The design and development of Low fuel consuming electricity Generators for the Halliburton Company, the “Halliburton Mega Generator”
Product design and development is highly important for every company or industry and according to Lawson and Samson (101) it is viewed as a kind of organizational capability. Oil and gas service is one such industry which highly demands for product design and development. Many companies in this industry invest huge sums on innovation which enable them to develop new, effective and innovative products, acquire superior performance of business and experience a phase of innovation dynamics. It is this process of product innovation, design and that guide how and whether an industry, especially service industry like that of oil and gas can develop a lead function and build defense against its competitors globally.
According to Ven, Polley, Garud and Venkataraman (37), the success of such industries in competitive markets strongly depend on the percentage of continuous innovation of their products. This means that timely introduction of innovative or new product is able to increase the market share of a company, increase its profits as well as productivity. Apart from this, product development could as well affect productivity by creating changes in product designs and costs. However, for any new product development to occur, the company must be innovative. This report provides a focus on Halliburton Companyand proposes and designs a Halliburton Mega Generatorthat would help in seeking competitiveness.
2.0 Company Background
The business under review in this report is that of Halliburton Company, an AmericanMultinational firm providing oil field services in about 80 countries worldwide. In its many subsidiaries, branches, affiliates and brands, the company manages to employ more than 70,000 people. The company has headquarters in Dubai as well as in Houston but remains incorporated in America (Halliburton Company, 1). It was founded by Erle P. Halliburton in 1919. For Halliburton Company, the key services segment is the energy services group where it provides technical services and products in natural gas and petroleum exploration as well as production. An earlier subsidiary of Halliburton Company, KBR (now sold), constructs major oil refineries, constructs pipelines, oil fields as well chemical plants.
It is also important to mention that Halliburton Company has been involved in numerous industry controversies the biggest of which was the Deep water horizon which led to oil spills affecting many ecological habitats. In legal suits following the Deep water horizon oil spill explosion, the company attested to it that they would settle claims that litigants had estimated to about US$1.1billion. In 2014, Halliburton and Baker Hughes agreed to merge where Halliburton was to buy the latter at a cost of $35 billion as an effort to restructure the integrations underway (Halliburton Company, 1). However, Halliburton Company was to divest about $5 billion of its assets basically as a way to conform to the US competition enforcement bylaws. Turnover values were obtained for 2014 where the company’s revenues from energy products and services were 32.87 billion US dollars with $5.1 operating balance and a net income of $3.5 billion. In the same year, 2014, total assets reported were $32.24 billion while the total equity was US$ 16.27 billion
3.0 Internal Environment Analysis
Tidd and Bessant (107) correctly argue that the effect of new products on productivity of a company, customer choice and product cost is an indication that product development is important in the face of competitive implication. However, if production innovation could be achieved instantaneously and at low cost, then, the competiveness of the new products would be lost.In oilfield serviceindustry where the life of the final product (oil and gas) is short, product innovation is required occasionally to create new products that will attract new customers (Archibugi and Michie,123). For this reason, an analysis of Halliburton is conducted to understand its market and internal capabilities for new product design.
3.2 SWOT Analysis
The analysis of Halliburton was to find whether it could sustain the new proposed Halliburton Mega Generator, a fuel efficient electricity generator from the company’s available opportunities.
Strengths:In the energy sector, Halliburton is an oil field service provider. The main strengths for the company include regional leadership in markets found in North America. The company has a powerful working slogan Solving Challenges; unleash the energyas well as a very superb unique selling proposition (USP) titled World’s largest oil field company. Other strengths of the company according to Halliburton Company (1), include first global presence making marketing easy; many employees and workforce of more than 70,000 implying less expenses on product innovation and design directed towards human resources; already offering products and services in natural gas and petroleum exploration which gives the advantage of reduced advertisement efforts; it has a high presence in CSR activities hence easy to sell the new idea; and strong brand equity and name.
Weaknesses:One of the company’s weaknesses includes a myriad of controversies following spills for example the Gulf of Mexico oil spill. Another weakness is interference of policies of the government world over that eventually affect the company’s operational efficiency. In addition, recently,there have been increased costs of oils as well as declines in oil reserves altogether.
