tnk-bp (russia) 2008 pestle
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PART II– Situational AnalysisA. General External
Environment
CASE ANALYSIS : TNK – BP (RUSSIA) 2008
Situational Analysis - General External Environment
POLITICAL/LEGAL
SOCIO-CULTURAL TECHNOLOGICAL
Centralized Power by
President Putin
Energy Policy of Russia
-energy superpower
Russia’s Relation with
European Union
-diversify export market
and favorable customers
Russian Tax Policy
-tax exemption on
Greenfield provinces
General Rule: Russian
language is a MUST
Russians took duality to
greater extremes than
other nationalities
Loose hierarchical
structure in Russia
Environmental concern
(Green):
-Hybrid Car
Fossil oil technologies
Renewable energy
technologies
-Oil Drilling Using Floating
Nuclear Power Plants
-Use of ISOJET Perforation
Technology
Building up capacity to
deliver a new generation of
Greenfield projects
CASE ANALYSIS : TNK – BP (RUSSIA) 2008
DEMOGRAPHIC ECONOMIC GLOBAL
Russia ranks 178th in
population density
2008: Average real
wages and real disposable
incomes increasing by
13.1% and 11.8%
respectively
Fastest-growing income
and consumption [growth]
rates
Global economic crisis and
resulting recession in 2008
-Rapid decline in world oil
prices
Rising inflation and fuel
prices
Russian Economy and Oil
Price Volatility
Impact of Fluctuating
Exchange Rates
-decline in Russian Rubble
Russia had 20% world’s
large reserves of : oil
production and natural gas
Russia industrialized and
inherited most of the
defence industry from
Soviet Union
Major contributor to
global ozone depletion
Corruption remained
serious issue
PHYSICAL
-Oil :limited supply -Natural conditions -Infrastructure -Transportation
CASE ANALYSIS : TNK – BP (RUSSIA) 2008
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PART II– Situational AnalysisB. Industry Analysis
CASE ANALYSIS : TNK – BP (RUSSIA) 2008
Situational Analysis - Industry Analysis
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CASE ANALYSIS : TNK – BP (RUSSIA) 2008
THREATS OF NEW ENTRANTS/
BARRIERS TO ENTRY
BARGAINING POWER OF SUPPLIERS
BARGAINING POWER OF
BUYERS
PRODUCT SUBSTITUTES
INTENSITY OF RIVALRY AMONG
COMPETITORS Low
- Number of main oil companies that
canexplore and mine oil
field are limited
- BP, world’s third-largest oil and gas
supermajor.
-High Capital Requirement
- High level of technical
knowledge & technology
requirement
High-Suppliers for BP
are countries that have oil
reservoirs and oil fields
(Russia) and other
countries (Arab,
Norway, Iran, Iraq)
- OPEC controls 40% of world’s
supply of oil and, thus,
has a strong influence on the price of
oil.
Low- Buyers of
crude oil, market price
is determined
by the demand
- Buyers do not have other alternatives
(high demand)
Low- Minimal
substitute for natural resources
(petroleum/gas)
- Crude oil cannot be
substituted
- Other sources :
Biogas /biodiesel/ synthetic oil/solar
energy/nuclear energy ( not cost effective)
High- Competition from
local oil producers/miners
in Russia and globally
- Gazprom, Rosneft, Surgutneftegaz, Tatneft (Russia)
- Exxon Mobil, Shell, Petronas, Arab Oil
Companies, National Iranian Oil
Company (NIOC) (Global)
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PART II– Situational AnalysisC. Competitive Environment
Analysis
CASE ANALYSIS : TNK – BP (RUSSIA) 2008
Situational Analysis - Competitive Environment Analysis
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CASE ANALYSIS : TNK – BP (RUSSIA) 2008
TNK- BP LUKOIL GAZPROM TNK-BP Holding OAO (TNK-BP
Holding OJSC) is a Russia-based vertically integrated oil company.
