The Strategic Position Of Baker Hughes Incorporated Management Essay

Baker Hughes is a combination of baker international cooperation and Hughes Tools Company in April 1987. A supplier of formation rating, boring, completion, production and reservoir consulting to the oil and gas industry with its operations into two Hemispheres, eastern with five parts ( Asia Pacific, Russia/Caspain, Middle East, Europe and Africa ) , western with four parts ( US Golf, Latin America, US Land and Canada ) with 35,000 employees in 90 states.


The purpose of this study is to critically measure the strategic place of Baker Hughes Incorporated and how its emerging engineering in good completion may impact on the future place of the administration.

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The company is really broad in oil and gas industry, provides reservoir consulting, formation rating, boring, completion and production merchandises and services to the world-wide oil and gas industry. The intent of this class work is to research the country of good completion merchandises and services. Baker Oil Tools ‘ is a subdivision of Baker Hughes in good completion merchandises and services, its engineerings, planning, and attack to avoid hazard, reduces production, intercession cost, and widen the life of good. The range and deepness of dependable completion solutions allow you to make the ideal conduit from formation to come up, irrespective of your well type or operating environment. This is the key to acquiring the most returns. For high-rate, big-bore completions to multizone, openhole horizontals in shale gas multilaterals, our completion systems are bettering and minimising life of good cost.

The engineering associated with this subdivision of the oil and gas industry are unreal lift systems, lasting monitoring system, chemical injection system, incorporate operation, wellbore building and completion, forte chemical and direction. Baker Oil tool is responsible for the proviso of equipment, services from its completion stage through the productive life of oil and gas Wellss. Wellbore intercession merchandises and services are to bring forth the plus, trades with trouble-shooting boring jobs, better care, and reconstruct economical production. Technologically based tools used in wellbore intercession are tubing fishing system, casing exists, wellbore cleansing and impermanent forsaking. ( Baker Hughes 2010 ) .

2.1 Profile

Baker Hughes ( Wikipedia 2010 ) provides reservoir consulting, formation rating, boring, completion and production merchandises and services to the world-wide oil and gas industry. It has made impact in the oil and gas industry in supplying dependable, practical solutions when and where to its clients to cut down costs, hazard and bettering on its productiveness. From reservoir to the refinery, they have created value with high-performance merchandises and services to analyse, bore, measure, complete and bring forth oil and gas militias and so conveyance and polish the hydrocarbons. Invention has been portion of Baker Hughes, through conceived land interrupting innovations that has revolutionized the oil and gas industry. They have advanced and seeking for solutions to suppress the following frontier in countries such as: Differential public presentation, Regions and geomarkets, Technology, Technical expertness, Drilling and rating, Completions and production, Fluids and chemicals, Reservoir engineering and consulting services.

It is a top-tier oilfield service company with a century-long path record which delivers solutions that help oil and gas operators make the most of their reservoirs that provides dependable, practical solutions when and where to their clients at lower costs, cut down hazard and better productiveness and helps oil and gas manufacturers by supplying practical engineering to happen, develop, bring forth and pull off crude oil reservoirs. ( Wikipedia 2010 )

2.2 Mission

Strive to construct an inclusive civilization that values the diverseness of our planetary work force and sustains an environment in which employees can develop and make their ultimate potency.

2.3 Vision

Global squad of diverse, talented, and results-driven people makes Baker Hughes the company of pick for our employees, clients, and communities.


The environment comprises of two sections viz. the Internal and External Environment.


