Fracking Debate: Social & Economic Impacts

This assignment delves into the complex issue of hydraulic fracturing (fracking) by examining its social and economic impacts. Students are tasked with conducting a PESTLE analysis to identify key political, economic, social, technological, legal, and environmental factors influencing fracking. Furthermore, they will utilize the Ansoff Matrix to develop strategies for companies operating in the fracking industry, considering market penetration, product development, market development, and diversification. The assignment emphasizes the importance of sustainable development within the context of this controversial energy source.

STRATEGIC
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Drawing on fracking industry ....................................................................................................1
Macro environment analysis.......................................................................................................2
Competitive analysis ..................................................................................................................4
TASK 2............................................................................................................................................6
Strategic options available with Cuadrilla..................................................................................6
Evaluating the strategic implementation process ............................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Strategic management can be defined as a process of continuous planning, monitoring
and analysing all the necessities which business enterprise have to meet in order to achieve their
goals and objectives (Matthew, 2015). This also involves the formulation and implementation of
set organizational standards where decisions are taken by the top management of business
venture on behalf of their owners. These decisions are eventually made by considering the
internal and external environment where organization competes.
By taking the above scenario into consideration this present report has been prepared on
Cuadrilla resource which is the oil & gas exploration and production company of the UK.
Mentioned firm is known for its continuous efforts for developing shale gases by using hydraulic
fracturing or fracking. This report also analyse the macro and competitive factors for the cited
organization. Moreover, it will also emphasize on understanding the varied options that are
available for mentioned venture to extend its energy industry.
TASK 1
Drawing on fracking industry
Cuadrilla has its business operations within the UK and is indulged in the production of
oil and natural gases. Hydraulic fracturing or fracking is a technique where rock is cracked with
the help of pressurized liquid. The process used for cracking involves a high pressure injection
which comprises water, sand and other major components constitutes of thickening agents.
Fracking is big industry within the UK and Cuadrilla is a part of that industry who abstracts oil
and natural gas products (Gu and Nazmy, 2014).
Fracking eventually allows accessing more of the natural oil and gas then before and
many countries around the globe depend on the countries where this process is undertaken . By
making effective relationship with the company, other countries will be able to use these natural
resources. Further, by using natural gas, companies can generate electricity and can avoid the use
of coal which is considered as the major problem of air pollution. Moreover, when the natural
gas is taken into consideration, CO2 emissions gets reduced and it resulys in decrease in air
pollution (HYDRAULIC FRACTURING, 2016).
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Macro environment analysis
Cuadrilla has to conduct macro environment analysis in order to identify the potential
factors which act as a barrier in order to increase their efficiency and productivity. PESTLE
analysis for the mentioned organization has been discussed down as under: Political: These factors are those where the government has full interference in the
working and operations of business corporations of the economy. These factors include
areas like taxation policy, labour law, environment law, varied trade restrictions and
tariffs, etc. In order to maintain this, cited firm has to follow especially the acts related to
the surrounding. Environment act, 1995 is all about maintaining better surrounding
conditions within the country (Jones, Hillier and Comfort, 2014). Further, Cuadrilla is in
need of immense support from the government so that they can extract more oil and
natural gas from the environment and become a global leader in this industry. The
government has also taken varied steps in protecting the rights of individuals who are
working within this industry.
 Economic: Economic factors involve major components like financial growth, interest
rates, exchange rates and the inflation rate. These factors have their major influence and
impact on business enterprise in taking their own decisions. Further, the price of oil and
natural gas is generally decided by the government of UK. Cuadrilla resources have to
depend on the decisions taken by the top management. Moreover, with the rise in
inflation in particular country, their business operations will go down because
organization has to vary the price of oil and natural gas in that country.
