The Canadian Natural Resources limited is considered as one of the world’s leading companies in the production of natural gas and crude oil. The operations of this company continue to flourish despite the challenges it faces in its strategies. Canadian Natural Resources has embraced the adoption of cost effective business alternatives in its endeavors as a way of ensuring high levels of portfolio development in its initiatives (Soderbergh Robelino and Aleklett, 2007). Further, the firm boasts of a well set plan to act as a blueprint for its developments. This has proven its effectiveness in creation of the desired value for its stakeholders. Being a great player in Canadian oil production, the company diversifies its operations in light and heavy oil and natural gas particularly in the Pelican Lake. Further, Canadian Natural Resources ventures in exploration and exploitation activities in offshore Africa and selected parts of the North Sea area. The company has periodically increased its production to more than 200,000 barrels on daily basis (Casman, Dobermann, Waters and Yang, 2003). This paper makes an analysis of the business environment in which Canadian Natural Resources operates based on its internal and external factors.
The Canadian oil industry faces a lot of challenges particularly from governmental legislations. Unlike other economies with fossil fuel consumption subsidies, Canada has put in place systematic mechanisms of taxation as a way of cutting down fuel consumption. For instance, the gasoline taxes of this economy rose to a significant value of 31% reaching 39 cents for a liter. The Federal excise taxes reached $5 billion a year and about $ 8 billion for provincial taxes (Giachetta, Leporini and Marchetti, 2015). Further, the government’s support for renewable energy policies has acted as a great drawback for the Canadian oil industry. For instance, the Feed-in Tariff Program of Ontario has acted as a way of discouraging the consumption of oil products. Similar initiatives have been adopted in New Brunswick and Nova Scotia as mandatory Renewable Energy Standards. These initiatives allow renewable energy producers to make purchases of the required electrical supplies from renewable sources of energy. In Quebec, the government has come up with initiatives to aid it in granting about $700 million each year for the production of wind energy until 2020 (Giachetta, Leporini and Marchetti, 2015). In its eco-ENERGY program, the Canadian government has encouraged stakeholders to produce biodiesel and ethanol. These initiatives have acted as great setbacks to Canadian oil companies dealing in production and distribution.
The key external factors affecting Canadian oil producers and other stakeholders include political factors, geological risks and market factors. The political environment is known to be the key regulator of the oil industry in any economy. Unlike other industries, the critical nature of oil and gas businesses makes it vulnerable to excessive regulations which vary between economies. The Canadian Natural Resources company has its operations located in different parts of the world. Political risks for oil and gas industries tend to be stricter in instances where these firms have their operations in other countries away from home. Since the organization operates on leases in other economies out of Canada, it prefers to get involved with countries that depict high levels of political stability. While the Canadian Natural Resources company has not had political wrangles abroad, hessing, and summeville (2007) explain that there are tendencies that such situations may take place. Issues like abrupt nationalization and changes in political environments of these economies may initiate significant changes in regulatory issues particularly after the adoption of policies like the Kyoto Protocol. The firm has made heavy investments in the politically unstable and highly vulnerable African economies which have revealed some levels of political instability and dictatorship. However, the organization has tackled these issues by initiating proper mechanisms of environmental analysis and creation of sustainable ties with other players in these international markets.
Geological risks act as the greatest threats to companies dealing in extraction and production of oil and gas all over the world. The Canadian Natural Resources company has not been spared either. It is important to put into consideration the fact that most of the oil and gas deposits that are easily accessible also undergo depletion at a faster rate. This could be attributed to the fact that they could be smaller than the estimated levels before they are exploited. Geological risk ids a function of the tendencies of finding accessible oil and gas reserves and the complications associated with the processes of extraction (O’faircheallaigh, 2007). The Canadian Natural Resources company has worked towards curbing such occurrences by investing in geological research and development programs as a way of reducing the risks associated with geological issues by undertaking proper mechanisms of frequent assessments. As a matter of fact, geologists make use of terms like possible, probable and proven as a way of advising the organization on the best steps to undertake with reduced risks.
