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Subject: In Search of Service Selection Variables For Iranian oil and gas industry Date: 2022-08-22 Author:

In Search of Service Selection Variables

In Search of Service Selection Variables


Abstract
This article is written based on the result of the research about Service Selection Model in oil and gas drilling industry that issued from Sweden Linkoping University. In service selection we require exploiting the effective variables so that they can help the company to run and provide the services in good condition and cover the market needs. This article has illustrated a theoretical conclusion consist of effective variables for empirical model that can facilitate selection of services with appropriate technology levels in oil and gas drilling companies, that can be used in any Service Company.
Since the drilling service market is a very strong competitive environment, it is very important to select most significant services with consideration of appropriate technology level
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In Search of Service Selection Variables

For Iranian oil and gas industry
 
 
Abstract
This article is written based on the result of the research about Service Selection Model in oil and gas drilling industry that issued from Sweden Linkoping University. In service selection we require exploiting the effective variables so that they can help the company to run and provide the services in good condition and cover the market needs. This article has illustrated a theoretical conclusion consist of effective variables for empirical model that can facilitate selection of services with appropriate technology levels in oil and gas drilling companies, that can be used in any Service Company.
Since the drilling service market is a very strong competitive environment, it is very important to select most significant services with consideration of appropriate technology level.
 
As you may know with variety of services, they are more than 20 types, and have their own technology, level, and then it is very important to study market in all aspects, and then prepare a plan to develop and apply suitable services.
 
To clear the purpose of study, we defined two questions to breakdown that into research questions, so that we were led to answer, and recognize effective variables by using the relevant methodologies and theories which can help to define a business model that covers Service Company needs to realize its business unit and size.
 
    To test the applicability of variable it checked in four cases selected as the samples among drilling service companies in Iran market. Two of them are foreign companies including; Schlumberger and Halliburton which are famous and in some services are pioneer in the world. The Iranian companies are NIDC as a biggest public company in Iran, and Sarvak drilling Services Company in private section.
 
 
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In other words, the defined variables by this study indicate that every company should be able to select an appropriate service(s) to invest in and develop existing services with consideration of appropriate technology. Based on this result we concluded it can not only apply in oil and gas industry, but also is useful for other industries.

  Key Words: Service selection, Service Marketing, Market screening, Technology Management,, Drilling

 

1.Introduction

Drilling operation in oil and gas industry needs special complementary services which, without it cannot execute and achieve its goals. Then all drilling companies have to select and employ one or more drilling service companies for all needs within their activities.
 
Based on our pre-study in service selection as a core study we found and considered all effective context factors that affect service selection including; market needs, competitors advantages, accessory technology level, company inter characteristic (capability and core competency), client preference, and government role. With regard to these effective factors we develop the expectance model to select services.
 
Moreover according to opened documents of tender, we found, drilling services market as a one of main section of EPD[1] project is equal up to 12% - 16% of total cost of field development.[2]Since, Iran ministry of petroleum announced (2010), in the next 5 years Iran has to invest about 100 billion USD in developing offshore and onshore oil fields, this amount shows that this market is very attractive.
Therefore, with regard to proportion of the services in drilling the expenditure of the drilling services will be 10 billion USD for 5 years.
 
  With regard to experts point of view generally, all of the drilling services are divided into two drilling groups. The first group includes necessary services to drill and complete the wells. These services usually are general and used in all drilling operations such as tubular running, cementing, well head and completion. The second group incorporates side technical services that are needed for evaluation of drilling operation and appraisal of wells, for example logging, testing, and so on. All of the services in second group are technically higher than services in first group. We must note that without the services in first group, we cannot drill and complete the wells and respond to all of the client needs. All services, with considering to techniques are evaluated in three categories including high, medium, and low level, by the professional science same as physics, electronics, mechanic etc. The second services are more expensive than those of first group and for this reason many clients try to select the required services to optimize the drilling time and final costs.
     There are more than 20 types of services provided and supplied by well drilling service companies around the world whose accuracy and functions are improved every day.
At the present the drilling services have been provided by foreign companies that are professional and even we can say some of them are the pioneers in the world includes Schlumberger and Halliburton. Then any company which wants to enter this market has to use existing technologies because the pioneer companies that are supported by strong R&D have created strong competitive environment which makes it difficult for new comers to enter.
The study results explore the relationship between the core competencies and the technology level of services. In other word, the realized variable by this study should able each company to select an appropriate service to invest and develop existing services so as to meet the company’s economic goal.