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Illustration 1: PESTLE analysis
(Source:What is PESTLE Analysis?. 2016)

 Social: These factors are inclusive of aspects which assess the cultural aspect as well in
determining individual’s need and demand. Moreover, the increasing trend of social
living of people also leads to high demand of oil and natural gas. This is because of
various devices which are used by the people as a part of their regular activities that
demand this gas and oil. This in turn will help the cited entity to increase more of their
revenue and productivity (Jones Hillier and Comfort, 2013). However, there are some
people who are against the working of this business firm as these UK residents faces
major noise pollution with the fracking process. Along with heavy trucks moving within
the city, there has been developed terrible living of people. Thereby mentioned
organization should take some initial steps in order to minimize the harmful impact of
people living in the UK. Technological: As Cuadrilla works in the mining industry, they have to undertake
various Research and Development (R&D) activities like automation, technology up-
gradation, effective transportation and many others. However, this will include heavy
cost to the firm as because of shifting of one technology to other, but the expenses so
incurred in expanding will be overcome with the long run of the business existence. Legal: These factors include various laws and acts such as discrimination law,
employment aspects and health and safety legislation (Pros and Cons of Fracking: 5 Key
Issues, 2016). Cited firm has to consider these legal factors in order to stay competitive
within the fracking industry. Moreover, they also have to follow the mining rules and
regulations which are prescribed by the government and have to keep an effective bond
with the local body to carry their oil and natural gas processes within the whole UK.
 Environmental: This is true fact that with the business activities of this firm such as
digging and extracting of natural resources, environment is highly affected. The major
responsibility for the cited firm is to take necessary steps so that they can reduce some
sort of carbon emission which generally not that much effect the environment. Further,
increased pollution is a major cause as various toxins released into air at the time of
digging (Jones, Hillier and Comfort, 2015). Organization has to consider that and need to
implement new policy for their effective functioning.
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Competitive analysis
Competitive analysis for Cuadrilla will help the mentioned organization to take a
competitive advantage of their major rivals to achieve their desired goals and objectives. Further,
the fracking industry which is extracting oil and natural gas consist of few companies within the
UK and these are Cuadrilla, Igas, Centrica, etc. Further, there is Porter Five Force analysis which
is a framework to study the level of competition within which organization faces in industry.
This model is used to examine the external of five major segments of Cuadrilla and these have
been discussed down as under:
Rivalry of existing competitors-
 Porter's model stated that there exists rivalry among top firms and these firms are
different in terms of size and power, where industry growth also turns low and
organizations can't see each other changes as well. Mentioned organization is getting stiff
competition from their major competitors like Igas and Centrica because they are also
indulged in the same sector and focusing on expanding their market share and operational
process (Upham and et.al., 2015). Cuadrilla can improve their functioning and can lead the oil and gas industry sector by
conducting various new innovations. These innovations should be Eco-friendly and must
not harm the environment. Further, powerful competitive strategy and degree of
transparency will also help the business venture in getting a competitive edge.
Threats of new entrance-
 Power of individual also affect the functioning of business enterprise as they can enter the
industry and give them competition. However, fracking industry is quite condensed and
to be enter in such type of organization require a large experience, huge amount of capital
and vast knowledge in the field of science. From UK perspective, Cuadrilla, Igas and
Centrica are the major organization who are working in this industry. Apart from it, a lot of support is required from government body and organizations to
make a good approach with the ministers in order to regulate the desired functions. Thus,
new individuals or ventures cannot tap the mining industry that much easily.
Threats of substitutes-
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 Organizations like Greenpeace are starting campaign of protecting the environment and
they are directing to not to spoil the environment through any harmful activities (Reap,
2015). Convincing audience for the same will distract their mind towards the production work
done by the Cuadrilla and their functioning will have a negative impact because of the
campaign run by the Grrenpeace. Further, no such other substitutes are available in the
fracking industry.
Bargaining power of Suppliers- Suppliers for Cuadrilla are their contractors because at times they supply heavy machines
to the business organization for regulating their operational process.
Bargaining power of buyers-
 Buyers having a huge influence on cited firm functioning and individual having that
much of power that they can put firm in immense pressure to lower down the price of the
oil and natural gas products.
 Extraction of crude oil like petrol, diesel is used by individuals for varied purpose and
there are many entities who are supplying the same and have dealership with mentioned
organization. Though the price is set by government but the employee's behaviour and
product quality differs from one enterprise to the other.
