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Business Analysis

Instructor’s Name
Student ID
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Table of Contents
Executive Summary.......................................................................................................................2
Introduction and Brief Background............................................................................................3
Situational Analysis.......................................................................................................................3

PESTLE Analysis.......................................................................................................................4

a. Political Factors...............................................................................................................4
b. Economic Factors............................................................................................................5
c. Social Factors...................................................................................................................6

d. Technological Factors.........................................................................................................6
e. Legal Factors.......................................................................................................................6

SWOT Analysis..............................................................................................................................6

a. Strengths..............................................................................................................................6
b. Weaknesses..........................................................................................................................6
c. Opportunities......................................................................................................................7
d. Threats.................................................................................................................................7

Analysis of Strategic Choices........................................................................................................7

a. Exportation of Oil...............................................................................................................7
b. Licensing..............................................................................................................................7
c. Franchising..........................................................................................................................8
d. Joint Ventures.....................................................................................................................8
e. Strategic Alliances..............................................................................................................8
f. Foreign Direct Investment.................................................................................................9
g. Licensing and Manufacturing Agreements......................................................................9

Strategy Implementation...............................................................................................................9
Potter’s five forces.......................................................................................................................10

a. Threat of New Entrants....................................................................................................10

b. Bargaining Power of Buyers............................................................................................10
c. Bargaining Powers of Suppliers......................................................................................10
d. Threat of Substitutes........................................................................................................10
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e. Industry Rivalry................................................................................................................10

a. Exporting.......................................................................................................................10
b. Strategic Alliances.........................................................................................................11
c. Joint-ventures................................................................................................................11

d. Foreign Direct Investment...............................................................................................11

Conclusion....................................................................................................................................12
Reference List...............................................................................................................................12
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Executive Summary
This report aims to establish and anticipate the prospects of expanding Saudi Aramco Refineries
Company to Nigeria. Saudi Aramco Company can enter the Nigerian Petroleum market using
different channels or modes of entry. Significantly, this report uses research materials and
findings to provide evidence to prove that there is an opportunity for the organisation to go
international. In addition, the report analyses data and employs problem-solving skills required to
solve business issues internationally, which will be achieved through PESTLE Analysis. Also,
the notification includes up-to-date information about the organisation through a SWOT
Analysis. Throughout the paper, there is an inclusion of subjective ideas that have been
developed using theoretical frameworks that help support several arguments in the paper.
Therefore, with this information, the report will use situational analysis to analyse the
organisation's strategic position at the macro, industrial sector, and organisational levels while
identifying the competitive forces the organisation will face using Porter's Five Forces.
Situational analysis is essential because it highlights vital factors that support the rationale for
choosing Nigeria as the target country. Additionally, the report provides information about the
study of strategic choices using Porter’s Five Forces to identify the best way to earnest the
opportunity through strategic planning. This has been done by identifying the primary strategic
options for entry into the foreign market. The report intended to use the organisation's
internalisation strategy to benchmark the opportunity to enter the target country. The report
compares whether other international organisations have used similar methods to achieve
competitive advantage. Further, the report ends with identifying approaches that can be used by
Saudi Aramco organisation to implement the chosen strategy. The paper includes a conclusion
demonstrating the applicability of theories and concepts highlighted throughout the report.
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Introduction and Brief Background

Internationalisation of business is crucial for organisations willing to expand into new markets,
often identified with new markets, people, and cultures. Significantly, before choosing to expand
into a new international market, it is crucial to analyse different modes of entry that can be used.
According to Fernandes, Gouveia, and Pinho (2014), multinational companies can enter
international markets via direct investment, direct exporting, or contracting a local distributor.
This suggests that it is always important to identify the competitive advantage that the
organisation may have in the target market before deciding to enter. For instance, Saudi Aramco
Company Limited is an established organisation that can enter any new market worldwide. First,
Saudi Aramco Company is an Arabian national petroleum and natural gas company.
Accordingly, Saudi Aramco is one of the largest chemical companies in the world: it is
established as a global organisation with an integrated chemical and energy company (Saudi
Aramco, n.d).
According to Izuaka (2022), the Nigerian Petroleum industry was riddled with a fuel shortage in
2022. This is a challenge that a country with the highest petroleum production in Africa should
have avoided. While Nigeria is one of the largest petroleum producers in the world, it is
unfortunate to note that the country does not refine its oil locally (Izuaka, 2022). This report,
therefore, provides situational and strategic choice analysis to reconcile market opportunities and
strategic actions and identify corporate strengths that Aramco can use to establish itself in the
Nigerian market.