1.1Background

The drilling operation needs special complementary services which no company can‌ execute and achieve its goals. Then all drilling companies have to select and employ one or more drilling services within their activities.

1.2Definition about Drilling Services

Because most of information has related to drilling services, first of all we must present a definition in various points of view to create a common sense for all of us. This industry has more than 22 groups of relevant services that can categories into six general application groups. With regard to above description about different types of services, we are prepared to enter the main subject. But first of all; it needs to express some main descriptions and clarify drilling services in experts' point of view. With regard to these ideas there are at least two definition of technical categorization; so that are placed as a scope of work in tender documents as well as to form service package.

1.3Functional Categorization

At this time there are more than 20 types of services which have been provided and supplied by drilling service companies around the world. Since these services have important effects on drilling efficiency and performance, they can affect the quality of well drilling and more importantly they can lower costs of drilling. Because some of services increase drilling equipment performance dramatically, the duration of utilization of rigs as the biggest upstream equipment may increase, and so they affect the total well drilling costs. All services in this condition define based on their functionality, and recognize services in three main groups as follow:
  • Monitoring and Diagnostic tools: in this category all services have been used as a gauge and tools to recognize and identify the information about situation of well in drilling activities.
  • Drilling complementary services: this category of services is necessary to start drilling activity; so as to it cannot be done without the complementary services because they have critical roles in drilling.
  • Intermediate services: to do some complementary services we need to use intermediate services that consist of material and tools such as coiled tubing that create a channel to inject acid and cement.
 
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Table 1.1 Various types of services in functional aspect
 

1.4Purpose of study

As we mentioned, the drilling activities cannot execute and achieve its goals without drilling services. Then all drilling companies have to select and employ one or more drilling service companies for all needs within their activities.
 Since services include a wide range of professional activities which help drilling operation teams to do their job with high accuracy, any company that intends to equip their business with these services has to do market study and realize to apply best decision to develop services.
  Based on the problem discussion, the purpose of this study is to realize effective variables to facilitate selection of services with appropriate level of technology in Iranian oil and gas drilling companies.

1.5Research Questions

With regard to purpose of study, the research questions are formed into broken down questions as follows:
  1. Research Question 1(RQ1): What are the important criteria to select services?
  2. ResearchQuestion2 (RQ2): What is the relationship between company capabilities and exploiting appropriate level of technology for services?

2.Theoretical framework

 
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With regard to our study subject, and purpose of study model, service selection, and technology management. With consideration to these issues we will lead the areas that are related to service marketing and how studying the marketing evaluation aspects. According to our field study, while considering service selection area, we proposed the theories and views that can help us to develop business model as follow:
  1. Marketing management; to understand market needs as a business driver to outside in approach
  2. Services marketing; as a main related literature with thesis topic
  3. Service selection; as a main issue to define service package  
  4. Market study; Scanning market through qualitative method Business Portfolio
  5. Marketing environment analysis
    1. External environment factors is called PEST analysis
    2. Internal analysis to find Company capabilities
  6. Technology management; to select appropriate Technology level of Service selection
  7. Competitor analysis; to study the competitive environment situation
While considering above description, we will present our study result in the relative articles and theories in this stage in detail.