TASK 2
Strategic options available with Cuadrilla
There are various strategic options available for cited firm and they can implement
Ansoff matrix for understanding the same in clear and fluent manner. This process has been
discussed down under: Market penetration: Under market penetration, Cuadrilla will focus on conducting their
existing process in the existing markets. Here, they will focus on making more of the
production for satisfying the needs and demands of the customers (Ochieng and et.al.,
2015). Efficient techniques will make work easier to complete and firm will be able to
achieve their desired goals and objectives. Further, the cited firm can accomplish this
process decreasing their price for the product, increase in promotion and distribution
support and can acquire their rivals who are working within the same industry.
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 Market development: In this process, Cuadrilla will expand their services into the new
markets by using their core natural gas products. This process will increase the revenue
and profits for the cited firm as they will tap the countries who lack in the oil and natural
gas products and by fulfilling the requirement in the particular country, they will be able
to get the immense trust of the customer’s as well as the government. Further, with the
unique development technology, they can expand in new market with best of the
resources (Boersma and Johnson, 2012). Further, they can tap the market which is well
within the reach and deliver their existing oil and natural gas products through different
transportation medium.
Illustration 2: Ansoff Matrix
(Source: Ansoff's Matrix. 2015) Product development: In this strategy, Cuadrilla can start new services for their existing
market in order to improve their brand image and profitability. Organization can focus on
introducing solar energy and wind energy which will give them a new source of
generating income and from this they will be able to work in both renewable and
renewable resources (Jones, Comfort and Hillier, 2014). In order to implement this, cited
organization can develop contact with some organisations so that they can enter in the
joint contract. Further, they can opt the process of acquisition of rights so that they can
develop someone's else product and give tag of their company. This will surely act as an
positive sign for the firm in order to get an competitive edge over their major
competitors.
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 Diversification: Diversification is the strategy where organization develops brand new
product for the brand new market. Although, it is considered as a risky step because both
the product and market is new for the enterprise and they have to conduct a proper micro
and macro analysis before keeping their foot in that particular market (Short and et.al.,
2015). Here too, mentioned company can rely on developing solar and wind energy
sources for new market but they have to consider each and every pros and cons before
implementing a particular step.
Evaluating the strategic implementation process
Strategy implementation is the execution of the most suitable strategy which the
organization has chosen in order to achieve their goals and objectives. Following mentioned are
the major steps in the strategic implementation process:
 Aligning the initiatives: Here for Cuadrilla, new strategies will genuinely set the new
priorities and new activities. All activities need to be reviewed against the relevance of
the new strategy.
 Developing budget and measure the performance: Organization have to develop the
budget and have to deliver the strategic initiatives (Metze, 2014).
 Structurally followed strategy: Proper hierarchical structure have to be developed by the
organization in order to avoid the mis-communication. This will lead into proper
functioning of the business enterprise.
 Engaging employees: Employees need top be recruited for the different posts so that they
can undertake the development work in proper and precise manner.
 Monitoring and adopting: The strategy so implemented should be easy in reach and
employee's must be boosted up in order to achieve their desired goals and objectives
(Steger and Milicevic, 2014).
Mentioned company can undertake market development and product development
strategy in order to increase their business operations and become a wider energy industry. With
the product development, mentioned company will find new energy source like wind energy and
solar energy for improving their business operations. Furthermore, this process will help cited
firm because they having vast image in the UK and their goodwill will be developed if new
source are generated within the same field. Product development is the major area where
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organization can take their foot in and by taking effective measurement, they can increase their
revenue and productivity as well.
Apart from it, organization can also focus on market development and can develop their
existing source of extracting oil and natural gas in different countries so that they can increase
more of the production in that area. For implementing this strategy successfully, they have to
scan the market environment of that area and need to take relative measure before conducting the
extraction process (Cotton, Rattle and Van Alstine, 2014). However, also from a recent news it is
evident that the Lancashire council has thrown out the Cuadrilla proposal as their fracking plans
were rejected by the local body. Further, there were people who came on street in protection of
their environment and they were appealing to have a “Frack free Lancashire”. Due to this
incident, mentioned firm is planning to tap new country where they can easily extract more of oil
and natural gas. Response from the government for that country plays a crucial role and they
need immense support of them in order to conduct their operational process.
