Saudi Aramco-Total Refinery Joint Venture's Benchmarking | Free Essay Example

Saudi Aramco-Total Refinery Joint Venture’s Benchmarking

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Topic: Business & Economics
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Introduction

Since its pioneering by Xerox cooperation benchmarking has been adopted by various companies in a bid to improve their performance in their respective sectors. In an increasingly competitive world of business, corporations have sought to improve their services and performance through adoption of cutting edge technologies that address competition and delivery of services. The oil sector presents one of the most important frontiers where benchmarking has become a necessity (Cheney 1998; Ferson 2009, p. 82).

Precisely, benchmarking has become the norm in oil mining and refinery (Ostoblom 1993; Leonard & Zairi 1994; Zhu 2008, p. 43). In this research proposal, the focus will be on the benchmarking process implementation in a Joint venture between Saudi Aramco and Total refinery. To complete the research proposal perspective, this paper will detail other sections including literature review, research questions and research objectives, research methodology, reflections, and the conclusion.

Literature Review

Benchmarking is largely a performance improvement tool that calls for a well structured process of a company’s initiatives. Business and non-business entities use benchmarking initiatives to enhance their competitiveness. According to Bogan benchmarking has nowadays evolved to become one of the most essential business elements in corporate business performance management (1994, p. 89).

Boxwell defines benchmarking as the process involving comparison of a business entity’s business processes and performance metrics to those of the industry’s leaders (1994, p. 23). More often than not, benchmarking processes that are measured include time, costs and quality of the deliverables in the particular industry (Kozak 2004, p. 29). Commonly, business entities identify leading corporations in their particular industrial sectors to which they study and compare their existing business processes with the aim of making necessary improvements or adjustments (Saul 2004, p. 34).

Thompson concurs with the above assertion by saying that benchmarking success of a company mostly rests on the consistent evaluation of its performance (1996, p. 67). Bergh & Ketchen (2009, p. 63) add that constant evaluation of performance mainly depends on existing standards that the businesses have set for themselves. They also need to measure their performance against recognised industry leaders as well as best practises by other industry leaders operating in an environment similar to their own (Coers et al. 2002; Seybert 2006, p. 40).

Stevenson (1996, p. 78) also has a similar assertion on benchmarking as those highlighted above. According to him, benchmarking involves measuring one company’s performance against its peers in the industry. Benchmarking also according to Stevenson refers to being mentored by others in order for companies to grow in their respective industries. Additionally, benchmarking is an undertaking of analysis to ascertain the weaknesses and strengths to determine what must be done to improve an organisation’s performance (Watson 2008, p. 21; Blessing et al. 2009).

Damelio (1995, p. 91) quoting a study by Suncor Energy details the value of benchmarking. According to him, benchmarking provides the best platform to gauge the industry on the good, the average and the bad. Spainhower (2008, p. 55) also says that the petroleum refining has been an active participant in benchmarking for the past 25 years during which numerous benchmarking initiatives have been developed.

In fact complexity ranks top among the factors to be considered when engaging in an oil refinery project similar to the one Saudi Aramco and Total refinery are engaging in. There is consensus that all oil refineries are unique in their own ways depending on the target market, feed availability, ability to adopt to the dynamic market place, financial capability of the owners and the environmental realities (Leibfried 1993, p. 12; Camp 2006; Zairi 2012). The above factors make benchmarking in the oil refinery sector a crucial tool in order to ensure quality and other necessary deliverables are achieved.

Codling reinforces the need for benchmarking in the petroleum industry by alluding that it is a valuable tool that is crucial to industry and facility performance (1992, p. 223). Also, benchmarking is necessary in the quest to establish appropriate targets for quality and high performance attainment (Zairi 1996; Wober 2002, p. 41).