2.1.Service selection

With regard to our articles review in service selection, we found some conclusions that explain different dimensions of study aims in various aspects.
 According to Azlan Shen (2009) the critical issue for service selection is Quality of Service (QoS) attributes and service providing process. Based on this the evaluation parameter to select within the candidate services are included:
1.             Time constraints (This means the constraints of potential to select appropriate supplier is the time for service provision)
2.             Objectionable functions (readiness to provide all sequential activities by selected provider)
3.             Satisfying to cover the requirement
4.             Strategy selection
Also, based on their process model, they propose an approach to select service categorized into two aims including; to achieve optimal solution; to achieve feasible solution.
Based on above researcher's finding, the service selection as a problem have recently attracted researchers’ attention, so that it is preferred to select a group of services that can satisfy most of requirements.
Liang and Wang 2009 in International Conference described the Selection service based on users’ QoS preference.  Then with considering to their algorithm, the Quality of services preferences is able to screen the appropriate service effectively. The main factor in this model is QoS satisfaction degree that probability formed by the distinction between QoS attributes and user expectations.
Based on the Ukor and Carpenter (2009) finding that presented in Fourth International Conference on Software Engineering Advances as a Goal-Oriented Business Process Model has focused on the concept in business
There are two types of goals associated with business processes: strategic and operational goals Nurcan (2005).Also the authors describe an approach by modeling the problem to service selection as a constraint satisfaction optimization problem. They define a notion of conformance; so as to it is satisfied by a provider based on the constraints on the QoS metrics supplied by the provider. They concluded that there are two main perspectives to service selection as follow:
  • Modeling Goals
  • Capability Definition (capability refers to the ability of a company to achieve a specific goal)
One of the important aspects to service selection is the sources of advantage that organizations may draw on (Day, 1994). Paper of Matear et al. (2004) explains the roles of market orientation, branding and innovation as sources of advantage for Service Company that led to advantage.
Positional advantage is the similar result of both the Day and Wensley (1988) and Bharadwaj et al. (1993) frameworks reflect Porter’s (1985) view in terms of either cost leadership or differentiation. This view of positional advantage has created a challenge. Based on another article review we found that market orientation as a market concept study has attracted considerable attention since the scale development work of Narver and Slater (1990) and Kohli and Jaworski (1990). Kohli and Jaworski (1990, p. 1).
                                                  
The studies result emphasize that new service development (NSD) is important as it leads to both cost-effectiveness and NSD success positional advantages.
According to Rezaei et al. (2011) as a model developer, the main effective item that impact on the provision services is selected strategy. It meant to develop services we have to return to study our company strategy as a service provider.
The authors also approved the choosing an appropriate service from all the usable services regardless of user’s location and heterogeneous architecture consist of software and hardware infrastructure is depends on the Client' perspective and expectation. Then we can say the main effective factors to select services are:
  1. Service providing process
  2. Quality of services (QOS in accuracy, time and price…)
  3. Deadline Satisfaction
  4. Selected Strategy
  5. Brand
  6. Client need and expectation
  7. Human resource
  8. Cost
  9. Performance
  10.  
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Capability

2.2.Service selection road map

With regard to the problem discussion, authors are focusing on the services selection in drilling with consideration of appropriate technology level for service companies in Iranian oil and gas drilling industry; hence we need to find relative theories and methods to develop our study model.
According to results of articles review in the service selection, we found various items that can affect selection of services so that with consideration of these items we can do our study by comforting the relation of them with our study purpose.
According to our field studies that consist of reviewing, discussion, interview with experts and the results of article review in service selection we realized some of main issues and categorized all those factors as follow:
  1. Market environment and needs
  2. Competitors' advantages
  3. Accessory technology level
  4. Company inter characteristic (capability and core competency
  5. Client preference
  6. Government role
  7. Human resource
With regard to these effective factors we have to review the related studies to find interrelationship between those to develop the expectance model to achieve services selection offer. Based on our pre-study, we identify a roadmap to help us to achieve purpose of study. (Figure2.1. shows roadmap)
 
 
 
Figure 2.1 Roadmap of service selection study
 
 
With regard to figure 2.1 we need to review the theories and methods to find the interrelationship between service selection area and marketing study.
Based on Marketing management process, Mullins et.al (2006, P.15) this process, the overall environment analysis is the outcome of focusing on the four main elements that may influence a given strategy’s appropriateness and ultimate success:
  1. The environmental context—such as broad social, economic, and technology trends—in which the firm will compete
  2.  
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The company's internal resources, capabilities, and strategies
  1. The needs, wants, and characteristics of current and potential customers
  2. The relative strengths and weaknesses of competitors and trends in the competitive environment.

2.3.Service marketing

Although the definition of service marketing has a common with marketing management, the focusing on this can create closer mind to clear our aim and go to detail to show essential aspects of service marketing as the main subject of this study.
One of the main things that make services different from products is the loyalty that is often related to the quality of the service and this makes service marketing somewhat different from products.

