World Wide operations of Halliburton Company

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Halliburton is a world wide corporation in the oil fields operating in more than 70 countries across the world. It's international network of subsidiaries, brands, divisions, and affiliates are close to 300. The company has more than 57,000 employees across the world as per its annual reports in 2008. The head quarters of Halliburton Corporation are located at Houston, Texas in the United States of America where it's Chief Executive Officer; David J. Lesar resides and works devoting over 50 per cent of his time in the company affairs. The Energy Services Group (ESG) forms their major business segment across the globe. However, the ESG mostly deals with petroleum and natural gas. The provision and technical services in the energy industry to facilitate exploration and production is also their responsibility. The company broke up with its subsidiary KBR which for over 44 years had acted as its contractor and engineer. Throughout the energy industry, KBR had made a significant progress in refineries, pipelines and chemical plants (One Word Trust, 2008, p. 1).

Business overview

The company is involved in gas production which forms a major component in the energy industry globally. It activities range from locating hydrocarbons, well construction and management of geographical data and drilling. The formation of gas and oil valuation through optimization of production across the world is a major business objective for the company. The company's sustainability in the market is based on provision of energy services like digital and consulting solutions, drilling and formation assessment, fluid systems and production quantity optimization. Halliburton forms one of the largest and most profitable companies in the energy industry constituted by wide market diversification and the high prices of energy products and services across the international market (Halliburton, 2010, Para. 1).

Its major competitors are Schlumberger and the Weatherford followed by others like the Baker Hughes and Tesco Corporation. The company suffered huge losses between 2002 and 2004 approximated at an amount over $ 900 million. These losses were accredited asbestos - related costs and additional losses which were witnessed in one of its construction plants; Barracuda Caratinga FPSO which was carried out in a location near Rio - de Janeiro, this was considered the favorable place due to reduced costs and convenient to the market. Its subsidiary KBR continued to be in the 11 bracket of bankruptcy until the first quarter of 2005 when the company moved in profitability revenues and production levels. Despite this increased revenue base for Halliburton as a result of many contracts in the middle East Asian countries, its bottom line has however continue to suffer greatly and struggling to regain profitable trends. However, KBR continued with non performance trends prompting actions by the management to sell it through spin - off or expose it to initial public offer (Salvatore, 2007, p. 56).

Halliburton Company has enjoyed special treatments from the U.S government, especially during the Iraq war. This was attributed to its close ties with the former US Vice - President Cheney (2000-2008) who had been the Chief Executive Officer of Halliburton from 1995 to 2000. Halliburton began its processes of unloading its biggest subsidiary KBR in November 2006 which completed the whole process by February 2007 witnessing total independence and listed as a company on its own rather than a subsidiary of Halliburton. The company has been leading the energy industry for more than 75 years. In addition the company has specialists who are in a position and have expertise of tailoring jobs to meet specific customer requirements (The Economist, 2009, p. 34).

Their aim of the corporation is attaining international excellence accompanied with cost reduction with creation of real value from every activity they engage. Through utilization of competitive monopolistic advantages, they maintained vibrant work force, they strive to be regarded as the best preferred employer in the market for purposes of attracting, developing and retaining the world's best talents and potentials. Lastly, it's the company's ethical and business principles to maintain the best values in safety, health, ecological and environmental performances as stipulated by the law (Thomson Reuters, 2010, p. 1).

The company has not been affected by the business cycle and the adverse weather effects giving it an advantage in the market. This can be attributed to its wide geographical locations which plays a fundamental role in the mitigation efforts adopted by the company. The global recession only had a slight impact on it due the demanding nature of its business industry. The company's activities are driven by the need to have more reservoir activities. This will intensify the services provided through a process aimed at accelerating investment in human capital and infrastructural growth in the international market. The achievement was through following a competitive strategy in the monopolistic market through exploiting available technology in a unique manner that sets the company aside in the global market (Jean & Truett, 1998, p. 76).

