Master Thesis: Which solutions and trade strategies petroleum services companies can deploy to face difficulties linked to the fall of barrel prices? The case of Schlumberger Software.

MEMOIRE D’APPRENTISSAGE
Sujet du mémoire
Which solutions and trade strategies petroleum services companies can deploy
to face difficulties linked to the fall of barrel prices? The case of Schlumberger Software.
Auteur: Eleonor Demail
Tuteur école: Philippe Wagner
Maître d’apprentissage (Entreprise) : Myriam Ait Youcef (Schlumberger)
Année de réalisation : 2015 - 2016
Filière Apprentissage Négociation et Management des
Affaires
2014 – 2016

MEMOIRE D’APPRENTISSAGE
Sujet du mémoire
Which solutions and trade strategies petroleum services companies can deploy to face difficulties
linked to the fall of barrel prices? The case of Schlumberger Software.
Auteur: Eleonor Demail
Tuteur école: Philippe Wagner
Maître d’apprentissage (Entreprise) : Myriam Ait Youcef (Schlumberger)
Année de réalisation : 2015 - 2016
Filière Apprentissage Négociation et Management des
Affaires
2014 – 2016

“If I had an hour to solve a problem I'd spend 55 minutes thinking about the problem
and 5 minutes thinking about solutions.”
― Albert Einstein

ACKNOWLEDGEMENTS
I would like to thank my colleagues Myriam Ait Youcef and Astrid Kenga, Account Managers at
Schlumberger, for guiding and supporting me over the last two years. Your discussion, ideas and
feedback have been precious. You have set an example of excellence as professionals, mentors and
role models but also as women.
I would like to thank Philippe Wagner, Deputy Director at EMLV and mentor for this essay, for his
availability, guidance and benevolence.
Many thanks to Taoufik Manai, Advisor in Reservoir Engineering at Schlumberger, for his valuable
comments and book recommendations. I am grateful to Dalila Hanifi, SIS Operation Manager at
Schlumberger, for her advices.
I thank all the Schlumberger SIS Account Managers and Sales Leads in Asia and Europe for taking
the time to fill in my questionnaire and for their valuable comments.
Finally, I would like to say thank you to my classmates, Sacha Allix and Marion George for their
constant help and suggestions.

Table of Contents
Foreword ................................................................................................................................................1
Introduction............................................................................................................................................2
PART I: REVIEW OF THE LITERATURE........................................................................................................3
Chapter I: PETROLEUMSTAKES.................................................................................................................3
a) What Is ‘Petroleum’? ....................................................................................................................3
b) Is a World Without Oil Possible?....................................................................................................3
c) Forecasts......................................................................................................................................5
d) KeyPlayers...................................................................................................................................5
e) Resources Access Conditions.........................................................................................................7
f) Petroleum Price History ................................................................................................................8
g) Mechanisms of the fall of the barrel price .................................................................................... 11
h) Petroleum Price.......................................................................................................................... 12
Summary: Confines to Sell in the Oil & Gas Industry............................................................................. 14
Chapter II: SOFTWARE TRENDS............................................................................................................... 14
a) Presentation of the Software Industry.......................................................................................... 15
b) Software Industry Trends ............................................................................................................ 16
c) Porter’s 5 Forces Model on The Software Industry ....................................................................... 17
Chapter III: STRATEGY & SOLUTION HYPOTHESIS..................................................................................... 19
a) What is a strategy? ..................................................................................................................... 19
b) What is Strategy? ....................................................................................................................... 20
c) The Blue Ocean Strategy ............................................................................................................. 22
d) What to do when competitorslowers their prices?....................................................................... 25
Lower Price versus Keep/Increase Price ........................................................................................... 25
Price Responses.............................................................................................................................. 26
Non Price Responses....................................................................................................................... 26
Price Sensitivity versus Quality/Value Sensitivity .............................................................................. 26
Selective Pricing Actions.................................................................................................................. 27
Use a Fighting Brand....................................................................................................................... 27
Change Package ............................................................................................................................. 27
Stealth Marketing........................................................................................................................... 27
Retreat.......................................................................................................................................... 27
Porter Generic Strategies................................................................................................................ 27
Competitor Types........................................................................................................................... 27

Market Development/Penetration, Product Development, Diversification......................................... 28
Differentiation................................................................................................................................ 29
Vertical Integration (product).......................................................................................................... 29
Horizontal Integration(buyout)....................................................................................................... 29
Common Mistakes about Pricing .....................................................................................................29
Hypothesis Summary: Solutions and Strategies to Deal with a Decreasing Price Market......................... 30
PART 2: EMPIRICAL RESEARCH............................................................................................................... 32
Chapter I: Schlumberger & Competition..................................................................................................32
a) Schlumberger Presentation............................................................................................................. 32
b) Schlumberger Competitors............................................................................................................. 34
Chapter II: Survey Analysis...................................................................................................................... 36
Scope of the Survey........................................................................................................................ 36
What type of clients do you workwith?........................................................................................... 37
How are your clientsimpacted by the fall of the barrel price?........................................................... 38
What isthe average MarketShare SchlumbergerSoftware representsinyourclientforExploration&
Production software? ..................................................................................................................... 38
What could facilitate the sale of Schlumberger Products and Services?.............................................. 41
What about the clients new needs?.................................................................................................41
Which solutions have you (and your sales organization) identified to meet their new needs?............. 42
Which solutions have your clients suggested to meet their new needs?............................................. 42
Which solutions have you witnessed from competitors to meet the new client needs? ...................... 43
Have you been able toimplement all the solutions?......................................................................... 44
Did yourimplemented solutions succeed to meet customer new needs?........................................... 44
Which result did you obtain?........................................................................................................... 45
What about competitors, are they able to meet customer new needs?............................................. 45
What new customer strategies have you defined?............................................................................ 45
What is the strategy that works best to stimulate sales?...................................................................46
Concerningthe fall of oil price,whichlongtermconsequencesdoyouforecastonyourclient
behaviors, needs and relationships?................................................................................................ 47
Chapter III: Recommendations................................................................................................................ 47
Lower Price for Price Sensitive Customer Segments.......................................................................... 49
Keep Same Price for Big Companies: Compete on Quality .................................................................50
Change the Size.............................................................................................................................. 50
Reframe Price in Customer Minds: Bundle Products and Services...................................................... 51
More Flexibilityin Contracts............................................................................................................ 51

Conclusion............................................................................................................................................. 52
Bibliography.......................................................................................................................................... 53
APPENDIX.............................................................................................................................................. 55
GLOSSARY & ACCRONYMS...................................................................................................................... 68

1
Foreword
Because understanding people's needs and motivations are central in my life, I decided to work in
Negotiation and Sales. It is with great enthusiasm that I have been specializing in Negotiation &
Business Management through the apprenticeship program at EMLV. This cursus enabled me to
master tools, technics and methods of business.
I have been working in a multicultural environment at Schlumberger as a Junior Account Manager
for two years and this opportunity strengthened my want to build my career in International Sales.
In August 2014, I was taken on as an apprentice at Schlumberger Software in the Sales department.
It was just before the start of the barrel price decline. In only few weeks, the whole industry was
caught on the hop and new issues arose.
For years, Schlumberger sales force was smoothly selling products and clients were satisfied.
Suddenly, our customers withdrew into themselves: less and less contacts were possible and more
and more clients were trying to avoid our calls and questions. Even our most loyal customers were
postponing our meetings and companies started to discuss about stopping the maintenance.
At this point, the concerns were big and it was obvious that we had to adapt to the situation to retain
our customers and save at least our market shares. As a consequence, it appears as an evidence to
look for solutions and possible strategies to overcome this crisis.
This essay has been challenging to write because of data privacy policies of petroleum companies.
Hence, I had to widen my research to get tracks and have a better understanding of crisis
mechanisms and what could result from it.

2
Introduction
In 2008, Olivier Appert, the President of the Institute of French Petroleum (IFP) declared that in
2015, the price of oil could reach $300 USD. The same year, oil price soared to $146 a barrel.
Brazil, Russia, India, China and South Africa were growing very fast, especially China, with an
average growth rate of 10% over the last 30 years and its demand in oil was supposed to be
exponential. In June 2014, the barrel price was around $110. Specialists were foreseeing for the next
decade a shortage and an imminent peak oil. In light of this coming strong demand, no one would
have predicted the 2015 oil drop.
In January 2016, Brent crude slumped to $29 a barrel, the lowest price since July 2004. The increase
in supply is one of the cause of this dizzying fall of oil price combined to the decline in demand.
Indeed, OPEC countries keep on oversupplying while China’s growth is slowing down and Europe
stagnates. Furthermore, the use of oil is more mastered, the global warming reduces demand in
domestic fuel and renewable energies are more and more utilized. Late last year, Goldman Sachs
announced that oil price could fall to $20 a barrel this year.
Finally, since spring 2016, the oil price has slowly been moving back up. In June 2016, the barrel
price stagnates around $50. A poll from Reuters forecasts Brent crude oil prices around $65-$70 per
barrel by 2020 while the International Monetary Fund expects an average price at $45 in 2020.
Estimate oil prices are various but tend to the same trend: low prices.
Also, geopolitics plays a great role in the oil pricing and the recent conflicts between Iran and Saudi
Arabia will probably impact the barrel price in a negative way. For Saudi Arabia strategy, the lower
the barrel price is, the better it is. As a result, this cheap oil strategy will then keep on impacting the
entire energy sector for a considerable time.
Since the beginning of the fall of the barrel price, Schlumberger has cut 50,000 jobs in response to
the slump. In 2015, 258,000 energy sector employees were laid off and year 2016 will be as
challenging as last year.
In this difficult situation, Oil & Gas companies have to reinvent themselves to face this never-
ending crisis. Hence, it seems relevant to study possible strategies in a decreasing price market in
order to find answers to the following question:
Which solutions and trade strategies petroleum services companies can deploy to face difficulties
linked to the fall of the barrel price?
I will focus on Schlumberger Software.
This question has been raised several times in the Oil & Gas industry but rarely in petroleum
services companies. Investigating on this topic has been tough regarding the lack of information
about petroleum firm strategies.
However, in order to get around this difficulty, I will dedicate my first part to existing strategies to
face decreasing prices on a market.
It will enable to draw hypothesis that will be verified in the second part of this essay, combined with
a sales survey. Finally, I will make recommendations.

