Saudi Arabia A Country In The Middle East Commerce Essay


Saudi Arabia is the largest country in the Middle East, was founded by King Ibn Saud in 1932. The government confirms the form of an Islamic absolute monarchy known as the Basic Law of Government. Saudi's citizens must abide by the Islamic's law or known as Shariah and the Qur'an. In the Kingdom, political parties or national elections are not allowed. The country is well-known for "The Land of the Holy Mosques" the land refers to Mecca and Madina. Whereas the mosques refers to Masjid Al-Haram and Masjid Al-Nabawi. The kingdom has a desert climate with extremely hot in day-time and extremely cold at night. The World Economic Forum in 2010 Global Gender Gap Report ranked Saudi Arabia 129th out of 134 countries for gender separation. [1] Women in social and legal position are different from men. For instance, all women of any ages are required to have a male as their guardian as they go outside the house. Behaviors and dress code are having the limitations legally and socially. Public expression of opinion about domestic political or social matters is banned. There are no organizations such as political parties or labor unions to provide public forums. In the daily life is control by Islamic observance. Five times each day, Muslims are called to prayer from the minarets of mosques scattered throughout the country. Because Friday is the holiest day for Muslims, the weekend begins on Thursday. This makes Saudi one of the most influential countries in the world for culture. As many countries such as Malaysia, Singapore, or Dubai is following their law and culture. Saudi Kingdom has the world largest oil reserves and exporters made seventy-five percent revenues to the government. Especially Saudi Arabian-American Oil Company, is one of the biggest asset for the country's income. As they are going to international business, apply difference production of their oil wisely between home and across country, use competitive advantage strategy, conduct political, economic, social, technology, environment, and legal tactics to their company, and about the Saudi Aramco's culture itself. These strategies are used in order to succeed in the world market. Saudi Aramco makes Saudi one of the richest countries in the world where there were no poverty and low standard of living.

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ARAMCO, Arabian American Oil Company, is a type of government-owned corporation oil of the kingdom of Saudi Arabia. It is the most beneficial company which is estimated at 2.2 trillion US$ in 2010. [2] In 1933, Saudi Government signed a treaty to California-Arabian Standard Oil Company for support the business. Unfortunately, three years later the Company lost money because the Company was located in Texas. After four years of exploring another places to build another business then a major success was occurred when seventh drill site in Dammam, Dhahran, or refers as Dammam number seven was found. The well produced over 1,500 over barrels per day which gave the company to develop. [3] In 1944 Californian-Arabian Standard Oil Company changed their name into Arabian-American Oil Company or known as ARAMCO. This company gain tremendous amount of money in order to have an equal partnership, King Abdul Aziz Ibn Saud publicly owned his country's oil facilities by made an agreement of sharing the profits by 50/50 and the moved the headquarters office from New York to Dhahran. Finally, Saudi took control of the Aramco in 1980s and changed their names into Saudi Aramco when Saudi government acquired from twenty-five percent to sixty percent shares. This background brought Saudi Aramco to be the most successful oil company in the world.

Saudi Aramco is a powerful oil company. First, it is because they are going international business. Why international business? It is because the Western International oil companies control less than ten percent of the world's oil and gas resource base. In order to fulfill customers demand Saudi Aramco play a big role. The company produces petroleum product, manufacture, marketing, and shipping. In the force for the expansion international business, the corporation's require additional competence to pursue a global and regional leadership role at a time conflict and instability in Persian Gulf. Some Saudi analysts have suggested that it is important to the kingdom to be able to replace Iranian oil exports. Saudi analyst Nawaf- Al Obaid, who was formerly the Managing Director of the Saudi National Security Assessment project, published an article "Saudi Arabia's Strategy Energy Initiative" which stated that Saudi Arabia will be able to replace all of Iran's exported oil when he mentioned, "Saudi Aramco not only has a strategic interest in reigning in Iran but it is well-positioned in the globalization world." [4] 

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Saudi Aramco, made a relationship business with Indonesia. The company asked the Indonesian government to provide more incentives for a fuel refinery project. In order to develop state oil and gas firm PT Pertamina in East Java that has a capacity of 300,000 barrels per day. Sugiharto, Pt Pertamina president commissioner, assured that the project was very crucial to address domestic fuel processing capacity shortages. [5] 

More connection operated in international business in order to manage and provide inspection services to project management and material supply customers in many countries. In Italy, Netherlands, UK, China, India, Singapore. Aramco Overseas Company (AOC) in August 2009 was located in Hague, Netherlands, this location situated in central Europe with access to business and logistics center throughout region that allows to effectively fulfilling role as representatives in Europe and Asia of the company that manages proven conventional reserves of 260.1 billion barrels of crude oil.

