summary

In this research proposal I will be introducing my topic that is about “ the impact of corporate governance on the firm’s financial performance in UAE. The aim of this research project is to focus on the financial performance that is in UAE, to identify the issues related to the financial implementations. The research proposal will contain several ideas on how to analyze the nature and activities carried by the corporate governance. First, I will be focusing on my research question and the objectives regarding the research to achieve the goals purpose of the project. Second, I will mention the SWOT based on ADNOC Distribution Company or the challenges that leaded me to propose the research objectives. Third, I will also discuss the methodology on how was the data collected and how was it analyzed. At last, I will be presenting the work plan I’m going through to accomplish my work.

Description of the industry

Abu Dhabi National Oil Company (ADNOC) is one of the world's leading companies in the energy sector and extends its operations to the entire hydrocarbon value chain. Its operations range from exploration, production, storage, refining and distribution to the development of a wide range of petrochemical products. ADNOC is a world leader in the field of oil and gas, which is comprised of 16 subsidiary companies including ADNOC Distribution. The company’s goal is to find, produce and market the natural resources on which the modern world relies on.

 

Organization Overview

 

Over the past 45 years, ADNOC has played a major role in supporting Abu Dhabi's economic development through the management, production and maintenance of oil and gas reserves in the Emirate of Abu Dhabi on behalf of the Government of Abu Dhabi.

ADNOC Distribution runs an extensive network of service stations for all types of fuels, lubricants and support services. In addition, to ADNOC oasis convenience stores. The company also refused airplanes and ships it has also launched a campaign to convert vehicles to work on natural gas, which is available in many stations run by the company.

On 15, Oct 2017 ADNOC have incorporated all its labors, assets, products and services together underneath a unified company. ADNOC is a world leader in the field of oil and gas, which is comprised of 16 subsidiary companies. They produce around 2.7 millions barrels of oil a day for the global market. The most talented people in the most advanced technology combined to make ADNOC a multi-layered company that has become a symbol of Abu Dhabi’s success. Every organization has the aim of expanding in order to increase their profitability. In order to initiate the expansion process and elevate income, a company is obliged to invest a certain amount of capital into efficient organization activities. A large corporation, such as ADNOC, would issue shares to the public in order to ‘raise’ capital and increase the speed of the expansion process. By selling shares to the public, ADNOC has the potential to form new partnerships and generate an astonishing revenue stream. The procedure of issuing shares would also associate and contribute to the development of the UAE’s economy by nurturing Abu Dhabi’s capital markets. ADNOC began issuing shares to individuals as well as other institutions towards the end of 2017. 

SWOT Analysis:

 

ADNOC Distribution is a state-owned organization. This implies that it has inevitable support from the government in terms of organizational activities, procedures and finances. Therefore, despite the hefty costs that are associated with innovative organizational development, the government is willing to fully support any goals that would enhance the overall performance of the organization, hence creating limitless opportunities for the company to exploit. As one of the main governmental organizations, ADNOC Distribution has little to no competition domestically. This distinguishes the company and regards it as a valuable asset to the UAE as a whole. Also, opportunities to infuse technology into their product and service range are constantly rising. This would certainly increase their product line and strengthen its position as one of the leading oil companies in the region. 

Threats and weaknesses include existing entrants, whether domestic or global, ADNOC still competes with larger oil enterprises that strive to achieve similar goals. Hefty investments are required to analyze and implement a distinct competitive advantage. Another prominent issue is uncertainty; the future is unpredictable and oil consumption is constantly on the rise. This means that, at some point in the future, this resource will be completely abolished from existence. ADNOC Distribution must be prepared to act upon such sudden dependencies prior to their happenings. ADNOC SWOT. (2017).

 

 

 

 

 

 

Strength	Weakness
Domestic Market Low-labor costs Implementation of technological opportunities Governmental support Globalization	Oil resources are scarce Uncertainty Technological advancement requires immediate adaptation to rigorously changing environment
Opportunities	Threats
Technological implementation Innovation Global expansion Skilled workforce Internationalization Increase of product line Provision of new services and products	New entrants Tax imposition and changes External business risks Increasing rates of interest Globalization of competitors Scarce resources in the future

Critical Learning Objectives

 

In order to write this report, I will be using some of the course I have learnt last semesters. The following courses are basically connected with the impact of corporate governance on the firm’s financial performance in UAE.

 

 

 

1. Corporate finance

 

• CLO 4 - Recommend strategies to improve financial performance using financial analysis.

 

In this course, the aim of studying it is to improve the financial performance such as accounting ratios and profitability margins by using the financial analysis.