3
PARTI: REVIEW OF THELITERATURE
Chapter I: PETROLEUM STAKES
“Oil is 90% politics”
-Henri Simonet, European Commissioner for Taxation and Energy
It is essential to have a look at the petroleum industry to understand in which environment services
companies and Schlumberger software have to evolve and adapt. This overview will enable to know
the confines to sell in this sector.
a) What Is ‘Petroleum’?
According to the Oxford Dictionaries, the word “petroleum” comes from Latin petra ‘rock’ and
Latin oleum ‘oil’. It is “a liquid mixture of hydrocarbons which is present in suitable rock strata and
can be extracted and refined to produce fuels including petrol, paraffin, and diesel oil; oil.”
The U.S. Energy Information Administration (EIA) explains that “petroleum products are fuels
made from crude oil and other hydrocarbons contained in natural gas”. “Crude oil was formed from
the remains of animals and plants (diatoms) that lived millions of years ago in a marine environment
before the existence of dinosaurs. Over millions of years, the remains of these animals and plants
were covered by layers of sand, silt, and rock. Heat and pressure from these layers helped the
remains turn into what we now call crude oil. The word petroleum means rock oil or oil from the
earth.”
b) Is a World Without Oil Possible?
“Taken to its logical conclusion, it encompasses so much more: a complete and rapid breakdown of
society, leading to desperation, lawlessness, wars and untold suffering. The scenario is unreal, of
course, because we could never shut off our oil supply in a day, and in any case, there are trillions
of barrels of the stuff still in the ground, right?”
-Steve Hallett, John Wright (2011), “Imagining a World without Oil”
Energy consumption has always been in correlation with human development, from control of fire in
prehistoric age to our modern energy mix. As you can see in the below table, population, wealth and
energy are interrelated and grows together.
Years 1900 2013
Population1 1.6 billion 7 billion
Total World Real GDP, preferred (Billions of 1990 International Dollars)2 1,100 > 40,000
Primary Energy Consumption (tons)3 < 1 billion 13 billion
1 Worldometers
2 , J. Bradford De Long, Estimates of World GDP, 1998, Department of Economics,U.C. Berkeley

4
Petroleum is at the base of our consumer society. It is the first source of primary energy in the world
and is key in the transport sector. Transport sector is highly dependent on petroleum at about 95%
since substitutes are still costly.
The petroleum industry is characterized by its plurality of products. Crude oil are different
depending on regions, they distinguish by their sulfur rate and density. Expensive crude oil are
sweet and light such as the Brent from the North Sea and the West Texas Intermediate (WTI) from
the South of the U.S.A. Conversely, the Dubai/Oman oil is less sweet and is heavier. Crude oil is
rarely used itself. Refining is usually necessary.
It is used everywhere and for every type of products: textile, cosmetics, rubber, detergent or even
medicine. It is largely employed because it used to be very cheap until the 2000’, it is easy to store
and to transport, it is safe and reliable. Petroleum is both a source of energy and a raw material.
As a result, petroleum is key in our economy and is almost irreplaceable. When its price
increases, our whole life is impacted: trip, food, comfort…
Petroleum is a strategic product utilized in many sectors:
 Housing: fuel oil for home-heating has replaced coal.
 Mobility: fuel for automobiles. Only few cars can work without oil or derivatives (natural
gas, diesel). Air transport with kerosene.
 Railway (if fuel is necessary for produce the electricity).
 Industry: for producing plastic.
 Modern agriculture stems from the green revolution, which is very dependent on petroleum
or natural gas. Tractors consume diesel fuel, fertilizers and pesticides spring from petro-
chemistry and natural gas.
To give you an idea of what one barrel (159 litters) of crude oil can produce, please have a look at
the below data from the US EIA (November 2013).
3 World Energy 2014-2050 (Part3), Peakoil,net
Gasoline, 47%
Heating Oil/Diesel Fuel,
20%
Jet Fuel (Kerosene), 8%
Propane/Propylene, 6%
Natural Gas Liquids and
Liquid Refinery Gases, 6%
Still Gas, 4%
Petrochemical
Feedstocks, 2%
Petroleum Coke, 2%
Residual/Heavy Fuel Oil, 2%
Asphalt and Road
Oi, 2%
Others (lubricants, other
liquids, aviation gasoline,
special napthas, waxes,
kerosene), 2%
WHAT DOES ONE BARREL OF CRUDE OIL MAKE?

5
c) Forecasts
Petroleum production is massive and even increases. The total world production of petroleum
and other liquids for 2016 is 96.23 million barrels per day (mbpd*) according to the US EIA.
The forecast for 2017 total world production is 96.99 mbpd. The total world consumption is also
predicted to be rising as we can see in the below graph from the EIA.
Oil is essential in our economics societies and its production has been growing over the last 5
years... However, oil is not an inexhaustible source and renewable energies are more and more
used. New technologies are trying to push back the boundaries of peak oil. 4
As stated by the U.S. EIA in International Energy Outlook 2014, the global supply of crude oil,
other liquid hydrocarbons, and biofuels will meet the world's demand for liquid fuels for at least the
next 25 years, which is not that much.
Regarding the proven oil reserves, figures are a bit different: 53 years for oil and 55 years for
natural gas.
Reserves depend on the barrel price, the higher the price is, the more we can use complex and
costly technologies to produce petroleum.
As reserves are more and more challenging to reach, easy oil will end soon and elaborate
technologies will be central to extract black gold.
d) Key Players
In order to understand who the Schlumberger clients are and to have an idea of the main stakes of
the petroleum industry, we have to take a look at the main industry operators.
4 JD Edwards, Crude oil and alternate energy production forecasts for the twenty-first century: The end of the
hydrocarbon era, 1997,AAPG bulletin

6
 Supermajors or also called ‘Big Oil’, are the six biggest private petroleum companies in the
world:
o Exxon Mobil, U.S.A.
o Shell, U.K. / Netherlands
o BP, U.K.
o Total, France
o Chevron Texaco, U.S.A.
o ConocoPhillips, U.S.A.
They came up at the end of the 90’ when oil price plummeted. Big companies merged in
order to improve economy of scale, to protect against oil price volatility and to lower their
important money reserve by investing. According to OilPrices.org supermajors control over
5% of the world’s oil and gas reserves.
 National Oil Companies (NOC) are fully or majority owned by a government. On the study
of the World Bank, in 2010, NOCs constitute 75% of global oil production and dominate
90% of proven oil reserves. Governments set strategic and financial objectives, not
necessary focused on the satisfaction of the market. NOC capitals are owned by states,
NOCs provide them the majority of their funds to finance their programs. Governments have
a decisive weight on how their companies will work but also how the international
companies will operate in their countries. The main NOCs are: Saudi Arabia's Saudi Aramco
which produced in 2010 12% of the world’s production, NIOC (Iran) with 5% of the world’s
production, Venezuela's Petroleos de Venezuela SA (4%) or also for example China National
Petroleum Corp ‘CNPC’ (3%).
 International Oil Companies (IOC) have their capitals split in different investors who are
waiting for a high return on investment. Decisions are taken on profit maximization base.
The main IOCs are ExxonMobil Corp. (3% of global oil production), BP PLC (3% as well),
Royal Dutch Shell PLC (2%).
 Russian Petroleum Groups such as Lukoil, BP-TNK and Gazprom.
 The well-known Organization of Petroleum Exporting Countries (OPEC) is based in
Vienna, Austria. According to OPEC website, its mission is “to coordinate and unify the
petroleum policies of its Member Countries and ensure the stabilization of oil markets in
order to secure an efficient, economic and regular supply of petroleum to consumers, a
steady income to producers and a fair return on capital for those investing in the petroleum
industry.” The OPEC was founded in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and
Venezuela, which were later joined by Qatar (1961), Indonesia (1962), Libya (1962), the
United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973), Gabon (1975)
and Angola (2007). All members of the OPEC have a NOC. The Largest OPEC countries are
called “petro states”.

7
 The International Energy Agency (IEA): it was founded in 1974 by the Organization for
Economic Co-operation and Development (OECD), it is an autonomous agency of the
OECD and it is based in Paris. 29 countries are members of the IEA (in fact all the country
members of the OECD, except: Chile, Iceland, Israel, Mexico and Slovenia). According to
the IEA, its original mission was to “help countries co-ordinate a collective response to
major disruptions in the supply of oil.”, through several actions listed by the IEA:
The IEA extended its work scope and henceforth it delivers statistics and analysis on the
energy markets.
The IEA is widely known for publishing every year several reports focusing on oil, gas, coal,
renewable energies and energy efficiency such as the World Energy Outlook and the Energy
Technology Perspectives.
e) Resources Access Conditions
The resources access conditions depend on the countries. We can distinguish 4 cases:
1- Countries where any company can have access to resources, on condition that operators
respect country laws (for example: the U.S.A., the U.K., Canada)
= This type of access represents 15% of the world reserves
2- Countries where there is a NOC but which does not benefit from a preferential treatment (for
instance: Colombia, Indonesia, Denmark)
=1% of the world reserves
3- Countries where a NOC exists and which benefits from a preferential treatment. However,
external companies can access resources through contracts that share production (ex: China,
Angola, Russia)
4- Countries where the NOC is the only one to have the right to operate. Resources are its
exclusive property and external companies are only able to operate through a local subsidiary
(ex: Iran, Iraq, Saudi Arabia)
It should be noted that almost half of the world reserves belongs to governments through their
NOCs.
As a consequence, we are far from the general accepted idea that super majors control the oil
market.
o to maintain and improve systems for coping with oil supply disruptions
o to promote rational energy policies in a global context through co-operative relations
with non-member countries, industry and international organizations
o to operate a permanent information system on the international oil market
o to improve the world’s energy supply and demand structure by developing alternative
energy sources and increasing the efficiency of energy use
o to promote international collaboration on energy technology
o to assist in the integration of environmental and energy policies

8
f) Petroleum Price History
The spectacular drop of oil price in the course of the last 18 months is a major event in world’s economy. 2014 has been the start of the oil
price decline, wreaking havoc in the global economy and devastating the oil industry. But is it the first time that the energy sector faces such
circumstances? Was the energy sector prepared to contend with these difficulties?
Let’s have a look at the below oil price history graph to better understand the present situation.

