Английский язык. Практический курс для решения бизнес-задач
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Consolidation Strategy
To grow companies and thus raise the companies’ stock value, A.T. Kearney has developed the Value Building Growth method. Central levers of this method are revenue growth and value increase. They form a matrix with four quadrants in which companies of a sector can be positioned according to their stock market performance.
The position within the matrix gives a rough orientation of the relative competitiveness of a company and the strategic and operational improvement requirements. Accordingly, the position in the matrix gives four major thrusts.
Simple Growers face the question as to further focus core activities and competencies and develop them above average. The goal of Profit Seekers is to build on realized profits. Underperformers have to undergo a substantial process and organizational restructuring and portfolio optimization. For Value Growers the challenge is the sustainability of success and the preparation of the next step for growth.
YukosSibneft and LUKOIL are identified as Value Growers from 1997 until 2002. However, this should be seen as an honoring of both companies’ activities in the near past. For both it is now crucial to carefully evaluate their next steps in the market: compared to their global competitors both are still small players in the game.
Other East European players like Gazprom, Orlen or MOL have under-performed in terms of value and revenue growth. Restructuring their businesses and an even clearer business focus is the key message for these players.
Conclusion
To survive consolidation, East European oil and gas companies must take into account their specific positioning in the global consolidation curve. While business and portfolio restructuring as well as a consequent focus is the appropriate strategy for local players only few are in the position to compete against global industry leaders today. However, even these East European industry leaders may find themselves targeted by global majors; oil and gas is further moving towards an industry consolidation.
All companies have to quickly align the strategy to their relative industry position; otherwise they are running the risk of being taken over by industry leaders and becoming part of the oil and gas history. The urgency for East European companies to decide which future strategies they should pursue in the consolidation game is underlined by the fact that foreign companies have already defined their strategies and are on the way to implementing them.
Source: Oil and Gas Eurasia, october 2003, pp. 36—41
Essential Vocabulary
1. exploration and production (E&P) –
2. penetration n – проникновение
penetrate v – проникать
3. state-owned – государственный
4. consolidation n – консолидация (реинвестирование дохода, полученного от продажи акций, в менее рискованные ценные бумаги; конверсия краткосрочной задолженности в долгосрочную; укрепление рыночной конъюнктуры; объединение отчетности компаний группы)
consolidate v – консолидировать
5. major n – зд. крупная
6. rumor n – слух; непроверенная информация, которая может повлиять на рынок
7. privatization n – приватизация
privatize v – приватизировать
8. frontier n – граница, рубеж; новая область
9. dissolution n – роспуск (компании или товарищества): юридическое прекращение деятельности компании в добровольном или принудительном порядке
dissolve v – распускать, прекращать деятельность
10. trigger n – курок, механизм; условие соглашения, невыполнение которого автоматически влечет определенные действия
trigger (off) v – приводить в движение, начинать, вызывать
11. first-mover – первопроходец
12. footprint n – след, отпечаток
13. powerhouse n – электростанция; очень энергичный человек; мощная и динамичная компания
14. emulation n – соревнование, состязание, соперничество, подражание
emulate v – соревноваться, состязаться, соперничать, подражать
15. alliance n – союз
ally n – союзник
ally (to, with) v – соединять(ся), вступать в союз
16. risk sharing – разделение риска
17.authority n – власть; орган власти; полномочие
18. restructuring n – реструктуризация (кредита или компании); пересмотр сроков выплаты долга
restructure v – реструктуризировать
Exercise 1. Answer the following questions.
1. What is the risk that the East European oil and gas companies currently face? 2. What is the policy pursued by the oil and gas majors in Eastern Europe? 3. What is the industry lifecycle according to A.T. Kearney? 4. What are the characteristics of the Opening Stage? 5. What are the main features of the Scale Stage? 6. What do companies in Stage 3 focus on? 7. Why is the Stage 4 named «Balance and Alliances»? 8. Where is the oil and gas industry located in the consolidation curve? 9. What is the essence of the Value Building Growth method developed by A.T. Kearney? 10. What are the challenges faced by Growers, Profit Seekers, Value Growers and Underperformers, respectively? 11. What Russian oil and gas companies can be included in these four categories? 12. What should East European do to survive consolidation? 13. Do you agree with the conclusions of A.T. Kearney’s experts and have their forecasts come true with respect to the Russian oil and gas sector?