Situational Analysis
Situational analysis is an important concept influencing an organisation's views of the existing
market. In the case of Saudi Aramco, situational analysis prompts the organisation to analyse the
ripple effects of choosing Nigeria as a target market. This is based on the implications of the
decision in relationship to the macroeconomic effects, the operation industry, and the
organisation's ability to support the dynamic expansion into a new foreign market. Therefore, the
situational analysis will provide a conceptual overview and analysis of the Nigerian petroleum
market based on the macroeconomic effects, industrial effects, and the ability of the organisation
to support the expansion. Situational analysis helps provide the basis for the decision or
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development plans (Straková et al., 2018). This will be achieved using the PESTLE Analysis,
SWOT Analysis, and Porter’s Five Forces.
PESTLE Analysis
PESTLE analysis is a concept that is used in marketing principles. Importantly, this concept is
often used as a macroeconomic tool that companies such as Saudi Aramco can use to monitor,
evaluate, and track their operating environment (Citilci and Akbalik, 2020). PESTLE analysis
touches on the mnemonic issues that affect a nation's marketing and management environment or
any company. It evaluates political, economic, social, technological, legal, and environmental
factors. These mnemonic factors can affect the ability of Saudi Aramco to tap the business
opportunity available in Nigeria.
a. Political Factors
Political factors are issues that affect the operational activities of a country and the business. In
this essence, political factors have a subjective and objective influence on Aramco's investment
in Nigeria and the Saudi Arabia government to support the initiative of Aramco to invest in
Nigeria. For instance, Aramco is a state-owned organisation. Therefore, most of its activities are
influenced by the government. Suppose the Saudi Arabia government aligns itself with the
organisation's vision. In that case, there is a high chance that the company will be supported with
resources and a diplomatic partnership with Nigeria, especially with foreign taxes.
Political stability is a significant factor when investing in a foreign country. Nigeria's political
stability has increased in recent years than seven years ago. However, the country was politically
unstable in the past, which led to many people being displaced (Dare, 1997). Political stability in
a foreign country can influence the business outcome because it enhances cash flow in the
economy. Political stability in Nigeria will influence the operations of Saudi Aramco Company.
The regulatory environment in various governments is crucial in influencing the business's
operations. Changes in government policies and regulations affect the way foreign countries
operate (Mark and Nwaiwu, 2015). For instance, Nigeria's government policies and regulations
can change in the coming years after the election of a new president. New government regimes
tend to establish new foreign policies and regulations that can affect Aramco positively or
negatively.
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Additionally, geopolitical tension around the region of investment can affect the organisation's
economic development. For instance, regional conflicts around West Africa and neighbouring
countries with Nigeria will hurt Saudi Aramco's business activities and operations.
b. Economic Factors
Economic factors, such as the fluctuation of oil prices globally, can significantly impact
Aramco's business operations in Nigeria. Also, factors such as inflation can affect an
organisation's economic activities. Inflation affects the overall operations of the business because
of the ripple effects it has on the production cost and the effects it has on the purchasing power
of consumers. In Nigeria, the effects of inflation have significantly affected the rate of volatility
in foreign exchange. According to Nuhu (2021), the causal association between oil/petroleum
prices and inflation greatly affects foreign exchange. From 1986 to 2019, using the time series
data analysis, Nigeria faced variable effects of inflation, which caused volatility in the foreign
exchange rate.
However, in recent years, the economic growth of Nigeria faced a downturn due to the reduction
of global oil prices (Sani and Nwoye, 2023). This challenge had an overall effect on the business
activities in Nigeria (Abubakar, 2020). Nigeria is showing the rights signs of economic
development, which is important for Aramco Company.
Additionally, the country shows great quality in institutional growth, development, and
administration. Aramco can use This key influential factor to establish itself in a new market
economy. Economic growth is always coupled with factors such as institutional maturity and
quality (Shah, Zubair, and Hussain, 2020). Institutional growth is an important factor of
globalisation in emerging economies.
Economic factors such as Interest rates play a significant role in identifying a business
opportunity in foreign countries. Often, changes in interest rates by a country's Central Bank can
influence various factors of production. In recent years, the Nigerian Central Bank increased its
interest rates from 18% to 18.50%. This increase in interest rates has a significant effect on the
operational activities of foreign companies. It increases the operational activities, especially
doing business, and affects the borrowing abilities of the organisation. High-interest rates can
affect the company's ability to expand in a foreign country (Natal and Stoffels, 2019).
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c. Social Factors
Social factors employ the aspects of the availability of labour and the productivity of labour in
Nigeria. Nigeria has a productive workforce that Saudi Aramco Company can use while
investing in Nigeria (Jekelle, 2021). Changes in social attitudes towards foreign investors in
Nigeria can also affect the productivity of Saudi Aramco Company. In addition, the energy
transition in Nigeria to renewable energy can also affect the production activity of Saudi Aramco
in the country.
d. Technological Factors
Technological advancement can affect a company's development in a foreign country.
Technological development increases innovation and efficiency. Therefore, technological
advancement can help improve the extraction of oil by Saudi Aramco in Nigeria. For instance,
Nigeria is Africa's largest producer of petroleum oil; however, the industry needs more resources
that can be used for oil refineries (Sani and Nwoye, 2023). The ability of Saudi Aramco to use its
technological development in Nigeria will help improve the extraction and refinery of oil.
e. Legal Factors
Legal factors such as Environmental regulations in Nigeria will significantly affect the
investment of Saudi Aramco in Nigeria. In addition, competition laws in the country can also
affect the development of foreign countries. If the country has stringent competitive laws against
foreign investors, it would be difficult for the company to develop into a successful organisation
in that country.

