Strategy of Noble Company

Oil drilling industry had two inherent risks. One was financial risk that was derived from intensive capital requirement and cyclic fluctuation. The other was operating risk that was involved with employeesЎЇ hazardous working environment below the earth.

In spite of these serious risks, Noble Corporation (Noble), one of the major drilling companies, did not, however, regard these risks as threats to its operation, but considered them opportunities for competitive strategies. First of all, Noble extraordinarily focused on Health, Security, and Environmental (HSE) issues. As a result, Noble established strong customersЎЇ confidence coupled with development of its reputation as an outstanding drilling company. Secondly, with strong HSE which reduces Lost Time Incident Rate (LTIR) and strategic acquisition over the world, Noble was able to position itself as a cost leader. Finally, by monitoring the trend of oil and gas drilling market thoroughly, Noble was always able to move to next market, from land to offshore, and again to deepwater market.

To execute these strategies, the following three tasks were critical, each of which worked synergistically within virtuous cycle structure. 1) Excellence in HSE issues; HSE was the key factor to succeed in this industry for many reasons. Excellent HSE provided effects of increasing revenue and reducing cost, which eventually led to high profitability. As E&Ps were not free from drilling companyЎЇs safety accident, E&Ps preferred drilling companies which had high HSE record. Therefore, NobleЎЇs excellence in HSE was the key factor to increase its revenue. This high HSE also decreased LTI, which eventually reduced the cost, 2) High utilization of the rigs; the rigs were expensive equipments. Therefore, Noble should have to increase the utilization of the rigs to spread high fixed cost over output, which could be achieved by high HSE, and 3) Strong financial performance; Excellent HSE brought strong financial performance, which, in turns, enabled next investment in HSE. In this way, the critical tasks of Noble were linked to each other to reinforce the positive feedback loop.

Noble were able to implement these tasks because these were supported by its culture, people and system. The culture of Noble can be represented as one word, Ў°Safety First.Ў± Noble always put safety first over any other thing. Those culture emphasizing on safety enabled Noble to maintain a competitive advantage in its business. Noble also focused its efforts on people. From the companyЎЇs first day, Noble recognized that the most important asset is its people so it tried to recruit employees to fit for companyЎЇs culture and direction and to maintain them competitive through various training programs. By doing so, Noble was able to retain highly capable employees and also able to improve operational efficiency. Another way Noble tried to maximize its efficiency through its people is by matching right people to the right place which enabled maximum use of its human resources. NobleЎЇs system also was structured to emphasize safe and efficient operations. NobleЎЇs