10
We can observe that oil history has been made up of ups and downs. Before 1973, oil price was
quite stable.
In the early 1970s, the oil demand increased, particularly in the USA where extraction was more and
more expensive. The USA decided then to get their supplies from the Middle East, which was
cheaper.
In 1971 and 1973, the American government devaluated the dollar, which affected the global
economy. In the documentary “L’Histoire secrete du petrole” (The Secret History of Petroleum) by
Patrick Barberi, 2010, it is explained that, the Middle East felt exploited since they were paid with a
devaluated dollar.
As a consequence, in June 1973, the Middle East announced in Geneva the decision to raise their
prices by 12% and to institute a new indexing system: price would be re-examined every month and
reassessed when the global inflation would be greater than 1%. In three years, the Saudi Arabia
crude increased by 60% and the Libyan light crude doubled.
The first oil crisis arose in 1973, Arab members of the Organization of Petroleum Exporting
Countries (OPEC) decided to impose an oil export embargo during the Yom Kippur War (October)
against Israel supporters such as the USA, the Netherlands and the South Africa. Production was
also partially cut (monthly reduced by 5%). Petroleum is used as a political weapon against Israel
and its allies.5
Supported by the soviets, the Organization of Arab Petroleum Exporting Countries (OAPEC) rose
crude oil price, they fixed it to $5.75/b while the day before it costed $3/b.
This embargo caused real difficulties in supply and led to a panic reaction which aggravated the
shortage. Countries tried to store the maximum volume of oil as they could and decided to discuss
separately with Arab countries. On November 4th, after that Egypt asked for the armistice, Arab
states lessened their production by a fourth, prices shot up. From October to December 1973, barrel
price goes from $3/b to $11.65/b.
This oil crisis is the detonator of the economic crisis and it suddenly worsens inflationary tensions. It
is the end of the “Trente Glorieuses” (“The Glorious Thirty”), international trade drops and
bankruptcies increase. As a consequence, consumer countries founded the International Energy
Agency and governments imposed energy savings (car free Sundays for example), which bore fruits.
Development of energy substitutes such as solar energy, nuclear power or geothermal energy
(energy generated and stored in the Earth) were more and more used.
Last but not least, since the late sixties companies had discovered new rich oil & gas deposits in non
OPEC countries such as Mexico. Petroleum was once more in excess. Oil price could have fallen. In
1975, the OPEC produced 35% under its capacity and price did not fall. The OPEC had control
over price and quantities…
In September 1978 a new crisis enabled oil producing countries to maintain their pressure on prices:
the Iran revolution. In January 1979, the Shah of Iran was overthrown. The global oil production
5 SA Schneider, Oil pricerevolution,1983,The Johns Hopkins University Press

11
decreased because of these events and as a result it caused a price increase. This is the second oil
shock.
In September 1980, the Iraq-Iran war started and the stop of the Iranian oil exports led to new price
hikes. Finally at the end of 1981, OPEC members re-established reasonable price.
The 1980s Oil Glut was due to the falling demand caused by the 1970s energy crisis and the
slowed economic activity in industrial countries. Oil demand reduced in favor of electricity
generated from coal, nuclear power, natural gas and home heating from natural gas while petroleum
production increased from Non-OPEC countries. This period echoes to the present crisis.
Between 2003 and 2008, price moved from $30 to $147 (July 2008). This increase was caused by
Middle-East tension, a huge demand increase from China6, the falling value of the US Dollar, a
decline in petroleum reserves7 and concerns about peak oil8.
In 2008, demand for oil shrank because of the subprime mortgage crisis and the global recession
“with oil prices collapsing from the July 2008 high of $147 to a December 2008 low of $32.” 9
“Oil prices stabilized by August 2009 and generally remained in a broad trading range between $70
and $120 through November 2014.”10
In January 2016, oil price was at the same level as 2003 pre-crisis. It seems that history
repeats.
g) Mechanisms of the fall of the barrel price
Why oil prices dropped that fast and that much while specialists were predicting a barrel at $200-
$250?
6 Oil price'may hit $200 a barrel',7 May 2008, BBC News
7 US Markets-Oil"Reuters, 2008
8 Peak Oil News Clearinghouse,EnergyBulletin.net
9 Robert Tuttle, Ola Galal,Oil Ministers See Demand Rising,PriceMay Exceed $85,May 2010, Bloomberg
10 Europe Brent Crude Oil Spot PriceFOB (DOE), Quandl.
Demand: Fall in Consumption
• 2008 Downturn
• Economic crisis in Europe
• Slowdown in emerging countries
Supply: Over Supply
• US production increased with shale oil & gas, US flooded their own market and limited
imports
• Saudi Arabia decided to keep its markert shares and increased its production
• Venezuela & Russia produce more to maintain their external incomes

12
Between 2000 and 2007, market needed additional 1.4 Mbpd, while since 2008 it only needed
738,000 bpd. Supply has risen by 7% between 2000-2007 and 2007-2014 while demand was
stagnating.
According to Xerfy, there are four factors responsible for this great plunge in oil prices:
First of all, the supply excess has been stored but storage was rapidly full and finally in July 2014,
oil price started to decrease.
Secondly, financial markets are key in the drop, “futures” contracts* have impacted a lot. Oil
volumes exchanged on the financial markets are 35 times more than the real market (35 virtual
barrels = 1 real barrel). As a result, when financial markets face difficult conditions, it makes huge
damages. On these financial markets, several operators take actions. Hedge funds for example
speculate a lot which amplify movements. The suddenness of the price drop highlights the fact that a
speculative bubble was formed
Another factor is the dollar/oil correlation. In fact, when dollar rate exchange (DXY) increases, the
price of oil (WTI) decreases. The correlation coefficient between Jan 2000 and March 2015 is -0.92.
It a strong negative correlation and it shows how tightly related dollar and oil are. In 2014, the dollar
rose and it crude oil price was impacted.
Finally, oil is a geostrategic weapon that the U.S.A. is taking advantage by favoring cheap oil, as a
result Russia, Venezuela and Iran are destabilized and the Islamic State of Iraq and the Levant
(DAECH) have less financing to take actions.
h) Petroleum Price
Petroleum market can be seen as a partially controlled competitive market. This mean that
price variations reflect market forces (supply and demand adjustment) but they can also be
influenced by player strategies.
According to Nicolas Carnot and Caterine Hagege, writers of Le Marché pétrolier in Economie &
Prévision review, 2004/5, the game of the market forces has two consequences:
1- Short Term: Big exchange rate fluctuations because supply and demand are rigid.
2- Mid-Long Term: Supply and demand are more flexible and market forces apply pressure on
prices.
Equilibrium price is the market price where the quantity of
goods supplied is equal to the quantity of goods demanded
in a market.
 The Short Term Equilibrium

13
Supply is not very flexible when price rises once production capacity is getting close to saturation
point. Generally, most of the producers face this situation at the exception of OPEC countries.
However, supply is not really flexible when price decreases, since only few producers are better off
limiting their production. Indeed, the crude oil production marginal cost is low (even if the marginal
cost is variable depending on regions) and is generally below the selling price. Besides, additional
costs come up when stopping production such as lay-off, subsequent putting back into service cost,
losses in market share.
Moreover, the demand is inelastic because substitutes to petroleum cannot be rapidly used or at an
expensive price.
However, a significant price increase will lead to saving behaviors, that is to say, demand will try to
reduce their consumption of oil. For example, motorists will tend to use less their cars. Besides, the
macroeconomics downturn is likely to cause a rise in petroleum price which will lead to a lower
demand in petroleum products because of an income effect (and not because of an exchange value
effect).
In theory, the short term weak sensibility of demand and supply regarding price could lead to a pure
equilibrium market to a wide variability of petroleum prices. Nevertheless, in practice, futures
market and stock variations play a great role as price shock absorber. Price stabilization is also
managed by OPEC producers.
 Long Term equilibrium
The long term reaction of petroleum supply to a maintained rise in price is more substantial. The
increase in production capacity calls for heavy and long-term investments: several weeks or months
are necessary to intensify exploitation of an existing well, several years nay a decade to explore a
new field. Nonetheless, once producers are convinced that the price rise will last, reaction can be
strong and companies invest.
In the same way, demand is quite price-sensitive in long term period, particularly when price goes
up.
As a result, on the petroleum market, for short term periods, everything happens as if anticipations
were self-fulfilling. For instance, an anticipation in a rise in exchange rate push players to buy,
which cause higher prices.
Conversely, for long term periods, a forecast of lasting high prices will urge stakeholders to make
adjustments in order to lower prices.
Generally, market mechanisms tend to maintain prices to an acceptable, viable level for producers,
buyers and sellers, to stay close to the equilibrium price.
Price have become flexible and more dictated by market forces than by cartel pricing or quota
production agreements. OPEC countries are not the only players anymore and other countries like
Russia or the U.S.A. also want to get their piece of the pie. OPEC has also to deal with new
consumers powers like China and India.

14
Summary: Confines to Sell in the Oil & Gas Industry
The confines to sell in the Oil & Gas industry are numerous and intrinsic.
Petroleum price is hard to predict since it is related to geopolitics.
Companies in the industry are very fearful when the price is lowering, they
need to be sure that the price will step up to invest on new tools and spend
budget on services.
Clients of the services companies like National Oil Companies are not free to
decide and serve government plans and objectives.
International Oil Companies depend on investors who are waiting for high
Return On Investment, budgets are tight in a crisis context.
Call for bids are regular in the industry and the best offer in price usually wins.
Finally, confidentiality and special non-disclosure processes can slow down
sales.

