Recommendations And Justification For Strategic Options Marketing Essay

Recommendations And Justification For Strategic Options Marketing Essay Introduction From the last three decades hospitality business environment is becoming more aggressive and competitive for the businessmen due to the impact of globalization. Therefore, it is mandatory for every businessman to develop and implement a comprehensive and profitable strategic planning for the survival of their business. A strategy indicating the opportunities to propose, specific targets, and the types of competitive advantages those are to be developed. (Dibb et al., 2006) So strategy preparation is the overall preparation that facilitates the goodness of management procedures. Of import provision takes you after-school the day to day activities of your governance or task. It provides you with the big picture of what you are doing and where you are going. Strategical planning gives you lucidity about what you actually want to achieve and how to go astir achieving it rather than a program of activity for day to day operations. (Janet Shapiro et al., 1998). Strategical management is a continuous process that estimates and controls the activities of the organizations in which the organization is involved. It also helps to evaluate its potential competitors keeping in view the organizations set goals and strategies to achieve the organizational overall objectives. The implementations of these strategies are evaluated on regular basis and if these strategies are not working in the business environment to achieve the organizational goals then these are replaced by new strategies. Stephan P. Robbins and Mary Coulter (2009: 180) tell us: Every organization needs a mission-a statement of its purpose. This mission induces the managers to take favorable actions to accomplish this mission. For instance, the mission of Brook Hotels is Brook Hotels is committed to realizing our guests needs. This statement provides clues to what this organization sees as their purpose. They achieve this, by development and providing innovative dare and first-class hospitality products served by devoted attached highly disciplined vibrant people. In so doing, they always strive to create and sustain prominent returns and value and to honor their sociable and biology responsibilities to the fullest. The managers usually observe the two environments in the situation analysis. External analysis of hotel, so the managers know that what the competition is doing and what the labor supply is like in locations where it operates. Therefore, managers examine both the specific and general enviro nment to see the positive and negative trends (opportunities, threats) of the hotel and then create and develop the strategies accordingly. Internal analysis of hotel provides you the important information of the hotel resources (financial, physical, human and intangibles assets) and capabilities (skills and abilities to do the activities). These resources and capabilities give the hotel a competitive edge. Tools that can be in use to evaluate acceptableness include what if analytic thinking neutral functions. After evaluation all the strategies are going to be implemented in a developed organizational structure and design in a way that the company goes towards the profitability. As we know that the hospitality industry is reaching at the maturity due to a large number of competitors and the effect of globalization. Therefore, in order to survive in such a competitive environment, everyone have to work out on the effective strategic formation and implementation. Thus, it is very imp ortant to have a good strategy because organization can only gain the sustainable growth if they have good plans for the consumers as they are the only source of all the revenues help in building a good reputation in the industry. 4. Company Introduction The Hilton Hotels Corporation is recognized worldwide in hospitality industry. It owns over 514 hotels worldwide with over 176,257 rooms. According to Forbes, it is ranked as the 43rd largest private company in the United States. It was founded by Conrad Hilton in 1919 in Cisco, Texas. The corporation has highly regarded hotel brands. Their brand portfolio includes: Hilton Conrad Doubletree Embassy Suites Hotels Hampton Inn, Hampton Inn Suites Hilton Garden Inn Homewood Suites by Hilton, and The Waldorf Astoria Collection Hilton is guided by the principles of Conrad Hilton, in which the company strives to: Consistently delight customers invest in team members Be mindful of the environment Deliver innovative products and services Give back to the communities that are served Expand the family of brands Continuously improve performance Provide a healthy, safe environment for team members, guests and customers Create a culture of pride Strengthen the loyalty of constituents Hilton in recent years, have aimed to target those aged between 25 to 55, and therefore to become more appealing to the younger audience. Most of the Hilton brand hotels are franchised to independent companies. 4.1 Vision Hospitality is all about the individual and at Hilton; we pride ourselves on our unique service culture. Yes I Can! Is our company-wide philosophy which promises that each guest will be treated with a positive service attitude at every point of contact? The hotel manager, the waiter, the receptionist, the porter everyone plays a vital role in delivering a memorable guest experience. 4.2 Mission We provide concern and leisure time travellers with a pick of first-class hospitality products that offering good economic value while reassuring good return to owners and shareholders and inspiration to employees. 4.3 Values of Hilton Hotels H Hospitality: The organization is passionate about delivering exceptional guest experiences I Integrity: To do the right thing all time L- Leadership: To continue its leadership in the industry and also in its communities T- Team work: To perform the tasks in teams O- Ownership: To be the owners of the actions and decisions taken. N- Now: To operate with a sense of urgency and discipline (Hilton, 2010) 5. PESTEL Analysis PESTEL analysis defines the external factors to business, depending on the market Ecological and Legislative factors are included. PESTEL analysis measures the market capability by indicating the areas of growth. Political factors include legislation, international legislation, regulatory bodies, government policies, government terms and change, funding, grants and initiatives and lobby groups. The economic factors comprise domestic economy, international situations and trends, taxation issues, seasonal issues, market and trade cycles, distribution issues and others. The social factors include lifestyle trends, demographics, consumer attitudes, opinions, media views, brand, company, technology image, consumer purchasing patterns, fashion and role models, competing technology development, associated and dependent technologies, replacement technology solutions, maturity of technology information and communication and others. Political Factors: Considering the political factors Hilton Hotels have faced many political barriers on its way to