Research Questions

The research will be seeking to answer the following questions:

  • Why is benchmarking necessary in the joint venture of Saudi Aramco and Total refinery?
  • What personnel are required for the effective implementation of the benchmarking process in a joint venture?
  • How can past benchmarking undertakings help in the successful implementation of the benchmarking process between Saudi Aramco and Total refinery?

Research Objectives

This study will aim to achieve the following objectives:

  • To determine already existing benchmarking thresholds that will ensure quality service delivery during the joint venture
  • To determine through data analysis the best way forward in the benchmarking implementation process in the joint oil refinery between Saudi Aramco and Total Refinery
  • To determine the ways through which benchmarking will be institutionalised in the joint venture and also provide for necessary adjustment points for continuous improvements

Methodology

Research criteria

Various multi-stage benchmarking techniques have been recommended by several researchers (e.g. Engel 2000; Kumar 2002; Singh 2006; and Jonker & Pennink 2010) suggest that benchmarking processes can be combined into four key steps:

  • Organising the research: choosing and describing the procedure(s) to be investigated.
  • Carrying out the study: gathering both primary and secondary data regarding companies being investigated.
  • Evaluating the data: evaluating and construing the data gathered with a view of establishing suggestions for self-development.
  • Implementing the findings: determining and implementing the procedure for development in the case organisations (see appendix).

The current research will adopt a similar four-stage technique for benchmarking. The four-stage benchmarking process strategy is preferred because it is a modified model, which is largely adapted from the model utilised in benchmarking research (Andersen 1996). Also, the model is preferred since it indicates that benchmarking is a systematic approach to performance improvement in order to satisfy customers’ needs and requirements (Tucker 1996). The four-stage process of benchmarking is enough to achieve our objectives because the model has been used in other research to achieve similar objectives.

The challenge with this methodology is that it is time consuming. However, in this study we will allocate adequate time for the various stages and sections of the study. In the absence of any current databank or joint grouping for benchmarking oil refinery improvement actions in oil industries, it would be decided that a sovereign benchmarking be conducted. It would be additionally decided that to attain the most from the process, the benchmarking research would gather not only qualitative but also quantitative data, and adopt two key subjects:

  • The quality control procedure and method to benchmark improvement in the joint venture between Saudi Aramco and Total Refinery;
  • The inputs, processes, outputs and results of oil refinery improvement actions of similar units in other oil-oriented organisations.

To gather information from both Saudi Aramco and Total refinery, a letter would be written to the management of the joint venture requesting for data regarding its specific quality control processes. Information about inputs, personnel, processes, outputs and results of comparable measures in other organisations would be collected by an orderly review of published yearly action plans of similar organisations through the online databases. Information obtained will be assembled and evaluated with a view of addressing the research questions and achieving the research objective.

Data collection

In this study, descriptive research methodology will be used. The research will use a survey approach to obtain data for analysis. The survey will be administered to a predetermined number of participants drawn from the target population (Patra 2004; Ossowski 2008; IGI 2008). Krishnaswamy says that a survey mainly involves the use of various research methods and instruments such as questionnaires and interviews which have perennially proved useful in the research especially the data collection process (2009, p.90).

The sample size will be 40 participants drawn equally from each company. The sample will include senior managers and stakeholders. This study will use the survey method to gather data and information from refinery industry participants concerning the benchmark implementation process. It is important to note that this is a targeted research and a survey will come in handy in collecting and analysing information. The survey will apply both to individuals and business entities involved in the oil refinery business.

Data evaluation

Regarding data analysis, stratified random sampling will be used to choose the sample from the participating population. The study will use random sampling to ensure the best representative sample is obtained. The population from which the sample will be drawn will include different leaders and stakeholders in the petroleum refining industry. Data collected during the study will be analysed using SPSS software and inferences recorded according to the objectives of the study.

Reflection

It is rather obvious that the benchmarking activity illustrated above has been initiated by extrinsic quality control procedures. Whereas it is likely for oil companies to undertake benchmarking willingly on their own joint venture agreement, it is hard to think, at least for the organisations to be studied, that they would be prepared to spend the time and energy in a proper methodical effort of benchmarking their operations and actions amongst large workload without any demands from outside, in particular in cases of decreasing resources.