CONCLUSION
From the above report it is clearly scripted that Cuadrilla is an organization who is
working in the extraction of oil and natural gases. Further, this report showcase the PESTLE
analysis which speaks about the factors which organization have to consider before conducting
the extraction process. Moreover, this is also evident of Porter's five forces model which shows
that the organization functioning is different from other firms who are working in the same
industry and due to this they get an competitive edge over them. At the end, Ansoff matrix is
conducted to visualize the growth which organization can have in near future. This report also
contains the area where Cuadrilla can expand their process for increasing their revenue and
profits.
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REFERENCES
Journals and Books
Boersma, T. and Johnson, C., 2012. The shale gas revolution: US and EU policy and research
agendas. Review of Policy Research, 29(4). pp.570-576.
Cotton, M., Rattle, I. and Van Alstine, J., 2014. Shale gas policy in the United Kingdom: An
argumentative discourse analysis. Energy Policy, 73, pp.427-438.
Gu, B. and Nazmy, H., 2014. Britain’s Shale Gas Zeal and Riches. Journal of European
Management & Public Affairs Studies, 1(2). pp.5-10.
Jones, P., Comfort, D. and Hillier, D., 2014. Fracking for shale gas in the UK: property and
investment issues. Journal of Property Investment & Finance,32(5). pp.505-517.
Jones, P., Hillier, D. and Comfort, D., 2013. Fracking and public relations: rehearsing the
arguments and making the case. Journal of Public Affairs,13(4). pp.384-390.
Jones, P., Hillier, D. and Comfort, D., 2014. Fracking in the UK: planning and property issues.
Property Management, 32(4). pp.352-361.
Jones, P., Hillier, D. and Comfort, D., 2015. The contested future of fracking for shale gas in the
UK: risk, reputation and regulation. World Review of Entrepreneurship, Management and
Sustainable Development, 11(4). pp.377-390.
Matthew, C., 2015. Stakeholder perspectives on shale gas fracking: A Q-method study of
environmental discourses. Environment and Planning A,47(9). pp.1944-1962.
Metze, T., 2014. Fracking the debate: Frame shifts and boundary work in Dutch decision making
on shale gas. Journal of Environmental Policy & Planning, pp.1-18.
Ochieng, E.G. and et.al., 2015. Fresh driver for economic growth: fracking the UK nation.
International Journal of Energy Sector Management, 9(3). pp.412-431.
Reap, E., 2015. The risk of hydraulic fracturing on public health in the UK and the UK’s
fracking legislation. Environmental Sciences Europe, 27(1). pp.1-7.
Short, D. and et.al., 2015. Extreme energy,‘fracking’and human rights: a new field for human
rights impact assessments?. The International Journal of Human Rights, 19(6). pp.697-
736.
Steger, T. and Milicevic, M., 2014. One global movement, many local voices: Discourse (s) of
the global antifracking movement. Advances in Sustainability and Environmental Justice,
15, pp.1-35.
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Upham, P. and et.al., 2015. Addressing social representations in socio-technical transitions with
the case of shale gas.Environmental Innovation and Societal Transitions, 16, pp.120-141.
Online
Ansoff's Matrix. 2015. [Online]. Available through:
<http://www.tutor2u.net/business/reference/ansoffs-matrix>. [Accessed on 5th March
2016].
HYDRAULIC FRACTURING. 2016. [Online]. Available through:
<http://www.dangersoffracking.com/>. [Accessed on 5th March 2016].
Pros and Cons of Fracking: 5 Key Issues. 2016. [Online]. Available through:
<http://www.yaleclimateconnections.org/2015/05/pros-and-cons-of-fracking-5-key-
issues/>. [Accessed on 5th March 2016].
What is PESTLE Analysis?. 2016. [Online]. Available through: <http://www.focus-on-
training.co.uk/business-analysis-resources/what-is-pestle-analysis/>. [Accessed on 5th
March 2016].
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