2.3.1.Services

   According to Lovelock and Wirtz (2004), a service is an act or performance offered by one party to another. Although the process may be tied to a physical product, the performance is transitory, often intangible in nature, and does not normally result in ownership of any of the factors of production.
     Normann and Ramírez (1998) suggest value constellation rather than a value chain, indicating that value is created at the user side when the provider’s offering is consumed, i.e. instead of output from a supply chain it serves as input to the customer’s value-creation process. Whereas physical goods are tangible, services are intangible. Physical goods are things and services are activities Grönroos (2000).
According to Normann, (2001) Services can be seen as occurring both within the company and between the company and its customers. With this definition the services can be made visible or remain invisible. Examples of invisible services are how accompany manages and handle invoicing, quality problems, complaints, offers documentation, handles queries and offers customers training on how to use machines Grönroos (2000).
 
The vital components of service development are, service concept, service process and service system that come out of result. Customer-friendly services emerge from a dialogue with competent and demanding customers Edvardsson and Modell (1996).
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Also we can define service marketing as on carefully understanding the deeper needs of customers, and then providing services that will help to make them more successful.

2.4.Marketing environment reaction

 
According to Mullins et.al (2006) about marketing process, there is relationship between marketing study and market environment, and then authors try to indicate this mentioned relationship with service selection. The actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers and meet their needs by appropriate selection services.
According to Elaine O’Brien (2006), all businesses operate within an environment, which directly or indirectly affects the way in which they function, just as we, as consumers, live within a cultural and social environment that have a greater or lesser degree determines the way in which we behave as individuals.
Since the marketing environment impacts on the organization then it is necessary to study various aspects of this. The market environment has three dimensions including, macro-environment,’ the ‘micro-environment’ and the ‘internal environment’. In following sections these are explaining in detail to define and understand their role in the service selection.

2.4.1.The micro-environment

According to Kotler (2002) that mentioned micro describes the relationship between firms and the driving forces that control this relationship. This environment influences the organization directly and includes suppliers that deal directly or indirectly, consumers and customers, and other local stakeholders. Micro tends to suggest small, but this can be misleading.

2.4.2.The macro-environment

According to Kotler (2002) that mention companies and their suppliers, marketing intermediaries, customers, competitors, and publics all operate in a macro environment of forces and trends that shape opportunities and impose threats. These forces represent ‘uncontrollable’, which the company must monitor and respond to.  
Macro-Environment includes larger societal forces that can influence and an organization, but that is out of their direct control.

Figure 2.2Environmental scanning (Authors’ illustration)
Strengths and weaknesses enumerate as internal factors that destroy or create value. They can include assets, skills, or resources that a company has at its disposal, compared to its competitors. They can be measured using internal assessments or external benchmarking.
Opportunities and threats are external factors that create value or destroy value. A company cannot control them. But they emerge from either the competitive dynamics of the industry/market or from demographic, economic, political, technical, social, legal or cultural factors (PEST).
The SWOT diagram is the first step for analyzing a corporation. If we want to fit with the external environment is often the most difficult work. Confrontation Matrix a tool to combine the internal factors with the external factors is the Confrontation Matrix.

2.5.Company internal environment analysis

 
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Internal environment is related to company resources and capabilities, it must be mentioned that resources are the firm-specific assets useful for creating a cost or differentiation advantage and that few competitors can acquire easily. But capabilities refer to the firm's ability to utilize its resources effectively. Such capabilities are embedded in the routines of the organization and are not easily documented as procedures and thus are difficult for competitors to replicate.
Therefore for studying ‘internal environment’ we need to know all factors that are access in the company, that they are generally verified by the ‘5 Ms’ which are Men, Money, Machinery, Materials and Markets. The internal environment is as important for managing change as the external. (Kralj & Markic, 2007)

2.5.1.SWOT analysis to find company situation

SWOT analysis is a tool for auditing an organization and its environment and used in management and strategy formulation. It is the first stage of planning and helps marketers to focus on key issues.

Table 2.1 Confrontation matrix (Fred R. David, 1997)
Frequently the two columns of the SWOT are pointing in opposite directions and strategists must still deal with the paradox of creating alignment. This can be done via Outside-in strategy formulation (market-driven strategy) or Inside-out strategy formulation (resource-driven).
With consideration to above perceptions that approved there are impacts from market environment, as well as company situation analysis (by studying the SWOT tools) on condition of service selection.