This portion of the environment explores the organisation ‘s mission, vision, intent and value, stakeholders and power, civilization, organisational balance, procedure and competency, etc

3.1.1 Stakeholder

Stakeholder can be a individual, group, organisation, or system who affects or can be affected by an organisation ‘s actions. Harmonizing to the definition above, Baker Hughes shareholders comprises of the direction, clients, providers, authorities bureaus, staff, local community, stockholders, political parties, brotherhood, trade association, proprietors, fiscal community, activity group, client association and group, media. Baker Hughes shareholder service is managed by Mellon Investor Services, a transportation agent and registrar who assist in pull offing the investing, keeps record of every outstanding stock certification and the name of the individual to whom it is registered. When stock alterations custodies, the agent transfers the ownership of the stock from the marketer ‘s name to the purchaser ‘s name. At the terminal of each twenty-four hours, they reconcile all transportation records and makes certain that the figure of portions debited is equal to the figure of portions credited. It besides uses the shareholder records to pay dividends and issue placeholders. ( Baker Hughes 2010 )

3.1.2 Stakeholder ‘s map

Low Interest High


Customers, Union, Media,

Trade Union, media

Staff, Top Management, Shareholders,

Financial Community, Suppliers, Local

Community, Customers

Government, Shareholders,

Management, Political Group,

Financial Community

Customers, Local Community,


3.1.3 Culture

Company civilization is the alone qualities of the administration. It determines how the workers act, energy contributed to overall teamwork, invention, engineering, client service, productiveness, job resolution and quality.

Baker Hughes delivers public presentation at good site through application of proficient cognition, practical experience, and dedication to quality service. This company has built a really high public presentation civilization, based on its Core Values of Teamwork, Integrity, Performance and Learning. Programs in baker Hughes are introduced to promote, acknowledge and honor perfect executing at rig site. Baker Hughes field public presentation is supported with world-wide operations networking organized around specific merchandise lines, to enable best in category planning, logistics, equipment fix and proficient service. With the construction of Baker Hughes civilization, stockholders can raise sentiments and decide it together, moving on new chances, move into new one and, originative in way. ( Baker Hughes 2010 )

3.1.4 Balance of the Organization

This section describes the balance of the merchandise and services of Baker Hughes as a company.

High SHARE Low


High Revenue, High Market Share

Low Revenue, High Market Share

High Revenue, Low Market Share

Low Revenue, Low Market Share

The Market Growth versus Market Share interprets the organisational balance of Baker Hughes, its growing in merchandise and services, and Market Value. Efficiency and Effectiveness increases their value.

Baker Hughes is a provider of wellbore-related merchandises and services provide merchandises and services for boring, formation rating, completion and production, and reservoir engineering and consulting to the world-wide oil and natural gas industry. Baker Hughes concern is dependent on the capital of its clients, outgos, dedication to field development and production, oil and natural gas geographic expedition, clients ‘ outlooks for future oil and gas monetary values, economic growing, hydrocarbon demand and current and future oil and natural gas production. The balance of the administration and its operations is organised into a figure of geomarket parts, which report to nine different part presidents, so describe to two hemisphere presidents. Product-line selling and engineering study to the president of merchandises and engineering. The presidents of Western Hemisphere, Eastern Hemisphere, Products and Technology, Vice President of Supply Chain study to Chief Operating Officer of the company.

This organisational construction is intended to beef up client-focused operations by traveling direction into the states where its concerns are conducted. The product-line is responsible for merchandise development and fabrication, engineering, selling and bringing of solutions for clients to progress reservoir public presentation. While the supply concatenation is responsible for development of cost-efficient procurance and fabrication of merchandises and services. ( Wikipedia 2010 )

Harmonizing to Deaton C. C. , ( 2010 ) “ Quarter three was a good one-fourth for Baker Hughes. Our Drilling and Evaluation section reported record gross, record operating net income and record operating net income borders with 44 % year-over-year incremental operating net income borders. Consequently, we will go on to put in fabrication capacity, make add-ons to our rental fleets, and hire and train field applied scientists to back up our clients ‘ demands through the terminal of the decennary. ” ( Baker Hughes 2010 )

3.1.5 Process / Value

In Baker Hughes, unity is the foundation of their single and corporate actions in honestness, trustworthy, regard and ethical in our actions which drives an organisation. The values of baker Hughes are the footing for keeping a common civilization. These civilizations are: Integrity, Teamwork, Performance, and Learning. Teamwork enhances their single abilities and strengths to accomplish a common end. Performance excellence, concentrating on things that are of import thrusts the consequences that differentiates baker Hughes from other rivals in the oil and gas industry. Learning in an environment where benchmarking and following best patterns is the key to accomplishing the potencies of single and the company.