Second, because Saudi Aramco apply difference production between across and home countries that creates a tremendous profit to the company. In across countries, Saudi Aramco becomes a vital supplier to the U.S., European and Asia. Nowadays takes around sixty percent or some 4.5 million Saudi Aramco export the majority of crude oil. The Corporation sells about 1.6 million to U.S customers and 1.5 million to European customers. [6] The kingdom has use the theory of "looking East" as a strategic oil policy. King Abdallah emphasized the important of Asia as a key to the economic region. For instance, between China and Saudi Arabia, both leaders made a diplomatic agreement to increase cooperation in oil, natural gas and mineral deposits. Saudi Aramco currently supplies around 14 percent of China's oil imports and hope for more collaboration. [7] Saudi Foreign Minister Prince Saud Al-Faisal added, "China is one of the most crucial markets to the Saudi Kingdom because it is the important sources for China." [8] Saudi Aramco also share common concerns in regional, security, oil exports and important with The United States. The continued availability of oil, particularly from Saudi Arabia, remains important to the affluence of the United States as well as to Europe and Japan. Saudi Arabia is one of the leading sources of imported oil for the United States, Europe and Japan, providing more than one million barrels/day of oil and become the largest trading partner.

At home country, King Abdallah is taking control in planning a new investment by refining heavy crude oil. Saudi Aramco will increase more production of heavy crude oil than ever. More heavy crude refining capacity will enhance Saudi Arabia's ability to influence global crude oil prices and market supply at any time. [9] 

Third, Saudi Aramco use competitive advantage strategies to win their world competitors. The primary competitive advantage is the sole supplier of petroleum energy. The corporate mission statement is about the commerciality and profitability in hydrocarbon operations. With the "tripod" concept of international dimensions and benefit local economy by use upstream, downstream, or in support function project management, engineering, logistic, and health and safety environment. Three "T's" or tripod is a vital strategic for competitive advantage known as talent, technology, and team.

The first "T" in technology comes in different shapes, sizes and applications. For instance, POWERS reservoir simulator is an upstream technology designed to model the Ghawar field in a single run to increase production. Upstream, the vanguard when it comes to the deployment of cutting-edge tools to maximize reservoir contact and extended wells and remote geo-steering referred to as the Intelligent Field or I-Field Concept. This technology is being commercialized, converts low-value heavy gas-oils into higher value light olefins and aromatics feedstock, suitable for supply to combine with petrochemical processes. [10] 

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The second "T" for Talent," is the abilities and control the skills and experience of workers. Saudi Aramco depends on people and their ability to find innovative and effective solutions to overcome world challenges. Saudi Aramco views the men and women who call themselves as the "Aramcons" as the most significant competitive advantage. That is why the company maintains extensive corporate training. Last, "T" means teaming, pursuing a joint-enterprise partnerships with leading global petroleum companies and maintain a strong relationships with many customers over the world.

Third, Saudi Aramco conduct Political, Economic, Social, Technological, Environment, and Legal analysis" as their powerful concept in business. Political factors are how and to what degree a government interferes in the economy. Political factors include tax policy, labor-and-environmental law and political stability. Furthermore, governments have great influence on the health, education, and infrastructure of a nation. Saudi Aramco's has the strength strategy of access of low cost oil and gas production access, advance technologies and highly recommended employees and good relationship with government. The company's good relationship with the Saudi Arabian government is a perfect strength for the business. As a fully state-owned oil company, Saudi Aramco is under strong national control and by the King. However, there is a boundary within their close relationship. The King has the right to decide the country's OPEC's policy, oil production level, capacity target, and domestic oil production prices. [11] 

The elements of politic in Saudi's Aramco are tax policy, labor law, exchange rate policy, and political stability. The bond between Saudi Arabian's governments with the Saudi Aramco is because of the impressive performance in the past. The corporation has continued to meet the demand and targets by the government. With the strong trust in the company's performance the corporation has been allowed to have a certain level of operational autonomy. Saudi Aramco offers highly competitive wages and benefits packages of labor law. These benefits are designed to attract technical skills and expatriates around the world. Other compensation benefits of labor law are includes retirement, saving, and insurance plans, severance award, educational assistance and others

Saudi Aramco's truly is the keystone of the Saudi's economy. Oil accounts for more than eighty to 85 percent of the country total earnings and about 80 percent of government revenues. However, the government does take advantage of big revenues to forbid Saudi Aramco's from being coalition with any political parties in any countries. Because the government wants Saudi Aramco's be able to make decision in regard to the company's expenditure, investment projects, and other operational issues for the good of the company. These boundary relationships are unique and beneficial for both and ensure the company's operational autonomy and minimize political intervention in the company's operational activities.

Economic factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses operate and make decisions. Saudi Aramco's remain the demand of growth rate for the next century. [12] It is wide accepted consensus that it will continue to be the world's total primary energy supply. The corporatiobn secure sufficient funds for capital investment and therefore more opportunities for the state energy firm. Aramco admitted in the World Trade Organization in 2004 and creates a promising opportunity in swaying the other member countries to maintain low domestic natural gas price. The country's current domestic natural gas price of $0.75/ MM BTU exceeding low compared to international market prices. [13] These situations harm European or other oil companies' production. In recent high economic growth has inflated domestic power and demand. Saudi Aramco is in charge of securing and providing a sufficient amount of natural gas for domestic users to enhance the existing of gas supply amount.

