Aramco 2

Q1. Critically discuss the key factors and forces in the general and industry
environments that affect the demand for crude oil and consequently Aramco.

The results of their optimization decisions are collectively decided by an overall balancing model
for the global petroleum industry, which determines oil price, supply, and demand, for importers
and petroleum exporters. Saudi Aramco is an energy company with a competitive edge on the
production side. The transition from oil prices to shocks is widely discussed and thought to be
external in a literature. However, there are no surprises on oil prices individually. Instead, they
are triggered by stronger flavor, infrastructure, and policy shocks, as are other relative price
increases. The foreign oil price will be determined by the balanced result of the interactions of
many market actors in conjunction with the quantities of oil generated and consumed. They
found compelling evidence that global oil markets are heavily influenced. Despite this proof, few
models of balanced fuel oil markets are calculated, and both the price of oil and oil quantity are
much less endogenous.

A general equilibrium process to match the petroleum industry structure with that of petroleum
and petroleum prices as a balance of outcomes to improve decision-making between oil
importers and oil exporters. Aramco is the world's biggest oil producer with a well above one-
tenth of global supplies and an estimated one-fifth of the proven oil reserves. Although
production costs are lower, it is the sole company that manages sample spares and restricts
investment in the increase of the reserves available. Indeed, its output in comparison with the
other major producers was extremely unpredictable, whereas Aramco itself suffered few shocks
which affected its production directly. Technological standards for the life, use and sustainable
growth of the leading petroleum industry. The combined movement between the price of oil and
the value of the oil field. It can be positive or negative depending on the cause of the shock. The
joint supply of Iraq/Kuwait dropped and the initial saw in the price of oil was between 19 and 34
dollars a barrel. From a paradigm standpoint, this is fully consistent with its own intent of profit
maximization, unlike non-economic alternative factors (e.g., external policy). The dominant
corporation should raise its demand significantly, but not sufficiently compensate for the fall in
the fringe so that oil prices grow in tandem with oil sales. The flexibility of two policies from the
point of view of interventions in oil imports electricity tax and oil fringes.

In contrast to partial equilibrium conditions which assume an exogenous oil price, the system is
well suited to trace the general impact of the balance through the endogenously determined price
of oil. The tax is not a rise in welfare and its effects depend on whether the oil prices are stable or
declining. Indeed, a marginal oil subsidy is more likely to alleviate economic coercion than an
oil sale tax because it has a stable return. The best support for marginal production strikes a
balance between reducing market leverage in the dominant business and assigning resources to
more efficient technology. The nation of oil imports employs citizens to produce finished goods,
some of which are domestically consumed, while others are exported to the two oil-producing
regions. The region where oils are imported imports oils to be consumed. The presence, not as a
growth factor, of oil as a luxury product. The market influences internal demand for goods and
services rather than as an input into production. It is also a helpful way of postulating inelastic oil
demand which is required for the high oil price in the figures. Oil is also an equivalent
commodity manufactured by the leading firm and several rival oil suppliers. Fringes take the
price of oil as shown in the collection of the production volume. The dominant firm faces a
downward sloping residual demand curve at all points of time and state of life and gathers points
for optimum gain. The transport sector accounts for the largest share of oil demand following the
consumption of the industry. OECD countries account for some 50% of these by road transport,
8% by air, 14% by petrochemical goods and 9% by industrial, commercial, and farming
industries. Around 15% come from varied manufacturing operations. The pandemic, as well as
parts of the petrochemicals, commercial and manufacturing, has already struck aviation and
private road transport sectors hard. Many passengers of airlines have been stranded for longer
than they would have liked. Others claim that they were not well handled as passengers either.

Q2. Based on your findings in question 1, discuss how the pandemic COVID-
19 affected Aramco demand for crude oil and its byproducts. From your own
perspective, what should Aramco do to keep its position as the world's largest
exporter of crude oil if this situation prevailed?