Harmonizing to Bradfield, D. H. , ( 2010 ) The Company specialises in the design and supply of procedure bundles and wholly incorporate systems for oil/gas production, refinery waste H2O intervention, petrochemical and power coevals markets. Baker Hughes concern is fundamentally in two sections viz. boring and rating, and completion and production. The boring and production provides merchandise and services used to bore and measure oil and gas Wellss, boring and completion fluids, directional boring services, measuring while boring ( MWD ) , logging while boring ( LWD ) . The completion and production section provides merchandise and services used in the completion and production stage of oil and gas Wellss. It ‘s fundamentally offers wellbore building, casedhole completion, sand control and wellbore intercession solutions. ( Baker Hughes 2010 )


This subdivision of the administration is where either the construction, scheme is affected or both.

3.2.1 Five Forces Analysis

Five forces analysis looks at five cardinal countries viz. the entry, power of purchasers, power of providers, the replacements, and competitory competition.

New Entrants.

There is a batch of oil and gas service companies all over the Earth, barriers to entry into this industry are legion to frighten away the new companies. They vary depending on the country of merchandise and service, market the company is situated. If we consider a company to provide pumping trucks needed at good sites which will really dearly-won at a rate of one million lbs each. While other countries of the oil and gas concern requires skilled manpower to manage this equipments. This class of company in the oil and gas sector such as these have higherA barriers to entry thanA those offering merely boring, support services or services. Sufficient hard currency is another large barrier to entry. New companies need to hold sufficient money to displace the bing 1s. These factors are besides considered ; The economical value, the high or low cost of entry, easiness of entree to distribution channels, cost advantages non related to the size of the, will rivals revenge, authorities action, how of import is distinction. , really high if there are few but large participants in the industry, the rate of cost decrease when exchanging clients is ever low.

Suppliers. A

Baker Hughes is one of the prima oil and gas company in the universe, much of this subdivision of the concern is dominated by powerful companies. Their big sums of immense capital investing tend to weed out providers of rigs, polishing grapevine. No much of competition, but have important power over smaller boring and support companies.


Power tends to travel towards the purchaser but about all trade goods there are no much difference, the purchaser goes for where monetary values are low and a better contract term.

Substitutes. A

These are by and large alternate to oil which includes solar power, air current power, gas, coal, biofuel, atomic energy and hydroelectricity. Oil is non powering car, it is really utile in other stuffs like plastic. Baker Hughes can defy the dainty of replacement because of its forte in countries directional boring and seismal boring. This company is critically analysed because of their merchandise and services.

Rivalry. A

The slow rate at which these oil and gas companies grow is what is confronting most of them. Almost every company in this industry can make one thing ; there is a high issue barrier in the oil and gas companies. Aside of the company ‘s bit value of the equipment, if it non runing, so, it value-adding capability.A Baker Hughes major competition is Slumberger, Halliburton and Weatherford. This is most likely to be high where entry is likely ; replacement merchandises, providers and purchasers intend to command the market. ( Baker Hughes 2010 )

3.2.2. PESTL

New Entrants















Support Activities of the company

Firm INFRASTRUCTURE: Administration, Legal, Financial Management, Accounting

Human RESOURCES: Training, Recruitment, Personnel, staff planning

PRODUCT AND TECHNOLOGY: Production Engineering, Market Testing, R & A ; D, Product and Process Design, Drilling Engineering

Procurement: Specification, Funding, Supplier Management, Subcontracting

Inbound Logisticss


Outbound Logisticss

Gross saless and Selling


Supply Agendas,

Raw stuff, Controls,


Quality control,


Production control,



Quality control,


Well Completion



Order handling,


Completing goods


Market research,

Gross saless analysis,

Order pickings,

Customer Management

Education and Training,



Primary Activities of the company.


