ONGC

Individual Assignment 3

03 DECEMBER 2018

N ISHIT V ORA
PGFS-60
 Internal Environment Analysis:

The Resource-Based View (RBV)

It is a model that sees resources as key to superior firm performance.RBV is an approach to

achieving competitive advantage that emerged in 1980s and 1990s, after the major works
published by Wernerfelt, B. (“The Resource-Based View of the Firm”), Prahalad and Hamel (“The
Core Competence of The Corporation”), Barney, J. (“Firm resources and sustained competitive
advantage”) and others. The supporters of this view argue that organizations should look inside
the company to find the sources of competitive advantage instead of looking at competitive
environment for it.

ONGC Resources:

ONGC has a unique distinction of being a company with in-house service capabilities in all areas
of Exploration and Production of oil & gas and related oil-field services. ONGC Videsh is a
wholly owned subsidiary of Oil and Natural Gas Corporation Limited (ONGC), the National Oil
Company of India, and is India’s largest international oil and gas Company with 41 Oil & Gas
projects in 20 countries. ONGC Videsh had total oil and gas reserves (2P) of about 711 MMTOE
as on April 1, 2018. ONGC has discovered 6 out of the 7 oil and gas producing basins in India:

 This largest energy company in India has established 8.70 billion tonnes of in-place
hydrocarbon reserves. It has to its credit more than 570 discoveries of oil and gas with
Ultimate Reserves of 3.02 Billion Metric tonnes (BMT) of Oil Plus Oil Equivalent Gas
(O+OEG) from domestic acreages.

 It has cumulatively produced 998 Million Metric Tonnes (MMT) of crude and 645 Billion
Cubic Meters (BCM) of Natural Gas. The Company holds the largest share of hydrocarbon
acreages in India (61% in PEL Areas & 81% in ML Areas).
 ONGC possesses about one tenth of the total Indian refining capacity.
 This E&P Company has a well-integrated Hydrocarbon Value Chain structure with interests
in LNG and product transportation business as well.
  A unique organization in world to have all operative offshore and onshore installations
(403) accredited with globally recognized certifications.

Best in Class Infrastructure and Facilities

 This public sector enterprise operates with 14 seismic crews, manages 262 onshore
production installations, 268 offshore installations, 69 drilling (plus 37 hired) and 54 work-
over rigs (plus 25 hired), owns and operates more than 25,500 kilometers of pipeline in
India, including 4,500 kilometers of sub-sea pipelines.
 ONGC has adopted Best-in-class business practices for modernization, expansion and
integration of all Infocom systems.

Human Resource of ONGC

Today, ONGC is the flagship company of India; and making this possible is a dedicated team of
nearly 33,000 professionals who toil round the clock. It is this toil which amply reflects in the
aspirations and performance figures of ONGC. ONGC has 33,000 employees on its rolls. Of this
number, 24,000 work across the company’s various offices, while 9,000 are employed on rigs. The
company has adopted progressive policies in scientific planning, acquisition, utilization, training
and motivation of the team. At ONGC, everybody matters, every soul count. This largest energy
company has vast pool of skilled and talented professionals – the most valuable asset for the
company.

Over 18,000 technically-competent experienced scientists, engineers and specialist professionals,

mostly from distinguished Universities / Institutions of India and abroad form the core of our
executive profile. They include geologists, geophysicists, geochemists, drilling engineers, reservoir
engineers, petroleum engineers, production engineers, engineering & technical service providers,
financial and human resource experts and IT professionals. The Company cares for each & every
employee and has in-built systems to recognize & reward them periodically.

Thus, in terms of resources ONGC has strong global presence, robust financial position, large and
multi-disciplined workforce, strong tangible and intangible assets, well manage processes that
gives ONGC competitive edge over other competitors.
Core Competencies of ONGC:

The term core competency was coined by the leading management experts, CK Prahalad and Gary
Hamel in an article in the famous Harvard Business Review. By providing a basis for firms to
compete and achieve sustainable competitive advantage, Prahalad and Hamel pioneered the
concept and laid the foundation for companies to follow in practice.

