Vietsovpetro Has Gained The Significant Achievements Management Essay

As reference above, Vietsovpetro has gained the important accomplishments in the oil and gas industry in Vietnam, and has contributed significantly to national economic development. These fond regards can be illustrated with the produced crude oil end product of 201 million metric ton of rough oil and 71.2 billion three-dimensional metres of natural gas keeping about 80 % of produced oil & A ; gas end product of Vietnam every bit good as with the part in Vietnam national Budge near 39 billion USD.

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The above accomplishments help Vietsovpetro to be one of the taking companies in rough oil production and export in Vietnam and to go the 3rd state in Southeast Asia in oil production and export.

Although, Vietsovpetro has achieved the singular success in the oil and gas industry of Vietnam in general and in the National Oil and Gas Group in peculiar, but in fact, we can happen out many cardinal restrictions in its organisational construction and operation, which have mentioned above and can be summarized as follows: obsolete and old current organisational construction, bulky direction system, anti-cross, low decision-making, inflexible, many beds, low competitory ability, hapless motive and promote non to advance resources, hard to mobilise human resources, non efficient in utilizing its big possible capacities and installations, scattered in R & A ; D activities, diminishing in oil production end product and non fiting between strategic undertakings and current organisation construction.

So, in order to last and develop, there is no other manner that Vietsovpetro itself has to be changed and improved, particularly in term of organisational construction. To make this, a large inquiry for Vietsovpetro is how to better the current organisational construction of Vietsovpetro to go more efficient, flexible and competitory and to carry through its current strategic undertakings.

Analysis of state of affairs and scheme of Vietsovpetro

External and internal environment scanning

1 ) Political

The socio-political environment in Vietnam is evaluated to be one of the most stable, unfastened and instead dynamic in comparing with Asia part and the other countries in over the universe in which there are a batch events refering to terrorist act, racial wars in recent old ages. Therefore, Vietnam is known as per one of the safest topographic points for life, going every bit good as making investings.

Government is promoting and proclaiming unfastened policy and Torahs attracted strongly national and international investings, for illustration, no VAT ( value- added revenue enhancement ) is be applied for stuffs and equipment used for oil and gas undertakings.

Consequently, the political stableness and good investing environment has became most of import factors for the foreign investings to many different countries in Vietnam such as banking, finance, building, transit etc, particularly oil and gas industry.

2 ) Legal

Government and other bureaus of Vietnam have great attempts to set the legal model and continuity policy to continuously better the investing and concern environment in Vietnam.

The legal model for foreign investing is provided for the Investment Law of 2005 in Vietnam and Vietnam besides became the hundred-and-fiftieth member of the World Trade Organization on January 11, 2007.

Vietnam considers and encourages foreign investing as portion of its development scheme, and bettering the concern and investing clime is committed by the Government of Vietnam.

However, the terrible challenges for foreign investors such as ailing developed substructure, developing and cumbrous and a deficit of skilled forces still is bing in Vietnam.

The countries and sectors that Vietnamese authorities specially encourages investing are production of new stuffs, new energy beginnings, fabrication of hi-tech merchandises, bio-technology, information engineering, labour-intensive undertakings ( utilizing 5,000 or more full clip labourers ) , substructure undertakings, instruction, preparation, and wellness etc.

In overall tendency, it can be emphasized that Vietnam is now a good topographic point for foreign investors to put and make concern in different countries, particularly for oil and gas country the Vietnamese Government ever pay particular attending and encourage.

3 ) Economic

The rising prices rate in Vietnam was valuated to be 7.02 per centum in February of 2013. Historically, from 1996 until 2013, Vietnam rising prices Rate is averaged 7.37 per centum.

The Vietnam ‘s economic system has developed instead stably from the clip of the Renovation policy with “ market economic system following the socialist orientation ” was established and applied in since 1986. The mean economic growing rate every twelvemonth had reached 9 % from 1993 to 2008 and about 5.0 ? 6.6 % from 2009 up to 2012. So that, Vietnam is considered to be one of the safest concern state effected negligibly by planetary economic crisis.

In term of foreign investing capital, the flow of international investing capital into Vietnam has been increasing aggressively. Furthermore, since fall ining the WTO in 2007, it is new dynamic for Vietnamese companies to go more active and dynamic in catching good opportunities from international trade.

A good chance is coming to Vietnamese crude oil industry because more than 25 international oil companies from 13 different states had signed under 27 concern contracts with investing capital over US $ 13 one million millions and this opportunity will make 1000s of occupations for Vietnamese employees.

