The Competitive Strategy For China Oilfield Services Ltd.

China Oilfield Services Limited (COSL) is the first listed integrated offshore oilfieldservices company in Chinese market. The company has four distinct businessdivisions, which, in total, combine a comprehensive suite of services to the offshoreoil and gas exploration and production (E&P) industry. The divisions are offshoredrilling, marine support and transportation, well services and geophysical services.Maintaining its leadership in Chinese market and expanding internationally has beenset as the company's most important strategy. In recent years, the company devotedto integrating its business line and tried to provide one-station service to customers.However, it has no other strategies except for internationalization. This reportanalyzed the status quo of offshore oilfield services industry, market demand,developing trend, government policies, and its main competitors, and clarified theadvantages and disadvantages of COSL. The analysis indicated that COSL and otheroffshore oilfield services companies will benefit from rapid growth of offshore Chinain the coming 15 to 20 years and is facing a big opportunity. In dog-eat-dog andhigh-risked international offshore oilfield services market, COSL will have nocompetitiveness in economy scale, equipments, technology, operation experience andbrand, but will have low cost structure compared with its competitors. In Chinesemarket, COSL will enjoy unexampled competitive advantages because of governmentsupport, good customer relationship, and management experience. The authorformulated four strategies for COSL, which include total cost leader, business focus,technology driving, and internationalization. In his opinion, low cost is the corecompetitiveness of COSL. The executives should look on cost with strategical eyes,improve management and focus on Chinese market so as to lower cost and preventoperation risks. Positioned on low-end and middle-end marked, the existingone-station service can not provide differentiated services to customers and is only ashort-term strategy in Chinese market. In long-term, COSL should shrink its businessscope, concentrate on its core business, and transfer its business to middle-end andhigh-end market. In order to develop its technology-based core competitiveness,COSL should carry out technology driving strategy and improve its equipments andtechnology through importing, joint-venture, or independent research. Although thereport agreed with COSL's internationalization strategy due to limited capacity ofChinese market, it advised COSL to go cautiously during this process. It alsosuggested that COSL should train its management team at the same time whenabsorbing elites abroad and COSL should buy share of some international oilfieldservices company.