The core competency theory is the theory of strategy that prescribes actions to be taken by firms
to achieve competitive advantage in the marketplace. The concept of core competency states that
firms must play to their strengths or those areas or functions in which they have competencies. In
addition, the theory also defines what forms a core competency and this is to do with it being not
easy for competitors to imitate, it can be reused across the markets that the firm caters to and the
products it makes, and it must add value to the end user or the consumers who get benefit from
it. In other words, companies must orient their strategies to tap into the core competencies and
the core competency is the fundamental basis for the value added by the firm

ONGC continues to be a dominant player in the upstream sector with over 80% contribution to
the production of oil and gas in the country.

1. Oil & Gas (Exploration & Production): Unique and distinct advantage in
terms of being a horizontally integrated player, with in-house infrastructure for oil field
services.

2. R&D: As India’s premier Maharana, ONGC has pioneered in research and technology
development in the country, setting up twelve world-class Institutes under the aegis of
‘Committee of ONGC Institutes’ or ‘COIN’. These twelve institutes have become the
backbone of India’s hydrocarbon industry and support the entire spectrum of Oil and Gas
production, which begins at the well bore and culminates at the consumer point.

EPINET: ONGC has set benchmarks for industry to follow. ONGC has setup EPINET,
through which a live E&P information network and a virtual database has been developed
for Basin & Petroleum System Modeling of various basins. Through SCADA all production
and drilling executives at different levels utilize and reap benefits of online SCADA data for
enhanced operational efficiency and productivity.
 3-D virtual reality centers: ONGC has set up four 3-D virtual reality centers

known as 'Third Eye' for real time dissemination and information of onshore and offshore
applications. These centers are used for exploration and production activities including
real-time surveillance of producing oil and gas fields thus helping ONGC network all its
centers together by parallel computing technologies for all the major projects.

3. Technology: The state-of-the-art technologies inducted and absorbed over the years
such as depth domain processing, stratigraphic inversion, advanced volume-based
interpretation tools, stochastic lithofacies modeling using neural network, spectral
decomposition, geo-statistical modeling, etc.

SAP implementation started by ONGC’s management: Thinking

ahead of times, in 2002, ONGC’s management started the SAP implementation, which
turned out to be the largest India has ever seen. ONGC is now moving towards a paperless
office through adoption of latest pioneering technologies.

Project ICE: ONGC has also implemented an enterprise-wide ERP implementation by

the name of Project ICE. It comprised of 23 SAP modules in more than 500 physical
locations across the length and breadth of the country, starting from mobile Survey units
at Jwalamukhi of Himachal Pradesh to Deep Sea vessels at Bay of Bengal, from Production
installations at far flung areas of Assam to Drilling rigs in the desert of Rajasthan.
VRIO Framework

Value

Resources are valuable if they help organizations to increase the value offered to the customers.
This is done by increasing differentiation or/and decreasing the costs of the production. The
resources that cannot meet this condition, lead to competitive disadvantage. ONGC has strong
infrastructure, efficient and professional management team, due to abundant resources it is
largest producer of crude oil in India thus all its resources are valuable.
Rarity:

Resources that can only be acquired by one or few companies are considered rare. When more
than few companies have the same resource or capability, it results in competitive parity. Crude
produced by ONGC is sweet and most are light and hence attract a premium in market. Also, ONGC
has a unique distinction of being a company with in-house service capabilities in all areas of
Exploration and Production of oil & gas and related oil-field services. Therefore, its resources are
rare.

