Strategic Analysis of Statoil

1. Strategic Analysis
Demiris George
Trevezas Simon
MaurinAurelie
Banou Kristi-Monika
Kastidou Despina
Course: Strategic Management
Prof: N.Theriou

2. Introduction
 Evaluate the industry’s background and illustrate efficient and
effective solutions in order to accomplish its primary objectives.
 Express critical thoughts on our strengths and weaknesses but
also to opportunities and threats.
 The report is a recommendation of possible and logic actions
through scientific and supported evidence.

3. History
 After 1965, licenses were first given from the government to exploit in Norway North
Sea.
 In 1972 Statoil was created as a state corporation in the city of Stavanger in Norway.
 In 1975 becoming net exporter. First subsea oil pipeline and first explorations
(the Norpipe line from Ekofisk to Teesside in the United Kingdom).
 In 1992, operations for gas in Ireland from British Petroleum (BP)
 In 2001, Statoil became a public limited company (privatized) and was listed on Stock
exchange. Before it was called Statoil Energy & Retail AS. After changing of name,
was renamed Statoil Fuel & Retail ASA (18 May 2010) (transportation fuel, stationary
energy, marine fuel, lubricants, chemicals and aviation fuels, it has been closed on 12
July 2012.

4. VISION
According to annual report of 2013, vision refer’s as :
‘’Crossing Energy Frontiers’’
It guides our long term strategy as an upstream- oriented & technology
based energy company. Represents both past achievements and the
challenges we have to solve, to continue developing our great company.

5. VISION
According to annual report of 2013, vision refer’s as :
‘’Crossing Energy Frontiers’’
It guides our long term strategy as an upstream- oriented & technology
based energy company. Represents both past achievements and the
challenges we have to solve, to continue developing our great company.
Proposed
“Provide innovative energy solutions for every humankind activities worldwide.”

6. MISSION
The statement refers as:
“Our mission is to accommodate the world energy needs in a responsible manner. We are
determined to develop resources responsibly with zero harm to people and environment. This
lasting values orients our worldwide operations and delivers profitable growth and prudent
redistribution of capital to shareholders”

7. MISSION
The statement refers as:
“Our mission is to accommodate the world energy needs in a responsible manner. We are
determined to develop resources responsibly with zero harm to people and environment. This
lasting values orients our worldwide operations and delivers profitable growth and prudent
redistribution of capital to shareholders”
Proposed Mission
“Statoil is a world leading Energy Company determined to deliver to our customers
responsibly oil, gas and petrochemical solutions with zero harm to people and to
environment. Our values distinguish us within the global market delivering profitable growth
and financial rewards to our shareholders. Innovating technology is the key feature for
achieving our everlasting values providing sustainable societies and also is our major
advantage worldwide. Finally we believe that the employees reveal the whole image of the
company and illustrate a live example of our ethics, that’s why we reward our people on the
basis of their performance, giving equal emphasis to delivery and behavior.”

8. External Audit
 Determine and evaluate the external oil
industry’s environment
 Five Forces Analysis
 CPM Matrix
 Determine the Opportunities andThreats
 EFE matrix for both Upstream and Downstream
sector

9. Competitive Rivalry
(high)
Large IOCs & NOCs
High exit barriers
High competition for
new oil fields
Threats of new entrants
(very low)
Huge capital requirements
Economies of scale
Channels of distribution
Access in oil fields
Bargaining Power of
Buyers
(low)
Countries(US, EU, India,
China)
Refineries
Major international
companies
Threat by Substitutes
(low)
Existent technology
oriented towards oil &gas
consumption
Cost of substitutes
Bargaining Power of
Suppliers
(high)
Pipeline constructors, raw
material, special equipment
suppliers, engineers
OPEC
Need for strong political
connections
External Audit
Five Forces