Social factors include the cultural aspects, health consciousness, population growth rate and emphasis on safety. Development in social factors affects the demand for Aramco's company products and how that company operates. Companies may change various management strategies by hiring educated-workers in order to create new-bright ideas for the good of the company. Also, they are making sure that the workers' family has prestige education.

Technological factors include technology incentives to determine minimum efficient production level. Moreover, technology advance can affect costs, quality, and lead to innovation. The elements of technologies strategic of Saudi Aramco are such EXPEC ARC, strive for the most advanced and efficient means to optimize the development of Saudi Aramco's oil and gas fields. Innovative technology solutions are tested. EXPEC ARC provides an environment in which technology is created, modified and improved for quick adaptation. Some technologies under research and development includes: Extreme Reservoir Contact Wells, going beyond multilateral wells to create smart wells with a large number of laterals to optimize drainage and reduce development cost.

Another elements of technology strategic in order to succeed from the world competitors are Reservoir Nano-Agents "Resbots" International award-winning research and development of nano-agents 1/1000th the size of the human hair. [14] Resbots, fully developed, to provide more accurate reservoir characterization and eventually function as a transport mechanism to alter reservoir properties for more effective production. Giga Cell-Simulation: Gigapowers, Industry-leading reservoir simulation technology capable of giga-cell (billions of cells) models at seismic resolution. The giant fields of Saudi Arabia are simulated in their entirety with great accuracy to achieve reservoir management, drilling and production efficiencies without need for upscaling. [15] Casing While Drilling, Innovative casing while drilling technology significantly reduces drilling lost time and well cost. It effectively helps resolve hole problems (loss circulation, unstable formation and tight hole/stuck pipe), ensures casing reaches the planned casing point, and eliminates extra trip to run casing. Crosswell EM provides a cross-sectional resistivity image between two wells and can be deployed for one-time or time-lapse surveys. With record-breaking well distance coverage across multiple wells, Crosswell EM monitors fluid movement, mapping cross sectional resistivity in the interwell area and 3D fluid distribution. [16] Smart fluids modify the behavior of the reservoir thus improving sweep and well productivity. Relative permeability modifiers are able to hydrate and expand in the presence of water, plugging the pores and preventing water movement. However, where there is little or no water, in the presence of oil, these modifiers dehydrate and contract, thus allowing the oil to move.

Environmental factors include ecological and environmental growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer, both creating new markets and diminishing or destroying existing onesConcern for the environment is one of Saudi Aramco's basic responsibilities and a long-standing company commitment. The Environment Protection Department provides leadership on environmental issues and ensures that the company operates in an environmentally responsible manner. Saudi Aramco has developed a broad array of operational requirements, engineering standards and performance guidelines to direct its commitment. These include sanitary codes, project environmental assessments, air and water quality standards, occupational health regulations, hazardous material communication guidelines, waste management procedures and vital oil spill contingency plans. Although Saudi Aramco has never had a major oil spill incident, the company recognizes the value of preparation and has the capability to respond to incidents anywhere it operates. [17] The company hones its response plans through regular drills held both at home and abroad in cooperation with local, national and international agencies. In addition to its readiness training, the company maintains regional command and control centers for oil spill response and houses emergency equipment, including dedicated aircraft, to battle spills at sea. The company engages in aerial and sea surveillance of all its offshore operating areas.

Saudi Aramco is a charter member of key regional and international agencies involved in oil spill response, such as the Gulf Area Oil Companies Mutual Aid Organization. [18] The company is also a member of the International Petroleum Industry Environmental Conservation Association, whose main purposes are to inform members of environmental developments and facilitate communications between the oil industry and relevant international organizations on environmental issues. Saudi Aramco also participates in the Oil Industry International Exploration & Production Forum, the Oil Companies International Marine Forum and the International Tanker Owners Pollution Federation. Company Contingency Plan: Saudi Aramco maintains constant aerial and sea surveillance of all its offshore operating areas to prevent or immediately respond to any oil spills. This is particularly important now that the company is involved in the worldwide transportation of crude oil through its affiliate Vela International Marine Limited.

Legal factors include discrimination law, employment law, and health and safety law. Saudi Aramco has equal opportunity between any workers from around the world. [19] Health and safety law, Running parallel with the company's programs to protect the environment are its equally robust efforts to assure the health and safety of its people. The company serves more than 350,000 employees and dependents through aggressive wellness programs, state-of-the-art health center facilities, satellite services in company communities and a network of designated private-sector medical facilities across the Kingdom. In addition, Saudi Aramco conducts environmental health inspections at all company community and industrial facilities, contractor camps and facilities owned by company suppliers (such as food and beverage manufacturers, ice producers, water bottling plants, dairy farms, etc.). Of equal importance is the company's commitment to safety. The Loss Prevention Department's mission is to ensure the safety of Saudi Aramco employees and the public, as well as company assets, by identifying hazards, by controlling risks and by educating and motivating company personnel and their families to work and live safely.