Competition in the market

To capture the wide international market, Halliburton has gone beyond the market competition in all its markets across the world. In the international oil fields, the company is considered as the only one with the capacity to perform a turn of key performance drilling and completion of any project from start to end. This gives them a higher comparative advantage in production, drilling and marketing thereby commanding a larger international market share and market area size. Despite stiff competition from other major gas and oil companies in the international front, Halliburton has developed a wide capability to deliver services with the requirements stipulated in good time and proper conditions. Another strategy that the company exploits is the ability of command in the market through the massive and vast resources it enjoys, with the rapid increase of oil prices per barrel, small and medium sized companies are gradually exiting the market while large companies like Halliburton are able to meet the market requirements due to large scale production (Brooker 2007, p. 34).

The strategic positioning of the company in all the countries it operates with government authorities offers an opportunity for the company to exploit its potentials fully. This eases the environment of doing business and the managers besides other employees have sufficient time to concentrate on other productive and innovative activities. The large capital base of Halliburton gives them an opportunity to persevere hard economic times like global recessions where they opt to utilize their profits in any expansion and operating expenses when the financial crunch and money supply in economies is minimal as shown by the data below.

Source: Thomson Reuters 2010.

During seasonality in the global market, credit availability becomes a challenge for many companies without a strong capital base especially in the highly volatile energy industry unlike Halliburton which mitigates these challenges from the wide capital base it enjoys (Salvatore 2007, p. 69).

Decision making process

The company is managed by 10 to 14 directors who are elected during the company's annual general meeting. The board of directors composes of not more than two members who are company employees to act as directors, whereas two thirds of the directors must be independent parties. There is also a corporate and a nominated governing committee which considers board nominations and together with the board of directors is responsible for decision making process of the company and its subsidiaries. Due to these unethical practices in the decision making process of the company, many corporate entities and businesses have distanced themselves and are closely watching the company greatly reducing their activity level which threatens their downfall in the international market. The management at Halliburton decided to relocate their headquarters from Houston in United States to Dubai United Arab Emirates in 2007. This move received mixed reactions from across American congress members who blamed the Halliburton management team for incompetency and greed in the decision making process as full of selfishness and corrupt practices (Brooker, 2007, p. 57).

Marketing in Halliburton

The marketing aspect in Halliburton is a priority whether in the headquarters or in any of their subsidiaries. The stiff competition that has emerged in the last decade in the oil, energy and gas industry has witnessed the dynamisms in the market approach of the company. They have adopted a competitive market structure to capture the wide geographical market. To organize themselves strategically in the market, the company performs drilling to completion of any project locking out any competitor in the projects they undertake. The company has assumed a diversified strategy where it ventures in numerous markets in bid to be the market leader in terms of oil and gas drilling and energy industry for a large market area not only in America but also across the international market (Jean & Truett 1998, p. 84).

To enhance performance of the company, the subsidiaries are granted the autonomy to perform all the market operations in their respective jurisdictions guided by profit optimization without interference from any quota including the company headquarters. This is demonstrated by their marketing strategy in Egypt where the company works independently in relation to marketing and production of products and services. The company's strategic positions in networking of partnership with key players in the market have greatly boosted the company's marketing strategy (Salvatore, 2007, p. 75).

Costs and production

The international market competition has recently intensified due to emergence and entry of new companies in the same industry accompanied by increasing costs of production and acquisition of raw materials. This has resulted in Halliburton implementing cost cutting measures while maximizing their production to maintain or increase the activity levels in operations which consequently increases the revenue at reduced costs. The company has also implemented cost effective measures by using capital intensive latest technology thus enables the company to cut down costs on labor. This has been possible through use of Long run cost curves in production which attracts large scale economies of scale to the company. This move has witnessed the company reducing cost be 11 per cent while increasing its revenue by 7 per cent annually with the greatest and significant action in 2007 when Halliburton was contracted by the United States government to assist in supply for its Iraq soldiers (One Word Trust, 2008, Para. 6).

The company is however faced with stiff competition from other energy sector players. This has reduced its profit margin and the management had resolved to implement measures to safeguard its market position despite the increasing competition levels. The also faced a management crisis where the decision to relocate its headquarters posed a great challenge not only to its market base but also the operational procedures.