success. One such incident is the Arab boycott of American companies. Arab countries have boycotted businesses with countries that do businesses with Israel even though the issue was not directly related to America. Most of the American companies like Ford, IBM and Hilton were blacklisted by the Arabs. Hilton Hotels continued to expand its business in Israel and Egypt along with promoting peace in the region. Hilton Hotel received no threat from Israel after opening its hotel in Egypt. Economic Factors: The internet is not severely alive to the efficient economic cycles. However, it is observed that the tourism or hotel sales are dejected due to unnatural economic changes in those countries from which customers are booking and reserving the products. These changes include in economic growth, interest rates, rising prices or currency fluctuations that can eliminate tourism organization s cost advantage and can have an adverse consequence on the margins. Hilton has formed alliances with various organizations and also strategic agreements to continue its prosperity. Social Factors: Sociology changes and changes in customers attitudes towards new technology and internet in particularly will have absolute wallop on internet and hospitality industries respectfully. Time customers are Thomas More experienced and innovative in the use of engineering science. The social system of rules dimension moldiness includes the larger mixer and persuasion processes through with which the interests of the dissimilar social groups interact with one another and with the technology. Hilton has figured its services suitable for all the sectors. It has provisions for theatres, conference rooms for business delegates, U-shaped bedrooms and board rooms, dinner halls social gatherings and other similar activities. Technological Factors: Hilton has implemented electronic marketing as part of its technology drive. The rooms booked over the web for the Hilton hotel accounts for half billion dollars. Hilton has developed its own system of technological department for managing the international operations worldwide. Hilton is among the few hotels that use internet for booking rooms. Hilton has merged with various firms like Starwood for expansion and also for its technologic advantage. Hilton International use computers in their core information physical processing centers of selling and statistical distribution, front office, back-office, and beverages control. Information technologies are dispersing in eight key areas of hotel trading operations like selling, distribution, reservations and gross sales, telecommunications, guest accounting, room management, back-office, food and drinks, control energy management and safety and security. Merchandise distribution is a critically important mathemati cal function of Hilton International. Information technologies, such as computerized reservations systems and video brochures, aid hotels in selling and distributing their bed nights. For Hilton the employment of information technologies to nexus neurotic their front office, back office and beverages departments may be essential for the businesslike and cost-effective bringing of their services. However, it aim not be decent to warranty the sales agreement of hotel bed nights without links to international selling and statistical distribution networks building bed nights cannot be sold. Ecological Factors: Hilton New York has unveiled eco-centric initiatives as part of its two-years of celebration of generating clean power with fuel cell technology. Hilton New York has performed various leading-edge initiatives throughout the hotel. (Organic Fertilizer Waste Vector Decomposition System) This system was set up to reduce the 8 tons of wet rubbish which is approximately equal to 5000 meals produced on an average at the building each day. This system facilitates the employees to dispose of table and kitchen scraps into unit which is a size of chest freezer. This system eliminates nearly 400 bags of garbage per day. (Water Purification System) Hilton New York has deployed an on-site water purification system created by the Natural Water. The Natural water system is connected to the existing water source. This water system of rules has eliminated nearly 12 000 expendable glass and plastic bottles from paper routine change of location in the hotel. Legislative Factors:- The hoteliers in US are about to expect lobbying and assembly action that will feeling travel companionship taxation and card bank check which are important issues to the lodging manufacture according to the American Hotel and Lodging connection. The association believes that this move will certainly bear an impact on the industry. Chris Nassetta the CEO of the Hilton Hotels has same that it is a greater menace than people are giving it credit for. Building companionship executives fearfulness the execution of the this statute law as they would no choice but to brand up what they consider as incomprehensible gross by levying high monetary value onto hotels. 6. SWOT Analysis of Hilton Hotels Hilton hotels corporation is also recovering from the event of September eleven the like all Major building corporations. This tragic homo event also delivered a financially annihilating blow to the traveling industry as a unit and to the building industry in particular. In order to fully recover and thrive in the coming old age Hilton mustiness assess its overall all strengths and weaknesses as it moves forward done the new millennium. The favorable grind analytic thinking sheds any easy on any of the pitfalls and opportunities that await the Hilton Hotels. Strengths Hilton Hotel Corporation is a well-established organization and industry leader in the hospitality industry. It is well diversified across the industry with hotels in the high end, business and mid-priced classes in their product mix. It also possesses solid integration features such as owning the companies that manufacture its furniture and has invested in online reservation travel enterprises Weaknesses It may be two narrowly focused making it exposed to a downturn in the global economy and other world-wide misfortunes that could limit global travel such as the bird-flu and a significant terrorist strike. It may be defenseless to workers strikes and crack down on undocumented workers in the U.S. Most of its holdings are in the U.S. Opportunities It should offer a range of characteristic and expert services to the high end guests and high whitecaps such as wedding planning hosting, spas that specialize in personal services and personal trainers. It should look to expand into or purchase a cruise line. A cruise ship is little more than a hotel that floats this would essentially match what it currently doing with its leased properties Gaming activities would spurt regulation, etc. Take advantage of emerging markets, especially with business class and mid-priced markets. Threats It must be careful not overstretch its labors to mix entertaining and betting The delay of credit and other side effects of betting can slowly but surely chew profits. September 11th was a major blow to the hotel industry. A similar event could result in another