4 ) Social and environmental

The population of Vietnam is evaluated to be approximately 87.840 in 2011 with its construction such as 23.8 % from 0?14 old ages, 69.4 % from 15?64 old ages and 6.8 % from 65 and more.

Vietnam is ranked as the 2nd largest state in Southeast Asia, merely after Indonesia. Vietnam has a immense potency work force with chief population in labour age. Besides that, immature population about 24 % will take of import function for high quality labour resource in the following decennary.

Low labour resource besides is the other really of import factor attracted for foreign investing in Vietnam.

Vietnam is located at the Centre of SEA on the blood route to transit from China and the other development states to other ASEAN states. With long beach length over 3000 kilometer, Vietnam is considered to be one of the most convenient states to develop sea transit, deep-water ports, international airdromes, multinational rail-road systems and transit web, specially for oil and gas development in the Continental shells of Vietnam.

5 ) Technological

Invention has become one of the efficient solutions for organisation to beef up it power and adapt the alterations of external environment. Invention can make new cognition constructs to develop distinction merchandises or and add more values to the bing merchandises and services that will increase competitory ability of the organisation.

As known that the advancement of engineering and inventions in our globalisation age is really great and the high engineering merchandises are manufactured rapidly.

Vietnam is able to near information engineering, cyberspace in high degree. The Vietnamese Government besides pays particular attending and encourages using the new and high engineering in the different countries of concerns and services. Vietnamese employees have great attempts in surveies, preparation, and transportation of new engineering. That is great convenience for companies, discoverers holding intend to making concern and services in Vietnam

In drumhead: Vietnam has a safe, stable and instead convenient environment for investings and making concern in the different countries, particularly in oil and gas industry the Vietnamese authorities wages attending and support extremely.

Analysis of advantages and disadvantages of Vietsovpetro

In this subdivision we will discourse the strengths and failings of Vietsovpetro to plan suited scheme for the concern activities of Vietsovpetro.


Vietsovpetro has the important strengths, as follows:

Have a big fiscal resource with gross of 5.4 billion USD/year and entire crude-oil turnover up to US $ 39 billion, low debt, liquidated quickly for the completed contracts.

Become chief force of Vietnam ‘s crude oil industry and economic system.

Have the synchronized, complete and advanced proficient systems with workshops, warehouses, port logistic installations, and many offshore platforms, FSO, Jack-ups to function to oil and gas development and production in seaward oilfields.

Have a good human resource with skilled workers – 50 % , applied scientists and unmarried mans – 39 % and many individuals in doctorial and maestro ‘s grades.

Supply the strategic goods ( oil and gas ) and service ( crude oil building undertakings ) to function to developing industry and life for people.

Good client good will is believed and committed by the Government and PetroVietnam to implement really of import undertakings of Vietsovpetro.


Vietsovpetro has the cardinal failings and restrictions as follows:

Organizational construction establishing on disused construction theoretical account existed more than 31 old ages with the important restrictions such as many beds, cumbersome, low determination devising, and low competitory ability ;

Bulky direction system, disused machinery, anti-cross, hard to mobilise human resources ;

Solving the plants establishing on corporate and bureaucracy manner taking clip long ;

The policy does n’t promote the attempts and creative activity of employees, encephalon drain ;

The research and development is non focused, scattered and in some different divisions and chiefly work outing the short-run undertakings ;

Poor publicity chance, low rate place rotary motion, many leaders but deficiency of extremely qualified experts ;

The equipment and engineering for oil and gas development and production still are chiefly establishing on instead disused Russian engineering ;

High wage of employees in low labour environment of Vietnam that Cam makes Vietsovpetro have low competitory ability in service activities ;

Narrow merchandise scope with oil and gas goods chiefly. Exploitation and production of oil and gas in seaward oilfield is extremely hazardous plants.


Bing a member of the WTO in 2007 is great opportunity for Vietsovpetro to open and develop oil and gas development and production non merely in Vietnam, but besides in other states.

The political stableness and good investing environment besides are considerable convenient for Vietsovpetro to collaborate with foreign inspectors to develop the strategic undertakings of oil and gas development and production in Vietnam and in oversea.

The Vietnamese authorities supports and encourages investing in other industry countries including oil and gas country besides is the other good opportunity for Vietsovpetro to develop its strategic undertakings.

The high and stable economic growing rate of mean 6?9 % /year and low labour resource is good environment for Vietsovpetro to make concern expeditiously.