Opportunities: In terms of Opportunities, the company has the chance of improvement using strategies like mergers and acquisitions. Some of the strengths and weaknesses give rise to opportunities. For example, increasing oil and fuel prices provide an opportunity for increased exploration for increased profits as well as providing room for product innovation, design and development. The other opportunity lies in increase in oil well discoveries that imply a sustained business in oilfield services globally and in newer markets (Halliburton Company, 1). Finally, growth of infrastructure globally has paved way for more fuel consuming gadgets such as motor vehicles and construction equipment making demand of oil high. Since this is economic, many industries are likely to come by equally increasing demand for alternative and uninterrupted supply of electricity.
Threats: The main of the in oilfield services’ is about the regulatory environment and the law especially in environmental conservation and protection (Aslanbayli, 10). There is also high competition from other companies that provide oil services for example Schlumberger, Weatherford International and Baker Hughes. In addition, environmental hazards have caused a backlash for the company. By venturing into the new product, the company reserves some break from most of the threats and weaknesses using its strengths and opportunities.
4.0 Halliburton Mega Generator Design and Development Concepts
4.1 Product Description
The proposed product design and development is an introduction of Halliburton Mega Generator, electricity generators that boast of low fuel consumption, environmental sustainability, and silent dispensing. The product is targeted for high power companies globally that cannot rely on mainstream electricity alone. By designing Halliburton Mega Generator, the company is therefore able to enjoy from its strengths to push the product to the global market courtesy of the strong brand, USP and slogan. Besides, being an oil field services company, access to sources of fuel to be used for pilot program is unlimited.
With the new product, Halliburton Company does not need to look for new markets but utilize the current segment comprising of companies and countries looking to fulfill energy service’s needs. The product is viable given that reliability of electricity is low because of issues like power blackouts. For some companies, their activities need uninterrupted power that may be caused by power blackouts. With the low fuel consuming Halliburton Mega Generator, the company is easy to appeal to such companies and countries.
In addition, the product will not only appeal to the companies but to the entire population. However, narrowing to high consumers of electricity is recommended for this product so that the production is focused on high power and mega electricity generators that use oil. Typically, additional product equity may enhance acceptability for the product for example silent burning of oil, reduced smoke emissions, ability to automatically switch on and off when power is interrupted among other attributes. This product does not deviate too much from the company’s position to provide solutions to challenges in the oil services sector because electricity is also used in oil exploration; hence, the Halliburton Mega Generator could also be applicable in oilfield solutions by reducing reliance on external electricity sources for oil processing and exploration in interested companies and countries.
4.2 Design and development
In product development, Gmelin, and Seuring (6) intimates that new products are created and sold by an enterprise to customers. Product design refers to activities that generally improve the look, style and feeling of a product such as decisions on the mechanical architecture of the product, components engineering, and selection of processes and materials. Product design and development according to Urban, Hauser, and Glen (19)is a time consuming and expensive venture when products are allowed to benefit fromcountless research, prototyping, engineering efforts and finally modifying and testing. In a model of product design and development, Homburg, Schwemmleand Christina (48) identify a number of steps towards new product development which were also followed in the design for Halliburton Mega Generator.
Aims and objectives: The first step is to identify the needs of customers through research. Identified needs and specifications of products must be hierarchically organized using comparative ratings. As mentioned earlier, large corporate organization need an interrupted power supply for their production activities and this has not been achieved using conventional methods. The aim and objective of this product, based on the identified need, is to lead the production of mega power generators that use fuel (diesel or petroleum) for large-scalecompany’s electricity deficits. The USP for Halliburton Mega Generator is set to fuel efficient and automatic electricity generators. This is a noble idea that fills this gap so that industrial processes in companies remain intact even as power blackouts are experienced.
Target market:Every new product must be directed towards a market niche. In this product, largescale companies are the targeted primary segments. The largescale corporates need uninterrupted cost effective power most of the time. Because of fluctuations in the conventional power suppliers, an automatic silent and fuel efficiency generator can be very essential in industrial processes of largescale companies.
Target specifications and product concepts: The second step in product development after needs identification is target specification and competitive products analysis. Ulrich (27) argues that after a review of customer needs as well as competitive products, it is time to establish targeted spefications for the production being introduced. These are wish lists tempered by technical constraints that are known hence the specifications should account for economic and manufacturing realities as well as technical capabilities.
