ADNOC Sustainability and Competitive Advantage Measures

Introduction

Abu Dhabi National Oil Company (ADNOC) operates in the United Arab Emirates understands the needs of embracing a sustainable business (ADNOC, 2015). The sustainability involves ensuring that the company is ethical and promotes environmental conservation measures. Indeed, a sustainable company is able to meet the changing needs of consumers. Further, due to the competitive environment in the oil industry, a company requires to offer value for customers. Indeed, consumers are likely to associate with a company that identifies with their needs and is responsible in its activities. Through understanding the market, ADNOC is able to attract more customers from different segment in United Arab Emirates (ADNOC, 2015). The company directly contributes to socio-economic development of the region through empowering industries that rely on oil products (ADNOC, 2015). There management of the company has dedication in creating profitable upstream and a relatively high valuable downstream. The paper focuses on the sustainability measures of ADNOC in addition to recommendation on how management can improve such measures. 

Company Description

Abu Dhabi National Oil Company started in 1971 and has relatively grown in size and customer base over the years (ADNOC, 2015). Currently, the firm is a leading oil and gas company in the world with a production of over 3 million barrels per day (ADNOC, 2015). The amount is relatively high and sold in both the local and the international market. The company has a significant energy infrastructure that supports its exploration and sells of oil and gas in the world. Indeed, it comprises of different specialists ventures and subsidiary company that together form ADNOC Group of Companies (ADNOC, 2015). The group is able to fund innovation and development activities of the company ensuring that it keeps up with market changes. Further, the relatively reliable source of funding enables the company to carry marketing in different markets thus penetrating new segments. Additionally, the specialists allow the company to have significant number of experts that supports its competitiveness in the market (ADNOC, 2015). Through a commitment to deliver reliable and safe energy, the company encompasses an excellent portfolio of assets and projects. Indeed, the company supports natural gas and oil exploration, refining and marketing its hydrocarbon products. 

ADNOC operates under the guidance of clear mission and vision that directs the efforts of its employees. The company strives to maintain its role as a producer of energy that powers the development of a nation (ADNOC, 2015). The company achieves this through unlocking prosperity potential of human and natural resources. The organization champions for innovation and thus invests in its workforce to be creative in developing new ideas that support growth of the company (ADNOC, 2015). Indeed, the company maximizes use of its resources to meet energy demands in the market and gets prepared to serve new market in the future. Through strategic measures, the company aims at offering valuable products to the customers through incorporating best talents in its workforce. However, the organization understands that it cannot meets its objectives without providing a positive workplace culture that boosts positive energy and encourages teamwork. The employees are value driven and agile in their activities thus enabling them to meet and exceed customers’ expectations (ADNOC, 2015). 

Situation Analysis – Current Dimensions of Sustainability (EGSEE)

There are different stakeholders such as investors and the public who needs satisfaction from the company in different dimensions.  The economic dimension sustainability is important for the oil sector where shareholders want value for their investment. Shareholders want their organization to maximize the profits they get from the capital they invest in the company. Actually, the shareholders want the management to be profitable through efficient production to lower cost.  Indeed, it is the role of management to ensure that the company operations are suitability and thus able to cover its expenses. The investors want the management to reduce issues of asking out of pocket funding to support expansion of the company (Rezaee & Rezaee, 2014). Therefore, it is responsibility of the management to realize such a goal.  

The government wants companies operating in their territories to ensure that they are responsible and they adhere to different regulators guidelines (Rezaee & Rezaee, 2014). The Abu Dhabi government challenges the stakeholders in the oil industry to embrace responsible investment principles. Therefore, ADNOC operates in an environment where it has to employ a given percentage of employees from Abu Dhabi. Further, there are different working conditions that the government stipulates to ensure safety for the employees. Indeed, the operations of the company should not expose workers to possible dangers that can affect their health. Therefore, as a sustainable company, the government expects ADNOC to provide its workers with safety equipment. In addition, the government requires the company to have safety policy in place to avoid unnecessary accidents in workplace. Additionally, the government influence terms of payment for the employees protecting them from unreasonable sacking (Rezaee & Rezaee, 2014). It also provides a framework for minimum pays to ensure that the employer do not exploit the employees. 

Corporate social responsibility forms an important foundation of companies that tend to increase their reception by the society (Rezaee & Rezaee, 2014). Companies require boosting the life of the community within which they operate. ADNOC requires offering employment opportunities to the locals within where it operates. The situation boosts its sustainability through creating a friendly relation with the society. Further, social sustainability is also necessary in ensuring that the payment for employees is attractive to enable them afford decent living (Rezaee & Rezaee, 2014). The company has to match the remuneration of its workers to the standards in the market. Supporting social activities such as infrastructure or amenities also supports company sustainability as it seeks to penetrate new markets. Through introduction of the concept of triple bottom line, the company seeks to offer optimum satisfaction of needs of its different stakeholders especially the community where it operates (Rezaee & Rezaee, 2014). 

Ethics forms an important element in the success of any organization because it influences the extent of responsibility of employees to their employer and to the consumers (Rezaee & Rezaee, 2014). Organization has to provider ethical frameworks that guide behavior of ether employees. Through embracing ethics, employees embrace issues of integrity and honesty in their undertaking. The impact to ADNOC is ability to offer quality products to the consumers. Therefore, the company should not act with the aim of exploiting consumers through presenting substandard products. Further, the company has to operate with regulation of reporting correct financial performance to the government. The reporting enables government to demand accurate taxes from the organization (Rezaee & Rezaee, 2014). Unethical behavior such as evading tax has negative impact on suitability of the company due to its ability to face possible closure or fines. 

