Business Strategy

5/13/2018 Business Strategy - slidepdf.com

http://slidepdf.com/reader/full/business-strategy-55a750fbb3c2e 1/18

Financial statement analysis

Ellie Wilbraham

An Qian ChenJohnny Chiu

Case Study:Woodside petroleum



Agenda

IntroductionIntroduction

Economic &I

ndustry AnalyseEconomic &I

ndustry Analyse

Competitive strategyCompetitive strategy

2/25

Growth and profitability



I ntroduction

3/25

Introduction

Company

Background

E conomic

analysis

Porters 5 forces

Industry analysis

SWOT analysis

Competitive

strategy

Corporate

strategy

Sustainability

Industry growth

Company growth

Future

profitability

Conclusion



C ompany background

Exploration company for natural resources,Oil and Gas

Based in Western Australia

Founded in 1970s Focus on LNG- liquefied natural gas

Expansion and growth actions Pluto

4/25

Introduction

C ompany

Background

E conomic

analysis

Porters 5 forces

Industry analysis

SWOT analysis

Competitive

strategy

Corporate

strategy

Sustainability

Industry growth

Company growth

Future

profitability

Conclusion



E conomic analysis

5/25

Newspaper Articles Australian financial review

Internet sites- RBA, ASXCurrent situation-

Environmental factors

Government policies (carbon Tax)

Foreign exchange rate (USD/AUD)

Energy sector GDP

Companys place in industry Company financial reports

Analyst website reports

current news

Introduction

Company

Background

E conomic

analysis

Porters 5 forces

Industry analysis

SWOT analysis

Competitive

strategy

Corporate

strategy

Sustainability

Industry growth

Company growth

Future

profitability

Conclusion



I ndustry analysis - Porter¶s five

forces

6/25

Introduction

Company

Background

E conomic

analysis

Porters 5 forces

Industry analysis

SWOT analysis

Competitive

strategy

Corporate

strategy

Sustainability

Industry growth

Company growth

Future

profitability

Conclusion



I ndustry analysis

7/257/25

Porters 5 forces Rivalry among Existing Firms (high)o High fixed costs

o High exit barriers

o Low levels of product differentiation

Threat of New Entrants (low)o Economies of scale

o Capital requirements

o Government policy/approval for explorationand extraction

o significant regulatory environment withinthe oil and gas industry, which is restrictiveto the entry into the industry

o High exit costs

o First mover advantage

Introduction

Company

Background

E conomic

analysis

Porters 5 forces

Industry analysis

SWOT analysis

Competitive

strategy

Corporate

strategy

Sustainability

Industry growth

Company growth

Future

profitability

Conclusion



I ndustry analysis (cont)

8/25

Threat of Substitute Products/Services(low)

o limited substitute products available in the market Shifting to renewable

energy sources is costly and will take time, which is in short supply

o There are several substitutes for coal and consumable fuels within the

power generation market -nuclear fuels, alternative energy sources etc.

o However, while power companies can alter their primary energy mix to a

small extent without incurring many costs, a thoroughgoing transition to

these substitutes would require investment in different generation facilities,which constitutes a very high switching cost. Overall, the threat of

substitutes within the global oil, gas and consumable fuels industry is weak

but still growing with technological advances.

Introduction

Company

Background

E conomic

analysis

Porters 5 forces

Industry analysis

SWOT analysis

Competitive

strategy

Corporate

strategy

Sustainability

Industry growth

Company growth

Future

profitability

Conclusion



I ndustry analysis (cont)

9/25

Bargaining Power of Consumers (moderate)o Buyers are concentrated - there are a few buyers with significant market

share

o Buyers purchase a significant proportion of output - distribution of

purchases or if the product is standardizedo However, the fact that oil, gas and coal are strategically important to its

users tends to weaken buyers strength.

Bargaining Power of Suppliers (high)o Major suppliers are gas and oil equipment and services providers, meaning

limited number of suppliers and their importance to the industry increases

supplier power.

Introduction

Company

Background

E conomic

analysis

Porters 5 forces

Industry analysis

SWOT analysis

Competitive

strategy

Corporate

strategy

Sustainability

Industry growth

Company growth

Future

profitability

Conclusion



SWOT analysis

Strenghts Weaknesses

Retaining highly skilled and motivated

workforce, as evident by record number of

new employees in 2010 and a low attrition

rate

Cost of sales, royalty and excise costs

increased. Production costs were

unfavourably impacted by higher

AUD:USD. Exploration and evaluation

expenses were higher coupled withincreased general and administrative

costs.

Opportunities Threats

More investments in Asia as Asian

economies have recovered well from

the global downturn and have

generally returned to high levels of

economic growth.

The financial crisis

Environmental factors

Exchange rate influence

Increased competition for labour

Fragile industrial relations

environment.