10. Statoil ExxonMobil Shell BP
Critical Success
Factor
Weight Rating Score Rating Score Rating Score Rating Score
Advertising 0.15 2 0.3 2 0.3 2 0.3 2 0.3
Product Quality 0.1 4 0.4 4 0.4 4 0.4 4 0.4
Price
Competitiveness
0.1 4 0.4 4 0.4 4 0.4 4 0.4
Management 0.06 4 0.24 3 0.18 3 0.18 3 0.18
Financial Position 0.15 2 0.3 4 0.6 3 0.45 3 0.45
Customer Loyalty 0.1 3 0.3 4 0.4 4 0.4 4 0.4
Global Loyalty 0.2 2 0.4 4 0.8 4 0.8 3 0.6
Market Share 0.1 2 0.2 3 0.3 3 0.3 3 0.3
Production
Capacity
0.04 2 0.08 4 0.16 3 0.12 3 0.12
Total 1 2.62 3.54 3.35 3.15
External Audit
CPM Matrix

11. EFE MATRIX-UPSTREAM
Opportunities Weight Rating Weighted
score
1. Annual growth in oil demand 1.3 mb/d for the next 5-10 years. 0.11 3 0.33
2. Global expanding/acquisitions, merges. 0.07 2 0.14
3. Increase in Gas demand by 1% in Europe, 2% n. America & 5% Asia 0.09 3 0.27
4. NGL production from unconventional is anticipated from 1.8 mmbl/d this year to 3.8
mmbl/d by 2020. 0.05 2 0.1
5. Conventional reserves in challenging areas (Artic, far north). 0.05 3 0.15
6. Cross-sector strategic partnerships/investment in renewables (wind, solar, hydro). 0.03 4 0.12
7. Increase in oil and gas production/new large fields after 2015. 0.07 3 0.21
8. NOC-IOC partnerships. 0.07 2 0.14
Threats
1. Energy and climate policies. EU declare a 20% reduction of emissions until 2020. 0.04 4 0.16
2. Unstable political environment in international operations, such as Libya, Egypt and
Syria.(Terrorist attack at the In Amenas facility) 0.08 1 0.08
3. Health/safety accidents. 0.03 3 0.09
4. Environmental risks. Exploratory drilling risks. 0.03 3 0.09
6. NOC’s control at about 90% of the world oil proven reserves. 0.06 2 0.12
7. 18% average decrease of oil prices over the last four months. IEA forecasts present an
overall decrease of oil prices since 2015. 0.09 1 0.09
8. Government regulations/ bureaucracy. Host-governments tend to increase taxes imposed
on foreign companies. 0.05 1 0.05
9. 22% of oil and gas respondents indicate lack of qualified personnel. 0.01 3 0.03
10. High competition among companies. (justification) 0.07 2 0.14
Total Weighted Score 100% 2.25
External Audit
EFE Upstream

12. EFE MATRIX-DOWNSTREAM
Opportunities Weight Rating
Weighted
score
1. Increase in Gas demand by 1% in Europe, 2% n. America & 5% Asia. 0.12 2 0.52
2. Cross-sector strategic partnership/investment in renewables (wind, solar, hydro). 0.06 2 0.12
3. Annual growth in oil demand 1.3 mb/d for the next 5-10 years. 0.09 2 0.12
4. New markets (India, China)/sales exports. 0.1 1 0.3
5. Stable home market/geopolitical stability in Norway. 0.07 2 0.16
6. Norway’s continually growth economy. Annual growth rate 2.8%. 0.08 4 0.18
Threats
1. Energy and climate policies, EU declare a reduction of emissions 20% until 2020. 0.07 4 0.28
2.Unsteable political environment in international operations, such as Libya, Egypt and
Syria 0.05 1 0.1
3. Health/safety accidents. 0.05 4 0.2
4. Environmental risks. 0.06 4 0.24
5. High competition among companies. 0.08 1 0.08
6. Renewables gain market share, from 2% to 7% next 15 years. 0.06 2 0.12
7. Fuel economy enhancements of new cars, 23% of full hybrids and 44% mild-hybrid
in the next 15 years.
0.06 1 0.06
8. Fluctuation in oil prices. Unstable industry environment. 0.06 1 0.21
Total Weighted Score 100% 2.23
External Audit
EFE Downstream

13. Internal Audit
 Examine company’s value chain
 Determine and evaluate firms’ strengths and
weaknesses
 IFE Matrix-Upstream & Downstream