down turn. By studying national and regional industry trends Hilton Corporation will be capable to return advantage of opportunities that will enable growth piece identifying threats that may affect profitableness. Growing in the hotel and cordial reception manufacture will include a continuing focusing on gambling International enlargement and exploitation all media to promote its products to potential customers. One advisable strategy for Hilton is to emphasize the grandness of family in all its hotels including the gambling and gambling casino locations. Las Vegas has exhausted millions to attract families by adding childrens attractions as well spring as the conventional casinos for the adults. Most of the hotels rich person at affair a little country devoted to colonnade games. However some hotels have luxuriant arcades plot areas and child attention centers motivated for those traveling with children Hilton Hotels Corporation, 2007. Hilton needs to ensure they are right field in the middl e of this demographic of parents traveling with children. Spell the focusing can stillness be on the senior high school dollars that are tossed around in the casinos by the parents it will be critical that the edifice have the facilities usable that testament attract parents with children to check at the property. Since location is a greater requirement and holiday clip has become one of the few multiplications that families are capable to spend superior clip together, Hilton essential capitalize on this marketplace section. 7. Evaluation of the Strategic Options After analyzing the internal and external environments, it is important for Hilton Hotel Corporation to identify the strategic options that are available. This gives them the opportunity to select the most suitable strategic option for the corporation. The strategic options are evaluated on the following criteria: The required resources The degree to control over future strategies The speed with which a change in the position of SBUs can be achieved Strategic options Environment Competencies Expectation of the company Risk involved Market Penetration Gain market share for advantages Superior resources and skill force to adopt this option Increase return by using the current strategies Low risk Market Development Current market is saturated, opportunity to enter new segment, new geographical areas Current product portfolio can be used. Increase return by using the current strategies Medium risk Demographic Segmentation Focus on age and low income group to get competitive advantage Skilled force to adopt this option using current product portfolio Increase return by using the current strategies High risk Backward Integration Become a furniture manufacturer Skilled force to adopt this option with new product line Increase return developing new strategies Medium risk Joint venture Obtain local management to reduce risk Distinctive skilled force with new and existing product Increase return developing new strategies Low risk Recommendations and Justification for Strategic Options After an internal and external analysis of Hilton Hotel Corporation and evaluation of the strategic options the following growth strategies for the company are recommended. Market Penetration Acquisition of motels Market development Excursionists Demographic segmentation Backpackers:Â  18-28 years, no children. Attracted to adventurous activity, consider themselves travellers not tourists, generally well-educated and cost conscious. Empty Nesters:Â  Parents whose children have flown the family nest, between 43 and 58 of age, well-educated and medium disposable income. Backward Integration Distribution of furniture manufacturer Joint Venture Expansion of businesses other than the western world Strategies Attractiveness Company strengths Level of importance Market Penetration (Acquisition of motels) Very high Highly recognized brand name in the western world High [Company doesnt have motels in US and UK ] Market Development Obtain the market of (Excursionists ) Very high Highly recognized brand name in the western world Very high demographic segmentation (Backpackers and (Empty Nesters) High Highly recognized brand name in the western world high Backward Integration (Supplier of furniture) Moderate Highly recognized brand name in the western world Low Joint Venture (Acquire some assets in Pakistan) Moderate Highly recognized brand name in the western world Moderate Conclusion Marketing is the lifeblood for any business organization which can be defined as the collection and coordination of interrelated activities. The degree and the impact of marketing planning determines the success or failure of a business organization as they help in the analyzing the markets and also the needs of the customers. The founder of Hilton hotels is the Conrad Hilton which was renamed as Capital Hilton in the year 1977. Many celebrated guests have considered Hilton group of hotels as home away from home which was trademark for customer service and hospitality. Hilton group of hotels have been affected by the political controversies in the Middle East but it didnt confine its growth in the region. The organization went on to open its hotels in Egypt and Israel amidst controversies and also promoted peace in the process. Apart from political and legislative factors remaining of the PESTEL factor didnt affect the Hilton hotels business across the world. The marketing planning l ived up to the expectations of the expectations of the Hilton Hotels. The marketing approach used by Hilton is geocentric to a great extent. The hotel chains in the US failed to attract the guests at the beginning of 2002 vacation season later they managed to balance the figures. Therefore it can be concluded that the Hilton group of hotels is performing to standards of its reputation but there is plenty scope for the American based organization to develop further. References Cathy A. Enz, Hospitality Strategic Management Concepts and Cases: 2nd Edition Stephen P. Robbins, Mary Coulter, Principles of Management: 10th Edition Philip Kotler, John T. Bowen, James C. Makens, Marketing for Hospitality and Tourism: 5th Edition Gerry Johnson, Kevan Scholes, Exploring Corporate Strategy: 6th Edition Johnson G, Scholes K, Whittington R., 2008, Exploring Corporate Strategy, 8th Edition, FT Prentice Hall, Essex.

Scm in Petroleum Industry

