Question

Dealing a Rigged Game

The case study concerns Pete Miller, CEO of National Oilwell Varco (NOV) since 2001. Miller acquired over 200 companies, each with a strategic tie to the oil producing industry. The company now has a dominant share of the market for offshore drilling equipment, a segment of the industry that reported the most orders ever in 2013. NOV stands to capitalize on all segments of the future oil industry – the actual building of the drilling rigs, jack-ups, and ships that have to go offshore and do the drilling.

Management Update: In November 2013, Pete Miller announced he was stepping down as NOV’s CEO to serve as executive chairman of DistributionNOW

Case Question: Recall our definition of strategy as “a comprehensive plan for accomplishing an organization’s goals.” Explain why NOV’s approach to acquisitions qualifies as corporate-level strategy. Be specific by discussing the company’s moves, the nature and state of the industry that it’s in (drilling equipment and services), the nature and state of the industry to which it’s closely related (oil and gas drilling), and, most importantly, its goals. What are NOV’s goals?

Answer 1

Corporate level strategy can be seen as a game plan for the company into its future role. It can be expanding the operations, or cutting it down, or maybe protecting it against the forces like during this time of the pandemic. These strategies are based upon business and the internal environment and the capabilities that the company possesses.

Corporate level strategy can be of 4 types or 4 purposes stability strategy, expansion strategy, retrenchment strategy, and a combination strategy.

Here, in the case, where they are acquiring different companies and delving to become the best or a near-monopoly in the oil industry, by controlling all aspects of it. Be it drilling, boring, shipping, etc.

The company as it can be seen from its working has acquired companies that belong to the oil industry and also intends to take upon all segments of it and not just drilling equipment.

The company currently deals in drilling equipment which is only one aspect of the industry but with related diversification into the supply chain, production, drilling, etc. they can delve into many more spaces of the umbrella oil and gas industry.

If goals are analyzed, then it can be seen that the company wants to be the pioneer in not just drilling equipment but the entire industry of oil and gas. It is going for it strategically. Acquiring companies would help in expansion to other regions, reducing competition, and the ability to take upon the big competitors. Being the pioneer, they can also hold major market share worldwide and, perhaps, set the price too.

So these seem to be the few goals of NOV