Imitability:

A company that has valuable and rare resource can achieve at least temporary competitive
advantage. However, the resource must also be costly to imitate or to substitute for a rival, if a
company wants to achieve sustained competitive advantage. ONGC has maximum number of
exploration licenses, including competitive New Exploration Licensing Policy (NELP) rounds. It
owns and operates more than 25500 kilometers of pipeline in India, including nearly 3800
kilometers of sub-sea pipelines. No other company in India operates even 50% of this route length.
Hence it is costly to imitate ONGC’s resources.

Organization

The resources itself do not confer any advantage for a company if it’s not organized to capture the
value from them. Only the firm that is capable to exploit the valuable, rare and imitable resources
can achieve sustained competitive advantage. ONGC has established 8.70 billion tonnes of in-place
hydrocarbon reserves. It has to its credit more than 570 discoveries of oil and gas with Ultimate
Reserves of 3.02 Billion Metric tonnes (BMT) of Oil Plus Oil Equivalent Gas (O+OEG) from domestic
acreages. It has cumulatively produced 998 Million Metric Tonnes (MMT) of crude and 645 Billion
Cubic Meters (BCM) of Natural Gas. ONGC produces over 1.26 million barrels of oil equivalent per
day, contributing around 70% of India's domestic production. Of this, over 75% of crude oil
produced is Light & Sweet. Thus, it is utilizing its resources efficiently.
Value chain analysis

VCA is a process where a firm identifies its primary and support activities that add value to
its final product and then analyze these activities to reduce costs or increase differentiation. Value
chain represents the internal activities a firm engages in when transforming inputs into outputs.
Value chain analysis is a strategy tool used to analyze internal firm activities. Its goal is to recognize,
which activities are the most valuable (i.e. are the source of cost or differentiation advantage) to
the firm and which ones could be improved to provide competitive advantage. In other words, by
looking into internal activities, the analysis reveals where a firm’s competitive advantages or
disadvantages are. The firm that competes through differentiation advantage will try to perform
its activities better than competitors would do. If it competes through cost advantage, it will try to
perform internal activities at lower costs than competitors would do. When a company is capable
of producing goods at lower costs than the market price or to provide superior products, it earns
profits.

Although, primary activities add value directly to the production process, they are not
necessarily more important than support activities. Nowadays, competitive advantage mainly
derives from technological improvements or innovations in business models or processes.
Therefore, such support activities as ‘information systems’, ‘R&D’ or ‘general management’ are
usually the most important source of differentiation advantage.

Exploration includes seismic, geophysical and geological operations. Production operations

include drilling, reservoir, production, and facilities engineering. Refining is a complex operation
and its output is the input to marketing. The main services offered by Indian Oil are Refining,
Marketing, Pipelines, R&D and Training. ONGC competes on differentiation rather than costs while
considering competitive advantage. It creates source of differentiation advantage from creating
superior products, adding more features and satisfying varying customer needs.

ONGC mission is “Dedicated to excellence by leveraging competitive advantages in R&D

and technology with involved people”. As India’s premier Maharatna, ONGC has pioneered in
research and technology development in the country, setting up twelve world-class Institutes
under the aegis of ‘Committee of ONGC Institutes’ or ‘COIN’. These twelve institutes have become
the backbone of India’s hydrocarbon industry and support the entire spectrum of Oil and Gas
production, which begins at the well bore and culminates at the consumer point.
ONGC continues to be a dominant player in the upstream sector with over 80% contribution to
the production of oil and gas in the country. ONGC has a unique and distinct advantage in terms
of being a horizontally integrated player, with in-house infrastructure for oil field services.
Experienced and professionally competent manpower is another huge advantage with ONGC.
Business model of ONGC
A business model describes the rationale of how an organization creates, delivers, and
captures value in economic, social, cultural or other contexts. The process of business model
construction and modification is also called business model innovation and forms a part
of business strategy.In theory and practice, the term business model is used for a broad range of
informal and formal descriptions to represent core aspects of a business,
including purpose, business process, target customers, offerings,
strategies, infrastructure, organizational structures, sourcing, trading practices, and operational
processes and policies including culture.

