TULLOW OIL PLC

Introduction

Tullow is one of the world’s leading oil and gas independent production and exploration

companies. The company has interests in 80 licenses in 15 countries. They are headquartered in

Ghana and have their major offices in Ghana, Ireland, Uganda, Kenya and South Africa. Based

on their 2014 financial report, the report is based on their overall operation and management

objectives. The energy company's business strategy, mission and vision, SWOT and PESTEL

analyses are all included in the study.

i. Firm Information and Overview – SWOT Analysis

Tullow Oil Plc is a London-based oil and gas business that focuses mostly on exploration. It was

founded in 1985. It is Africa's leading independent oil company and one of Europe's major

independent oil and gas exploration and production firms. TULLOW Oil is Africa's largest

independent oil business, with a light oil exploration-led expansion plan across Africa and the

Atlantic Margins. TULLOW is a highly successful explorer who has recently opened new oil

basins in Africa and South America. Their success followed the East African Rift Basins from

their large discovery in Uganda's Lake Albert Rift Basin to a substantial discovery in Kenya's

South Lokichar Basin in 2012. Tullow Oil (Tullow Oil, 2015).

Mission

TULLOW believes that in order to preserve a competitive advantage, it must contribute

meaningfully to long-term economic growth by sharing the benefits of oil and gas with host

countries. TULLOW accomplishes this by enlisting the help of local residents and businesses to

assist their country's oil and gas industry while also contributing to the overall economy. We are

dedicated to cultivating successful local suppliers and increasing their capacity to obtain

competitive local goods, services, and talents that meet international standards.

Vision

Tullow Oil PLC is a significant independent exploration and production firm based in the United

Kingdom. Our business model demonstrates how the various components of the Group

collaborate to manage the company and produce value.

Tullow's mission is to be "the world's top independent exploration and production company with

a consistent exploration-led growth strategy." Tullow wants to create a company with a

"unrivalled competitive position." Tullow will accomplish this through a "balanced yet varied

portfolio of high-impact exploration, targeted advances, and material production," according to

the company. Tullow will support its expansion and development through "cash from operations,

asset monetization, and debt and equity markets." Tullow's success will be measured by long-

term value growth that "provides considerable returns to shareholders and shared prosperity to all

stakeholders."
SWOT Analysis

TULLOW Oil PLC is the subject of this analysis, and this aims to determine the company's

strengths, weaknesses, and dangers. And this is perceived as an isolating process, with crucial

decisions being made based on our analysis. TULLOW Oil PLC's SWOT analysis is as follows:

Strengths

1. Strong Brand Name - TULLOW has a number of well-known brand names all around the

world. The brand name is developed from the company's goodwill and name recognition,

which has grown through time and has translated into higher sales volume and profit

margins when compared to other competing brands in the oil and gas business.

2. Service Quality - TULLOW's service quality is excellent, attracting more people from all

over the world to purchase the product.

3. Effective Workforce - TULLOW is one of the greatest firms in the oil and gas industries,

with a large workforce that has always been linked to success, and they also provide their

employees a flexible working schedule.

4. Proper Management – Over the other key companies in the oil and gas industries, they

have the ability to maintain a comprehensive management system.

Weakness

1. Lack of Freedom – The government still have the main control across all their locations

and this has an effect on their ability to increase or decrease

2. Covid 19 - Tullow, like other oil companies throughout the world, was hit by the

coronavirus crisis, with oil prices collapsing as demand fell. It reported a $1.2 billion loss
 for 2020, citing exploration write-offs and impairments, as well as $625 million in "pre-

financing" cash flow. At $50 a barrel, it expects cash flow to be around $200 million this

year.

3. Unstable Oil Prices – The changes in oil prices have made them unstable especially in the

wake of the COVID 19.

Opportunity

1. New Fields - TULLOW has more than 40 exploration and appraisal well campaigns

scheduled for 2013, as well as new nation additions. The possibility of Tullow making

strategic purchases of smaller oil companies is hanging in front of it.

Threats

1. Ecological Threats - Natural disasters and industrial mishaps could drastically impair

TULLOW's operations.

2. New Players - When there are new oil companies making similar products and willing to

offer them at a lower price, this is a big factor that can affect TULLOW oil.

3. Currency Devaluation – Changes in the currency rates of the countries within which

Tullow operates can have a significant effect on its performance.

SWOT ANALYSIS
Strength Weaknesses Opportunities Threats
Strong Brand Name Lack of Freedom New Fields Ecological Threats
Service Quality Covid 19 New Players
Effective Workforce Unstable Oil Prices Currency
Devaluation
Proper Management
 ii. External Environment

This entails assessing and managing risks and uncertainties that may obstruct an organization's

capacity to achieve its strategy and strategic objectives, as a result of internal and external events

or situations, with the ultimate goal of creating and protecting shareholder and stakeholder value.