The Company is involved in the exploration and production of crude oil, as well as distribution and marketing of oil and petroleum products.
TNK-BP Holding OAO is active on the territory of various Russia's hydrocarbon regions in the West Siberia, Volga-Urals, East Siberia and the Far East.
The Company operates through five refineries and has a retail network of approximately 1,400 sites spread across Central region of the Russian Federation, as well as Ukraine.
The Company sells its products, on the domestic market, as well as exports them to Europe and the Commonwealth of Independent States (CIS) countries.
Neftyanaya Kompaniya LUKOIL OAO (NK LUKOIL OJSC or Lukoil OAO) is a Russia-based integrated oil and gas company.
The Company is engaged in the business of oil exploration, production, refining, marketing and distribution. It is an owner of refineries, gas processing, petrochemical plants and gas stations network located in Russia, Eastern and Western Europe.
The Company’s petroleum products are sold in the Russian Federation, the Commonwealth of Independent States (CIS) countries, Eastern and Western Europe and United States.
Lukoil OAO operates through numerous subsidiaries and affiliated companies in eight business segments: Oil and Gas Production, Petrochemicals, Oil and Gas Refining, Petroleum Products Marketing, Services and Others, Financial Activity, Electric Power Generation and Banking. As of May 7, 2010, the Company’s major shareholder was The Bank of New York International Nominees.
OAO Gazprom, and its subsidiaries, operate gas pipeline systems. The Company is also a supplier of gas to European countries.
The Company is engaged in oil production, refining activities, electric and heat energy generation.
The Company and its subsidiaries are involved in exploration and production of gas, transportation of gas, sale of gas within Russian Federation and abroad, gas storage, production of crude oil and gas condensate, processing of oil, gas condensate and other hydrocarbons, and sales of refined products, and electric and heat energy generation and sales.
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ROSNEFT
Open Joint Stock Company (OJSC) Oil Company Rosneft is engaged in exploration, development, production and sale of crude oil and gas, and refining, transportation and sale of petroleum products in the Russian Federation and in certain international markets. It has three business segments.
The exploration and production segment is engaged in field exploration and development, and production of crude oil and natural gas.
The refining, marketing and distribution segment is engaged in processing crude oil and other hydrocarbons into petroleum products, as well as the purchase, sale and transportation of crude oil and petroleum products.
Its primary investment in production sharing agreements (PSA) is through the Sakhalin-1 project (PSA 1).
CASE ANALYSIS : TNK – BP (RUSSIA) 2008
Situational Analysis - Competitive Environment Analysis
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PART II– Situational AnalysisD & E. Environmental Trends
&Attractiveness of External Environment
CASE ANALYSIS : TNK – BP (RUSSIA) 2008
Environmental Trends
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CASE ANALYSIS : TNK – BP (RUSSIA) 2008
Globalization – BP’s joint-venture with TNK in Russia to accommodate increasing oil and gas production and replacing reserves
Outsourcing – Russia, world’s largest natural gas producer and second-largest crude oil producer
Expansion – Russia’s proven reserves ranked number seven in the world, huge opportunities for further exploration
Strategic Alliance – BP and AAR combine their interests in Russia to create the country’s third largest oil and gas business, in which both parties have a 50% stake (TNK-BP)
Expatriation – Globalization created a global market for skilled professionals and levelled the income of skilled professionals relative to cost of living
Summary : Attractiveness of External Environment
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CASE ANALYSIS : TNK – BP (RUSSIA) 2008
Globalization and outsourcing trends by customers have created boundless opportunities for a company like BP : ExpansionGlobal networkingStrategic alliance with local partnerExpatriation
The Mining/Crude-Oil industry, Petroleum Refining, and Chemicals industries as a group are very attractive because the :Threat of new entrants is lowBuyer power is lowSupplier power is high (which is good because most of the big industry players are both suppliers and buyers) The threat of substitutes is lowThe attractiveness of the industry is reduced because business rivalry is high
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