2.5.2.Core competency

For the purpose of this study, core competencies were defined as the skills, knowledge, abilities, and attributes that employees across an organization are expected to have to contribute successfully within a particular organizational context.
   The outside-in approach (such as the Five Forces model from Porter) places the market, the competition, and the customer at the starting point of the strategy process. The core competence model does the opposite by stating that in the long run, competitiveness derives from an ability to build a core competence, at lower cost and more speedily than competitors. The core competency may result in unanticipated products. The real sources of advantage are to be found in management's ability to consolidate corporate-wide technologies and production skills into competencies, through which individual businesses can adapt quickly to changing circumstances.
 According to Prahalad and Hamel (1990) about the core competence of the corporation, dismiss the portfolio perspective as a viable approach to corporate strategy. They argue that the primacy of the Strategic Business Unit is now clearly an anachronism. They argue that a corporation should be built around a core of shared competencies.
Based on above perception the company internal characteristic evaluation is obtained by studying the company's strength and weakness to select determine competencies, which has shown in below figure.

Figure 2.3 The company competencies process

2.5.3.The External Environment (PEST analysis)

The PEST analysis is an efficient framework that strategy consultants use to audit the external macro-environment. PEST is an acronym for the following factors:
  • Political
  • Economic
  • Social
  • Technological
 
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Since the PEST analysis should be performed based on the country it requires understanding detail information about these four areas that usually there are as a secondary data that play an important role in the value creation opportunities of a strategy. However they are usually outside the control of the corporation and must normally be considered as either threats or opportunities.
For clarifying relationship between PEST and SWOT we must mention, PEST is useful before SWOT - not generally vice-versa - PEST definitely helps to identify SWOT factors. Other point is that there is overlap between PEST and SWOT, in that similar factors would appear in each and certainly two different perspectives.

2.5.4.Relation between Company situation and environment

Interaction between provider and client of services are B2B, B2G, and B2C. The challenges in each interaction of these ways need a special action. The difficult and tight condition in environment is depending on the competitors' reaction in the same services. In other words buyer – seller relationship in services according to several researchers have linked competitiveness with a company’s ability to develop and manage its array of network relationships (P.Turmbul& D. Ford & M.Cuningham, 1996).
 
Since there are two general approaches to market study include outside–in and inside-out, so that in outside-in approach, the market needs and demands determines how the company empowers itself to meet market needs, and opposite in inside-out the company core competence determine how the company set the market targeting. Because the market needs affects to select services by companies then we have to contribute outside-in approach.
In this stage we try to illustrate the necessary theoretical framework and tools to define market needs appropriately with company competitive advantages.

2.6.Outside-in approach

The substantial thing that affects the company marketing plan is market competitive advantages situation, that define opportunities and threats to use based on the company strengthens. One of the famous models that contribute in outside-in approach is Porter's model. By this model company can analyze competitive advantages situation and define its position in the market that describe in follow.

2.6.1.Porter's Model

The Five Forces model of Porter (1985) is particularly strong in thinking an Outside-in tool that is used to make an analysis of the attractiveness (value) of an industry structure. For more clarification it must be mentioned that the competitive forces analysis is made by the identification of 5 fundamental competitive forces:
  1. Entry of competitors
  2. Threat of substitutes
  3. Bargaining power of buyers
  4. Bargaining power of suppliers
  5. Rivalry among the existing players
In regard to advantages of five forces competitive model must be mentioned that the model in compare with PEST analysis is a strong tool for competitive analysis at industry level and other point is that the model can provide useful input for performing a SWOT Analysis.
Regarding limitation of this model must be mentioned that the model does not cope with synergies and interdependencies within the portfolio of large corporations and is designed for analyzing individual business strategies and other point is when using this model do not underestimate the importance of the existing strengths of the organization because it does not care about Core Competency.

2.7.Competitor Analysis

One of the important elements in our roadmap is Competitor Analysis. There are two reasons to approve that concept.
  1. Reveals the firm's competitive position in the market space
  2. Assists you to develop strategies to be competitive.
 