While the forecasts for future oil rates are uncertain, it is expected that a rebound of oil prices for
the third quarter of 2020 and moderate rebound in the first half of 2021, with WTI and Brent
ranging from $ 40 to $ 60 per barrel, would occur in the absence of a Middle East war which
causes serious supply problems. Despite this move, a variety of oil industries suffer loss from US
shale oil producers and Canadian tar sands manufacturers to numerous standard crude oil
exporters, creating difficulties in obtaining and costing production equipment or losing
competition in key markets. Crude oil prices fell briefly between the end of 2015 and Aprils
2016, and stabilized for most of 2018, but by the beginning of February 2020, the impact on the
oil markets and most other energy markets began to be reasonably steady with COVID-19. The
crude oil prices dropped by 30% or more for seven-month stretches from 1985 to 2015 due to
shifts in OPEC policy (or in areas separated by OPEC), strengthening of the US dollar, shift in
view of geopolitical threats, weakening of global demand, over-scalability, and unconventional
crude oil production.

As crude oil prices plummeted in early 2020, Russia and Saudi Arabia largely split, but then
picked up the pandemic COVID 19, followed by negative oil prices in April 2020 when May
contracts expired, with traders obliged to release stock. One of the most surprising aspects of the
present pandemic is the plethora of updates on potential pandemics and global epidemics issued
in recent years. This is particularly remarked, because after the outbreak in 2002-2003 and
MERS (Middle East Respiratory Syndrome) since 2012 there have been substantial worries
about avian influenza and the presence of "wet markets" across Asia, and repeated concern about
avian flu. Many observers and policymakers, especially energy-related politicians, seem to have
overlooked them.

Q3. Discuss whether Aramco world-wide market position is supported by its value
chain and other key internal resources. Identify problems you think they are
facing in respect to current COVID-19 pandemic situation.

Saudi Arabia ARAMCO Corporation is the multinational oil producer, marketer, and dealer.
ARAMCO is nevertheless one of the world's largest companies and rivals on foreign markets.
The organization is facing many growing cost pressures exacerbated by high demands for
efficiency, a fast-changing environmental protection production process and increasing business
division. When the coronavirus pandemic ends with its acute period in developing countries. The
new COVID-19 World Economic Forum reports that, amid threats to the food supply chain, the
risks to the Asian main agricultural producers are rising in 2020-21 in official Middle Eastern
sales rates. As the acute coronavirus pandemic ends in industrialized economies, scientists
caution that chronic temperature threats will trigger new public health crises. Saudi Arabian
corporation ARAMCO faced numerous difficulties in terms of management, development,
supply, and corporate processes for its employees. There was an immediate need to develop
management for system automation and to cover all the growth projects, which expanded
alarmingly rapidly in the 1990s. Saudi Aramco has taken a host of desperately required actions
and steps to reduce the impact on contractors and vendors of the COVID-19 pandemic. Like
reprogramming programs, reorganization of the discounts of contractors, and even the
completion of certain major contractors, to allow local contractors some control. A security
framework has been launched to ensure the expenses of sub-contractors. Any specifications have
been updated to allow bank guarantees to be used instead of currency guarantees and to decrease
these guarantees in relation to the completion of a project.

Aramco also built highly equipped centers of call and digital channels, in particular situations, to
boost markets for private contacts. As with COVID-19 pandemic. The Vendors Support Center
is prepared to receive and respond to company requests to ensure consistent communication with
all our suppliers. Both contacts with vendors are managed and monitored until the problem is
resolved and closed. They act towards minimizing illness spread, restricting proximity to unsafe
individuals, postponing events, and taking meetings and online training programs. Your teams
sweep public spaces and workplaces and build new health centers to create awareness posters
around our premises. They also advise our workers about their risks and warnings, including
regular guidance, advice, and a specific team of advisors. They close their schools, community
centers, shops, play areas and other essential spaces to make them happy. Their citizens have the
best advice and suggestions on wellbeing and prevention as to how they can manage a quarantine
home properly. They know, though, that life must be continued and services such as judges,
commissioners and pharmacies must be constantly refreshed. The workers contribute to the
continuity, the planning of sanitation and food for buildings and the transfer of our personnel to
their destinations. The service for a large network of offices covers the supply chains
administration, operational support, and a wide array of administrative support structures.