Strengths, Weaknesses, Opportunities and Threats. SWOT is the internal Strengths and Weaknesses of a house and the environmental Opportunities and Threats confronting a house. SWOT analysis is a technique, which is widely used by directors to analyze a company ‘s strategic state of affairs. Baker Hughes effectual scheme is derives from its internal resources ( strengths and failings ) and its external state of affairs ( chances and menaces ) . If accurately applied, baker Hughes has powerful deductions for the design of a successful scheme.

Strengths, Weaknesses, Opportunities and Threats ( SWOT )




Steady fiscal public presentation

Strong R & A ; D capableness

Wide merchandise portfolio

Wide geographical presence


Lack of graduated table

Colony with DOJ and SEC



Growth in planetary oil and gas boring

Acquisitions of BJ Services & A ; Nova Technology Corporation

Energy services in China

Deepwater Technology


Intense competition

Hazards associated with carry oning concern outside the US

Economic lag in the United states

Seasonal fluctuation

Renewable energy

Baker Hughes is focused on spread outing in high growing parts like Russia, Middle East, capitalising in high oil monetary value, profitableness in the Middle East is far guaranteed.

Baker Hughes is larning to swim in deeper Waterss which is a new demand in oil and gas industry. In deepwater engineering, boring is expensive and oil is drilled 1000s of pess below sea degree. Seasonal fluctuation poses a menace to baker Hughes net incomes. Renewable energy besides poses a menace to baker Hughes demands. ( Datamonitor 2008 )


Baker Hughes has invested on people, substructure and engineering. It served as the foundation for the following of scheme action designed to assist increase market portion and accomplish a long-run profitable growing. Their strategic place is in three-phase

Improve clients focus ; by bettering direction diverseness and quality, set up market section to ease communicating across the endeavor, reorganization, client cleavage and people scheme.

Achieve operational effectivity ; hiring of the first main information officer to take endeavor broad information squad, Outsourcing certain finance operations to cut down cost and better efficiency, Hiring of frailty president of supply concatenation to set up an endeavor attack to provide concatenation map, e.g. fabrication, buying and logistics.

Optimize merchandise portfolio ; Build out reservoir engineering and confer withing group.

Targeted research, development and technology disbursement in planetary web of engineering on cardinal undertakings, Establishing of three undertaking centres, viz. completion and production ; fluid and chemicals ; boring and rating. Filling of important spreads in merchandise portfolio in countries like force per unit area pumping through the amalgamation and acquisition of BJ Services and its merchandise lines which are ;

INTEQ: provides boring and formation rating.

Baker Atlas: wireline logging services e.g. advanced formation rating, production and reservoir technology, petrophysical and geophysical informations acquisition.

Baker Hughes Drilling Fluids: Fluid system and services e.g. optimize boring and completion procedure, maximise hydrocarbon production and manage boring waste.

Hughes Christensen: provides Tricone TM and PDC bore spots, ream while boring and casing boring engineering.

Baker Oil Tools: completion, intelligent production and intercession solution to pull off cost and cut down hazard while maximizing reservoir.

Centrilift: unreal lift systems e.g. submersing pumps ESP, specific technology, undertaking direction, good monitoring services.

Baker petrolite: chemical engineering solution for hydrocarbon production, transit and processing, delivers grapevine unity services. ( Baker Hughes 2010 )


Baker Oil Tools, universe leader in good completion and intercession solutions. Division of Baker Hughes, which provides completion through Packers and Flow Control, Subsurface Safety Systems, Liner Systems and Wellbore Isolation, Sand Control Pumping, Tools, and Services, Tubing-Conveyed Perforating, Systems. This subdivision of baker Hughes is sealing and grounding engineerings, planning, hazard turning away, maximizing production, cut down intercession cost, and widen the life of good. Baker Hughes has made impact in the oil and gas industry, from the reservoir to the refinery they have created value with high-performance in their merchandises and services to analyse, bore, measure, complete and bring forth oil and gas militias and so conveyance and polish these hydrocarbons. ( Baker Hughes 2010 )

These are the emerging engineerings in good completion and intercession

Packers and flow controls: To increase net income by cut downing hazard and minimising life of good cost.