With skilled employees, many experiences in oil and gas production and particular complex equipment and installations, Vietsovpetro has a great opportunity to derive the oil and gas service undertakings such as new edifice gas grapevines, offshore platforms etc.

The high international petroleum oil monetary value up to 900 USD/metric ton in twelvemonth 2012 is a important factor for Vietsovpetro to increase gross of oil and gas production concern.

With the good opportunities that PetroVietnam has planned the scheme until 2015 and vision toward 2025 establishing on the authorities ‘s determination to develop substructure in crude oil ports, gas grapevines, LPG, gas-fired power workss and fertiliser workss as cardinal state undertaking with the budget of $ 30 billion wholly with its half coming from foreign direct investing beginnings during 2006?2025, Vietsovpetro have good chance to collaborate and make services.


Debates of islands and Continental shelf from different counties and Continental countries in the Southwest and Pacific Seas in overall tendency become worse and more complex and that can be the possible grounds for foreign investors to worry in investing and making concern in offshore oil and gas development and production industry.

Vietsovpetro are confronting in increasing degree to possible rivals of in oil and gas development country such as Exxon Mobil, Shell, and Petronas etc.

The universe economic system crisis is go oning and causes serious effects which besides affect significantly investing capital in Vietnam.

In drumhead: From the about analysis and we can acknowledge that the failings is chiefly to be internal factors that can be corrected and overcome and the menaces are the issues to be reviewed and controlled. Besides that, with the above strengths and opportunities the advantages pay important and decisive function for Vietsovpetro to execute its scheme undertakings.

Competitive scheme

The operational effectivity scheme is one of the most executable competitory schemes that Vietsovpetro can utilize to accomplish advantage place in an industry. With this scheme, Vietsovpetro is to utilize the nucleus competences for service activity every bit good as for oil and gas development and production undertakings.

With the strong strengths of capacity, resources and finance, particularly core competence, Vietsovpetro has competitory advantages over other rivals in service activities for execution of the crude oil undertakings in Vietnam.

With more than 31 twelvemonth experiences in oil and gas development and production in seaward oilfields in the Continental shelf of Southeast Vietnam and with nucleus competence in detecting and expeditiously working oil reservoirs in cellar, Vietsovpetro besides is able to execute successfully its scheme undertaking for development of new oilfield undertakings in Vietnam and in other states.

Table 4.1: PetroVietnam figures from 2006 – 2012

Unit of measurement: VND billion











Employee turnover









Puting national budget








( Beginning: PetroVietnam concern one-year study, 2012, 2013 )

Harmonizing to the study of concern activity of PeroVietnam in table 5.1 we can acknowledge that its turnover addition on a regular basis from 170 VND one million millions at 2006 to 772 VND one million millions in 2012. It means that the scheme of Vietsovpetro in oil and gas development and service activities is wholly following with the scheme orientation of PetroVietnam and Government of Vietnam.

Organizational construction controls of Vietsovpetro

To go an effectual organisational construction, Vietsovpetro should be structured to go:

Stable to implement expeditiously work modus operandis such as executing oil production activities in some bing oilfields in the Continental shelf of the sou’-east of Vietnam ;

Flexibility to work competitory advantages and mobilise the resources needed for executing service activity and new oilfield undertaking development in Vietnam and other states.

Relative to the organisational controls, Vietsovpetro besides has focused on both strategic controls and fiscal controls establishing on the constructs and tools of organisational construction theory.

For strategic controls, most different production divisions in Vietsovpetro have established and followed the quality direction system ISO 9001: 2000 in oil production activities. The production processs have been established for efficient public presentation of seaward oil development and production in the White Tiger, Dragon and White Bear bing oilfields. The most of import green goodss among them are the processs for staff direction, ordinances of HSE working on offshore platforms and other drifting installations, oil and gas sample analysis, technology and design, stuff and equipment purchase, fiction, building, installing and transits, oil and gas production operation and care. The controls of all the above processs and public presentations are to be done in order to guarantee that all operations and activities in Vietsovpetro are in acceptable bounds.

For fiscal controls in Vietsovpetro, the Budge of each undertaking is to be established and approved by CEO establishing on estimated costs. The budgets should be controlled so that they besides are within the permitted borders. The usage the incorporate concern disposal system ERP of ORACLE is beef uping in order to overhaul direction process harmonizing to international criterions. Management and usage of the capital from 35 % gross in oil sale and the other capitals of Vietsovpetro have to be efficient. It is necessary to beef up the controls of the currency flow, to equilibrate the demands of production operation with the approved fiscal program, to set up the study of implement fiscal program in each month, to analysis in inside informations the fiscal points used more than the program in order to do suited determination and propose necessary measuring to equilibrate fiscal resource.