Maharatna ONGC is the largest crude oil and natural gas Company in India, contributing around
70 per cent to Indian domestic production. Crude oil is the raw material used by downstream
companies like IOC, BPCL, and HPCL to produce petroleum products like Petrol, Diesel, Kerosene,
Naphtha, and Cooking Gas-LPG. It is most valued and largest E&P Company in the world, and one
of the highest profit-making and dividend-paying enterprise.

ONGC has a unique distinction of being a company with in-house service capabilities in all areas of
Exploration and Production of oil & gas and related oil-field services. Winner of the Best Employer
award, this public sector enterprise has a dedicated team of over 33,500 professionals who toil
round the clock in challenging locations.ONGC is the only fully–integrated oil and gas company in
India, operating along the entire hydrocarbon value chain. It has single-handedly scripted India's
hydrocarbon saga. Some key pointers:

 ONGC has discovered 6 out of the 7 oil and gas producing basins in India:
 This largest energy company in India has established 8.70 billion tonnes of in-place
hydrocarbon reserves. It has to its credit more than 570 discoveries of oil and gas with
Ultimate Reserves of 3.02 Billion Metric tonnes (BMT) of Oil Plus Oil Equivalent Gas
(O+OEG) from domestic acreages.
 It has cumulatively produced 998 Million Metric Tonnes (MMT) of crude and 645 Billion
Cubic Meters (BCM) of Natural Gas.
 ONGC has won 115 out of a total 254 Blocks (more than 50%) in the 8 rounds of bidding,
under the New Exploration Licensing Policy (NELP) of the Indian Government.
 ONGC's wholly-owned subsidiary ONGC Videsh Ltd. (OVL) is the biggest Indian
multinational, with 41 Oil & Gas projects in 20 countries.
 ONGC produces over 1.26 million barrels of oil equivalent per day, contributing around
70% of India's domestic production. Of this, over 75% of crude oil produced is Light &
Sweet.
 The Company holds the largest share of hydrocarbon acreages in India (61% in PEL Areas
& 81% in ML Areas).
 ONGC possesses about one tenth of the total Indian refining capacity.
  This E&P Company has a well-integrated Hydrocarbon Value Chain structure with interests
in LNG and product transportation business as well.
 A unique organization in world to have all operative offshore and onshore installations
(403) accredited with globally recognized certifications.

Competitive Strength

 All crudes are sweet and most (76%) are light, with Sulphur percentage ranging from 0.02-
0.10, API gravity range 26°-46° and hence attract a premium in the market.
 Strong intellectual property base, information, knowledge, skills and experience.
 Maximum number of Exploration Licenses, including competitive NELP rounds. ONGC has
bagged 121 of the 254 Blocks awarded in the 9rounds of NELP.
 ONGC owns and operates more than 25,500 kilometers of pipelines in India, including sub-
sea pipelines. No other company in India operates even 50 per cent of this route length.

Frontiers of Technology

 State-of-the-art seismic data acquisition, processing and interpretation facilities

 Uses one of the Top Ten Virtual Reality Interpretation facilities in the world
 Alliances with Transocean, Schlumberger, Halliburton, Baker Hughes, IPR, Petrobras,
Norsk, ENI and Shell
 One of the biggest ERP implementations in the Asia

Best in Class Infrastructure and Facilities

 This public sector enterprise operates with 14 seismic crews, manages 262 onshore
production installations, 268 offshore installations, 69 drilling (plus 37 hired) and 54 work-
over rigs (plus 25 hired), owns and operates more than 25,500 kilometers of pipeline in
India, including 4,500 kilometers of sub-sea pipelines.
 ONGC has adopted Best-in-class business practices for modernization, expansion and
integration of all Infocom systems.