Environmental conservation is important in supporting suitability of ADNOC as it explores embrace of green energy and reduction of pollution (Rezaee & Rezaee, 2014). ADNOC has a responsibility of ensuring that during its exploration, it limits amount of emissions it gives to the environment. Further, byproducts from the refining process require responsible dumping to avoid contaminating water sources. Further, the company requires reporting and disclosing any changes it causes to the ecosystem to the government authorities (Panchal, 2016). Reporting of such incidences ensure that the company plays a role in supporting reduction of global warming. It is a requirement that companies conduct regular audits to gauge the extent of pollution and ways of preventing environmental degradation. The sustainability approach helps in supporting global initiative of providing a safe environment and reducing climate changes from increasing pollution from industries. 

Valuation and Interpretation of Situation and its Impact

The understanding of creating sustainable company for the shareholders makes the company operates with scrutiny on costs. The impact is ability of lower unnecessary operational costs that have capacity to lower shareholders value. Through establishing a culture of high performance, the company presents quality products in the market (ADNOC, 2015). Therefore, the products are able to fetch some significant amount of money that improves the profit margin. High profits allow the company to expand its operations and reach new market segments in different parts of the world (ADNOC, 2015). The management is collaborating with reliable suppliers who ensure that there is continuous production within the company. The impact is ability to competitively provide oil and gas products to the consumers on time, influencing their loyalty and repeat purchases.

ADNOC places significant importance in responding to government regulation especially concerning safety of the employees. The company understands that dealing with oil products pose significant hazard on its employees and thus conducts risks identification and develops mitigation approach (ADNOC, 2015). The incidence makes it possible for the company to prevent workers and the premises from avoidable risks. The company further subjects any upcoming project to compulsory assessment on its impact on safety, health and environment. The guideline is available in the code of ethics of the company. The company also has internal audit committee that ensures that all operations in the company match government regulations. 

In supporting social suitability, ADNOC employs more than 60,000 employees to support its different activities (ADNOC, 2015). The company engages the employees to ensure they remain productive and they positively contribute to success of their company. There are also programs that support local communities through development of infrastructure. However, the management engages with the community to know which projects they wish to get support from the company. Academic Training Institutes are also available from the company and they help the community secure education on petroleum (ADNOC, 2015). The impact is empowerment of the society, which later gets employment from the company. 

ADNOC embraces ethical approach in its operation especially concerning upholding integrity in all its operations. There is prohibition by the management on engagement of any employee engaging in unethical practices (ADNOC, 2015). The situations create a company that engages freely with third parties such as contractors and strives to give quality products to the market. When engaging contractors, the company ensures that fair bidding takes place and best contractors get the work. The result is efficient projects that lower risks to the employees due to possible failure. Through the department of quality, ADNOC ensure that all its products undergo quality check before dispatch (ADNOC, 2015). The incidence supports low levels of recalls in the market and this boosts confidence of consumers on products from the organization. 

In support of environmental sustainability, ADNOC is proactive in activities that protect destruction of ecosystem (ADNOC, 2015). Indeed, the company has an establishment of carbon sequestration portfolio that promotes biodiversity (ADNOC, 2015). There is also engagement with different stakeholders that understand oil products lifecycle and thus support social and environmental performance. Through the internal audit teams, the company provides material safety sheets or all the products (ADNOC, 2015).  The safety sheet ensures that customers are able to understand how to dispose some of the products and the possible environmental impact they can have. The company further carries tests on all its products before dispatch to ensure they adhere to environmental regulation in different markets. 

Recommendations

In order for ADNOC to remain sustainable and enhance its competitiveness, there is need to establish a balance between shareholder equity and other stakeholders interests. The company should improve the remuneration of the employees to boost their morale thus enhancing productivity (Rezaee & Rezaee, 2014).. Further, the company needs to train employees on its values and they can improve overall productivity. Actually, periodic audit are necessary for different departments to ensure that their productivity aligns with the mission of the company. Further, the company has a responsibility of environmental preservation through organizing public awareness campaigns and cleans up. The commitments make it possible for customers to identify with the company and reduce incidences of switching to buy from competitors.  It is also important to establish waste management approaches such as scrubbing to limit greenhouse gases to the environment. Additionally, imparting ethical values through training makes it possible for the company to produce quality products and establish good relation with the community and the consumers. 

Summary and Conclusion

Abu Dhabi Oil Company has been petting since 1970s and it is a leading gas and oil company in different parts of the world. The company has different subsidiaries that support its objective to maximize production and presence in the market. However, the sustainability of the company to enhance its productivity is necessary. The sustainability operates under factors such as government, economy, social, ethics and environment. ADNOC supports different sustainable approaches and this boosts its productivity and its competitiveness. However, there is need to ensure that it builds optimal maximization of achievement of both investors and others stakeholders. Further, engagement and training of employees is necessary to enhance their capacity to provide quality products, conserve environment and impart ethics on employees. 

References

ADNOC. (2015). Adnoc Group Sustainability Report 2015 Taking Innovation To New Heights. Retrieved December 17, 2018, from: https://www.adnoc.ae/-/media/adnoc/files/publications/adnoc_sr_main-eng.ashx

Panchal, R. (2016). Oil And Gas Regulation In The United Arab Emirates: Overview. Retrieved December 17, 2018, from:  https://uk.practicallaw.thomsonreuters.com/V1/Delivery/Download/i0ad6063200000167baeee034ac61c300/Oil%20and%20gas%20regulation%20in%20the%20United%20Arab%20Emirates%20overview.pdf?comp=pluk

Rezaee, Z. & Rezaee, H. (2014). Business Sustainability and Key Performance Indicators. Journal of Business and Economics, 5(9), 1484-1490.