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2.7.1.Competitors’ analysis Steps

According to Lake House Business Consulting Inc (2008), there are five steps to competitors' analysis:
  1. Identifying company competitors
  2. Finding your competitors
  3. Creating a competitor analysis grid
  4. Writing up the results of your analysis
  5. Defining your competitive position
Necessary background of business as the most important outcome of the competitor analysis section a description of your sources of endurable competitive advantage is competitor analysis. In final portion of the competitor analysis study focus turns away from competitors to our company. Specifically, we try to define the factors that will set our services apart from our competitors.
Every company will face competitors in three different types including:
A) Direct competitors are businesses that are offering identical or similar services as our business so that customers can easily receive from those, instead of us, so these companies place as our most intense competition.
B) Indirect competitors are companies that are providing services that are close substitutes. These competitors are probably targeting our markets with a similar or same value plan, but delivering different services.
C) Future competitors are existing companies that are not yet in the marketplace that we intend to occupy, but they can come there at any time they want.

2.7.2.Competitive situation

There are at least two approaches available for us to explain our sources of competitive advantage.
  1. Opportunities and threats: The SWOT analysis grid reveals the strengths and weaknesses of our competitors. On the other hand, a SWOT analysis looks for opportunities and threats that our company can use. Then, a weakness-opportunity strategy would create an opportunity for our business based on a weakness found in competitors. Or a strength-threat strategy focuses on risk avoidance by initiating a strategy that minimizes a threat caused by a competitor's strength.
  2. Competitive strategies: concentrate on product, pricing, promotion, distribution, and service and ask questions addressing the following issues;
  • Cost leadership
  • Differentiation
  • Growth
  • Time

2.8.Competitive advantage condition

In most cases, a sustainable competitive advantage at the corporate level is based on company resources: resources that other firms do not have, that take long time to develop, and that are hard to acquire (B. Barney, 1991, p 99-120)
Since service selection is affected from type of strategy then while considering the Michael Porter, (1985) classic book on competitive advantage that identified three generic strategies as below:
  1. Cost advantage
  2. Differentiation advantage
  3. Focus
As Porter points out, “A company can outperform its rivals only if it can establish a difference that it can preserve. It must deliver greater value to customers or create comparable value at a lower cost, or both.” (Porter, 1996, p.62) A competitive advantage exists when the company is able to deliver the same benefits as competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products (differentiation advantage). Thus, a competitive advantage enables the firm to create superior value for its customers and superior profits for itself.
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According to the Competitive Advantage model of Porter, a competitive strategy takes offensive or defensive action to create a defendable position in an industry, in order to cope successfully with competitive forces and generate a superior Return on Investment (ROI). Based on Porter, the basis of above-average performance within an industry is sustainable competitive advantage.

2.9.Resources and Capabilities

In order to develop a competitive advantage each firm is required to obtain resources and capabilities superior to those of its competitors. A resource-based view emphasizes that a firm utilizes its resources and capabilities to create a competitive advantage that ultimately results in superior value creation. Figure 2.4 combines the resource-based and positioning views to illustrate the concept of competitive advantage:

Figure 2.4 A conceptual model to match company capability and resources to create value (Authors’ illustration)
 
To distinguish between resources and capabilities, it must be mentioned that resources are the firm-specific assets useful for creating a cost or differentiation advantage and that few competitors can acquire easily.

2.10.Technology Management

  Since technology has very much effect on the services, then each company which is interested on providing services has to consider the suitable technology. Because of technology changes in related to time and environment interesting then it needs to implement a logical process to mange and apply it to increase technology performance and efficiency. At first it is necessary to know and understand about technology management process, so it will go on in detail in order to make a common sense.

2.10.1.Technology management process framework

One of the famous technology management processes belongs to Gregory (1995) that exploits by five stages and is applied as follows: (figure 2.5)
(1) Identification of technologies
(2) Selection of technologies that necessary to support in organization.
(3) Acquisition and assimilation of selected technologies.
(4) Exploitation of technologies to obtain company goal.
(5) Managing knowledge and expertise that produce by employees
 
 
 

Figure 2.5 Technology management process (Gregory, 1995)

2.10.2.Technology selection

The impact of technology as a source of competitive advantage for our industries is widely accepted by practitioners and governments. In order to realize this competitive advantage, it is vital to understand both the specific technologies, and the ways in which organizations can best manage technology. These issues are of increasing importance as the pace of technology development and its complexity increase.
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   By this model we try to recognize all existing services and select suitable services and then apply them and finally modify the service function. Technologies will be selected based on information supplied by the vendor, third party evaluation data, and the results of independent bench-scale studies.