15
Chapter II: SOFTWARE TRENDS
As I focus on Schlumberger Software for my essay, it seems relevant to have a look at the software
industry trends.
a) Presentation of the Software Industry
According to Gartner, in 2013, worldwide software revenue stood at $407.3 billion, compared to
$388.5 billion in 2012, registering a 4.8% increase. The software market is large and globalized,
even if the USA is the largest software market (half of it).11 “About 3.6 billion units of software
were deployed in 2008, a 20% increase over 2007.”12 BRIC countries are forecasted to be big
purchasers of PC and software.13
There are two types of software companies: Products companies (Microsoft, Apple, WhatsApp) and
services companies (Capgemini, Accenture, Infosys).
Schlumberger Software is hybrid and have to manage both a product business and a service
business, it is two organizations in one business segment.
According to InSync Solutions in “Your First Step to the Software Industry” (July 2014), Service
companies and Product Companies get business by following these steps:
11 IDC source
12 Software Industry Facts and Figures,Business Software Alliance
13 DG Messerschmitt,C Szyperski, Software ecosystem: understandingan indispensabletechnology and industry,2005,
MIT
Service Company
Promotionof services portfolio
Attract customer in need
Requirement gathering
Get the business
Define scope of work andquote
Requirement clarification through meetings
Product
Company
Identifya generic/specific problem
Product whichcanresolve this problem
Product Promotionto attract customerinneed
Get the business
Trial installation, customercanevaluate
Product showcase

16
‘Domain’ software indicates the business sector (Manufacturing, Education, Healthcare) and
‘Technology’ software refers to the tool to solve the business problem (PHP, JAVA)
b) Software Industry Trends
Software industry trends14:
New products/services:
 Software as a Service (SaaS)*: it is an online service (no need to install the software),
monthly or pay-as-you-go payment, self-service, demand-on-use.
 Cloud Computing: it is a new way to manage data and IT resources, cloud computing
suppliers offer unlimited capacities (no Central Processing Unit limits, no physical barrier,
no storage limits). Data are stored on the net, ‘on the cloud’, the online storage is infinite and
‘pay-as-you-go’ payment is used.
The cloud is more and more popular but some companies are still reluctant to use it for several reasons15
:
data security, hacker attacks, unwanted automatic updates, it can be costly if company structure is big,
data cannot be reach without internet access, outage from vendor, cloud provider’s terms and conditions,
in the USA the government can see data,lack of IT control, difficult to come back to in-house systems.
 Free software: software at no cost or free to be modified
14 Sumit Chandra,Jason Miller,BuildingFlexibility into Software Licensing,May 2010
15
DanieleCatteddu, from the European Union Agency for Network and Information Security (ENISA),Cloud Computing:
Benefits, risks and recommendations for information security, 2010,Web Application Security
•"Widespread, secure access to high-speed Internet has led to increased
adoption of SaaS. Vendors are being forced to accommodate new licensing
structures that reflect the new-found flexibility."
Increased
Internet Access
•"As the industry and products such as ERP become more mature,
consolidation will increase. A few major players are dominating the market
by offering "one-stop shops" for all enterprise software needs."
Software Industry
Consolidation
•"Vendors are exploring new arenas, such as enterprise performance
management and business intelligence."
Growth in Niche
Areas
•"Innovation is moving up IT leaders' agendas, and contracts that ensure
minimum cooperation, executive involvement, shared resources and co-
development with vendors on innovation will gain preference."
Innovation
•"Recent financial uncertainty has pushed customers to find value anywhere
they can. For many firms, there may be significant untapped value in
existing software agreements. Vendors, seeking stability, are also trying to
generatemore recurring revenue rather than one-time license sales."
Economic
downturn

17
 Open source: the source code is made available by developers but the software is not
necessary free ‘at no cost’ or free to be modified
 Free but not free software
Products, bundled support and maintenance are getting cheaper and cheaper and services
increase.
Michael A. Cusumano16 explains that for enterprise software vendors, sales have shifted from
products to services, such as maintenance and support. Service revenues become more important
than product revenues and maintenance accounts for more than 60% of service revenues. This trend
for services dates back to the 1990s since the open source software* appearance. Companies started
to develop their own software instead of purchasing expensive licenses, which forced software
vendor companies to develop new pricing models. For example, the SaaS pricing model eliminates
the maintenance payments but include some bundled technical support which will add costs. Please
have a look at the next page for new contracts models.
c) Porter’s 5 Forces Model on The Software Industry 17
The Software Industry is very competitive, since players are numerous, customers have a high power
of bargain. Buyers can easily switch from a supplyer to another with few costs, they are price
sensitive and can effortlessly know price of competitors. Also new entrants can easily enter the
market thanks to low initial investments. Differentiation is low so there is no need for big/costly
innovation to make money.
16 Michael A. Cusumano, The ChangingSoftware Business:Movingfrom Products to Services, 2008,MIT
17 Michael Porter, Competitive strategy: Techniques for analyzingindustries and competitors,1980
Industry competitors
(High)
-Nb of Players (High)
-Differentiation (Low)
-Industry Growth (High)
-Exit barriers (Low)
-Client switching Cost (Low)
Bargaining Power of
Supplier(Low)
-Availability of talent (High)
-Skill Differentiation (Low)
-Buyers Concentration (High)
Threat to NewEntrants (High)
-Differentiation(Low)
-Initial &BrandCapital
Investment(Low)
-ClientSwitchingCost(Low)
-Economiesof Scale (Moderate)
Bargaining Power of Customer
(High)
-Buyers switchingCosts (lowfor
customized sofware, high for
regular products)
-Buyers Concentration (High)
-Buyers PriceSensitivity (High)
-Buyers Information Availability
(High)
Threat to Substitures
(Low)
Hardlyany

18
Newmodelsof contracts have croppedupto adapt to clients’needs:

19
Chapter III: STRATEGY & SOLUTION HYPOTHESIS
Petroleum industry has the specificity of being an oligopoly market. According to the Oxford
dictionaries, an oligopoly is “a state of limited competition, in which a market is shared by a small
number of producers or sellers.” Meaning that, the action of one of the firm can have a great impact
and influence on the others. Price is set by this small group of firms.
As said previously, Oil & Gas market has decreasing prices. This decline in oil price has a direct
impact on the petroleum services market. Indeed, a firm’s actions in one market can change
competitors’ strategies in a second market 18, here, oil producers who are over supplying the market
change competitors’ strategies in the petroleum services market. All big oilfields services
companies, Schlumberger, Halliburton or Baker Hughes for example are facing the same issue: the
fall of the barrel price, which results in cuts in oil companies budgets. What to do when prices are
decreasing? Which strategies can be deployed?
Schlumberger’s competitors have chosen to reduce their prices but is it the only solution and
strategy possible?
What kind of strategies and solutions petroleum services companies can set up to face decreasing
prices?
Before detailing the different strategies that companies can apply in a decreasing prices market, we
should question what a strategy is.
a) What is a strategy?
In the Oxford dictionary a strategy is a plan of action designed to achieve a long term or overall aim.
Synonyms given are: game plan, plan of action, scheme, programme, procedure and schedule.
Here, strategy is about time, organization and methods. As a matter of fact, a strategy has at least
one goal and has to follow a certain order, has to be organized in steps to achieve its aim. The goal
will preferably follow the S.M.A.R.T criteria: Specific, Measurable, Achievable, Relevant and
Time-bound19 to be clear as much as possible.
Besides, strategy comes from the Greek stratos meaning ‘army’ and ageîn signifying ‘to lead’.
Precisely, the Oxford dictionary gives another sense to the word strategy “the art of planning and
directing overall military operations and movements in a war battle.” This tends to remind us of
The Art of War by Sun Tzu, the first military treatise about war strategies and tactics, which has also
been used for business strategy. Business and war are tightly related, actually, they are both about
gaining territories and beating competitors. Competitors can be regarded as enemies. Martial
language is commonly used in marketing20, we talk about ‘taking the high ground’, ‘planting the
18 Jeremy I. Bulow. Stanford University.John D. Geanakoplos.YaleUniversity.Paul D. Kiemperer. Stanford University
and St. Catherine’s College, Oxford Multimarket Oligopoly:Strategic Substitutes and Complements
19 George T. Doran,Management Review, 1981
20 Philip Kotler,Ravi Singh, Marketing Warfarein the 1980s, The Journal of Business Strategy

20
flag’, targets’ for potential customers, ‘campaign’, ‘officers’, ‘headquarters’21, three letter acronyms
are also largely used such as CTA ‘Call to Action’ or CPM ‘Cost Per Thousand’, “M” means
‘mille’.
Oxford comments that strategy is “Often contrasted with tactics”. Tactics are short-term based while
strategy is long term focused. Tactics will serve the strategy with specific resources to carry off sub-
goals, these sub-goals are defined to achieve the final objective. In this essay we will focus on long-
term strategy.
Exactly has an army, a company has an organization chart but battalions are replaced by different
departments such as Marketing, Finance or Sales. Each department has its own function as
regiments in an army and strategy leads them.
As a result, strategy and war have several common points and we have to keep in mind that strategy
is not only about having plans or following the best practices but in the end about conducting
an army.
b) What is Strategy?
That is the question that Michael E. Porter begs in “What is Strategy?” in the Harvard Business
Review in Nov.-Dec. 1996. In this article, Michael Porter explains that companies broadly mistake
operational effectiveness and strategy.
Operational effectiveness is any practice that enables to maximize outputs, it is about doing things
better and better. Those best practices, management tools and techniques override strategy as we go
along. The goal of any firm is to deliver superior performance, however it is only possible to
outperform competitors if company can show a difference that it can conserve. Operational
effectiveness is exclusively about performing similar activities better than competition, while the
most important is in fact to do things in a different way.
Actually, best practices can be easily copied and to a certain extent operational effectiveness can be
rapidly caught up by rivals. As competitors mimic one another’s upgrades, strategy coincides and it
conducts to wars of attrition.
Conversely, strategic positioning is key in strategy, since it helps “performing different activities
from rivals” or “performing similar activities in different ways”. “Competitive strategy is about
being different.” Michael E. Porter enhances the consequence of selecting different set of activities
(or perform them differently) to deliver “a unique mix of value”, which is the essence of
competitive strategy.
For Michael E. Porter, strategy is about strategic positions, divided in three sources:
1- Variety-based positioning: producing a subset of an industry’s products/services. The aim is
doing what the company does best. For example Lipton sells only tea.
2- Needs based positioning: serving needs of a particular group of customers (tailored set of
activities). Ikea serves all needs to its target: young furniture buyers.
21 C. von Clausewitz, On War,1993