14. ````
IFE -Upstream
IFE MATRIX-UPSTREAM
Strengths Weight Rating Weighted score
1. Ranked No1 in 2014 of the world’s most sustainable energy companies.
(flaring, CO2 reduce emissions) 0.04 4 0.16
2. 2nd in gas supplies in Europe. 0.06 3 0.18
3. Gas reserves close to EU. 0.06 4 0.24
4. New entry in offshore renewable energy. (Wind farms Shenghan shoal,
UK). 0.03 3 0.09
5. Financial total assets increased from 784.4 bnNOK to 885.6 bnNOK in
2013. 0.02 3 0.06
6. Current ratio is higher compared with competitors. (justify)
0.03 4 0.12
7. Statoil expect to invest around USD 20 billion on average per year 2014-
2016 Maintain ROCE. 0.03 3 0.09
8. Equity production for 2014 is estimated to grow for 2%.
0.04 3 0.12
9. Expect 50 wells to be complete in 2014 with expenditure USD 35 billion. 0.03 3 0.09
10. Innovative technology upstream driven company. (justify) 0.04 4 0.16
11. Strong network of transportation pipelines in Norway region and N.
Dakota. 0.01 4 0.04
12. Best exploration results in the industry, in 2013. Added 1.25 billion of
barrels of oil equivalent. 0.05 4 0.2
13. Norway’s continually growth economy. Annual growth rate 2.8%. 0.01 4 0.04
14. Liquidity. Balance sheet. Long term objectives. 0.03 3 0.09
Weaknesses
1. Financial Net income decrease 39.2 2013 from 69.5 to 2012. 0.04 2 0.08
2. Oil and gas production (mboe/day) decreased, 1.940 in 2013 from 2004
in 2014. 0.03 2 0.06
3. LNG imported in Europe fell at 23%. 0.08 1 0.08
4. 52% increase of long term debt. 0.02 2 0.04
6. A net loss of 4.8 bn NOK to the end of September, compared with net
income the same period last year. 0.03 2 0.06
7. Political, social and economic instability in regions where Statoil
operates, N. Africa, Russia, Mid. East. 0.05 2 0.1
8. Lack of effective regulations and legislation in operational regions.
Corruption. 0.03 2 0.06
9. Host governments tend to increase taxes imposed on foreign
companies. 0.03 2 0.06
10. Intense competition with other players in the market which are more
resourceful in terms of finances, and operations may erode its market
share. 0.08 1 0.08
11. 63% of oil production in Norway’s region. Old fields. 0.05 1 0.05
12. High dependence in EU market. 0.06 2 0.12
Total Weighted Score 100% 2.49

15. ````
IFE MATRIX-DOWNSTREAM
Strengths Weight Rating Weighted
score
1. 2nd in gas supplies in Europe. 0.14 4 0.56
2. Gas reserves close to EU. 0.12 3 0.36
3. Financial total assets increased from 784.4 bnNOK to 885.6 bnNOK in 2013 0.06 3 0.18
4. Current ratio is higher compared with competitors.
0.06 4 0.24
5. Statoil expect to invest around USD 20 billion on average per year 2014-2016
Maintain ROCE 0.07 3 0.21
6. Strong network of transportation pipelines in Norway region. 0.04 3 0.12
7. Norway’s continually growth economy. Annual growth rate 2.8%. 0.05 3 0.15
Weaknesses
1. Financial Net income decrease 39.2 2013 from 69.5 to 2012. 0.06 2 0.12
2. LNG imported in Europe fell at 23%. 0.1 2 0.2
3. 52% increase of long term dept. 0.06 1 0.06
4. Lack of effective regulations and legislation in operational regions. 0.06 1 0.06
5. Small Europe market share in retail sector. Concentration most in Russia and
Scandinavian countries. 0.03 2 0.06
6. Political, social and economic instability in regions where Statoil operates, N.
Africa, Russia, Mid. East. 0.1 1 0.1
7. A net loss of NOK 4.8 bn to the end of September, compared with net income
the same period last year. 0.05 1 0.05
Total Weighted Score 100% 2.47
IFE -Downstream

16. Strategy Formulation
 Determine Key Opportunities,Threats, Strengths and Weaknesses
 SWOT Analysis
 Internal – External Matrix
 Grand Strategy Matrix
 Simplified Methodology
 QSPM –Quantitative Strategic Planning Matrix