International Journal of Global Logistics & Supply Chain Management. Vol. 1, No. 2, 1 November 2006, 90 – 97. Supply Chain Management in the Petroleum Industry: Challenges and Opportunities RAED HUSSAIN Department of Quantitative Methods & Information Systems, Kuwait University, Kuwait TIRAVAT ASSAVAPOKEE Department of Industrial Engineering, University of Houston, Texas, U. S. A. BASHEER KHUMAWALA Department of Decision and Information Sciences, University of Houston, Texas, U.S. A. Supply chain management in the petroleum industry contains various challenges, specifically in the logistics area, that are not present in most other industries. These logistical challenges are a major influence on the cost of oil and its derivatives. However, opportunities for cost savings in logistics still do exist. Giant oil and petrochemical companies are undertaking a â€Å"swap† practice that saves companies millions of dollars.The objective of this paper is to shed some light on the supply chain challenges and opportunities in the petroleum industry and on swap practices that have long been employed by petroleum industry’s giants around the world, such as BP, BASF, Honeywell, Nova, and much more, yet have long been ignored in the operations management literature. Keywords: Supply Chain Management, Logistics, Petroleum Industry, The Swap Practice 1.Introduction The steadily increasing global demand for oil and its derivatives such as petrochemicals has enabled companies providing these products to reach more customers and increase their market share and profitability. This boom in global demand along with the ease of international trade and the inflexibility1 involved in the petroleum industry’s supply chain has made its management more complex and more challenging (Coia, 1999; Morton, 2003). Despite the importance of supply chain management and its growing complexity, the petroleum industry is still in the development stage of efficiently managin g their supply chains.In fact, according to Steve Welsh, a managing director of the College of Petroleum and Energy Studies at the University of Oxford, the oil and petrochemical industry’s insight into the supply chain is still in its infancy (Schwartz, 2000). However, even with the inflexibility and complexity involved in the industry’s supply chain, there is a lot of room for improvement and cost reduction, specifically in its logistics area. Werner Paratorius, president of BASF’s petrochemicals division said â€Å"Supply chain management is the backbone of a business where logistics costs can be greater than manufacturing costs† (Whitfield, 2004, p. R12).By the end of 2004, world-wide demand for oil reached 75 million barrels per day and has been projected to increase at a rate of 2 percent per year over the next ten years. For example, China’s demand for energy alone is expected to grow at a rate of 4. 5 percent per year for the next five year s and reach four million barrels by 2010. However, due to recent political unrest in the Middle East, which is the largest oil producing region, sustainable oil supply has become highly unpredictable. Oil and petrochemicals companies are forced to maintain higher safety stocks and search for alternative sources of supplies (Ikram, 2004).Inflexibility in the supply chain is the constraints involved along the chain, such as long lead-times, manufacturing capacity, and limited means of transportation, that are hard to change. 1 Commodities such as oil, gas, and petrochemicals require specific modes of transportation such as pipelines, vessels or tankers, and railroads. These commodities are produced in specific and limited regions of the world, yet they are demanded all over the globe since they represent an essential source of energy and raw material for a large number of other industries.Several weeks lead-time from the shipping point to the final customers’ location is very c ommon in this type of industry. For example, it takes five weeks for the Persian Gulf’s oil to make its way to the United States and up to another three weeks for it to be processed and delivered (Schwartz, 2000). Opening new production sites or distribution centers closer to dispersed customers is one way to reduce the lead time and transportation costs. However, the acquisition of such facilities in the oil and petrochemical industries, if feasible, is typically very costly and often results in higher inventory and operating costs (Hebert, 2004).Red Cavaney, president of the American Petroleum Institute, said â€Å"Most companies are unlikely to undertake the significant investment needed to even begin the process† (Hebert, 2004) These factors are pushing oil and petrochemicals companies to either absorb the increase in costs or pass the costs on to customers who are already facing increasing prices. Companies therefore have recognized that improved supply chain effi ciencies represent a huge area for cost savings, specifically in the logistics area; they are estimated to be an average between 10 and 20 percent of revenues (Hamilton, 2003).Also, companies believe that the supply chain in which they participate as customers and suppliers is what creates competition rather than individual companies (Whitfield, 2004; Lange, 2004; Morton, 2003; Bianchi, 2003; Collins, 1999; Coia, 1999). Despite the importance of the petroleum industry in our daily life and the operational challenges it involves, unfortunately the topic has received very little attention in operations and supply chain management literature. The objective of this paper, therefore, is to shed some light on challenges and opportunities in the petroleum industry’s supply chain management.Our discussion will focus on a practice that has been saving companies millions of dollars but has long escaped the attention it deserves from academia. The practice is referred to as systematic c ooperative reciprocal barter (also called â€Å"swaps†) (Haberman, 2002). 2. Supply Chain Management in the Petroleum Industry Before getting into any further discussion of supply chain management in the petroleum industry, it is important to first clarify the industry background and its production process. A brief explanation is available in the appendix. The supply chain of the petroleum industry is extremely complex compared to other industries.It is divided into two different, yet closely related, major segments: the upstream and downstream supply chains. The upstream supply chain involves the acquisition of crude oil, which is the specialty of the oil companies. The upstream process includes the exploration, forecasting, production, and logistics management of delivering crude oil from remotely located oil wells to refineries. The downstream supply chain starts at the refinery, where the crude oil is manufactured into the consumable products that are the specialty of ref ineries and petrochemical companies.The downstream supply chain involves the process of forecasting, production, and the logistics management of delivering the crude oil derivatives to customers around the globe. Challenges and opportunities exist now in both the upstream and downstream supply chains. 3. Challenges in the Supply Chain 3. 1. Logistical Challenges The logistics network in the petroleum industry is highly inflexible, which arises from the production capabilities of crude oil suppliers, long transportation lead times, and the limitations of modes of transportation.Every point in the network, therefore, represents a major challenge (Jenkins and Wright. 