For the Halliburton Mega Generator, in this analysis, it is expected to be a modern equipment taken up by mega power consumers. Unlike competitor products, the gadgets will be made to generate industrial power with very little petroleum. To make the fuel efficiency is realized, the engine capacities and modulations shall be controlled such that, instead of oil getting to the engine directly, a reservoir point regulates this consumption. The Halliburton Mega Generator shall also be made to work and produce electricity on a silent mode as a form of uniqueness, to avoid sound pollution which has been a major concern for companies looking for alternatives to conventional electricity that have enough power yet are not noisy to affect other firm processes. Similarly, the exhaust of the generators shall be absorbed in a system where carbon is extracted and recycled as electricity is produced to reduce impact on the environment.
4.3 Marketing Mix dynamics
Examining the marketing mix in product development is a crucial step described in new product development model of Rahmani, Emamisaleh and Yadegari (103). In this model, a new product must be accessed in terms of how well it conforms to product, place, price and promotion dynamics so that it is directed to anticipate customers.
Halliburton Mega Generator product characteristics: As mentioned, the product shall be based on the unique selling proposition of fuel efficiency, low gas emissions, carbon recycling for climatic sustainability and efficiency in terms of silent operations (minimal noise when the generator is running. In addition, this machine shall have dual switches i.e. manual and automatic. The automatic switch shall be made to sense presence and absence of current from other power sources to switch respectively. The switch shall have 3 seconds delay time which is not significant to cause stoppage of processes for industrial processes in case of power blackout from other sources.
Halliburton Mega Generator Pricing: For Halliburton Mega Generator, pricing shall be based on power output efficiency because the gadgets will be in different categories on understanding the diversities in customers. However, all the Halliburton Mega Generator categories shall be priced 25% above competitor prices for additional product features such as carbon recycling, low emissions, silent operations and fuel efficiency. The high price is justified on grounds of the additional features mentioned above.
Promotion, Distribution and place: In terms of place and distribution, Halliburton Mega Generator shall be focused first on the current market and slowly venture into new markets. The distribution mechanism shall be through hundreds of Halliburton Company subsidiaries and branches throughout the world. Promotional activities for the product shall be first the existing ones especially corporate social responsibility and conventional media. Social media and corporate newsletters shall be introduced as alternative marketing strategies.
Eppinger, and Ulrich (72) assert that product innovation, development and design ignites companies towards competitiveness for instance extending its market share and market equity. The design and design of Halliburton Mega Generator therefore presents a market opportunity for Halliburton to extend its brand into the electricity generation industry in addition to oilfield services. If well implemented, Halliburton Mega Generator is expected to penetrate international markets quickly through subsidiaries and therefore provide power solutions for large scale firms. It tops up with good equity in terms of oil efficiency, environmental efficiency, quality (noise reduction) and surplus low cost power to customers.
Rahmani, Kamaleddin, Korosh Emamisaleh, and Reza Yadegari. “Quality Function Deployment and New Product Development with a focus on Marketing Mix 4P model.” Asian Journal of Research in Marketing 4.2 (2015): 98-108.
Halliburton Company, “Official website” web.http://www.halliburton.com/en-US/default.page,2016
Lawson, Benn, and Danny Samson. “Developing innovation capability in organizations: a dynamic capabilities approach.” International journal of innovation management 5.03 (2001): 377-400.
Polley, Douglas E., Raghu Garud, and Sankaran Venkataraman. “The innovation journey.” New York: Oxford University Press (1999).
Tidd, Joe, et al. “Managing innovation: integrating technological, market and organizational change.” (1998): 111-116.
Archibugi, Daniele, and Jonathan Michie. “The globalization of technology: a new taxonomy.” Cambridge journal of Economics 19.1 (1995): 121-140.
Aslanbayli, Bakhtiyar. “Critical Infrastructure Aspects of Energy Security: Azerbaijan and Regional Context.” Energy Security in the Wider Black Sea Area–National and Allied Approaches 110 (2013): 10.
Ulrich, Karl T. Product design and development. Tata McGraw-Hill Education, 2003.
Eppinger, Steven D., and Karl T. Ulrich. “Product design and development.” Product design and development (1995).
Leonard‐Barton, Dorothy. “Core capabilities and core rigidities: A paradox in managing new product development.” Strategic management journal 13.S1 (1992): 111-125.
Urban, Glen L., John R. Hauser, and Glen L. Urban. Design and marketing of new products.