17. Strengths
 2nd
in gas supply in Europe.
 Added 1.25 bbr of oil equivalent.
 Current ratio is higher than
competitors.
 Gas reserves close to E.U.
 Innovative technology in upstream.
 Expect to complete 50 wells in
2014.
Weaknesses
 LNG imported in Europe fell at 23%.
 Political instability in regions where
operates
 High dependence in EU market.
 Financial net income decrease 39.2
bnNOK from 69.5 bnNOK in 2012.
 Intense competition with other more
powerful players.
Opportunities
 Annual growth in oil demand
1.3brd every year.
 Increase gas demand, 1% Europe,
2% N. America, 5% Asia.
 New large fields after 2015.
 NOC-IOC partnerships.
 Increase liquidity.
Threats
 Unstable political
environment in operational regions.
 E.U. policies to decrease CO2
emissions.
 Decrease in oil prices in 2015.
 Environmental risks/exploration
drilling risks.
 NOC s control at about 90% of the
world oil proven reserves
INTERNALEXTERNAL
HELPFULL HARMFULL
SWOT
Strategy Formulation

18. Strengths
1. 2nd in gas supply in Europe.
2. Added 1.25 bbr of oil equivalent.
3. Current ratio is higher than competitors.
4. Gas reserves close to E.U.
5. Innovative technology in upstream.
6. Expect to complete 50 wells in 2014.
7. New entry in offshore renewable energy.
Weaknesses
1. Political instability in regions where
operates
2. High dependence in EU market
(upstream).
3. Financial net income decrease 39.2
bnNOK from 69.5 bnNOK in 2012.
4. Intense competition with other more
powerful players.
5. Small downstream market share in EU and
Asia.
Opportunities
1. Annual growth in oil demand 1.3brd
every year.
2. Increase gas demand, 1% Europe, 2%
N.America, 5% Asia.
3. New large fields after 2015,Artic, far
north.
4. NOC-IOC partnerships.
5. Increase liquidity.
SO Strategies
 Increase gas exports in Europe through
agreements EU members. (S1, O2).
 Invest in R&D in renewable technology. (S7,
O5)
WO Strategies
 Invest in expanding pipeline network in EU.
(W2, O5)
 Expand retail network in Asia. (W2, W5, O2)
 Partnerships with strong NOCs. (W4, O4)
Threats
1. Unstable political environment in
operational regions.
2. E.U. policies to decrease CO2 emissions.
3. Decrease in oil prices in 2015.
4. Environmental risks/exploration drilling
risks.
5. LNG imported in Europe fell at 23%.
6. NOC’s control at about 90% of the world
oil proven reserves
ST Strategies
 Invest in R&D for new sustainable
environmental technologies (upstream).
(S3, S7,T2,T4)
 Invest in new environmentally friendly
technologies. (S3,T2)
WT strategies
 Expand retail network in Asia. ( W2,W5,T5)
Strategy Formulation

19. I
IV
VII VIII
V
IX
VI
II III
THE IFETOTAL WEIGHTED
SCORES
THE EFE
TOTAL
WEIGHTED
SCORE
High
3.0 to 4.0
Medium
2.0 to 2.99
Low
1.0 to 1.9
Strong
3.0 to 4.0
Average
2.0 to 2.99
Weak
1.0 to 1.99
(2.47, 2.23)
Strategy Formulation
IE Matrix - Downstream

20. I
IV
VII VIII
V
IX
VI
II III
THE IFETOTAL WEIGHTED
SCORES
THE EFE
TOTAL
WEIGHTE
D SCORE
High
3.0 to 4.0
Medium
2.0 to 2.99
Low
1.0 to 1.9
Strong
3.0 to 4.0
Average
2.0 to 2.99
Weak
1.0 to 1.99
(2.49, 2.25)
IE Matrix - Upstream
Strategy Formulation

21. I
IV
VII VIII
V
IX
VI
II III
THE IFETOTAL WEIGHTED
SCORES
THE EFE
TOTAL
WEIGHTE
D SCORE
High
3.0 to 4.0
Medium
2.0 to 2.99
Low
1.0 to 1.9
Strong
3.0 to 4.0
Average
2.0 to 2.99
Weak
1.0 to 1.99
(2.49, 2.25)
IE Matrix - Upstream
Strategy Formulation
Hold & Maintain
• Market penetration
• Product Development