Subsurface safety system: cut down hazard and increase net income utilizing subsurface safety valves.

Liner system and wellbore isolation: cut down hazard and CAPLEX ( Capital Expenses )

Sand control pumping, tools, and services: ensures operational excellence in unconsolidated formation at less hazard.

Tubing conveyed perforation: achieve upper limit production utilizing efficient completion solution.

Expandable solid tubular system: maximise hole size with significantly cut down not productive clip ( NPT ) .

Fishing service: cut down the cost of wellbore job.

Casing issue: addition net income by accessing antecedently uneconomic militias and short-circuiting problem

Remedial and stimulation: lower hazard, hike effectivity of redress and stimulation operations.

Baker Hughes has been know for success in engineering invention. Local squads are supported by planetary centres of excellence where scientists push the boundaries of value-adding engineering to happen solutions for increasingly more complex proficient challenges at dedicated invention centres. ( Baker Hughes 2010 )


The impact of scheme place has enhanced their productiveness, efficiency and effectivity in countries such as: Global Benefits Strategy, Labour and Management Relations, Employee Development, Recruiting and Retention, Global Workforce.


Workplace Diversity and Equal Opportunity


Employee turnover

Employee turnover


Baker Hughes strategic place will impact on a state ‘s economic system by implementing plans that provide sustainable benefits to the people and communities operation. Baker Hughes employment plan is designed to advance diverseness in workplace ; varied experiences and accomplishments are extremely valued and applied toward common ends. These schemes are implemented through confidence of occupation chances for local citizens at every degree of the organisation. Besides, developing and development plan to progress and win in their different callings. The authoritiess, non-governmental organisations, academic establishments, clients, and employees are engaged to turn to the societal demands of community stakeholders, instruction is placed as a precedence in baker Hughes worldwide parts. Employees are supported by a civilization which values workplace diverseness, squad work, together across geographicss and product-lines to present advanced engineering solutions. The engineering plan in baker Hughes promotes professionalism, development of scientific discipline, technology and employees with proficient abilities in their calling promotion chances based on their public presentations and parts to baker Hughes. Global Learning and Development Program provides non-technical preparation to professionals in corporate and support functions. ( Baker Hughes 2010 )

Baker Hughes is committed to national content to add people and its economic system. Expanding its investings in advanced engineering, developing oil and gas markets, placing national content development, as a step to operational success. Committed to advancing three cardinal countries: A planetary work force, local providers and communities. With focal point on these countries like: A planetary work force, local providers and communities, the part and each geomarket direction squad implement specific programs in accommodating with authoritiess statute law, and develop concerns, communities and its local citizens. Prosecuting clients as spouse requires an administration with the preparation and experience to present efficaciously. With planetary work force, local citizens are represented in managerial, operations and proficient places jointly presenting. There is impact through talent acquisition plan ; by constructing pupils.

Baker Hughes is taking to go on increasing the composing of workplace and calling development. In community degree, national content is encouraged through societal parts, which are majorly focused on instruction. In spread outing national content programs, baker Hughes is looking for chances to construct on the success of existingA educational plans. ( Baker Hughes 2010 )


Baker Hughes has invested significantly in people, substructure and engineering. These investings served as the foundation for the following set of strategic actions designed to assist increase market portion and accomplish long-run profitable growing. Increasing market portion and accomplishing long-run profitable growing requires Baker Hughes to prosecute two related endeavor schemes: continue to construct planetary capablenesss to function clients around the universe, and deploy customized local solutions to run into clients ‘ demands in each geographic market. For these schemes to be achieved, foremost, better client focal point, that is understand clients and proactively run into their demands. Second, achieve operational effectivity and better overall cost place. Third, optimise bing engineering portfolio and make full strategic spreads, including reservoir technology capablenesss and force per unit area pumping services. To run into this mark, baker Hughes needs to transport out a major reorganisation and marks more amalgamations and acquisitions. ( Baker Hughes 2010 )

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