Value-chain integration
Value chain Integration ONGC's purchase of majority stake in equity in the ailing Mangalore
Refinery & Petrochemicals Limited (MRPL), a stand-alone refinery of 9.69 MMT capacity in March
2003 is a standout testimony of ONGC's integrated business model. The refinery capacity has been
progressively upgraded to 15 MMT. Besides adding that desired comfort to this Oil & Gas Company
in mitigating higher risk of E&P operation, this deal also set an example in the Indian business
history where a PSU has taken over a joint stock company and turned it around in a record time
of one year.
Moving ahead, ONGC has taken structured initiatives towards value-multiplier integration projects
like - Refinery, LNG, Petrochemicals, Power, SEZ, etc., to have presence in the entire hydrocarbon
value-chain.
ONGC is the key promoter in ONGC Petro-additions Pvt. Limited (OPaL) - a grass root Mega
Petrochemical project in the PCPIR / SEZ zone at Port City of Dahej, Gujarat, India.

Corporate Social Responsibility

In recognition of its role as a 'responsible leader', ONGC’s CSR initiative continues its quest to make
positive, tangible difference in the lives of the vulnerable and disadvantaged, especially in and
around its operational areas. In FY' 17 it spent as much as INR 5,259 million in its CSR initiatives.
With a business paradigm that is based on an interconnected vision - of people's welfare, societal
growth and environmental conservation, ONGC with its Corporate Social Responsibility activities
in India continues to cater to the developmental needs across the following focus areas:

 Education including vocational courses

 Health Care
 Entrepreneurship (self-help & livelihood generation) schemes
 Infrastructure support: roads, bridges, schools, hospitals in and around the company's
operational areas
 Environment protection, ecological conservation, promotion
 Protection of heritage sites, UNESCO heritage monuments etc.
 Promotion of artisans, craftsman, musicians, artists etc. for preservation of heritage, art &
culture
 Women empowerment, girl child development, gender sensitive projects
 Water management including ground water recharge
 Initiatives for physically and mentally challenged
 Sponsorship of seminars, conferences, workshops etc. and
 Promoting sports/sports persons; supporting agencies promoting sports / sports persons.
Corporate Governance

ONGC has taken structured initiatives towards Corporate Governance and its practices which
evolve around multi-layered checks and balances to ensure transparency. Apart from the
mandatory measures required to be implemented as a part of Corporate Governance, ONGC has
gone the extra mile in this regard and has implemented the Whistle Blower Policy, Annual Report
on working of the Audit & Ethics Committee, MCA Voluntary Guidelines on Corporate Governance,
Enterprise-wide Risk Management (ERM) framework.

Health, Safety & Environment

ONGC has implemented globally recognized QHSE management systems conforming to
requirements of ISO 9001, OHSAS 18001 and ISO 14001 at ONGC facilities and certified by reputed
certification agencies at all its operational units. Corporate guidelines on incident reporting,
investigation and monitoring of recommendations has been developed and implemented for
maintaining uniformity throughout the organization in line with international practice.
Corporate Disaster Management Plan and guidelines have been developed for uniform disaster
management all across ONGC. ONGC has also developed Occupational Health physical fitness
criteria for employees deployed for offshore operations. Occupational Health module has now
been populated on SAP system.

Human Resources
This largest energy company has vast pool of skilled and talented professionals – the most valuable
asset for the company. ONGCians dedicate themselves for the excellent performance of the
company. ONGC extends several welfare benefits to the employees and their families by way of
comprehensive medical care, education, housing and social security.
Internal Factors Assessment Summary (IFAS)

Internal Factors S/W Weightage Ratings Weighted Ratings

Human Resource S 0.15 3 0.45

Core Competence S 0.3 3 0.9
Financial Position S 0.2 4 0.8
Profitability W 0.2 4 0.8
State Owned S 0.1 5 0.5
Diversification W 0.05 5 0.25

Final Score 3.7

The rating of ONGC is 3.7 which is above average hence we can say that ONGC as a whole a
company has a well-managed and efficient internal management and resource system adding to
the overall strength of the company.