, hence legislative steps are used in order to coerce concern into acting in a more environmentally sound mode. The policy includes strong new safety criterions for offshore boring including presentations of ability to react to future runawaies and heavy punishments for safety misdemeanors.
Environmental
Due to concern over the hazard of planetary heating, a figure of states have adopted regulative models to cut down nursery gas emanations. These include C revenue enhancements, addition efficiency criterions and inducements for renewable energy. These demands could do Wood Group cut down the demand for hydrocarbons and their merchandises become more expensive.
Wood Group has attempted to understate CO2 emanations for their operations. In 2009, they introduced a C footmark pilot programme to assist a better apprehension of C direction and place ways to cut down C usage throughout their operations ( 11 ). The plan includes pull offing waste more expeditiously, flying C footmark measurings and research possible solutions for salvaging energy.
APPENDIX B – 5 forces
Barrier to entry ( high )
There are many oil & A ; gas industry services companies in the universe, but barriers to come in to these types are plenty to forestall the serious companies. Barriers to entry are high due to the high capital cost, important regulative environment and being of scale economic systems are required to run within the industry. This indicates the competition is friendly.
Recently oil and gas service industry is turning at a really strong rate which is attractive to new entrants as alternate energy is indispensable at this clip of the universe. However due to present economic trouble has contributed a big diminution in attraction in these industries which deterrent the possible entrants. To keep with the taking participants in the industry, strong research and development capableness is required ( 16 ).
Competitive Rivalry – ( medium )
It is significantly of import to look at the peculiar part in which the company runing to analyze an energy company. The clients can take their merchandise by their companies ‘ services criterion and velocity of bringing of their merchandise. Technology can alter the nature and the footing of competition among bing rivals in several ways. It can dramatically modify the cost construction and hence affect pricing determinations. The function of engineering in merchandise distinction and shift costs are besides of import in competition. Technology progresss can besides impact on the competition issue barriers.
Wood Group chief competitions are Aker Solutions, AMEC, KBR, Technip, Worley Parsons, and Baker Hughes ( 20 ). Wood Group is a taking independent services supplier for the oil & A ; gas and power coevals markets ( 17 ). Wood Group planetary repute has been built by successfully pull offing the most complex battles for their clients and offering a broad scope of incorporate services across the plus life ( 17 ) has perceptibly increased the profitableness of Wood Group concern.
Menace of replacement – ( low )
The menace of replacements for energy services are low as they are by and large merely gas, air current power, solar power, coal and hydroelectricity. Therefore they are non much replacement for renewable energy and merely large company can hold those merchandises due to a high capital cost. The menaces of replacement for these types companies are normally with those who offer better engineering and specialised services such as directional boring.
Dickering power of purchasers – ( low )
The bargaining power of purchasers for Wood Group has increased as they developed strong relationships with their clients by supplying dependable undertaking bringing and cost-efficient. Their success in these countries is established by the go oning relationships with: the incorporate operators, national oil companies, independent operators and power companies throughout the universe ( 18 ).
Dickering power of providers – ( high )
The energy services companies are largely dominated by major companies. For these types of industries big sum of capital investing are required significantly to cut down the figure of companies and increase the power of bing participants in the industry.
The oil and gas services providers in UK are threatened by big companies able to beginning their merchandise abroad at cheaper trades.