1998). The oil and petrochemical industries are global in nature. As a result, these commodities and products are transferred between locations that are—in many cases—continents apart. The long distance between supply chain partners and slow modes of transportation induce not only high transportation costs an d in-transit inventory, but also high inventory carrying costs in terms of safety stocks at the final customer location.The great distances between supply chain partners present a high variability of transportation times that can hurt suppliers in terms of service levels and final customers in terms of safety stock costs. Moreover, the transportation process is carried out either by ships, trucks, pipelines, or railroads. In many instances, a shipment has to exploit multiple transportation modes before reaching the final customer’s location. â€Å"Very few industries 91 deal with that kind of complexity in shipping,† said Doug Houseman, a senior manager at the consulting firm Accenture (Morton, 2003, p. 1). Such constraints on transportation modes in this type of industry induce long lead times from the shipping point to the final customers’ location compared to other industries. Hence, considering the amount of inflexibility involved, meeting the broadening pro spect of oil demand and its derivates while maintaining high service-levels and efficiency is a major challenge in the petroleum industry. 3. 2. Other Challenges The logistics function is only one of many areas that affect supply chain performance in the petroleum industry.Integrated process management, information systems and information sharing, organizational restructuring, and cultural reorientation are as equally important (Ikram, 2004). The need for integrated processes all the way from procurement of raw materials to the delivery of the final product is crucial for a company’s success. â€Å"Manufacturing efficiency alone does not ensure a competitive advantage anymore,† said Paratorius, president of BASF’s petrochemicals division (Whitfield, 2004, p. R12). The industry lags behind in using integrated planning across the supply chain.This type of disintegration in the supply chain can increase the cost of acquiring crude oil, which will eventually affect gas prices for consumers (Coia, 1999). Also, due to the globalization of the petroleum industry supply chain, sophisticated information technology is essential for smooth information flow considering the complexity of the logistics network in such an industry. Companies’ relationships in supply chain networks are directly related to the effective use of information technology (Guimaraes, Cook, and Natarajan, 2002).A data flow diagram (DFD) was developed by Hull in 2001 to improve supply chain information flow reliability of the Alaskan North Slope Oil supply chain. The study showed that using the DFD helped to realize the importance of the relationship between scheduling and dispatching (synchronization). By using the DFD to examine the information flow, overall supply chain efficiency was improved and distortion,2 which is greatly related to supply chain structure, was greatly reduced.Moreover, the generic DFD developed offers a template for modeling any supply chain or logi stics activity, whether it is a push, pull, or a hybrid push/pull system (Hull, 2001). Sophisticated information technology is also essential for petroleum industries due to security needs. Petroleum companies ship a great deal of hazardous products, and supply chain partners (suppliers and customers) must be aware of the locations of each shipment at any point in time. According to Houseman at Accenture, chemical companies are considering wireless technology to track their shipments (Morton, 2003).Another challenge in the petroleum industry supply chain is the attitude and anxiety regarding collaboration and information sharing between supply chain partners. While collaboration and information sharing represent a crucial factor for supply chain efficiency, â€Å"companies in the petroleum industry are sometimes cautious when it comes to sharing their demand/costs information,† said Salah Al-Kharraz, a supply chain director at Equate Petrochemicals (Personal Communication, 23 December 2004). This type of parsimony regarding collaboration and sharing demand/costs information can waste opportunities for costs saving.Improved supply chain efficiency in the petroleum industry, therefore, needs a new philosophy in collaboration, even if this means working with competitors. â€Å"Collaboration, information sharing, and asset optimization require the greatest mind change because chemical producers and LSPs would have to work with their competitors, as well as with other operators in the supply chain,† said Phil Browitt, CEO of AGILITY, a logistics firm (Young, 2005, p. 10). The acquisition of sophisticated information technology, although necessary, can only do so much if it is not supported by a cultural change.The next section will discuss an opportunity, specifically a practice that has been saving companies millions of dollars in the petroleum industry’s supply chain, yet has not received the attention it deserves in academia. 4. Opportunitie s in the Supply Chain and Swap Practices In an effort to manage their supply chain and reduce costs, oil and petrochemical companies are outsourcing3 their logistics4 functions. As the trend in outsourcing has grown, these companies have become increasinglyDistortion in Hull’s paper is the â€Å"bullwhip effect† established by the well-known beer game developed by Sterman (1989) and Senge (1990). 3 Outsourcing takes place when an organization transfers the ownership of a business process to a supplier. 92 2 reliant on the services of third-party5 logistics companies for managing their supply chains (Collins, 1999). Companies in the petroleum industry, however, took the outsourcing idea one step further and found that one way of outsourcing their logistics functions is to ally and collaborate with competitors.This form of collaboration is referred to as a systematic cooperative reciprocal barter (also called â€Å"swaps† or â€Å"exchanges†) of supplies, a ssets, market share, or even the entire business among competitors (O’Dwyer, 1988; Robert, 1995; Gain, 1997; Alperowicz, 2001; Sim, 2002). However, despite the significant advantages this practice has generated for companies, a defined model for making such decisions does not exist. The subject has barely received any attention in the operations management literature.Currently, no specific method has been adopted to determine when companies should attempt to make swap decisions. An interview with supply chain directors in two international petrochemical companies that have been involved in swapping with their competitors for the past few years revealed that the only methods used are judgmental6 methods and spreadsheets. Although judgmental approaches may improve accuracy in many decision-making problems, they should not be the only methods employed. The use of only such approaches cannot guarantee an optimal solution. 4. 