2.10.3.Technology Selection Criteria

According to the research about the Pilot scale demonstration technology selection criteria by Sandia National Laboratories (2003)[3], selection of technology has four areas that have demonstrated as follow:
1. Performance
2. Cost
3. Degree of complexity, and
4. Level of maturity of the technology
 
1. Performance is a summary of the technology effectiveness as measured by the following items:
• changing levels in the treated effluent
• Site-specific treatment capacity
• Robustness of performance with respect to possible changes in:
• Ability to scale-up
• Residuals production & characteristics
• Volume & mass of residuals
• Characteristics of residuals that affect handling & disposal
• Kind of material consumption
• Pre-/post-treatment requirements
• Intellectual property/patent issues
• Technology span (applicability to other sites)
2. Cost is measured by comparing the following cost items to a baseline:
• Design/engineering
• Initial Capital
• Operation & Maintenance
• Any pre-/post- treatment requirements
3. Technology complexity
• Operation & maintenance requirements
• Skill level required by operational & maintenance (O&M) personnel
• HE concerns
• Safety (such as pressure, electrical, hydraulic, moving parts, etc.)
• Packaged system vs. new construction vs. add-on technology
4. Level of Maturity of the Technology
• Number of plants that have been installed.
• Variations in drilling industry have been successfully treated
• Different f the operational and performance record at sites
• Lead-time duration tor treatment system delivery

2.10.4.Technology evaluation to selection

    With consideration to above theory about technology management we can classify every service in wanted manner. In this study we can use the Khalil (2006) methods to define three technology levels for services. As mentioned in introduction one the drilling services divide in two groups that have different application of technology then based on this perception we can classify drilling services with regard to level of company technology readiness.

Figure 2.6Technology level classify (Authors' proposed theoretical MODEL)
 
This classification is defining in three groups including: High, Medium and Low technologies.
Then they define as below attitudes:
  • A company with high technology can exploit services with high tech supporting.
  • A company with medium technology can meet its needs in house or in an accessible supporting company.
  • And a company with low technology means that its capability to use and technically support needs other companies.

2.11.Human resource management

 
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With consideration to the drilling services that consist of individual attitudes those have a little differentiation in nature because in some cases of drilling services have to provide their requirements and complimentary by mix of information and possessing process which affect the quality of them. The people as a main attribute of providing the services especially in them that need to interpret at information and data the services require professional crew.  Also in some services our customer cannot be easily ensured about the quality of services within the well in depth of 5000 meters and it needs to trust the calibration of equipment. Furthermore the drilling service has a close relative to their crew; therefore the people have an important role in service operation. 

2.12.Marketing Strategy

The primary focus of marketing strategy is to effectively allocate and coordinate marketing resource and activities to accomplish the firm’s objectives within a specific product market. Firms seek competitive advantage and synergy through a well-integrated program of marketing mix elements (the 4 Ps of product, price, place, promotion) tailored to the needs and wants of potential customers in that target market. (Mullins et al. 2006)
"A strategy is a fundamental pattern of present and planned objectives, resource deployment, and interactions of an organization with markets, competitors, and other environmental factors"(Mullins et al, 2008, p.40)
By this action we will try integrate component of corporate strategy, defining how the organization will successfully engage customers, prospects, and competitors in the market arena.
With above mentioned about the rule of marketing strategy, in first step to developing a marketing strategy that drives significant business results is to make sure managers fully understand their market by doing some research: market size and growth, competitors, complementary, and customers.
With regard to Mullins et al suggest, we should specify three subjects that include what (objectives to be accomplished), Where (on which industries and product – market to focus), How (which resources and activities to allocate to each product market to gain a competitive advantage)
Based on this to determine our company business development we need to develop market strategy, to recognize candidate services and amount of required resources to implement them.

