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Risk Management at Apache case Case Solution & Answer

Risk Management at Apache case

Pestle Analysis

In this Analysis, we understand all the macro factors which affect the growth and profitability of Apache Corporation.

Political Factors

The corporation is to doing business in international level, so the effect of political factors is high on the business of oil and gas. Every country has its own policies of employee’s benefits, pricing, taxation and regulations of trade. These all the factors affect the business of Apache company.

Economic Factors

The economic factors all affect the business of Apache in a positive and negative manner. Currently, the increase in inflation, unemployment and tax rates affect negatively to the company because the purchasing power of the customer is depends on these all factors.

Social Factors

The social factors of the company has positive effect on the business. Because socially, the products of the Apache are high in demand. The corporation adapt the culture of every country where they expand the business.

Technological Factors

The Apache Company has the low technological factors. The research and development of the corporation is average through which the technology of the company is also affected.

Environmental Factors

The environmental factors have the positive effect the operations of the Apache Company. The company understands the environmental factors of every market and then starts its operation in the new market. The environment is favorable for Apache firm.

Legal Factors

The legal factors are also in favor with the Apache Company because the company follows all the legal factors of health and safety of employees, government policies of workplace and the laws of employment. The copywriters, patents are also safe for the Apache Company in every market because the intellectual property of the company is most valuable.

Vrio Analysis

Vrio analysis is also an important strategic tool for understanding the internal factors of the organization, which involves the value of organization, rarity, imitability and organization. In this analysis, the abilities and resources of the company are evaluated.

Value of organization

The value of the corporation is good for all the levels of employees. The company follows the strong rules and regulations which meet with the vision and mission of the corporation to meet with organizational objectives. The company motivates the employees in both the ways intrinsic and extrinsic. The company works on the overall behavior of employees and the Apache also focuses on the moment of competitors in the market.

Rarity

The products of the corporation are rare in the market because of the quality of the products of the company is good as compared to other competitors’ products.

Imitability

All units of the Apache’s portfolio have enough resources to operate. The corporation can compete with competitors in the market. The resources of the company are valuable. In the situation of low prices, the resources of the company can affect negatively and the company can stop the operation of drilling.

Organization

The Apache organization is the well-known organization of North America, which operates from 1954.

In the market in North America and other international countries, the company produces gas and oil. The employees are also experienced and task oriented. The business portfolio of the organization is also strong the organization is managing the risk for increasing the revenue of the corporation.

Financial Analysis

Ratio Analysis

The current ratio of the company is increased in 2000, which means the company improves its liquidity in 2000. The quick ratio of the company also improves and is greater than 1 in the year 2000, which means it is also in favor of the company. The working capital of the corporation also increases from $6290 to $76673, which means the company has high working capital for regular expenses. The gross and operating profit of the company also increases from 1999 to 2000, which means the profitability of the company increase from 1999 to 2000.

Recommendations

After analyzing the case of Apache Corporation, we recommended that the company must hire a professional financial analyst who designs the financial planning on an advanced level and forecast the future risk and growth of the corporation. The company must increase the variety of products which relate to its line of product. As mentioned above, the environment of the company is not compatible, so the Apache must work on the environment and culture   of the organization for increasing productivity of the employees.

Conclusion

After covering all the Analysis of the case, we conclude that the Apache Company generates more profit from the period of 1999 to 2000, as results mentioned in the below appendices. Oil and Natural Gas are the main products of the corporation. The theoretical and financial analysis are to be done for the understanding of internal, external, micro and macro factors. The company must work on the financial planning for increasing the profitability of the company by eliminating the risks…..

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