1.The Swap Practice In a commodity-type industry such a s oil and petrochemicals, the source of the commodity is often of no interest to the final customer as long as the commodity adheres to its required specifications and the delivery of that commodity is made by the promised due date. Therefore, competing oil and petrochemical companies form supply chain alliances when delivering commodities to customers in order to reduce transportation and inventory costs and improve customer service. In return, cost savings for transportation in the overall supply chain are shared among participating companies.This form of collaboration is referred to as shipment swapping. This kind of collaboration with competitors creates a shared solution to common supply chain obstacles and is predicted to be the â€Å"Next Big Thing† (Morton, 2003). The swapping technique is currently applied by oil and petrochemical companies around the world in all of its different forms: asset swapping, business swapping, and shipment swapping. However, because of th e absence of any general analytical discussion of swap practices in the literature, we first provide examples from the oil and petrochemicals industry for each form of swap practice being used.This is done to illustrate the advantages of collaboration among competitors. Due to brevity, only the more recent examples of such practices are discussed here. 4. 2. Asset Swapping In 2001, BP became the largest olefins producer in Germany after an asset swap with E. ON, a German utility company. Following the deal, BP took over Veba Oel, E. ON’s oil, refining, and petrochemicals business, and E. ON bought BP’s 25 percent stake in Ruhrgas, Germany’s largest gas distributor. The deal gave BP 2. 1 million tons of ethylene7 capacity in Germany, which is about 40 percent of the country’s total, and ave E. ON control of one of the largest gas distribution networks in Germany (Milmo, 2001). In 2003, BASF, a leading German chemical company, and Honeywell signed a long-te rm deal under which BASF will supply Honeywell with nylon chips and Honeywell will supply BASF with specialty nylon and nylon co-polymers8. Since Honeywell has a strong presence in electrical and tooling applications and BASF is strong in the automotive sector, the deal has benefited both companies in their business specialties. For example, in 2003 the deal raised BASF’s market share in nylon from 9 percent to 35 percent and gaveLogistics is the process of planning, implementing, and controlling the efficient, cost-effective flow and storage of raw material, in-process inventory, finished goods, and related information from point of origin to point of consumption to conform to customer requirements (Council of Logistics Management, 1998, p. 2). 5 Third-party logistics is the use of an outside company to perform all or part of the firm’s materials management and product distribution function. 6 A judgmental method is the use of people’s opinions when making deci sions. 7 Ethylene is a colorless gas at room temperature.At very low temperatures, it is a liquid. It is used as a refrigerant and in welding and cutting metals. It is also used to manufacture ethylene oxide, mustard gas, and other organics and to accelerate the ripening of fruits. 8 When a polymer chain-like molecule is made by linking only one type of small molecule together, it is called a homopolymer. When two different types of molecules are joined in the same polymer chain, it is called a co-polymer. 93 4 Honeywell the chance to concentrate on carpet, apparel, and fabrics for automotive upholstery. Honeywell plans to eventually sell the nylon business (Sim, 2003).More recently, the Kuwait Petroleum Company (KPC) and the Iraqi Oil Institute (SOMO) signed a comprehensive memorandum of understanding related to exchanges of shipments of Kuwaiti benzene and diesel with Iraqi natural gas. The swap will be implemented in two phases. Thirty-five million cubic feet of Iraqi natural gas will be supplied daily to Kuwait for about one year at an estimated cost of U. S. $24 million during the first phase. Then, 165 million cubic feet of natural gas will be supplied daily to Kuwait for about two years at an estimated cost of U. S. 700 million dollars during the second phase. Meanwhile, Kuwait will supply Iraq with oil derivatives, benzene, and diesel, ranging from two to three million liters of benzene and 1. 3 to 1. 5 million liters of diesel daily (Alshalan, 2004). The outcome of this agreement is expected to significantly benefit both countries. Kuwait produces a relatively modest volume of natural gas (around 293 billion cubic feet––Bcf––in 2002), the vast majority of which is â€Å"associated gas. †9 Prior to the 1990-1991 Gulf War, Kuwait received significant volumes of natural gas from Iraq.The gas came from Iraq’s southern Rumaila field through a 40-inch, 100-mile, 300 Mmcf/d pipeline to Kuwait’s central manifol d at Ahmadi. The gas was used for the production of petrochemicals, electricity, and water through desalination processes. With such uses of natural gas, the Kuwaiti-Iraqi swapping deal could free up a substantial amount of oil to Kuwait, possibly 100,000 barrels per day (bbl/d) for export by 2006, which is presently used for similar purposes. For example, 65,000 bbl/d of fuel oil is currently used to generate electric power in Kuwait.Throughout most of the 1990s, Iraq generally did not have access to the latest state-of-the-art oil industry technology. Saybolt International reported that Iraq oil companies, NOC and SOC, were able to increase their oil production through the use of short-term techniques not generally considered acceptable in the oil industry (i. e. , â€Å"water flooding,† the injection of refined oil products into crude reservoirs). In addition, a U. N. report in June 2001 stated that Iraqi oil production capacity would fall sharply unless technical and infr astructure problems were addressed.Moreover, Iraq’s southern oil industry was decimated in the 1990-1991 Gulf War, with production capacity falling to 75,000 bbl/d in mid-1991. The Gulf War resulted in the destruction of (a) gathering centers and compression/degassing stations at Rumaila; (b) storage facilities, including the 1. 6 million bbl/d (nameplate capacity) Mina al-Bakr/Basra export terminal; and (c) pumping stations along the 1. 4 million bbl/d (pre-war capacity) Iraqi Strategic (North-South) Pipeline. Seven other sizable fields remain damaged or partially mothballed.These include Zubair, Luhais, Suba, Buzurgan, Abu Ghirab, and Fauqi. Generally speaking, oil field development plans were put on hold following Iraq’s invasion of Kuwait, with Iraqi efforts focused on maintaining production at existing fields. At the present time, problems with Iraq’s refineries––stemming largely from post-war looting and sabotage in addition to power outagesà ¢â‚¬â€œÃ¢â‚¬â€œcontinue to force the country to import gasoline, diesel, liquid petroleum gas (LPG), and other refined products from neighboring countries (Iran, Jordan, Kuwait, Syria, and Turkey).As of October 2004, Oil Minister Ghadban said that Iraqi gasoline imports were running around 40,000 bbl/d (mainly by truck), costing the country U. S. $60 million per month in direct costs. This does not include the additional cost of steep government subsidies on the consumer price of gasoline, which runs around 10 cents per gallon. It is estimated that overall direct and indirect oil subsidies cost Iraq U. S. $8 billion per year, with no indication as to when this problem might be resolved (Country Analysis Brief, March 2004).As a result, both countries are expected to benefit from the swapping agreement; Iraq will secure current and future needs of oil, benzene, and diesel and Kuwait will use the natural gas for the production of petrochemicals, electricity, and water while freeing up a substantial amount of oil for exportation. 