BUSINESS STRATEGY EVALUATION IN LOW CRUDE OIL PRICE ENVIRONMENT

Mariama, Rina and Wandebori, Harimukti (2016) BUSINESS STRATEGY EVALUATION IN LOW CRUDE OIL PRICE ENVIRONMENT. International Conference on Ethics of Business, Economics, and Social Science. pp. 13-26. ISSN 2528-617X

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Abstract

Alpha-AA Company (AAA) is an upstream oil company operated in Indonesia for more than 90 years as part of Alpha-A Business Unit. When the global oil price has been declining since the end of 2014, the company has to change strategy to be able sustain in the business. The challenge situation also face by AAA despite of lower oil price is mature oil fields with declining production. The current situation has led to narrowing the company revenue margin since the lifting cost trend tends to increase meanwhile total oil production declines over time and oil price hit by global market condition. The fundamental issue nowadays is how the company minimizing the strategic gap exist in the current low oil price environment while keep seeking strategic competitiveness and above-average returns contribution to Government of Indonesia and Corporation. In the process of formulating strategy, the company will be verified through external and internal conditions. The result of external and internal conditions observations will be organized by the Strength Weakness Opportunity Threat (SWOT) analysis. Focus group discussion consisted of several experts was formed to discuss about the level of business strategy. In the low oil price condition, AAA should keep its competitive position using cost leadership strategy. Type of diversification of AAA is low level of diversification with dominant revenue from crude oil. The strategy should be able to answer the condition since global oil price is not something AAA could control. The strategy formulations are developed through hexagonal restructure framework. Keywords: cost leadership, oil price, strategic management

Item Type: Article
Subjects: Prosiding > Proceeding of ICEBESS 2016
Prosiding
Divisions: Fakultas Ekonomi > Pendidikan Ekonomi
Depositing User: Admin Pendidikan Ekonomi FE
Date Deposited: 30 Sep 2016 00:18
Last Modified: 01 Feb 2019 01:41
URI: http://eprints.uny.ac.id/id/eprint/41768

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