21
3- Access based positioning: segmenting customers who are accessible in different ways, (for
example by customer geography). Carmike Cinemas operates only in cities with population
less than 200,000.
Choosing a positioning (or some combination of the three) is the starting point of strategy.
Nonetheless, keeping a sustainable position requires trade-offs to avoid repositioners and
straddlers. Repositioners imitate a successful competitor but with better operational effectiveness.
Straddlers position their products in two categories simultaneously: they keep their own position and
try at the same time to imitate successful competitor position. Trade-offs are necessary for
consistency in image and reputation but also because some activities involve specific equipment,
skills or product configuration, reducing flexibility.
Trade-offs also make organizational priorities clearer to management and employees, setting
what not to do, which is as much as important as knowing what to do.
Porter highlights the importance of how activities are related to one another. Operational
effectiveness deals with individual activities whereas strategy aims in combining several
activities. Activities have to reinforce one another, activities fit is crucial for competitive
advantage. Competitive advantage is
inseparable from the entire system of
activities.
Three kinds of fit:
o First-order fit is “simple
consistency”: consistency between
each activity and the overall strategy.
o Second-order fit is “activities are
reinforcing”
o Third-order fit is “optimization of
effort”: for example by removing
redundancy and wasted effort.
Sustainability of the competitive advantage comes from the whole activity system, not the parts. All
the activities are linked together and any activity affects or takes advantage of another. They
influence one another. The best way to keep its advantage sustainable is to focus on second
order fit and optimization of effort. As a result, copying will be harder for competition, if all
firm activities are interconnected. As Porter wrote, “If there is no fit among activities, there is no
distinctive strategy and little sustainability”. Strategy is made of fit in activities.
Fit
Simple
Consistency
Reinforcing
Activities
Effort
Optimization

22
Companies usually fail at strategy because of their desire to grow. Consequently, they forget the
unique position they took at the beginning, they take out trade-offs they originally put and lose their
competitive advantage.
Growth is compared to a trap for Porter since firms choose to make compromise and give up
uniqueness instead of deepening their primary position and stay distinct. However, companies can
avoid this issue by extending its own strategy, leveraging its activity system, offering different
services or features that its rivals could not propose. They have to examine what is feasible or
what is less expensive (according to their complementary activities) and have to adapt these new
features/services to their target and strategy.
Developing a comprehensible strategy is also about leadership, if leaders do not teach others what
they cannot compromise or relax, then strategy will fade away. To make a strategy successful,
communicating what not to do is as much important as knowing what to do. Setting limits, such as
targeted customer groups or provided services are essential.
To put it in a nutshell, the core of strategy is all about defining a unique position and trade-
offs, knowing what not to do, reinforcing fit in activities and having a clear vision of the
company for the next decade.
c) The Blue Ocean Strategy
One ofthe possible strategywhen pricesdecrease in a market isto create a newmarket. That is the idea
of W.Chan Kim and Renee Mauborgne presentedin “The Blue Ocean Strategy: From Theory to Practice”
(2005).
Nowadays strategy is unthinkable without talking about competition. This reflex comes from the
military roots in corporate strategy. According to industrial organizations, market structure (supply
and demand conditions) moulds seller’s and buyer’s conduct which alternatively impacts end
performance. In other words, companies that follow a traditional, competitive strategic approach,
will try to make the most of the industrial and economic
conditions. This is the structuralist view. Here, market is
regarded as a given land, exactly as a war field, where
companies strive by adopting a defensible position and
building advantages over the other players. Strategy focuses
then on doing the same things as rivals but better. The
structuralist view is a zero sum game: I win, you lose (see
table).
Only two options are possible in this traditional strategy:
differentiation or low cost, meaning create greater value at a
higher cost or create reasonable value at a lower cost.
Besides, industry new technologies and Internet, sharing information instantaneously about price
and products, threat niche markets and intensify competition (for example, through price war).
Products and services are becoming more and more similar, as a result consumers choose a price
rather than a product.

23
How to escape from this situation?
Red Ocean represents all the industries existing today: the known market space, where boundaries
are marked out and accepted, where supply is exceeding demand, where firms have to outperform
rivals to survive. They are all competing for market shares and use the same analytical and best
practice tools as competitors. By following the rules that are already established on the market, they
hardly differ from rivals.
Conversely, the Blue Ocean strategy is about not competing, making competition irrelevant by
creating new demand and untapped market space, where there are no competitors. Blue Ocean
stands for industries that do not exist. In Blue Ocean markets, rules are waiting to be set.
Blue Ocean strategy does not use competitors for benchmark, tends to create a “leap in value”
(driving costs down while driving value up) for buyers and the company itself, moves pre-
established boundaries. This is the Reconstructionist view opposed to the structuralist, traditional
view. The Reconstructionist view goes after creating new rules by breaking the regular
value/cost trade-off.
How to create new demand?
Firstly, company’s attention has to shift from supply to demand and from competing to not
competing.
Then, it has to change its viewpoint and looks at the existing markets in a different way, removing
and reordering traditional boundaries in order to find a new market space with another
demand.
Blue Ocean strategy can only be achieved when the entire system of the company’s utility, price and
cost activities is aligned. This will make the strategy sustainable.
This strategy covers functional and operational activities, drawing a global strategy and not only an
innovation strategy.
How to put the competition offside?
Chan Kim and Renee Mauborgne set up some practical tools in order to move from theory to
practice. The canvas strategy tool is one of them.
It is used to see how the company and the competitors compete in a known market space according
to different key factors. It enables to make diagnosis thanks to the value curve obtained. On the
graphic, the horizontal axis gathers the factors that the industry competes on and the vertical axis
shows the offering level for each factors. As a result, the company can compare its scores with
competition and define where to focus and see where a Blue Ocean is possible.
Company has to shift its strategic focus from competitors to alternatives, and from customers
to noncustomers. Offering a little more for a little less is not a sustainable strategy.
Competiting Not Competing

24
Usually, customers want “more” for a lower price. In this case, “more” refers to existing
product/service features. Company should find other features that could differ from the one already
offered on the existing market.
The second tool to build a Blue Ocean is the four actions framework (see table below) which helps
to reassess the known market space and its key factors that contenders compete on. Usually by
calling the old business model into question, the company gets a new point of view of the industry
and comes up with new ideas. A blue ocean strategy has three characteristics: focus, divergence and
a compelling tagline. These characteristics will provide a clear products/service image.
New Logic
Shift viewpoint to alternatives and noncustomers
-> Redefine the problem the industry focuses on, reconstruct
buyer value elements.
Old Logic
Benchmarking competitors, differentiation or cost leadership
-> Offer different solutions than rivals to problems defined by an
industry.
ELIMINATE
Whichfactors that the indusrtyhas
longcompetedonshloudbe
eliminated?
RAISE
Whichfactors shouldbe raisedwell
above the industrystandard?
REDUCE
Whichfactors shouldbe reducedwell
belowthe industry'standard?
CREATE
Whichfactors shouldbe createdthat
the industryhasneveroffered?
NEW VALUE CURVE

25
d) What to do when competitors lowers their prices?
The first thing to do is to consider reasons of price cut: Why do competitors lower their prices? Are
they new? Do they want to distinguish themselves? A new value range because this is what
consumers want? Do they try to boost their sales?22
The second thing to do is to wonder if competing on price is a good option. Dropping price can be
seen as a source of new sales but it can also bring risks to the company. Conversely, Increase or
keep the same price should be contemplated. 2324
Lower Priceversus Keep/IncreasePrice
In any way, the scope of price change has to be taken into account: is it a long-term or a short-term
decision?
22 What to do when your competitor lowers their prices,marketingdonut.co.uk
23 Kent B. Monroe, Buyers' SubjectivePerceptions of Price,Journal of Marketing Research , Vol. 10, No. 1, 1973
24 Philip Kotler, Principles of marketing,1980
Lower
Price
Opportunities: Gaining market share, being
competitive, help the sales force, protect/increase
profit
Risks:Let clients think that productonly advantage is
price. Low quality reputation. Competition position
can weaken because company will be like the others
and it may lead then to unexpected competitive pitch.
Only attract a “price hunter” customer base that will
go for another company if your price increases. Price
war. Put long-term growth in jeopardy. Customers will
be accustomed to price cut and will defer their
purchases untilthe next price cut.
Keep /
Increase
Price
Opportunities: increase benefits, make product more
attractive, select clients
Risks: Bankruptcy, less sales volumes, loss in
economy of scale/production cost increase, production
overcapacity, loss of market share.