10/25

Introduction

Company

Background

E conomic

analysis

Porters 5 forces

Industry analysis

SWOT analysis

Competitive

strategy

Corporate

strategy

Sustainability

Industry growth

Company growth

Future

profitability

Conclusion



C ompetitive Strategy

11/25

Cost leadershipo Low production cost and thin margins

o Profits coming from a high volume

o Large scale of production

o Undifferentiated producto price of which is set according to supply and demand

Core competencyo Highly skilled employees

Efficient operation of plant and equipment- improving production reliabilityand capacity utilisation

Employee dedication- Healthy, safety and security policies

Introduction

Company

Background

E conomic

analysis

Porters 5 forces

Industry analysis

SWOT analysis

C ompetitive

strategy

Corporate

strategy

Sustainability

Industry growth

Company growth

Future

profitability

Conclusion



C orporate strategy

12/25

Corporate scope To create and deliver outstanding, sustained growth in shareholder wealth by

providing energy for the future.

Woodside continues to focus on improving its foundation business and delivering

long-term growth in shareholder value through commercialising its Australian LNG

portfolio.

Synergyo Management- Woodsides highly skilled employees combine knowledge and

expertise to maximise efficiency under all business units

o Leverage-Vertically and horizontally operations highly

integrated from exploration, mining, extraction,refinement, shipping and production of natural energy.

Resulting in maximised efficiency and integrated

systems throughout whole corporate umbrella

o Cost-Oil refinery and natural gas plants use similar equipment. Eliminating

redundant assets and ability to merge duplicate processes into one.

Introduction

Company

Background

E conomic

analysis

Porters 5 forces

Industry analysis

SWOT analysis

Competitive

strategy

C orporate

strategy

Sustainability

Industry growth

Company growth

Future

profitability

Conclusion



Sustainability

13/25

Sustainablecompetitiveadvantage

Price-based

strategy

Maximisedsynergy

Concisecorporate

scope

13/25

Introduction

Company

Background

E conomic

analysis

Porters 5 forces

Industry analysis

SWOT analysis

Competitive

strategy

Corporate

strategy

Sustainability

Industry growth

Company growth

Future

profitability

Conclusion



I ndustry growth potential

14/25

Developed countries will tend to opt for LNG as a transitional energy source as

oppose from coal/oil since LNG has more emission advantages and its efficiency

to transport over long distances.

increased at a rate of 7.4 percent per year over the decade from 1995 to 2005

Driven by Asias ever increasing demand of LNG

Recent activity in Japans nuclear dilemma prompted Japan to look at LNG for

sustainable energy

Introduction

Company

Background

E conomic

analysis

Porters 5 forces

Industry analysis

SWOT analysis

Competitive

strategy

Corporate

strategy

Sustainability

Industry growth

Company growth

Future

profitability

Conclusion



C ompany growth potential

15/25

Horizontal expansiono Project Pluto- Delivery of the foundation Pluto LNG Project will support future

LNG growth opportunities

o Development stages of project Browse and Sunrise. Fueling future LNG

growth

Existing market shareo Eight operating assets in North West shelf of Australia, Three of which are LNG

plants- Woodside aims to maximise the returns from these assets Woodside will

meet its financial obligations and contribute funds to support the companys

growth ambitions

Introduction

Company

Background

E conomic

analysis

Porters 5 forces

Industry analysis

SWOT analysis

Competitive

strategy

Corporate

strategy

Sustainability

Industry growth

C ompany growth

Future

profitability

Conclusion



F uture profitability

Total energy consumption would only ever increase

Woodside would significantly benefit from the widespread use of LNG globally as

it is one of Australias LNG suppliers. With current total of 3 operating LNG plants

and continuous expansion, Woodside has the capability to meet demand.

As Asia led the way in world economic recovery, Woodside advanced plans for

Pluto expansion, Browse and Sunrise to take advantage of growing energy

demand from the region.

Operating cash flow increased by 41.9% from the previous year (2009) to $2.10

billion, putting Woodside in a strong position to invest in LNG growth strategy.

16/2516/25

Introduction

Company

Background

E conomic

analysis

Porters 5 forces

Industry analysis

SWOT analysis

Competitive

strategy

Corporate

strategy

Sustainability

Industry growth

Company growth

F uture

profitability

Conclusion



C onclusion

Ever increasing costs in Energy sector

Multiple external factors influence

energy prices

Corporate and Business strategy vital

for company survival

High growth rate for rising LNG energy

Expected profits for Woodside in near

future

1717/25

Introduction

Company

Background

E conomic

analysis

Porters 5 forces

Industry analysis

SWOT analysis

Competitive

strategy

Corporate

strategy

Sustainability

Industry growth

Company growth

Future

profitability

C onclusion



End

Documents

Business Strategy