SWOT Analysis
In this essence, the SWOT analysis will factor in the internal and external issues affecting the
Aramco organisation. The internal and external factors affecting Aramco will help identify and
maximise the opportunities the foreign markets will offer Aramco's organisation.
a. Strengths
Saudi Aramco has vast oil reserves. This is a strength that gives the organisation a competitive
advantage even in foreign markets. As a result, Saudi Aramco is a leading global player in oil
production. This will make the organisation achieve greatly in Nigeria. In addition, the company
enjoys low oil production, which will impact its profitability in foreign industries.
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b. Weaknesses
Saudi Aramco needs to diversify more than it is at the moment. This will affect the organisation's
ability to invest in Nigeria, especially because Nigeria also produces its oil. Another area for
improvement is dependency on the states. Since the organisation is state-owned, several
bureaucratic issues must be addressed before it invests in Nigeria.
c. Opportunities
Saudi Aramco can utilise the opportunity for energy transition to establish itself in a country that
depends highly on oil exportation. This opportunity is important for Aramco so that it can invest
in clean energy in Nigeria. Also, the opportunity will help confer with the environmental legal
laws in Nigeria.
d. Threats
Volatile oil prices and geographical conflicts in Nigeria risk the ability of the organisation to
invest. Also, the expansion of Aramco to Nigeria will help the company avoid the risks of
business created by geographical conflicts in Iran and Iraq.