Price issues may be a product of natural disasters and calamities which may cause extreme destructions in this industry. The occurrence of the historical hurricane Katrina led to a dramatic increase ion oil prices. In this disaster, the prices of oil rose by a significant $ 3 for every barrel.
To sum up all the challenges faced by oil and gas companies in Canada, with the Canadian Natural Resources to be specific, the organization has come up with proper adaptation al mechanisms to counter the effects of these factors. Involvement in extensive research and development initiatives as a way of curbing the effects of geological issues has worked efficiently for this firm. Further, the organization has strived to maintain proper relationships with other stakeholders on foreign soils as a way of curbing political factors that may be as a result of governmental policies and aspects like overregulation, political instabilities and dictatorship particularly in Africa.
Business Model Canvas
The Canadian Natural Resources company has its key partners as the governments of the countries in which its operations are located, supply alliances, international oil and gas traders and competitors in this industry. The company has established and maintained a strong working relationship with the governments of the countries in which h it operates as a way of seeking political protection. Further, the company has maintained a good reputation with supply alliances and international oil and gas traders as a way of allowing its products reach the desired destinations in safe ways.
The key activities of this company include exploration and exploitation of gas and oil deposits. This is achieved through extensive research and development. By initiating proper research and development activities, the organization has been able to take advantage of the latest technologies in its processes leading to high levels of efficiencies.
Value proposition at the Canadian Natural Resources has been achieved by increasing its quality standards. All products delivered to customers are of high quality and are at per with the standards of the consuming economies. The quality of oil products is measured by the extents to which they fulfill the desired uses bashed on their densities. The company sells based on these qualities and has maintained its revenue over the years.
Customer relationships are considered as a key component of this organization. As a matter of fact, the company has acquired a number of tenders because of its effective customer service relationships. Canadian Natural maintains its brand name by ensuring high levels of loyalty to its customers as a way of maintaining these relationships. With its key channels being oil and gas exploitation, exploration and production, the company has set its operations in Alberta, Northeast British Columbia, the North Sea, Offshore Africa, Kirby and North America (O’faircheallaigh, 2007).
The Canadian Natural Resource has oriented its business operations as its key sources of revenues. The company’s key aim of operation is to increase shareholder value. For this reason, it puts a lot of focus on cost control initiatives which reduces its debts while maximizing its capitalization bases.
References
Cassman, K. G., Dobermann, A., Walters, D. T., & Yang, H. (2003). Meeting cereal demand while protecting natural resources and improving environmental quality. Annual Review of Environment and Resources, 28(1), 315-358.
Giacchetta, G., Leporini, M., & Marchetti, B. (2015). Economic and environmental analysis of a Steam Assisted Gravity Drainage (SAGD) facility for oil recovery from Canadian oil sands. Applied Energy, 142, 1-9.
Hessing, M., & Summerville, T. (2007). Canadian natural resource and environmental policy: political economy and public policy. UBC Press.
O'faircheallaigh, C. (2007). Environmental agreements, EIA follow-up and aboriginal participation in environmental management: The Canadian experience. Environmental Impact Assessment Review, 27(4), 319-342.
Söderbergh, B., Robelius, F., & Aleklett, K. (2007). A crash programme scenario for the Canadian oil sands industry. Energy policy, 35(3), 1931-1947.
Appendix
VALUE
PROPSITION
Efficiency
Quality
CHANNELS
Oil dealerships
Governments
RELATIONSHIPS
Loyalty to customers
A strong brand name
CLIENTS
Petroleum industries
Governments
REVENUE STREAMS
Exploration
Exploitation
COST CENTRES
Administrative
Research and development
Operational
KEY
PARTNERS
Supply Alliances
Governments
KEY
RESOURCES
Research and development
Labor
Sales and marketing
Strategic alliances
KEY
ACTIVITIES
Oil and gas exploration, exploitation and production
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