Changes in macro-environmental factors can have a direct impact on Tullow Oil Plc as well as

other businesses in the oil and gas industry. The PESTEL analysis, which determine strategy and

the competitive landscape, can be influenced by macro-environmental issues. They can have an

impact on a company's competitive edge or the industry's overall profitability. The effect of these

macro changes on the five forces analysis are highlighted below:

Threat of New Entrants

The risk of new businesses forming inside the integrated oil and gas industry is low for a variety

of reasons. To begin with, the costs of launching a new company would be considerable.

Furthermore, exploration and production expenditures are capital intensive. A new startup

company would need finances or access to funds to compete with the "super majors," such as

TULLOW. In addition to technical expertise for oil and gas exploration and production, financial

benefit from cash flow to operations, and investment-grade credit ratings, integrated oil and gas

companies have a competitive advantage. Changes in the political, economic, sociocultural,

technical, environmental, and legal environments of the company have little effect on this force.

Bargaining Power of Suppliers

Because there are a limited number of suppliers who provide technical equipment and demand

for technical supplies is considerably high, these suppliers have high leverage when it comes to
technical hardware and support. As a result, suppliers have high level of bargaining power which

is affected by the changes that occur in the environment of the company. Factors such as changes

in the political environment have considerable effect on the bargaining power due to their limited

number. Also, economic factors such as inflation or changes in the prices of oil and gas in the

countries Tullow operates are bound to affect the bargaining power. Legal matter,

environmental, sociocultural and technical changes also have significant changes in the

bargaining power of the suppliers. Even though the changes are considerably significant to the

operation of the country, there are still some limitations that may be faced and as a result it can

be said that there is medium level bargaining power of suppliers caused by changes in the macro

environments.

Bargaining Power of Buyers

Individuals, corporations, and governments are among the buyers of oil and gas products.

Customers have limited bargaining power when it comes to the price of oil or gas because

demand for fuel products is exceptionally strong at the current global consumption rate, and the

price of fuel is influenced by market factors that oil businesses have little control over.

Customers will continue to pay for the high cost of oil and gas until a viable alternative is found.

Furthermore, if the cost of refining rises, oil companies can pass these costs on to consumers

who desire it. Changes in the macro element have little to no effect on these.

Threat of Substitute

There are currently just a few oil replacements available. Despite the fact that technology in the

field of renewable energy is rapidly evolving, no ready replacement for oil has yet been

identified. Bio-fuel competes with existing energy sources, although it poses no major threat to
the oil market or industry, at least for the time being. As a result, no immediate threat of

substitution exists. Changes in the macro elements have little effect on the fact that consumers

will still seek oil and gas products which is good for the business being run by Tullow.

Degree of Rivalry

The vertically integrated oil and gas business has a large number of competitors, both

domestically and internationally, meaning fierce competition. Because most companies already

have a defined market to sell to, and because they don't have a concrete way to separate oil or

brand names from competitors other than brand loyalty and pricing, the degree of rivalry is

medium to low. The level of competition will be moderate until peak oil and gas becomes a big

worry. There are considerably medium level effects of changes on the macro environment of the

business on the degree of rivalry in the industry.

Barrier to
Entry
High

Bargaining Degree of Bargaining

Power of Power of
Buyers Rivalry Suppliers
Low Medium Medium

Threats of
Substitutes
Low
 iii. Internal Analysis

Tullow Oil Plc's VRIO Analysis will look at each of its internal resources one by one to see if

they create a sustainable competitive advantage. Tullow Oil Plc's VRIO Analysis also notes

whether these resources could be upgraded to create a competitive advantage at each step.

Equipment - Tullow Oil Plc considers equipment to be a tangible resource that encompasses all

of the company's equipment used for production, packaging, and other operational functions. In

this way, all technical breakthroughs and technological integration for improving processes and

operations can be viewed as an extension of the equipment that the firm uses to improve its

product line and achieve economies of scale.

Materials - Tullow Oil Plc uses a variety of raw materials and other packaging materials to

ensure the successful production and packaging of its goods. The materials are tangible in nature,

and competitors can simply acquire them for their own manufacturing processes and other uses.

Infrastructure - This includes all the land and facilities in terms of technology, buildings, office

materials and maintenance, and allocation of power resources such as electricity to its plants by

Tullow Oil Plc. The infrastructural buildup is an important resource for the company for

ensuring high performance, and ease of operations for the company. However, like other tangible

resources, it may be accessed easily by competing players – who may develop similar resources

for their own products and functions in the future. 

Brand reputation - Tullow Oil Plc's brand reputation is based on its historical uniqueness, since

the company has worked hard for decades to offer high-quality products and acquire consumer

trust. Competitors cannot copy the company's brand reputation, which is built on its

organizational culture and unique relationship with customers, and it may become a source of

competitive advantage.