The importance of evaluating financial performance can be summarized as the financial performance assessment provides a measure of the success of the economic unit by seeking to continue its activity in order to achieve its objectives. Conversely, the financial performance assessment process describes the strategic position within the sectorial environment in which it operates, and then identifies the mechanisms and changes required to improve its strategic position.

 

 

2. Financial assets and markets

 

• CLO 1 - Discuss the importance and the efficient operation of financial markets for the economy and corporations.

 

The aim of this course is to understand the importance of the financial markets for the economy and corporations. A corporation needs finance to establish a business, run it, and modernize it or expand it.  There are different types of financial markets such as: capital markets, money market, derivative market and etc.

The purpose of choosing this course in my research is because of the significance of the capital market in a company. Capital markets are markets for buying and selling equity and debt instruments. However, they are used to raise finance for long-term finance like securities.

 

3. Corporate finance and banking

• CLO 5 - Evaluate the ability of financial products and services to meet the financial needs of corporations

In this course, the objectives are to calculate the ability of the financial products and services to meet the financial needs. The financial products are known as securities and investments of a corporation, while the financial services are the services that are provided by the corporations.

To be linked with my research I will be able to calculate or to estimate the ability of the financial products to meet the financial needs of the company.

Research proposal

Research question

• The impact of corporate governance on the firm’s financial performance in UAE.

Research objectives

• To identify the relevant measurement of financial performance.
• To analyze the nature and activities carried at the corporate governance by ADNOC Distribution.
• To examine whether there is positive impact of the corporate governance on its financial performance.

Importance of the research

 

Implementing a strategic corporate governance will lead to the unity of employees, allowing them to work cohesively towards a unified goal. In order to align the workforce towards this goal, the organization must maintain a strategic approach to controlling the organization and it’s internal activities. Corporate governance is essentially aimed at aligning the interests of stakeholders by providing a framework for accomplishing the company’s objectives and focuses on every aspect of management. This also involves the centralization of decision-making. Corporate governance has a direct impact on the financial operations of ADNOC Distribution, as important decisions revolving around these operations are mainly planned and analyzed by upper-management. Rules and regulations that are instilled within the organization depict which stakeholders have the ability to impact or influence these decisions. For example, a drastic change in the organization requires immediate action taken. This decision should be thoroughly discussed, analyzed and planned prior to its implementation. This is because; big decisions such as the decision for change ultimately requires a large amount of investment and an ample amount of workforce training. This has a direct and crucial impact on the financial performance of the organization. In order to prevent a chaotic, unstructured process to these decision-making steps, corporate governance outlines a specific structure that the organization is required to follow. Investor relations. (2018).

Research Methodology

 

 

Concerning my primary and secondary research, it is both quantitative and qualitative method research. In the primary source it is mostly based on a survey and questionnaire contains of 10-15 questions that will be distributed to the employees in order to identify the impact of corporate governance on the firm’s financial performance. Yet, the survey will be send to around 40-50 people in order to receive a reasonable number that will allow me to evaluate the results. On the other hand, I will have an interview with one of the employees to be able to know more about the company and to get additional information regarding my research topic. At last, according to the secondary source it will be based of articles, journals and HCT library database.

Conclusion

In conclusion, the research will comprise why do corporate governance is important in every corporation and the impact on the financial performance of the corporation. ADNOC Distribution receives more than 20 million visits per month to more than 360 service stations in the 7 emirates. 

 

 

 

 

 

 

 

 

Timeline Of Research

 

 

Week	Submission date	Topics	Achievements
4	Thursday 8th of February	Plan and proposal	Plan proposal on the financial performance in the UAE
7	Sunday 25th of February	Literature Review	Research journals, books and HCT library database. Collect reports and financial statements. Evaluate the data.
10	Sunday 18th of March	Methodology and Data analysis	Gathering the data. Conducting interviews and distributing questionnaires Evaluate the collected data.
13	Sunday 22nd of April	Finding, Discussion and Recommendation	Discussing the research findings. Recommendations and suggestions.
14	During the week	Oral Defense	Will be questioned by the mentor on each task.
16	Sunday 13th of May	Final Submission	Final changes on the research. Submit the final report.

 

 

 

 

References

 

Investor relations. (2018). Retrieved February 07, 2018, from

https://www.adnocdistribution.ae/en/investor-relations/investor-relations/

 

Evington, J. (2017, December 13). ADNOC Distribution shares surge on ADX debut. Retrieved February 01, 2018, from

https://www.thenational.ae/business/markets/adnoc-distribution-shares-surge-on-adx-debut-1.684026

 

ADNOC SWOT. (2017). Retrieved February 03, 2018, from

https://www.swotanalysis24.com/swot-a/2027-swot-analysis-adnoc.html