4. 3. Swapping Businesses In 1997, PPG Industries, a specialty chemical company, exchanged its surfactants10 business for BASF’s packaging coatings business. This swap resulted in the growth of PPG’s portfolio and led to the expansion of geographic opportunities for the coating business.Moreover, this swap enabled PPG to become one of the world’s largest suppliers of package coating for food, aerosols, and other container and packaging applications. On the other hand, this business swap made it possible for BASF to expand its surfactants offerings for the food, personal care, and coatings industries (Gain, 1997). 9 10 Associated gas is found and produced in conjunction with oil. Surfactants are also known as wetting agents and may be liquids or powders. Surfactants are used in aqueous cleaners to provide detergency, emulsification, and wetting action. 4 Similarly, BP swapped its polyethylene glycol11 (PEG) ether brake fluid business for the butyl glycol ether12 (BGE) solvents operation belonging to Clariant, a Swiss specialty chemical company. However, this swapping deal was restricted only to the exchange of customer lists and contracts. No manufacturing units, staff, or cash transfer between the two companies took place. Clariant discontinued production of BGE at Gendorf, Germany, and BP discontinued manufacturing brake fluids at Lavera.The deal broadened the range of products that Clariant supplied to the automotive industry and enabled BP to better utilize the Lavera BGE plant (Alperowicz, 2001). 4. 4. Swapping Shipments During 2000, a swapping arrangement of liquid natural gas took place among Spain, Algeria, and Trinidad. Spain’s Gas Natural became the first European LNG buyer to resell LNG to the U. S. market. This gas had been sold to Gas Natural by Atlantic LNG of Trinidad. At the same time, Algerian LNG dedicated to the United States was delivered to Spain, reducing shipping cha rges for all parties.In 2001, these swaps developed into a more permanent arrangement with the signing of a contract between Sonatrach of Algeria, Gas Natural of Spain, Tractebel LNG North America in the United States, and Distrigas of Belgium. Companies with interests on both sides of the Atlantic gained an advantage over others, enabling them to react faster to any market opportunity (Gandolphe, 2002). Moreover, Nova Chemicals, a Canadian chemical company, and BASF entered a swap deal for styrene13 in which Nova supplied BASF in North America and BASF supplied Nova in Europe.This agreement provided each company with a stable supply of styrene without committing either one to significant investments. The deal also gave each company a low-cost styrene position for their PS (Sim, 2002). Another swap example is between world-class Indian polymer manufacturers Haldia Petrochemicals Ltd. (HPL) and GAIL Ltd. , India’s principal gas transmission and marketing company. The two compa nies entered into a product swapping and sharing arrangement that forced other polymer sellers in eastern and northern India to retreat from the market.Under this swapping agreement, both companies gained substantial savings on freight costs. Gail supplied HPL’s customers in northern India from its plant in Uttar Pradesh, and HPL served Gail’s customers in eastern and southeastern Asia by supplying them from the Haldia plant (Saha, 2003). 5. Conclusion More efficient and cost effective supply chain practices in the petroleum industry represent important factors for maintaining continuous supplies of crude oil, the reduction of lead times, and lowering of production and distribution costs.Due to the inflexibility involved in the petroleum industry’s supply chain network, logistics represent a great challenge. However, it is only one of several challenging factors. Integrated process management, information systems and information sharing, organizational restructu ring, and cultural reorientation are equally important. Despite the great challenges in the petroleum industry’s supply chain, opportunities for improvements and cost savings do exist along the supply chain. One major area for improvement and cost savings lies in the logistics function.Companies in the petroleum industry have become increasingly reliant on the services of third-party logistics companies to manage their supply chains. Companies in the petroleum industry took the outsourcing idea a step further to collaborate with competitors and found shared solutions to their supply chain challenges. This form of collaboration is referred to as a systematic cooperative reciprocal barter, or swaps. Collaboration among competing companies in the form of swaps is a practice that can offer companies huge savings and introduce new opportunities.However, despite its wide use and benefits, especially in the oil and petrochemical industries, the subject has not received the attention it deserves in the operations management literature. Currently, judgmental methods and the aid of spreadsheets are the only approaches utilized when attempting swap decisions. Although great savings are realized by companies using swap practices, the 11 Polyethylene glycol is a non-toxic chemical used in a variety of products such as skin creams, toothpaste, shampoos, etc. 12 Butyl glycol ether is a widely-used solvent for many applications. 3 Styrene is a chemical molecule used in polystyrene manufacturing, the rubber industry, and the reinforced plastic industry. 95 approaches used for making such decisions cannot guarantee an optimal solution, and hence, opportunities to utilize the full capability of swap practices are not fully exploited. Therefore, the next step would be the utilization of management science techniques, presumably mathematical/simulations models. These methods will significantly enhance the capability of such forms of collaboration and will represent valuable tools for practitioners to use. . Appendix: Production Process and Industry Background Crude oil and natural gas are the raw materials of the petroleum industry. They are used for the production of petrochemicals and other oil derivatives. After the production of crude oil is complete from oil reserves located deep underground or in sea beds, the crude oil undergoes a distillation14 process. As a result of the distillation process, various fractions of the crude oil are produced, such as fuel gas, liquefied petroleum gas (LPG), kerosene, and naphtha. 