Analysis of Strategic Choices

a. Exportation of Oil
Saudi Aramco Company can expand its operational activities by exporting its products to
Nigeria. Exportation as a foreign entry business model and approach can be achieved in two
ways (Shen, Puig, and Paul, 2017). First, the organisation can enter Nigeria by directly exporting
petroleum and energy products to a customer base in Nigeria. Notably, direct exportation is
crucial when the seller and the buyer want to avoid involving a middleman in selling and
exporting the product.
On the other hand, Saudi Aramco can easily enter the Nigerian market through exportation using
intermediaries such as agents, distributors, and trading intermediaries. This concept of business
entry is often referred to as indirect exportation. The approach involves working with other
licensed traders or companies in a foreign country to ensure that the company's products are sold
to the right customers (Shen, Puig, and Paul, 2017).
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b. Licensing
Licensing is an important mode of entry that Aramco can use to start its operations in Nigeria.
Many components are associated with Licensing as a mode of entry (Shen, Puig, and Paul,
2017). In many cases, licensing occurs when one company, such as Aramco, grants a company in
Nigeria the right to produce and sell products using its unique production process. The mode is
associated with granting a foreign entity the patent right to produce refined oil like Aramco's.
Licensing can be achieved in different ways depending on the agreement that a patent or an
intellectual rights holder decides to negotiate with the foreign entity (Shen, Puig, and Paul,
2017).
c. Franchising
Franchising is a crucial mode of entry into the international business arena, which many
multinational companies have used to establish themselves in potential foreign markets. As a
mode of entry, franchising happens through agreements (Shen, Puig, and Paul, 2017). These
agreements require a business to allow a foreign entity to replicate the business model in its
operational activities. For instance, Aramco Company can allow a foreign entity in Nigeria to
replicate its business model, brand, and operation system in all of its activities. This way,
customers can view the foreign entity as identical to the primary brand.
d. Joint Ventures
Joint ventures are agreements that occur when two similar business organisations operating in
the same industry agree to pool their resources together. Joint ventures are a method of entry that
organisations use to tap opportunities in foreign markets (Shen, Puig, and Paul, 2017). The mode
of entry through joint ventures can occur in two ways. First, it can occur through equity joint
ventures or non-equity joint ventures. Equity joint ventures occur when a company wishing to
enter a foreign market approaches a local partner (Shen, Puig, and Paul, 2017). The process
involves joining influential resources with the local partner to ensure to inspire the commencing
of business operations. Equity joint venture is factored with sharing of resources, risks, and
decision-making rights between the two partners. It is often referred to as joint ownership.
Additionally, the other form of joint venture is a non-equity joint venture. Here, the business
collaborates with a local partner in the foreign target market (Shen, Puig, and Paul, 2017).
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e. Strategic Alliances
Strategic alliances are entry modes in foreign markets where a business enters cooperative
agreements with other companies in the foreign target market. While this mode of entry requires
that the local entity is committed to the same business purpose as the contractual business, it is
often noted that strategic alliances occur when a company or business wants to leverage its
resources and distribution. The mode helps the organisation utilise the available resources to its
maximum potential.
f. Foreign Direct Investment
Foreign Direct investment is a method of foreign market entry associated with an organisation
starting its full operation in the target foreign market (Shen, Puig, and Paul, 2017). Foreign
Direct Investment may take place as Greenfield investment: Greenfield investment requires the
firm to establish itself in the foreign market and directly involve itself in all business operations
in the foreign market. The company often establishes wholly-owned and takes control of all
operational activities.
Also, foreign direct investment can be used as a mode of business entry by merging or acquiring
other organisations in the target market. In this process, the business can decide to acquire an
organisation in Nigeria that deals with similar business activities or merge with the organisation
and operate as one entity (Shen, Puig, and Paul, 2017). This will help the organisation gain
immediate access to the resources needed to operate in the foreign market. In addition, foreign
direct investment requires an investor to establish a lasting interest in the target market without
fail.
g. Licensing and Manufacturing Agreements
Licensing and manufacturing agreement is another mode of business entry that focuses on
establishing contractual agreements allowing an organisation to outsource its resources while
operating in the target market (Shen, Puig, and Paul, 2017). For instance, Aramco can enter and
establish its business operations in Nigeria under this mode of entry under a license or
manufacturing agreement with the Nigerian government. This entry mode is advantageous
because it provides the organisation with operational advantages: the company can utilise its
employees and managerial skills in the target market.
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Strategy Implementation
Saudi Aramco must consider an effective and influential market entry strategy that has attained
the key points and considerations highlighted in the market research findings. The organisation
must implement a strategy that encourages effective compliance with local regulations and does
not compromise the country's foreign policies. Also, Saudi Aramco Company will consider
factors such as inflation, interest rates, and economic growth in selecting the best entry approach
to use. Before choosing the entry strategies, it is important to understand Aramco's strategic
position and planning using Porter's Five Forces.