26
PriceResponses
Please see below some prices responses25:
Tactic Example
Price Responses
Use Complex Price Actions
Offer bundled prices, two-part pricing,
quantity discounts, price promotions, or loyalty
programs for products
Introduce New Products
Introduce flanking brands that compete in
customer segments that are being challenged
by competitors
Deploy Simple Price Actions
Adjust the product's regular price in response
to a competitor's price change or another
potential entry into the market
However, if a company does not want to enter a price war, several solutions are possible26:
Non PriceResponses
Tactic Example
Non Price Responses
Reveal Your Strategic Intentions and
Capabilities
Offer to match competitors' prices, offer
everyday low pricing, or reveal your cost
advantage
Compete on Quality
Increase product differentiation by adding
features to a product, or build awareness of
existing features and their benefits. Emphasize
the performance risks in low-priced options.
Co-opt Contributors
Form strategic partnerships by offering
cooperative or exclusive deals with suppliers,
resellers, or providers of related services
PriceSensitivity versus Quality/ValueSensitivity
Compete on price is not necessary the best solution, all customers are not high price sensitive, but
can also be quality sensitive27. Segmenting and applying different pricing according to each
segment particularities is a relevant solution.
“Some customers are more sensitive to quality than price, for a variety of reasons. Industrial buyers
are often willing to pay more for on-time delivery or consistent quality because they need those
features to make their business run smoother and more profitably […]
The basic lesson is that different customer segments exhibit different levels of price sensitivity for
different products at different times. Businesses that adopt a one-size-fits-all approach to pricing
do so at their peril.”28
25 Akshay R. Rao, Mark E. Bergen and Scott Davis,How to Fight a PriceWar,Harvard Business Review
26,26, 27 Akshay R.Rao, Mark E. Bergen and Scott Davis,How to Fight a PriceWar,Harvard Business Review
27 ValarieA. Zeithami, Consumer Perceptions of Price,Quality,and Value: a Means-End Model and Synthesis of
Evidence, 1988,Journal of Marketing

27
Selective Pricing Actions
Another solution possible is to “reframe the price war in the minds of customers”29 . For
example, competing on a bundle rather than on a single product. That was the strategy
MacDonald’s used with its value meal menu offer (drink, fries and burger) to face the cheap Taco
Bell’s taco at 59 cents. As a result, MacDonald’s and Taco Bell’s were not competing on the same
offer.
Quantity discounts or loyalty programs can also be a solution if it is not possible to compete on
bundle.
Modify only certain prices and do minor modifications is also a good option.
Use a Fighting Brand
In order to respond to a customer segment which is very price sensitive a company can build a
fighting brand. This will enable the mother company to keep its reputation and image.
ChangePackage
Change the size of the product or offer a special bargain for a particular size.
Stealth Marketing
Sell products at a low price under off-brand, unrelated brands, foreign markets. The risk is that the
product price sold under the mother company name has to be dropped, having the same
features/quality level of the cheap brand product.
Retreat
Some companies can decide to go back because they prefer to compete on innovation than fighting
for ‘old’ products. Not cutting price can be a strategy when price are decreasing.
Porter Generic Strategies
Porter distinguishes 3 types of strategy in Competitive Strategy (1980), which are called “Porter
Generic strategies” that will guide for pricing:
1. Overall Cost leadership: the product does not distinguish from competition, except its very
low price.
2. Differentiation: the product is unique. Price is higher to enable R&D, marketing…
3. Focus: niche target. It can be coupled with cost leadership or differentiation.
Here, pricing results from the strategy chosen.
Competitor Types
In order to know which strategies and which price to set, it is essential to know what type of
competitors a company is in its market. Philip Kotler in Principles of Marketing differentiates 4
types of competitors:
28 Akshay R. Rao, Mark E. Bergen and Scott Davis,How to Fight a PriceWar,Harvard Business Review

28
 Leaders may use an offensive strategy or a defensive strategy. Offensive strategy is used in
the case of a demand development by engaging new users, finding different consumption
models or changing use frequencies. Defensive strategy will be adopted against imitation
from competitors. These defensive strategies follow on from military strategies with for
example, defense position (for instance marketing activities), outpost defense (few products
or a subsidiary brand protect the product), preventive defense (price decrease, innovation to
anticipate competition), counter offensive (attacking a competitor on its favorite ground),
mobile defense (diversification or market expansion) and strategic withdrawal (focus on
particular segments).
 Challengers may try to eliminate the weakest companies but in general challengers attack
the leader or other challengers. Challengers use attack strategies such as frontal attack
(attacking the competitor product on all features, which is very costly), side attack by taking
advantage of a weakness of the rival product (for example one segment is a bit isolated),
guerilla between small companies with punctual attacks.
 Followers tend to reduce their costs and to segment. Followers have to know well the
market. Innovation is not its main concern.
 Specialists match with Porter’s focus strategy (see above).
Market Development/Penetration, ProductDevelopment, Diversification
In a decreasing price market, companies have to evolve and adapt to stay competitive. The Ansoff
Growth Strategies is an interesting tool for determining the best way to evolve on a new
market/market that has changed or with new products.
4 Strategies:
 Existing market and existing products/services:
Market Penetration  integration by acquiring a supplier or a competitor, decreasing
price by reducing costs, marketing actions.
 Existing products/services and new market:
Market Development  with new distributors, new territories or new consumers.
 New products/services on an existing market:
Product Development  with a product range
expansion or new product features.
 New market and new products/services:
 Diversification  ‘Concentric’ if the new
product is complementary with the previous one
(Lipton wants to sell teapots) or ‘Pure’ if it has
nothing related to the former one (Lipton wants
to sell cars).

29
Differentiation
As stated in Relaxing Price Competition Through
Product Differentiation, by Avner Shaked and John
Sutton in The Review of Economic Studies, Vol. 49,
No. 1 (Jan., 1982), about two rivals,” as their qualities
become close, price competition between the
increasingly similar products reduces the profit of
both firms.” As a result, imitation is not a good
solution to make profit. Differentiation seems a good
strategy to make more benefit. Differentiation can be
in price “I am the cheapest” or in value “my product
has these distinctive features and deserves a higher
price”.
VerticalIntegration (product)
HorizontalIntegration (buyout)30
Vertical integration will enable to make
economies of scale by purchasing companies at
all levels of production.
Horizontal Integration is the purchase of
competing companies in the same industry.
Common Mistakes aboutPricing
According to Philip Kotler in Principle of Marketing, the most common mistakes about pricing are:
“– Too cost oriented, instead of customer-value oriented
– Prices not revised often enough to reflect market changes
– Pricing does not take rest of the marketing mix into account
– Prices not varied enough for different products, market segments, and purchase occasions”
This echoes to the previous solutions we observed, it enhances the fact that customers are not always
price sensitive but also value or quality sensitive. Also price has to vary for few strategic products
according to market/client segments or specific situation. Price should not be regarded as a static
constituent but should be adaptable.
30 Bob De Wit, Ron Meyer, Strategy: Process,Content, Context

30
Hypothesis Summary: Solutions and Strategies to Deal with a Decreasing
Price Market
Source Strategy/Solution Detail
Michael Porter, What is
strategy?
Reassess its strategic
positioning
Variety based/needs
based/access based.
Set clear trade off Avoid repositioners and
straddlers.
Reconsider fit in activities Focus on reinforcing activities
and effort optimization.
Communicate, develop a
comprehensible strategy
Communicate what not to do/
setting limits.
W. Chan Kim and Renee
Mauborgne, Blue Ocean
Strategy
Create a Blue Ocean Create a leap in value, shift
from competing to not
competing, see alternatives,
draw a global strategy and not
only an innovation strategy.
Redefine the problem that the
industry focus on, it may not
be the real/actual clients
concerns, reconstruct buyer
element.
Philip Kotler, Principles of
marketing
Lower Price versus
Keep/Increase Price
Several opportunities and
risks.
Akshay R. Rao, Mark E.
Bergen and Scott Davis, How
to Fight a Price War
Prices Responses Use Complex Price Actions,
Introduce New Products,
Deploy Simple Price Actions.
Non Price Responses Reveal Your Strategic
Intentions and Capabilities,
Compete on Quality, Co-opt
Contributors.
Valarie A. Zeithami,
Consumer Perceptions of
Price, Quality, and Value: a
Means-End Model and
Synthesis of Evidence.
Bergen, Scott Davis,
How to Fight a Price War
Price Sensitivity versus
Quality/Value Sensitivity
Change consumer perception
value.
Add new/more features to add
value to product/service.
Example: Offer warranty, after
care service, unique selling
point…
Bergen, Scott Davis,
How to Fight a Price War
Selective Pricing Actions Competing with: bundle,
quantity discounts, loyalty
programs.
Vary Prices Vary prices according to
products/market
segment/purchase occasions.
Use a Fighting Brand To keep reputation, image

31
Change Package Change product size
Stealth Marketing Low price under off-brand
Retreat Compete on innovation rather
than on ‘old’ products.
Michael Porter, Competitive
Strategy
Porter Generic Strategies Differentiation/Cost
leadership/Focus (Niche
target)
Philip Kotler, Principles of
Marketing
Leader Position Offensive strategy: demand
development by engaging new
users, finding new
consumption models/use
frequencies.
Defensive strategy: defense
position, outpost defense,
preventive defense, counter
offensive, strategic
withdrawal.
Challenger Position Attack strategies: frontal
attack, side attack, guerilla.
Follower Position Reduce cost and segment more
customers.
Specialist Position Specialize/focus even more on
a particular demand.
Ansoff Growth Strategies Market
Development/Penetration,
Product Development,
Diversification
Avner Shaked and John
Sutton, Relaxing Price
Competition Through Product
Differentiation
Differentiation/Niche Differentiation in Price or
product.
Define New Contracts Models Perpetual, Value-based,
Subscription, Usage based,
Flexible capped, Open
contracts.
Bob De Wit, Ron Meyer,
Strategy: Process, Content,
Context
Vertical/Horizontal Integration Competing by purchasing
direct competitors or suppliers
(economies of scale).

32
PART2: EMPIRICAL RESEARCH
Chapter I: Schlumberger & Competition
a) Schlumberger Presentation
Schlumberger was founded in 1926 by Conrad and Marcel Schlumberger. It continues to excel
through advancing science and technology of the sub-surface. Intellectual curiosity and commitment
to research and technology are part of Schlumberger DNA.
It is today the world's leading oilfield Services Company supplying technology to customers
working in the Oil & Gas industry.
The 2015 revenue came down from 48.58 billion to 35.47 billion and the net income from 5.43
billion in 2014 to 2.07 billion in 2015.
5 Areas: North America, Latin America, Europe & Africa, Russia & Central Asia and Middle East
& Asia.
Schlumberger is composed of 4 groups: Reservoir Characterization Group, Drilling Group,
Production Group and Cameron Group which is new (merged in April 2016).
Schlumberger oil field services are divided in 24 segments, including Schlumberger Integrated
Solutions, the segment on which we will focus.