2.13.Theoretical framework to recognize variables

 
The above descriptions, has led us to a conceptual framework that covers all effective factors to selection services. For this aim we implement the main components of theoretical models including as follows:
  1. Market study in drilling services potential
  2. Competitors' situation study in the industry
  3. Technological and economical evaluation of each service
  4. Exploited technology level of services by samples companies in the past
  5. Data gathering analysis from questionnaires
  6. Data gathering analysis from interview
 
To selecting services we have to finalize the requirements variables to prepare the evaluation of service situation in three various dimensions that includes; technology requirements, background experiences, and services complexity.  Since selection of services depends on the correlation level of company ability to exploit and support them therefore it need to evaluate the requirement and needed technology level of services. For this aim we evaluate most of common services from three technology level categories including, High, Medium and Low, and distribute the questionnaire to take the expert people ideas about them.
With consideration to all tools and theories that has described in before we can illustrate an empirical framework as bellow:
 
 
 
Figure 2.7 implement process of service selection framework
 

3.Methodology

 
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We did our study in various dimensions of our research study including result, purpose and approach. Based on the study purpose, we are led to propositions and prediction of the research process by related research questions. Since our purpose is develop appropriate selection framework to recognize effective variable for drilling Services Company in oil and gas industry the qualitative approach will be more favorable.

3.1 Data collection

In this study we used relegated and useful data collection methods that includes; Primary data (Interview and Questionnaire), Secondary data, and Sampling.

3.1.1.Primary data

In study we required data about technology level of services and their requirements, therefore   we designed the questionnaires based on this aim and distributed among 30 respondents.
Also to evaluate competitive environment we issued the special questionnaires and distributed them among 30 respondents from SDS and other active companies in Iran. Also for company capability of four companies we designed the related questionnaires and distributed them among 45 respondents.

3.1.2.Secondary data

Secondary data is a main part of our study base. Several types of documentary secondary data were available outside or inside in our company. Internal data could be accessible through periodical report, invoicing, complaints, warranties and other available sources. Also external data were available from published or commercial sources.
Meanwhile, the sample companies are from overseas, and then there are some global published reports. Moreover since one of the main resources which are the Iranian oil ministry and its subsidiaries company top-level management process, the required secondary data were more available to the study.

3.1.3.Sampling as a Case

In the subject of service selection and realize the candidate services, every company which is interested to invest in the drilling services equipment try to use the general model. For this aim, we have considered four companies that have a suitable position and acceptable share of market in the world and especially in Iran that are including:
  1. SDS (Sarvak  Drilling Services company) new comer of Drilling Services
  2. Schlumberger as a pioneer in drilling services
  3.  
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Halliburton as a main services company has worked in Iran drilling services
  1. NIDC ( National Iranian Drilling Company) as a local public company in drilling operation and services
  We used data to evaluate and find criteria to categorize drilling services. Then finally could use to design our model. For this aim we used interview, questionnaire and secondary data.

4.Finalizing the variables 

  1. Market study to recognize opportunities
  2. Environment analysis (PEST and SWOT)
  3. Company internal characteristic 
  4. Competitors' analysis
  5. Technology selection
  6. Develop strategy
Based on the framework there are 14 variables that have to calculate and evaluate to run service selection function. The figure 3.8 shows the implementation process of service selection in this study, the mentioned variables are as follows:
  1. Strength
  2. Weakness
  3. Resources
  4. PEST analysis report
  5. Opportunities
  6. Thereat
  7. Market needs and wants
  8. Competitors' Situation
  9. Technology categorize
  10. Technology selection criteria
  11. Assess services technology
  12. Services Feasibility Study
  13. Service Selection Criteria
  14. Market study for services
To recognize and assess main variable (14 items) we had to obtain the sub items of them as demonstrated factors in figure 4.1.
Figure 4.1 variable of research study based on the framework
 
Based on above description about various variables that shown in the graphs we can to operational selection of services can be done to define an appropriate service package for any company.

4.1Technology Level of drilling service

Since the technology of service is the main parameter to select or refuse, it needs to determine the level of service technology based on the required criteria for each of them.
Based on the exploited technology in each service we rank all of them in three batches with regard to the technology level including:
  • High Tech; it is necessary to employ the professional and expert company to create infrastructure and provide technical support for services.
  • Medium Technology; it has partial dependency on other supplier.
  • Low Technology; most of technical needs cover in house for services and company can do all requirements activities individually.
 To rank the services with consideration to services attributes we distributed the questionnaire appendix (I) to take the expert people ideas about services' technical characteristics.
With regard to evaluate and categorize t