5 The output of the distillation process is then provided to refineries as feedstocks. These feedstocks are first processed through cracking16 operations before they are supplied to petrochemical plants. Once the cracking process is complete, companies are able to obtain new products that serve as the building blocks of the petrochemical industry, such as olefins (i. e. , mainly ethylene, propylene, and the so-called Carbon (C) derivat ives, including butadiene) and aromatics, which include benzene, toluene, and the xylenes.After the cracking process, petrochemical products such as ethylene, propylene, butadiene, benzene, toluene, and the xylenes are then used at petrochemical plants to produce even more specialized products, such as plastics, soaps and detergents, healthcare products (such as aspirin), synthetic fibers for clothes and furniture, rubbers, paints, and insulating materials. References Alperowicz, N. (2001, August 29 – September 5). BP swap business with Clariant. Chemical Week, 163, 33. Alshalan, M. (2004, December 15). Iraqi gas to Kuwait and Kuwaiti benzene to Iraq. Alwatan, 10368/4814 – Year 43.Bianchi, M. (2003). Getting to the route. ACN: Asian Chemical News, September, 19. BP, Conoco swap Gulf of Mexico, Alaskan assets. (1993, November 15). Oil & Gas Journal, 91, 46. Coia, A. (1999, July 12). Integrating oil’s supply chain. Traffic World, 259, 2. Collins, T. (1999, Septemb er 9). Striking it big together. Supply Management, 4, 18. Gain, B. (1997, August 27 – September 3). PPG, BASF swap businesses. Chemical Week, 159, 33. Gandolphe, S. (2002). Flexibility in natural gas supply and demand. International Energy Agency. Guimaraes, T. , Cook, D. , & Natarajan, N. (2002).Exploring the importance of business clockspeed as a moderator for determinants of supplier network performance. Decision Sciences. 33, 4, Fall, 629. Haberman, D. I. , (2002, April 19). Petroleum swapping between oil giants â€Å"exchanges†: An elephant in our living room, Statement submitted to the Federal Trade Commission Second Conference re: Factors that Affect Price of Refined Petroleum Products. Hamilton, S. (2003, August). Must chemical companies outsource logistics to save money? GL&SCS. Hebert, H. (2004, July 28th). Oil industry not building new plants. Arizona Daily Star. Tucson, Arizona. http://www. azstarnet. om/dailystar/starmedia/31783 Hull, B. (2001). A structu re for supply-chain information flows and its application to the Alaskan crude oil supply chain. Logistics Information Management, 15, 1/2, 8. Ikram, A. (2004, November). Supply chain management in the oil and gas sector. Supply Chain Update, University of Wisconsin-Madison School of Business. Iraq Country Analysis Brief. (2004, March). Country Analysis Briefs, pp. 1-18. www. usiraqprocon. org/pdf/ eiacountryanalysis. pdf Japan marketers to Swap supplies. (1998, July 6). Oil & Gas Journal, 96, 27. Jenkins, G. , & Wright, D. (1998). Managing inflexible supply chains.International Journal of Logistics Management, 9, 2, 83. Lange, C. (2004, November). Extreme makeover: Supply chain edition. Chemical Market Report, 266, 16, 21. 14 15 Distillation is the separation of heavy crude oil into lighter groups (called fractions) of hydrocarbons. Naphtha is used in the production of gasoline and is the primary source from which petrochemicals are derived. 16 Cracking is the process of breaking d own heavy oil molecules into lighter, more valuable fractions. 96 Milmo, S. (2001, July 23). BP bags Veba Oel following asset swap with E. ON. Chemical Market Reporter, 260, 4. Morton, R. (2003, October).Good chemistry in the supply chain. Logistics Today, 44, 10, 30. O’Dwyer, G. (1988, March 30). DSM, Kermira will swap plants. Chemical Week, 142, 13. Robert, B. (1995, July). A new dimension to shipping. Distribution, 94, 7. Robert, M. (1995, March 29). Hoechest, BP chemicals in PE swap. Chemical Week. Saha, S. (2003, November). Haldia’s Comeback. rediff. com. http://www. rediff. com/money/2003/nov/ 15haldia. htm. Schwartz, B. (2000, August). The crude supply chain. Transportation & Distribution, 41, 8. Senge. (1990). The Fifth Discipline, the Art and Practice of the Learning Organization, Doubleday, New York, NY, Chapter 3.Sim, P. H. (2003, May 7). BASF Honeywell complete nylon swap. Chemical Week, 165, 17. Sim, P. H. (2002, August 14). Nova-BASF Styrene Swap â€Å"m akes sense. † Chemical Week, 164, 32. Sterman, J. D. (1989). Modeling managerial behavior: Misconceptions of feedback in dynamic decision making experiment, Management Sciences, 355. 3, 321 – 39. Westervelt. R. (2002). Seeking greater supply chain efficiency through Whitfield, M. (2004, Sep 20 – Sep 26). A stronger link. European Chemical News, 81, 2116, R12. Young, I. (2005). Industry eyes big savings from supply chain collaboration. Chemical Week. Nov 2, 167, 36, 10. 97

The Life of August Wilson Essay - 1193 Words

Drama is about bringing reality to life through acting and interpretation. August Wilson wrote the play Fences about his life: the heartbreaking reality of racism in his own life and the struggles he faced to overcome it. He had a hard childhood and career due to prejudice and fatherly abandonment, and he reflected that through his works of African American drama. Wilson uses the character of Troy, his family, and his friends in Fences to pour out his life, his hardship, and the horrifying difficulty African Americans faced throughout the generations. August Wilson was born in a ghetto area of Pittsburg, Pennsylvania to his white father, August Kittel and African American mother, Daisy Wilson Kittel. His father left him,†¦show more content†¦The character Rose wanted a fence built to ―hold on toâ€â€" her family, especially Troy Maxson – her husband (Wilson 2.1.68). W. P. 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Bsbwor501B Assignment 1 - Fynntown City Personal...

Student Name: Student ID: Group: n/a Date: 29/10/13 Assessment Coding Assessment of this program of study is based on competency based principles. S = Satisfactory NS = Not Satisfactory Students who fail to perform satisfactorily for the assessment in the prescribed date may be assessed as ‘not satisfactory’. You are required to be assessed as ‘Satisfactory’ on completion of Assessments assigned by your assessor for this unit of competency. Re-assessment Any re-assessment is conducted as soon as practicable after you have been informed of the requirement to be re-assessed and have been given the opportunity to be re-trained and assimilate the training. You are re-assessed in only the areas†¦show more content†¦You have a lot of ideas on how to improve this situation, but as a Team Leader, you do not have the authority to implement any of these ideas. There is a genuine risk that FCC will lose its State and Federal Government funding, which accounts for 40% of all Council Funds, if Customer Service isn’t dramatically improved within 18 months. Consequently, the Council members are desperate to see improvements, without cutting into current spending or increasing rates. The current Customer Service Manager has been in the position for 24 years, and doesn’t believe that anything needs to change, and that the community will â€Å"come around in the end†. During your first Performance Review, held last week, you ask your manager to participate in the Management Development Program. You are aiming to be the Customer Service Manager within 12 months, as the current Customer Service Manager is retiring then. Your manager has just advised you that you have been accepted into the Management Development Program. You are required to come to the first Development Session with a draft Personal Development Plan. It must include: †¢ Personal Work Goals (minimum of three) – these must be SMART goals †¢ Alignment with FCC Goals – particularly as they relate to the above scenario †¢ Alignment with Position Description †¢ Key Performance Indicators (KPIs) and other forms of