33
Software Integrated Solutions
Software Integrated Solutions (SIS) is an operating unit of Schlumberger that provides software,
information management, IT infrastructure, and services. SIS enables Oil & Gas companies to
solve today's tough reservoir challenges with innovative workflows enabled by open collaboration
and comprehensive global services, step-changing the effectiveness of E&P teams.
Schlumberger software sells 6 major platforms*: Petrel (Exploration & Production ‘E&P’), Techlog
(Wellbore), Avocet (Production Operations), Ocean (Development Framework), Studio (E&P
Knowledge Environment) and recently Omega (Geophysical Data Processing Platform).
15 Foundations complete our software offer (see Picture 1 in appendix).
Cash cows are Petrel Platform, ECLIPSE foundation and Techlog Platform.
Our key software are: Petromod, SPT, GeoX, Geomechanics/Drilling software, Production software
and Intersect.
Through our technologies and services, Oil & Gas companies can improve business performance,
reduce exploration and development risk, and realize the potential of the digital oil field.

34
b) Schlumberger Competitors
In the below table we can see that Halliburton, Paradigm, IHS, Baker Hughes, Midland Valley, Ikon Science and LR Senergy are the
companies which are competing the most in our domains. Halliburton propose software solutions on 12 of our 14 domains. As a
consequence, it is our biggest competitor. Paradigm covers 6 domains and IHS, Baker Hughes, Ikon Science cover 4 domains of the 14
Schlumberger’s software domains. Midland Valley and LR Senergy cover 3 domains. These 7 companies are the ones which have the most
similar offer than Schlumberger in terms of covered domains.
Software Domain/Competitor Halliburton Paradigm I.H.S. Baker Hughes MidlandValley Ikon Science LR Senergy
Geology& Modeling 1 1 1 1 1
Geology& Modeling- PetroleumSystems 1
Geology& Modeling - Geomechanics 1 1 1 1 1
Geology &vModeling- DecisionSupport 1
Geophysics 1 1 1 1
ReservoirEngineering 1 1
Welbore 1 1 1 1
Drilling- Operations - Aggregation,storage,viewers 1
Drilling- Operations - Optimization&Efficiency 1 1
Drilling- Operations - Reporting 1
Drilling- Planning- Subsurface andEngineering 1 1
Production 1 1
Geomechanics 1 1 1 1 1
EconomicsPlanning 1
TOTAL domainscovered by the competitor 12 6 4 4 3 4 3
Schlumberger is competing with a lot of companies on each software domain (see Table 1 in appendix).
The 4 most competitive domains are:
 Geology & Modelling (8 competitors)
 Wellbore (8 competitors)

35
 Drilling: Planning -Subsurface and Engineering (7 competitors)
 Production (7 competitors)
On table 2 in appendix, we can notice that Halliburton competes on these 4 domains, Paradigm
competes on 3 (Geology & Modeling, Wellbore and Drilling: Planning -Subsurface and
Engineering). IHS competes on 2: Geology & Modeling and Production.
As a result in the most competitive domains, Schlumberger is competing with lots of
companies but more importantly with the ones we have identified previously as the most
dangerous for Schlumberger, that is to say Halliburton, IHS and Paradigm. We can notice
that rivalry is extremely high in Geology & Modeling since 8 companies are present with
Halliburton, Paradigm and IHS.

36
Chapter II: Survey Analysis
Scopeof the Survey
The main problem of Schlumberger is that Oil & Gas prices are decreasing, companies are cutting
their budgets in exploration and invests, while Schlumberger propose premium products & services
at a costly price.
I have decided to carry out a survey to understand what difficulties Account Managers face when
visiting the clients. I focused on Account Managers in Europe and Asia because I work in Europe,
so it was really important for me to know what our neighbor Account Managers deal when selling
and because I want to work in Asia after my apprenticeship, as a result, I wanted to have an idea of
the sales conditions in this area.
It has been tough to convince 23 busy people to take 20 minutes of their time to answer a
questionnaire.
The purpose was also to share ideas and tips from Europe and Asia in order to improve the way we
sell our products & services, to find solutions to make this obstacle course easier. I will send the
results of the survey to the Account Managers, as a consequence this survey is also a great
opportunity for them to learn from their colleagues worldwide and see what they experience in their
daily life. The survey was anonymous so that people could feel free to express themselves.
Please find in Appendix a copy of the survey submitted to the Sales Force. The survey is made up of
20 questions. I have had a hard time analyzing all the answers since there were 23 participants.
I have received 23 responses: 16 from Europe, 5 from Asia and 2 from the SIS HQ (in Europe, I
guess).
69%
22%
9%
Territories/Answers
Repartition
Europe Asia SIS HQ

37
Accounts Managers responded
massively to the survey:
 17 Account Managers
 3 Global Account Managers
(GAM)
 1 Sales Lead
 2 “Others” (1 Sales &
Marketing Coordinator and 1
GeoMarket Manager)
Whattype of clients do you workwith? (Multiple choice question ‘MCQ’)
The type of clients that sales people deal with is quite varied. Here is the detail: Independents (61%),
Consultants (57%), Engineering Companies (52%), IOC (52%), NOC (48%), Other (17%):
“Research Institutes & Universities”, “Major”, “Small companies”, “Service Companies and
Competitors”. Schlumberger is working with a wide portfolio of clients: small (Consultants)
and big structures (IOC, NOC…).
74%
13%
4% 9%
Job Repartition
Account Manager
GAM
Sales Lead
Other
Type of Clients
IOC (International Oil Companies) NOC (National Oil Companies)
Independents Consultants
Engineering Companies Other

38
How areyour clients impacted by the fall of the barrelprice? (MCQ)
The fall of the barrel price mainly resulted in budget cuts (23 times answered), Stop of activities
(19), People laid off (19), Decline in Market Share/Revenue (18) and Cancelling drilling operations
(1 additional proposition). Clients have been touched on every aspects.
Whatis the average Market ShareSchlumberger Softwarerepresentsin your client
for Exploration & Production software?
The average Market Share that Schlumberger Software represents in our client software (for
Exploration & Production) is in majority between 30-75%. In more details, 48% of the respondents
selected “50-75% market share” and 44% selected “30-50% market share”.
This means that usually when clients deal with Schlumberger they tend to use several of our
tools. They rely well on our solution set.
15%- 30%
4%
30% - 50%
44%
50% - 75%
48%
> 75%
4%
Market Share
15%- 30% 30% - 50% 50% - 75% > 75%
23
19
18
19
1
B UD G E T CUT S ST OP OF
ACT I VI TI ES
D E CLI NE I N
MAR KE T
SH AR E /R EVENUE
PE OPLE LAI D
OFF
OT H E R
MAIN IMPACTS
OF THE FALL OF THE BARREL PRICE

39
Nothing is regarded as “very easy” to sell and only 2 responses (<5 % each) are concerned by the “easy” level. All the results are
concentrated on the left part of the column chart, which reflects well the industry situation. Selling is challenging.
We can note that Software and Consulting are considered as “very difficult” to sell, this level of difficulty represents 56.5% of the answers
for Software and 43.5% for Consulting. We can see that both are also pointed as “difficult” by responders. Almost 40% of the responses for
each. Difficulty percentages (“very difficult” accumulated with “difficult”) are extremely high: more than 95% for Software and almost
85% for Consulting. Whatis the most difficult to sell at the present time?
We can deduce that the majority of the Sales people have a hard time selling Software and Consulting.
0.00%
20.00%
40.00%
60.00%
Very
Difficult
Difficult Average Easy Very Easy Not
Applicable
answersin%
What is the most difficult to sell at the present time?
Software Training Maintenance Support Consulting

40
Difficulty to sell Training is spread on different difficulty levels which may depend on the countries (“very difficult” 30%, “difficult”
44% and “average” 26%).
Maintenance is not regarded as “very difficult” and is in majority considered as “average”. However, 40% of the responders classify
maintenance as “difficult” to sell. The Maintenance perceived difficulty is split.
Viewpoints on Support are focused on the “difficult” level with more than 55% but it tends to be less difficult than others
products/services, since “average” level is 26% and “easy” level is 4%.
Difficulty to
sell
Very
Difficult Difficult Average Easy
Very
Easy
Not
Applicable
Software 56.50% 39.10% 4.30% 0.00% 0.00% 0.00%
Training 30.40% 43.50% 26.10% 0.00% 0.00% 0.00%
The average difficulty level perceived to sell Software, Training, Maintenance, Support and Consulting is “difficult” with 43%,
which is significant. “Very difficult” and “difficult” average levels combined together are almost 75%.
The overall selling situation is quite difficult.
Maintenance 8.70% 39.10% 52.20% 0.00% 0.00% 0.00%
Support 13.00% 56.50% 26.10% 4.30% 0.00% 0.00%
Consulting 43.50% 39.10% 13.00% 4.30% 0.00% 0.00%
All Products
& Services
Very
Difficult Difficult Average Easy
Very
Easy
Not
Applicable
Average 30.42% 43.46% 24.34% 1.72% 0.00% 0.00%

41
0 5 10 15 20 25
Cost Reduction…
Portfolio Optimization
Timing Optimization
Resources Optimization
Other
New Needs
Whatcould facilitate the sale of Schlumberger Productsand Services?
As I was certain that I would get responses highlighting the fact that selling is difficult in this
context, I asked Account Managers if anything could facilitate sales. You will find in Table 3 in
appendix the entire list of the responses I obtained.
To summarize answers, I classified the inputs into two columns.
Most of the answers given by the sales force regard internal factors. Internal factors are mixed
but price is a consistent concern.
Whatabout the clients new needs? MCQ
The “Cost reduction” need has been selected
massively. It affects all type of services and
equipment. “Resources Optimization” and
“Portfolio Optimization” have been also
largely voted in. Regarding “Timing
Optimization” it is not regarded as a top
priority. Other suggestion is “data governance
and workflow standardization”.
Cost Reduction, Resources Optimization
and Portfolio Optimization are key for
clients.
InternalFactors to FacilitateSales
• Lower/Adapt Prices, Apply Discounts
• Smarter Package Offering
• Improve Support
• Integration, Cross Segment Initiatives
• Widen Software Offering (Production)
• Payment Facilities
• Be more Creative, Flexible
• Business Model Revision
• Focus on Well-Known Technologies to Reduce Risks and Ensure Efficiency
• Increase Value Client's Perception, Focus on Added Value
• Clearly Defined Solutions within SLB
External Factors to Facilitate Sales
• Barrel >$75
• New projects on client's side, Increase in budget