Potter’s five forces

a. Threat of New Entrants
Saudi Aramco can overcome the threat of entry because of its ability to invest in capital-
intensive projects. Also, it has the technical abilities and expertise needed to explore and extract
oil. The organisation has gathered this experience over the years. Therefore, the organisation will
likely face minimal threats to enter a new market like the Nigerian market.
b. Bargaining Power of Buyers

The bargaining power of buyers in the oil industry in Nigeria varies. Therefore, Saudi Aramco
should invest in a diversified product that achieves consistent bargaining power from the buyers.
For instance, the country can encourage the use of renewable and clean energy other than oil.
c. Bargaining Powers of Suppliers
The bargaining powers of the suppliers in the Nigerian industry will help the organisation's
strategic plan for the method of entry it can use to achieve maximum influence in the market. For
instance, the power of suppliers in the market can influence exportation and joint-venture
partnership to gain more bargaining power of suppliers in the industry. Also, Aramco can use its
bargaining powers over suppliers to negotiate favourable terms with the Nigerian government to
use the Foreign Direct investment policy as a method of entry.
d. Threat of Substitutes
The threat of substitutes in the market will affect Saudi Aramco's influence in the Nigerian
market unless the organisation decides to invest in a diverse project promoting clean energy use.
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Also, threats of substitutes, such as the use of electricity for energy, will affect the bargaining
power of the buyers. Many people in the country will shift to reliable and energy-clean energy.

e. Industry Rivalry
Rivalry with other players in Nigeria's petroleum industry can affect Aramco's growth and
development in the sector. This is because Nigeria is oil producing country with existing players.
The government may create laws and policies that are harsh to foreign competition. Essentially,
it would be important for the organisation to use a form of entry that can deal with industrial
rivalry, competition, and foreign countries.
Significantly, the organisation can use the following strategies to enter into the Nigerian foreign
oil industry;

a. Exporting
Exportation is the most reliable and quickest entry method that Aramco Company can use to
enter its target foreign market. This is because exporting will allow the company to enter the new
target market faster than other forms. Also, exporting will help the organisation enter into
collaborative agreements with the Nigerian government to have bilateral business relationships.
These relationships can be implemented on the basis that Nigeria exports its crude oil to Saudi
Aramco, and Aramco, in return, exports refined oil back to Nigeria. This bilateral business
relationship will bring mutual benefits to Saudi Aramco and Nigeria.
b. Strategic Alliances
A strategic alliance is essential because it will allow the organisation to access the partners'
resources. Saudi Aramco Company should implement this strategy since it opens the
organisation to an established market share. Although the business will share in the risks and
substantial resources between them, this type of business arrangement will allow Aramco to
enter the market by leveraging the brand name of its cooperating partners. The mode of entry
allows Aramco to gain market knowledge of the foreign market through its partner. In the long
run, the organisation will be able to use this knowledge to enter the market through a different
mode that will allow it to operate as a lone player.
c. Joint-ventures
Saudi Aramco Company Limited can enter the foreign market through joint ventures. Using
industry analysis, Nigeria has established itself as a giant in Africa's petroleum and energy
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sector. Therefore, to impose itself into the Nigerian market, the organisation can enter into joint
ownership with a local petroleum company in Nigeria. This entry type will be important to
implement because it provides Aramco numerous benefits. For instance, the organisation can
navigate complex local regulations that may tame its existence in the market. Also, the
organisation will have a cultural intuitive advantage-it will help the organization overcome some
of the cultural nuances that affect foreign companies in new markets. Further, the organisation
will enjoy the risks and benefits of shared investments.
d. Foreign Direct Investment
Foreign Direct Investment is an effective mode of entry that Saudi Aramco organisations can use
to implement an internalisation strategy. This strategy is essential because it will allow Aramco
organisation to have full control of the operational activities in its new target market. It is
important for an organisation with multinational influence and financial capability, like Saudi
Aramco, to adopt an approach that gives it complete control over operations, strategies, and the
quality standards of the products and services it will offer in the new market. In addition, foreign
direct investment will give the company the opportunity, through its abilities, to build a strong
customer presence in the country and the region. This way, Aramco Company will have the
potential to attain long-term profitability potential.

Conclusion
In conclusion, Saudi Aramco Company can directly implement Foreign Direct Investment (FDI)
as the best approach to establish itself in the Nigerian market. This approach gives the
organisation an element of control. Also, the organisation can later acquire other organisations in
the foreign market after establishing its position and control. The report analysis shows that
Saudi Aramco has the opportunity to tap and invest in the Nigerian market.
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