Conclusion

The capability of an organisation to significantly assess its performance is critical to the procedure of constant quality development. However, a company may have an ordinary tendency of protecting its self-interests and therefore, be unwilling to accept its inefficiencies if not challenged by pragmatic proof. Benchmarking, even for a small-magnitude activity such as the one proposed for this study, can have the impact of putting a company into task and independently compare its performance against that of its competitors, via the development of suitable benchmarking processes. It can offer valuable “wake up” calls for an organisation which has possibly been too self-satisfied with its performance.

Timetable

Activities 2012
9 10 11 12
Research proposal XX XX XX
Literature review XX XX XX
Preliminary field work XX
Preliminary research XX
Thesis writing XXX XXX

References

Andersen, B 1996, The Benchmarking Handbook: step-by-step Instructions, Thomson, Sydney.

Bergh, D & Ketchen, D 2009, Research Methodology in Strategy and Management, Sage Publications, London.

Bogan, C1994, Benchmarking Best Practices, McGraw Hill, New York.

Boxwell, R 1994, Benchmarking for a Competitive Advantage, McGraw Hill, New York.

Blessing, L et al. 2009, DRM: a Design Research Methodology, McGraw- Hill, New York.

Camp, R 2006, Benchmarking: The Search for Industry Best Practices That Lead to Superior Performance, Springer, New York.

Cheney, S 1998, Benchmarking, Cambridge University Press, Cambridge.

Coers, M et al. 2002, Benchmarking: A Guide for Your Journey to Best-Practice Processes, Springer, Chicago.

Codling, S 1992, Best Practice Benchmarking: A Management Guide, Routledge, New York.

Codling, S 1998, Benchmarking, Irwin Publishers, London.

Damelio, R 1995, The Basics of Benchmarking, Cengage Learning, New York.

Engel, E 2000, Optimal Fiscal Strategy for Oil Exporting Countries, Springer, Chicago.

Ferson, W 2009, Portfolio Performance Measurement and Benchmarking: Market Timing: Part 13, Routledge, New York.

IGI 2008, Benchmarking: Webster’s Quotations, Facts and Phrases, McGraw Hill, New York.

Jonker, J & Pennink, B 2010, The Essence of Research Methodology: A Concise Guide for Master and Phd Students in Management Science, Routledge, New York.

Kozak, M 2004, Destination Benchmarking: Concepts, Practices and Operations, Sage Publications, London.

Krishnaswamy, K 2009, Management Research Methodology: Integration of Methods and Techniques, Springer, New York.

Kumar, A 2002, Research Methodology in Social Science, Springer, Chicago.

Leibfried, H et al. 1993, Benchmarking: A Tool for Continuous Improvement, Sage Publishers, London.

Leonard, P & Zairi, M 1994, Practical Benchmarking: The Complete Guide, Lippincott, New York.

Mastropieri, M et al. 2006, Applications of Research Methodology: Volume 19, Cengage Learning, New York.

Ossowski, R 2008, Managing the Oil Revenue Boom: The Role of Fiscal Institutions, Cengage Learning, New York.

Ostoblom, B 1993, Benchmarking: a signpost to excellence in quality and productivity, Springer, New York.

Patra, D 2004, Oil industry in India: problems and prospects in post-APM era, Springer, Los Angeles.

Saul, J 2004, Benchmarking for nonprofits: how to measure, manage, and improve Performance, New York, Cengage Learning.

Seybert, J 2006, Benchmarking: an essential tool for assessment, improvement, and Accountability, Thompsons Publishers, Melbourne.

Singh, Y 2006, Fundamental Of Research Methodology And Statistics, Thomson Learning, Melbourne.

Spainhower, L 2008, Dependability Benchmarking for Computer Systems, Thompsons Learning, New York.