22. The Grand Strategy Matrix
Weak
Competitive
Position
Strong
Competitive
Position
Rapid Market Growth
Slow Market Growth
5%

23. The Grand Strategy Matrix
Weak
Competitive
Position
Strong
Competitive
Position
Rapid Market Growth
Slow Market Growth
5%
 Market Development
 Market Penetration
 Horizontal Integration
 Divestiture/Liquidation

24. Proposed Strategic
Options
Internal-
External Matrix
SWOT Matrix Grand Strategy Matrix
Invest in R&D in renewable
technology. X
Expand retail network in Asia.
X X X
Partnerships with strong NOCs
X X X
Divestiture/Liquidation
X
Expand pipeline network in
EU. X X X
Unrelated Market
Penetration/Small tools &
accessories
X
Strategy Formulation
Simplified Methodology

25. Proposed Strategic
Options
Internal-
External Matrix
SWOT Matrix Grand Strategy Matrix
Invest in R&D in renewable
technology. X
Expand retail network in Asia.
X X X
Partnerships with strong NOCs
X X X
Divestiture/Liquidation
X
Expand pipeline network in
EU. X X X
Unrelated
Diversification/Small tools &
accessories
X
Strategy Formulation
Simplified Methodology
 Brand name closely connect
with heavy machinery,
working efficiently in
extreme situations,
reliability.
 High annual growth
compared with other
markets. (10,6 % )
 Spread worldwide the firms
brand name and reputation
by products more widely
used.

26. Strategic Alternatives
Expand Retail Network
in Asia
Expand Pipeline
Network in EU
Key Factors Weight AS TAS AS TAS
Opportunities
1 Annual growth in oil Demand 0.10 4 0.4 2 0.2
2 Increasing Gas Demand 5% in Asia 0.07 4 0.28 1 0.07
3 New Markets (India China) 0.11 4 0.44 1 0.11
4 Cross-sector strategic partnerships 0.04 2 0.08 1 0.04
Threats
1 High Competition among companies 0.10 2 0.2 2 0.2
2 Unstable political environment in host
countries
0.07 1 0.07 1 0.07
3 Strict energy policies in EU about emissions 0.04 3 0.12 1 0.04
4 NOCs control the 90% of proven reserves 0.05 1 0.05 2 0.05
QSPM

27. Strategic Alternatives
Expand Retail Network in Asia Expand Pipeline
Network in EU
Key Factors Weight AS TAS AS TAS
1 Strengths
2 Gas reserves close to EU 0.07 1 0.07 4 0.28
3 Expect 50 wells to be completed in 2014 0.04 2 0.08 3 0.12
4 Liquidity/Higher current ratio from
competitors
0.05 3 0.15 2 0.01
5 Innovative technology in Upstream sector 0.04 1 0.04 3 0.12
Weaknesses
1 LNG imported in EU fell at 23% 0.05 3 0.15 1 0.05
2 52% increase of long-term debt. 0.06 1 0.06 1 0.06
3 High dependence in Europe market 0.06 3 0.18 2 0.12
4 Small EU market share in retails 0.05 1 0.05 3 0.15
TOTAL 1 2.42 1.83
QSPM

28. Conclusions

29. Conclusions
Statoil seems capable to compete and operate effectively in each of their
business segments and improve its current position.

30. Conclusions
Statoil seems capable to compete and operate effectively in each of their
business segments and improve its current position.
Main Proposed strategy

31. Conclusions
Statoil seems capable to compete and operate effectively in each of their
business segments and improve its current position.
Main Proposed strategy

32. Conclusions
Statoil seems capable to compete and operate effectively in each of their
business segments and improve its current position.
Main Proposed strategy Expand retail network
in Asia

33. Conclusions
Take advantage of a promising market
Enlarge the downstream sector . A sector with high profitability
in which Statoil is weak.
Statoil seems capable to compete and operate effectively in each of their
business segments and improve its current position.
Main Proposed strategy Expand retail network
in Asia
Sales
Downstream
81%

34. Conclusions
The unprecedented strategy
Penetrate in
“Small tools and
accessories”
market

35. Thank you for your attention!