42
In order to get a precise idea of what was the
most important criteria for clients, I asked
participants to select the most important one.
Results are flagrant, the most important
new need is the cost reduction
(maintenance, new acquisition, PTS,
recruiting, data acquisition & services)
which definitely echoes to the internal
factors we previously observed (i.e.
reducing prices).
Which solutions have you (and your sales organization) identified to meet their new
needs? (Please refer to Table 4 in appendix)
The solutions identified by the sales force are:
 Reducing Price: discounts (for example one time discount, maintenance discount, discounts
on services/software), reduce total cost of ownership (TCO), reduce technology access fee,
lower service rate (ex: offshoring).
Most of the participants think that reductions would encourage purchase and enable to be
aligned with competition.
 Leveraging from particular software, e.g. GeoX, Merak, Petrel Geophysics, Intersect, IAM,
Avocet, Production Optimization and Enhanced/Improved Oil Recovery software.
 Improving and developing new workflows to increase efficiency, optimize and shorten time
to market.
 Standardizing workflows and software to increase optimization but also to reduce TCO.
 Portfolio optimization: one platform when possible, license bundle convert to hybrid model.
 Packaging offering solutions in combining software and services to secure current market
share and increase presence, Schlumberger could also provide additional service/training
when purchase.
 Being more flexible and creative by considering software as a service* (SaaS), renting
temporary licenses with conditions, being more flexible with service agreements, allowing
delayed payments and credit back options, suggesting open rental contracts, proposing
capital lease, payment calendars, promoting managed services and hosting solutions,
allowing deferred payment of maintenance, converting maintenance cost into purchase or
offer 2017 maintenance.
 Encouraging cross segment initiatives to leverage from all departments, all teams.
Which solutions have your clients suggested to meet their new needs? (See all answers
in Table 5 in appendix)
0 5 10 15 20 25
Cost Reduction…
Portfolio Optimization
Timing Optimization
Resources Optimization
Other
Top Priority for Clients

43
I was curious to know what clients suggest to the sales force to meet their new needs, i.e. resources
optimization, portfolio optimization and cost reduction.
Clients ask in majority for a price reduction, a discount on software, services, support and
maintenance. They also want to reduce the TCO.
Some of the clients want to cut the maintenance to reduce their costs or only keep what they have
for the moment and postpone purchase. Another solution clients suggested is the software licenses
swap.
Some clients ask for changing payment terms, for example delayed payments.
They are asking for risk assessment, portfolio and resources optimization. Intersect and Petrel
Geophysics software are seen as optimization solutions.
To put in a nutshell they basically want to have more value for the same/lower price. If they
cannot have a lower price, they will go for optimization.
Which solutions have you witnessed from competitors to meet the new client needs?
(Table 6 in appendix)
The sales force reports that competitors use aggressive strategies. They make huge discounts
and practice all-you-can-eat* & lump sum* models that we do not employ.
One survey participant shared the following; “What I heard in a client in ING, Paradigm has given
special monthly rate where client can access all software that is needed, along with the software
maintenance and also consultant / services that can be used to help clients in doing their task.”
Competitors push so much that they even offer extended free evaluation licenses (6 month licenses
for example) at no cost. Our competitors provide software licenses/services for free, one
responder gives the example of a competitor that donate (for free) access to all its technologies for
the 2016 period.
By offering service and software for free, our competitors are gaining market share. They also
tend to merge to have more power on the market.
Moreover it has been reported that some competitors are entering little by little in niche areas,
offering only what they are very good at. As a result, their customer satisfaction is high and
their company’s reputation increases.
One possible solution could be to propose only our best solutions and not to propose less reliable
software. Reputation is very important in this crisis context and customer satisfaction is the key.
Customers cannot be satisfied if they have the feeling to be ‘Schlumberger’s guinea pig’ as reported
by a survey participant.
 To sum up the situation, we have on one side clients who ask for price reductions and
on the other side competitors who make aggressive offers. But how does Schlumberger
react and defend its position? Let’s have a look at the following question:

44
0
5
10
15
yes
partiallyno
Did your implemented solutions
succeed to meet customer new needs?
Have you been able to implement all the solutions?
Yes (Table 7 in appendix): Minority
of the responses (4/23). Few
participants say that they have been
able to reduce price/cost for clients
with discounts, to lower daily rate for
services, to offer free support, to
reshuffle software bundles according
to client’s needs and to promote the
use of Petrel Geophysics and Intersect
(which allow clients to access
Schlumberger technologies with much
lower cost while delivering the same
results).
Partially (Table 8 in appendix): Most of the responses (17/23) reveal that solutions that Account
Managers are putting in place are ongoing. A lot of adjustments and follow up are necessary to
implement all these solutions. It is a long term endeavor. Giving discount is not the solution the
sales force focuses on. Most of the solutions they implement are about the technologies: new
workflows, trying to tend to SaaS, hosting solutions, software standardization, portfolio optimization
(but it requires investments). They implement contract flexibility, some managed to convert
maintenance fees into purchase or bargain with clients. For example one responder reports: ‘In order
to keep all the licenses active, we have agreed to some exceptional maintenance discount.’
No (Table 9 in appendix): Minority of the responses (2/23). Responders say that they were not able
to take advantage of product differentiation, neither making price adjustment, nor implementing
platform standardization (because it is costly).
Did your implemented solutions succeed to meet customer new needs?
The majority of the survey responders
consider the solutions they implemented
as successful (14/23 answers). Then comes
“partially” (8/23 answers). It may be due to
the fact that the solution implementations
are still ongoing as revealed in the previous
answers of the question “Have you been
able to implement all the solutions?” Only
one person declared that implemented
solutions were not efficient, which is
quite encouraging.
0
5
10
15
20
Yes
PartiallyNo
Ability to ImplementSolutions

45
Which result did you obtain? (Table 10 in appendix)
Results are largely positive with new technologies implemented (for example Petrel Geophysics
core and Intersect enabler), happy customers, signed contracts, optimized resources, increased
efficiency, reduced cost for the clients, renewed maintenance, saved or even increased market share
and earlier purchases than originally scheduled.
However, few answers point out that some clients are internalizing as much as possible, to reduce
costs and to be more independent from their contractors. In fact, they will ask for our help only if
they cannot do it themselves. As one of the responder wrote “Customers are looking to spend more
when engaging contractors, in this case Schlumberger only when they do not have any other
alternatives due to budget cuts etc. Mainly doing things internally. Customers have even started their
own development team as an initiative to be less dependent on contractors for customized
solutions.” Moreover, some new workflows implemented to increase efficiency are not totally
matching client’s environment “mainly for change management reason”.
Finally, as mentioned in the answers, the implemented solutions need continuous adjustment and
constant follow up even if they are doing well.
Whatabout competitors, arethey able to meet customer new needs?
17 persons on 23 answered “Yes” which means that competition is high.
Whatnew customer strategies have you defined? (Table 11 in appendix)
The new customer strategies that Account Managers have defined relate to different points and do
not focus only on pricing, quite the reverse. As a matter of fact, Schlumberger refuses to drop
significantly its pricing so Account Managers have to find other ways to meet customer needs.
Proposing new technologies and services are one of the strategies they use to help clients to
reduce cost and non-productive time. Account managers promote the Cloud, propose production
solutions, focus on differentiation, try to expand or make client adopt new technologies and try to
leverage new SIS Petro Technical Services and Data Services offering.
Optimization is also central to convince clients to keep using our solutions and services. Company
activities are slowed down as a result customers try to decrease their costs and only keep the
essential tools. As a consequence Account Managers focus on rentals (while before they use to push
for purchase) or even have to accept to cut licenses and head accounts.
Because of the oil crisis, companies have less work and use less our software. Account managers
have to face a change in the use of our solutions. They have to find creative ways so that customers
can keep using our products without having the feeling that they are tied down. They focus on
renting whereas before they use to insist on purchase, they accept to cut licenses and seek for
software standardization. Clients have to feel free.

46
Account Managers have to take into account the importance of market share protection and
competition displacement when negotiating. We are in a delicate context and we cannot permit
ourselves to lose market share. That is why negotiating is very difficult at this time, we cannot drop
drastically prices but we have to find a way to retain customers while their main concern is cost
reduction and by extent price reduction.
Price and payment flexibility are also part of their kit to negotiate, they suggest payment facility
(delayed or staggered for example), attempt to make discounts, reduce total cost of ownership,
create cost reduction scenarios to convince clients, "Support client financially today and get money
back tomorrow" or "Do more get same money" as two responders reported.
Finally, communication is key in their new strategies, the sales force tries to get closer to their
clients. Our presence is essential and it will prevent competition to approach our clients. For
instance, a responder explains: “[I] talk with the management and convince them they can save cost
and optimize their portfolio” The responder directly interacted with top decision makers to convince
them and get the contract signed. The aim is to increase communication with the clients to know
exactly what they need, who decides in their company and help them getting the top management
approval if necessary. We will also learn faster how we can meet their needs and how to value our
propositions. Communication helps the Account Managers to think out of the box by putting
themselves at clients place.
Whatis the strategy that works best to stimulate sales?
Price discount is the best strategy to stimulate sales according to the majority of the sales force.
48%
22%
17%
13%
What is the strategy that worksbest
to stimulate sales?
Price Discount
Technology
Differentiation
Providing additional
Support
Other

Master Thesis: Which solutions and trade strategies petroleum services companies can deploy to face difficulties linked to the fall of barrel prices? The case of Schlumberger Software.

Master Thesis: Which solutions and trade strategies petroleum services companies can deploy to face difficulties linked to the fall of barrel prices? The case of Schlumberger Software.

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