Stevenson, W 1996, Productions/Operations Management, 5th edn, Irwin Publishing Company, London.

Thompson, S1996, Strategic Management: Concepts and Cases, 9th edn, Irwin Publishing Company, London.

Tucker, S 1996, Benchmarking: a guide for educators, Springer, Delhi.

Watson, G 2007, Strategic Benchmarking Reloaded With Six Sigma: Improve Your Company’s performance using Global best practice, Cengage Learning, New York.

Wober, K 2002, Benchmarking in Tourism and Hospitality Industries: The Selection of Benchmarking Partners, John Willey & Sons, New York.

Zairi, M 2012, Benchmarking for Best Practice, Cambridge University Publishers, Cambridge.

Zairi, M 1996, Effective Benchmarking: Learning from the Best, Sage Publishers, London.

Zhu, J 2008, Quantitative Models for Performance Evaluation and Benchmarking, Springer, New York.

Appendix 1: Benchmarking Process Steps

Benchmarking Process Steps

Appendix 2: Questionnaire for benchmarking survey

Organisation profile

Company Name: ………………………………………………………..

Country: …………………………………………………………………….

City/Town: ………………………………………………………………….

1(a): describe main business operation and show industry specialization:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….

1(b): please specify two main products with the largest proportion of sales:

(i) ……………………………………………………… (ii) ………………………………………………………

2: Number of workers: ………………………………………………

3: Kind of ownership for the firm

  1. Joint-venture with foreign majority shareholder ◻
  2. Joint-venture with foreign minority shareholder ◻

4: Nationality of major foreign investor of the firm: (if applicable): …………………………………………….

5. The year of registration: ……………………………………………….

6. Total sales for the company (latest FY):

1. Less than US$1million 5. From US$30 million to US$49.9 million (300-499 Milliard)
2. From US$1million to US$5million (10-50 Milliard) 6. From US$50 million to US$99.9 million (500-999 Milliard)
3. From US$5 million to US$9.9 million (50-99 Milliard) 7. From US$100 million to US$499.9 million (1000-4999 Milliard)
4. From US$10 million to US$29.9 million (100-299 Milliard) 8. From US$500 million and above (5000 Milliard keatas)

Benchmarking and related concern

1: Competition and competitive strategies

1.1: Please indicate whether your company has performed the following corporate strategies in the last 1 year and whether your company is considering implementing the following corporate strategies in the next 1 year:

Last 1 year Next 1 year
Scaled down its operations in BBK SEZ 1 Yes 2 No 1. Yes 2. No
Expanded its operations in BBK SEZ 1 Yes 2 No 1. Yes 2. No
Maintained the same level of operations in BBK SEZ 1 Yes 2 No 1. Yes 2. No

1.2: Please indicate whether the following events have been/will be done in the last 1 year/in the next 1 year:

Last 1 year Next 1 year
involve(d) in Joint-ventures 1. Yes 2. No 1. Yes 2. No
If yes, specify type(s) of operations (to be) removed
Withdraw(n) from a joint-venture 1. Yes 2. No 1. Yes 2. No
If yes, specify type(s) of ventures (to be) withdrawn
If yes, specify the new venture(s)

2: Please indicate the current and most attractive location of key activities of your company and the key reason for the choice?

Current location Most attractive location in the world Key reason for choice
Headquarters (Joint)
Operational facilities
R&D
Technical support
Logistics/procurement

3: What are the 3 key concerns and setbacks your company is encountering in the joint venture?

…………………………………………………………………………………………………………………………………………………………………………………………….

4: What are the 3 main concerns and setbacks the joint venture is currently encountering in developing business ventures with other companies?

…………………………………………………………………………………………………………………………………………………………………………………………….

Name: …………………………………………… Email: …………………………………………………….

Designation: ………………………………….. Telephone No.: ………………………………………..

Company Name: ……………………………………………………………………………………………….