Intellectual property - Intellectual property rights protect Tullow Oil Plc's production processes

and product originality, preventing other companies from replicating or gaining access to its

unique product blend, ingredients, and inputs. Tullow Oil Plc maintains its uniqueness by doing

so, making its products incomparable to those of competitors.

Patents and Copyright - Tullow Oil Plc holds patents and copyrights not just for its

manufacturing techniques and product composition, but also for its product improvement and

enhancement research and development operations. Tullow Oil Plc is protected by these patents

and copyrights from encroachment or copying.

Customer experience - Tullow Oil Plc offers its consumers a one-of-a-kind customer experience

through its brand activities, offerings, and marketing efforts. Though competitors may copy

marketing activities, the strategic direction and aim with which customer experience and brand

activities are planned is unique to Tullow Oil Plc and provides a unique source of competitive

advantage.

Import quotas - Tullow Oil Plc has signed strategic import quota contracts with a number of

nations. These limits cover not only finished packaged goods, but also unique raw ingredients

and their import into other nations to support commercial activities. As a result, the stated import
limitations cannot be replicated by other companies because they are based on The Tullow Oil

Plc's unique position and strategic orientation.

Marketing rights - Marketing rights in various nations are granted based on the company's

strategic leadership and strategic direction, as well as its legal compliance and history. Other

players will not be able to duplicate this, nor will they be able to acquire it. This is due to the fact

that Tullow Oil Plc has created them over time and through rigorous methods and means, giving

it a competitive advantage over other companies in the market.

Tullow Oil Plc's competitive disadvantage would be the holding of non-valuable resources,

which could cause the firm to perform poorly in comparison to its competitors and cause it to

underperform. Tullow Oil Plc's resources that lead to competitive parity are those that enable the

company to attain industry standard and average results and performance. Tullow Oil Plc has a

competitive advantage and gains as a result of this. However, this is more of a transient situation,

as competition and participants in factor marketplaces may imitate the resources in the future. In

the same way, players in the factor markets may acquire them over time. As a result, while they

give Tullow Oil Plc a competitive edge, this is just temporary and not long-term. Tullow Oil

Plc's unique advantage, which is based on its resources, is both sustainable and long-lasting. This

is often unrivaled by the competition and has evolved as a result of historical values. Tullow Oil

Plc is able to exploit resources in order to increase its competitive edge in a long-term manner.

These are highlighted in the table below:

 VRIO ANALYSIS
Resource Valuable Rare Imitable Organize Competitive Advantage

d
Equipment Y N N Y Competitive Parity
Materials Y N N Y Competitive Parity
Infrastructure Y N N Y Competitive Parity
Brand reputation Y Y Y Y Competitive Advantage
Intellectual Property Y Y Y Y Competitive Advantage
Patents and Copyrights Y Y Y Y Competitive Advantage
Customer Experience Y Y Y Y Competitive Advantage
Import Quotas Y Y N Y Temporary Competitive Advantage
Marketing Rights Y Y N Y Temporary Competitive Advantage

4. Business Strategy

In today's extremely competitive market, customers want differentiation and low prices. Some

companies have reacted by putting in place a thorough strategy. The companies want to provide

more value than their competitors while keeping prices down. Integrated strategy enterprises

include brands such as Tullow Oil PLC who keeps costs down by repurposing parts from its low-

cost projects while adding luxury-car-like features. Tullow Oil Plc follows 7 sets of

chronological Strategic priorities. Since the company’s growth depends on exploration, the 7

sets of strategic priorities are perfectly compatible with the company. The company always put

emphasis on the safety of the employee and environment. The company reduces the risks by its

risk management system by setting up meeting weekly. All the goals and objectives of the
company is strategically decided. The company tasks Lintstock Ltd to evaluate its board.

Employees are given base salary along with pensions and benefits. Tullow has its own incentive

plan which is created to motivate employees achieve strategic priorities faster good cooperation

between management and their departments.

5. Recommendations

Tullow Oil PLC has had a lot of success. They had their ups and downs, but in the end, they put

on a fantastic performance. Their revenue is in the billions of dollars, and their stock is highly

valued. Despite their long-term success, they nevertheless have short-term problems. That's due

to a lack of marketing efforts on their part. We offer a few suggestions for Tullow Oil based on

our findings. Based on the findings of the report's analysis, businesses should pursue the fourth

approach, which is to expand the business by investing in content generation in order to improve

the customer experience. The technique is economically viable because it is estimated that this

work will provide the best IRR and NPV when compared to other options. Entering larger cities

will not be beneficial to the firm because of the increasing threat of new entrants as well as

intense rivalry among competitors.

6. Research and Self-Direction

Working on this report required the use of self-directed learning. There were limited guidelines

as to how this would be done. I assessed the task at hand, taking into consideration the task's

goals and constraints. I evaluated the available literature and my own knowledge and skills,

identifying strengths and weaknesses that would help in the completion of this task. I applied
various strategies to ensure this work was done to the best of my ability. The resources that were

used in the completion of this work are:

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