Business Model of Total Essay

1 Introduction There is no special and particular slogan used by transmit through its products. Total is using different slogans for their several kind of product lines in the countries, where they sale the products. â€Å"Winners fill up with TOTAL!† is the slogan in Germany for the B2C segment for their filling stations. 2 Company Profile – TOTAL The former â€Å"Compagnie francaise des pà ©troles†, now TOTAL S.A., is founded on March 28th in 1924, together with its subsidiaries and affiliates. The history of TOTAL began in the Iraqi sands in the 1920s. TOTAL began its Upstream in the Middle East in 1924. Over the past decades the company grew up, developed and expanded its presence throughout the world. Since 1999, the company has strengthened itself by merging with PetroFina and, at the beginning of 2000, with Elf Aquitaine, so as to join the small club of oil and natural gas majors. Today TOTAL is one of France largest corporations and the world ´s fifth largest publicly-traded integrated international oil and gas company.3 TOTAL is committed to meeting growing energy demand while consistently acting as a responsible corporate citizen.4 The company is registered in office 2, place Jean Miller, La Dà ©fense 6, 92400 Courbevoie, France. Up to and including the fiscal year 2011, TOTAL, with all its subsidiaries and affiliates, employs 96.104 people. 3 Business Model Canvas – applied by TOTAL â€Å"A business model describes the rational of how an organization creates, delivers and captures value.†5 The Business Model Canvas uses nine different perspectives, in order to portrait where the value of a company is created. It focuses on customer segments, value propositions, distribution channels, customer relationships, revenue streams, key resources, key activities, key partnerships and cost structure.6 The following sections are going to elaborate the theoretic basis of the Business Model Canvas and how it is practically applied by TOTAL. 3.1 Customer Segments Customers are the heart of every business or commercial model. Therefore they are one of the most important stakeholders of a company and to have them is the basis requirement for an economic venture. In order to be successful on the market, products should be designed according to customers ´ needs. Those needs can either be common or rather specific. Customers should be segmented. This depends on different expectations towards profitability, distribution channel or especially the price. Those segments are also divided in groups like common needs, common behaviors or other characteristic features. Kinds of customers segments can be the mass market or the alcove market. 7 As general definition customer segmentation is understand as the act of separating a group of clients into sets of similar individuals that are related from a marketing or demographic perspective. For example, a business that practices customer segmentation might group its current or potential customers according to their gender, buying tendencies, age group and special interests.8 Due to the fact that TOTAL is a company in the sector of power production, they are purchasing the strategy of customer segmentation to fulfill the different expectations at a best possible rate. On account of the spheres of business TOTAL operates in the area of the mass market, if you would lay a focus on the petrol production. Therefore TOTAL is one of the biggest suppliers in the transportation sector. But the company’s products are segmented by the different market segments. The business segment mainly focuses on 3 different branches: upstream, downstream and the energy sector. These branches are divided as follows9:  · Upstream: oil and gas transportation, development and production, liquefied natural gas  · Downstream: refining, petrochemicals, specialty chemicals, marketing and the trading and shipping of crude oil and petroleum products  · Energy sector: equity stakes in coal mines, operations in the power generation and renewable energy 3.6 Key Resources Depending on the field of business companies need different resources. According to Canvas ´ describes the component of the key resources the most economic goods which are necessary for functioning a business model.26 According to Canvas` TOTAL has the four from Osterwalder/Pigneur mentioned key resources. Physically, intellectually, humanly and financially. To bore after oil and gas and to produce fuel, lubricants and other goods from that, it ´s necessary to have appropriate production plants and equipments. Because these are capital-intensive the financial resource arises from that. To open pools or to allow constructing new offshore construction works the enterprise needs the necessary financial items. Among other things these were gained in the course of the company ´s history. Chemicals and special fluids, also the different fuels, need the humanly and intellectually resources. The mixture of all these four resources gives TOTAL the possibility to handle its operations in 150 countries. That there ´s a dependence between the key resources is visibly with the fact that TOTAL invested â‚ ¬ 776 million for R&D in the year 2011. It ´s necessary to have a good combination between all key resources to get benefits of these investments. 3.7 Key activities The component of the key activities describes the most important things which an enterprise must do, so that its commercial model functions.27 In combination with key resources, key activities are responsible for creating unique products and services to carry out the value of the enterprise. The promotion of oil and gas, as well as the production of fuels belongs definitely to the key activity of the company. Secondly a very important one is the know-how and the ability to create a functioning logistics network to operate through the countries all over the world with the different suppliers and customers. 26 Osterwalder/Pigneur (2011) p.38 27 Osterwalder/Pigneur (2011) p.40 10 3.8 Key partners Key partners are the network of suppliers and partners who contribute to the success of the commercial model.28 First of all TOTAL endeavors to use local suppliers of goods and services as often as it ´s possible. This action contents to the local content programs. TOTAL stands for using local resources. Programs are aligned with the project ´s technical characteristics and local industry. Special key partners are not able to indentify. TOTAL mentioned by itself, that the company purchased â‚ ¬ 27 billion of goods and services from roughly 50,000 active suppliers worldwide. 3.9 Cost structure The cost structure describes all expenses which result by the execution of a commercial model.29 This is the definition within the Canvas` model. In general a cost structure is a method to determine how much it will cost a company to manufacture a product and how much profit will be recognized from manufacturing the product.30 TOTAL has a mix of cost-driven and value-driven business model. Covered to the limited reserves of the fossil raw materials TOTAL invests millions of Euros into Research and Development. It is for developing unique and innovative products for helping to reduce energy consumption but also to find new resources of raw material like oil and gas or coal. Secondly a great part of the R&D portfolio goes to the sector of renewable energy like solar and photovoltaic. The biggest part of the Total expenses falls to the production of the several economic goods. 4 Conclusion The TOTAL ´s business model is very effective. According to the several different economic goods TOTAL is producing, the customers are focused by creating value added processes that are fulfilling their basically needs along with a comprehensive growth of revenue. With production plants and service 28 Osterwalder/Pigneur (2011) p.42 29 Osterwalder/Pigneur (2011) p.44 30 http://businessdictionary.com/definition/cost-structure.html 11 stations in 150 countries, a sales of about â‚ ¬ 184,693 billion, purchasing goods & services of â‚ ¬ 27 billion from about 50,000 active suppliers worldwide TOTAL is the fifth biggest oil and gas production company of the world. In order to the growing markets in Asia, especially the Chinese market, TOTAL could be able to increase their sales because of the increasing energy consumption in this area. It is not easy to imagine, that they are able to enter new markets, because they are operating worldwide and satisfy the energy needs of the private and business customers all over the world. Taking into account of the dropping reserves of fossil fuels it becomes inevitably furthermore to engage very intensively in sector of the renewable energy.