Improvement of organisational construction of Vietsovpetro

Reasons of betterment of organisational construction

As above analyzed, Vietsovpetro has big capacity, strong finance, human resources, nucleus competences that help it derive competitory advantages over other rivals. However, the inquiry is that if Vietsovpetro is able to utilize the strong strengths to execute good scheme undertakings with its current disused functional construction.

The reply for this inquiry is “ can non ” because with this functional construction Vietsovpetro merely can good implement itself oil and gas development and production undertaking. But, taking portion to execute service undertakings for other companies, Vietsovpetro has reacted easy and is flexibly non adequate to alter to the new demands from the service undertakings. So, in order to accommodate the above demands and alterations, the betterment of organisational construction every bit good as reconstituting the current organisation of Vietsovpetro are really critical in this phase. In pattern Vietsovpetro made many efforts for this construction changes in N the past. But, the standard consequences were non as per expected, all most of them had failed, one of the chief grounds of which is because of the composite of reappraisal and understandings from both the authoritiess of Vietnam and Russia.

In the pattern, there will be nil we can non to make if we determine to happen out the executable solutions, persuade leaders, overcome troubles and take a suited minute. That is why the research will concentrate on how to better the current organisational construction of Vietsovpetro to go more efficient, flexible and competitory and to carry through its current strategic undertakings.

Improvement of current organisation construction and restructuring Vietsovpetro are to transport out so that non merely the efficiency of oil and gas development and production activities is increased, but besides the operation system will be more flexible, more competitory and fiting with the current scheme undertakings such as service activity and new oilfield development in Russia and other states.

Correction of Procedures in Organizational Structure of Vietsovpetro

With the uneffective organisation construction as mentioned above it is necessary to rectify and set the current processs in the organisational construction of Vietsovpetro in order to better concern, direction and cooperation in all its operations. To make that we discuss some the undermentioned proposals:

Establish a information foundation package system that will be equipped in each section and undertaking to pull off and utilize all designed and completed paperss and drawings for each undertaking. This step is really convenient to foretell and offer the suited and speedy determination to catch the chances and to derive competitory advantages taking portion in service undertakings.

Enhance the connexions between the functional sections to understand and catch the occupations of each other that installation to finish the comparative plant because the different occupations within the undertaking frequently are linked to each other. The end product informations of this section are the input informations of other sections that once more become the input of following section and etc. So, if we portion this information to each other, the plants of the undertaking can be completed easy, the agenda of the undertaking can be shorted well because of comparative plants performed in analogue. These changed processs are much better than the current 1s, in which a occupation is merely started if the occupation before has finished in order to supply the input informations for it.

Establishing the direction processs, it is necessary to take people in centre to develop the scheme and the policies. The processs of human direction are:

First, to be designed so that employees will be encouraged to execute the given occupations with their best attempts ;

Second, to organize a good environment for them to expose all their abilities in the plants ;

Finally, to develop and point to develop for endowments that means to give them opportunities and necessitate them to endure duty with the plants they do, command and rectify their plants if necessary.

Besides that, these processs besides are to stipulate clearly that publicity, salary and incentive benefits will be evaluated and paid worthily for their part. That is the best manner for Vietsovpetro to pull off intelligence, pull endowment and prevent encephalon drained.

Choose the endowment applied scientists among its employees every bit good as recruit the pupils in taking university to direct them to oversea universities/colleges or well-known preparation organisations by Company ‘s fee to develop and update the new cognition and advanced engineerings in order to function to Vietsovpetro, specially to develop new crude oil undertakings in deep saltwater zones in Vietnam or oversea.

The other issue is low communicating in Vietsovpetro because of utilizing many different linguistic communications. Both Vietnamese and Russian linguistic communications are accepted for communicating in Vietsovpetro, but each party prefers to utilize their linguistic communication or Vietnamese or Russian. In add-on, in industrial environment and in paperss, English is to be used. All this things make communicating in Vietsovpetro to be more confusion and lead to hapless connexions and portions between the employees in its organisation. As the effect working efficiency and agenda will be lower than expected. It is hard to work out this job in close hereafter, but Vietsovpetro should promote and ease the immature applied scientists and its employees in Russian and English preparation and give them worthy awards for their accomplishments.