The goods and services of Saudi Aramco America company include financial and political
research, packaging, transportation, and distribution of Saud's cruder fuel. To achieve technical
advancements, access to the latest technologies, individuals and partners around the world is
critical. You will import refined goods, chemical components, and base oil, ensure that your
interrelated global network is stable and boost our resilience against demand volatility. Pioneer
alliances in domestic and international markets provide tools to facilitate or implement
innovative technologies, to develop new talent from current employees, to attract top skills and
to expand our testing experience in a manner that achieves our strategic business goals. Other
international partners are responsible for their global operations and markets through subsidiaries
and mutual ventures. The COVID-19 pandemic has influenced the output of oil supplies. The
latest crude demand was weakened by COVID-19. Both global oil producers have been impacted
since the height of the pandemic. Foreign trading has deteriorated and the growth of almost all
developed markets has crashed, as well as the balance of product supply and demand shakes in
many economies across world to reduce coronaviruses between and between continents. These
consequences have reduced energy usage and prices have plummeted to unparalleled lows in
almost two decades. However, Aramco's oil market management could transition from price
stability to market share if the COVID-19 crisis accelerates. This could have a strategic
advantage because Aramco is the leading single crude oil exporter.

Q4. Discuss how COVID-19 pandemic affected the Business–Level-strategy of

Aramco petrochemical division. Suggest ways by which this division may
sustain its competitive position in future.

ARAMCO in Saudi Arabia had different problems in the management, growth, delivery, and
organization of its employees. Management for system automation was suddenly needed and all
growth projects were covered, which grew alarmingly quickly throughout the 1990s. Saudi
Aramco has taken several urgently needed steps to reduce the effect of the COVID-19 pandemic
on contractors and vendors. Like programming, it reorganizes the discounts for manufacturers
and totally works with a range of big suppliers to allow local companies use them. Some
standards have been revised to allow bank guarantees rather than currency guarantees to be used
and to decrease these guarantees while a project is being finished. To improve promotions for
private contacts, Aramco has also developed fully equipped call centers and digital platforms.
Including the pandemic COVID-19. To maintain clear contact with all our vendors, the Vendor
Service Center is prepared to accept and respond to company requests. Both vendor
communications are handled and tracked until the matter has been settled and closed.

They work to minimize the transmission of disease, limit proximity to insecure persons, cancel
activities, meetings, and online training programs. Your teams will cover public spaces and
offices and build new health centers in our hospitals to produce awareness posters. They also
inform our staff about their risks and warnings, through daily guidance, recommendations, and a
particular team of consultants. They shut their classrooms, community halls, shops, playgrounds
and other vital places to please them. To make you happy, they shut their schools, community
centers, stores, playgrounds, and other important places. Their people provide the best guidance
and advice about how they can better run a quarantine house. They know, though, that there must
be a continuation of life and continually refreshing facilities like lawyers, commissions, and
pharmacies. The employees aid to ensure continuity, to prepare hygiene and food for buildings
and to move our staff to their destinations.

References

Porter, M.E., 2008. The five competitive forces that shape strategy. Harvard business
review, 86(1), p.78.

Morrison, A.J. and Roth, K., 1992. A taxonomy of business‐level strategies in global
industries. Strategic management journal, 13(6), pp.399-417.

Al-Moneef, Majid A. “THE ROLE of OIL and GAS in the SAUDI ECONOMY: THE INTERACTION
between ECONOMIC DEVELOPMENT and OIL and GAS STRATEGIES.” The Journal of Energy and
Development, vol. 28, no. 1, 2002, pp. 95–106, www.jstor.org/stable/24808867?seq=1.
Accessed 20 Feb. 2021.
2020 Saudi Arabian Oil Company First Quarter Interim Report.

Dobbs, M.E., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review

Jashim Uddin Ahmed, et al. “Saudi Aramco: A Blend between Profit and
Politics.” ResearchGate, SAGE Publications, June 2018,
www.researchgate.net/publication/336236354_Saudi_Aramco_A_Blend_between_Profit_and_P
olitics.