Strategic Solutions – Oman Case Study. Issue: Outsourcing

Your task is to produce a management report providing Strategic Solutions for an issue or Strategic issue or issues that you have identified in your own organisation or Strategic Business Unit.

The solution(s) should be based on thorough analysis and should involve critical evaluation of a range of potential solutions. The emphasis must be aiming to achieve competitive advantage. The choice of the final strategic decision should be justified. The solutions must not be descriptive of what the organisation is actually doing but analytical and proposing what it could and should do. This may be different to the actual decisions made by your organisation. It may however be a justification of what is actually proposed by the organisation but must justify it in the light of other options and through analysis. Which approach you take depends on the circumstances of your organisation.

The nature of Strategic Issues:

• Identification of the issue(s) is essential to the success of your assignment. You must therefore avoid operational issues such as Marketing, HR etc.
• Success depends on you being able to understand the difference between operational and strategic issues and actions
Choosing the Strategic Issue. Below are some examples of the sorts of issues that might be investigated. Please note that this is not a complete list and that different ones may be relevant. (Generally you would only focus on one but there may be more that you could consider). The emphasis on the options that are considered should be on achieving competitive advantage:
• Decision about which markets to enter
• Decisions about potential product or service development
• Decisions about which business units to invest in and grow and which to reduce
• Growing a new business
• Finding a new source of differentiation in the face of competitive pressure
• Finding innovative ways to compete hence avoiding competition
• Decisions about trade-offs
• Decisions about continuing on the current path

Non-Profit or Government Agencies. Despite the fact that some of these may be quite inflexible you should not let this restrict your thinking. You should be prepared to think about the following types of issues:
• Development of new services for different segments 
• Better Value Propositions to satisfy stakeholder groups

The Analysis:
This should be based on extensive study and use of data. The analysis must appear in your appendices. It is not necessary to do this in full report form but should be in the form of a series of annexes which will contain your notes. The analysis and appendices must be referred to in your report as evidence and justification for your options and decisions.

Proposed case study:

Oman Oil is one of the downstream oil companies, that operates in the Omani downstream oil and gas Market, beside Shell Marketing, Al Maha petroleum and Hormaz who just joined the industry. Nevertheless, both Shell and Al Maha remain the major rivals with almost equal offering of products and services. The market size of oil and gas downstream is USD 3.5 billion. Oman Oil beside other competition offers 
The downstream retail business in Oman is regulated by the Ministry of Oil and Gas, whom in 2016 decided to left subsidy on the fuel prices, due to the drastic drop of international market oil prices which is the main country income stream. In addition, the government spending on projects dropped due to its income drop. These changes enforced strains on the company profitability. Therefore, become important for the company to review possible cost reduction to maintain profitability by outsourcing some of the services or activities currently done in house, in order to reduce and control cost by converting some of the fixed cost into variable cost that responses to the market changes. The outsourcing decision become strategic issue and they need to decide on the services that will be outsourced. Such decisions expected Oman oil to be more resilient to economic changes.

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