Bucks University: Global Business Environment Report - Oil Industry

This report provides an overview of the global business environment specifically focusing on the oil industry, as requested in the BM461 coursework. The report begins with an introduction to the oil industry and highlights the use of SWOT and PESTLE analyses. The main body delves into the background of the oil industry, identifying major players like Royal Dutch Shell and Chevron, and analyzing both micro and macro factors influencing the industry's performance. Micro factors, including competitors and customers, are examined for both companies, with positive and negative impacts discussed. Macro factors, such as political, economic, social, and technological influences, are assessed, including the rise of electric vehicles. The report concludes by summarizing the challenges and opportunities facing the oil industry, particularly in light of the growing electric vehicle market. The report includes a comprehensive list of references.

Global Business
Environment
(Report on Oil Industry)

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................2
REFERENCES................................................................................................................................3
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INTRODUCTION
SWOT is used by companies for analysing their internal business environment as it help
then in overcoming their weaknesses like high employee turnover. PESTLE analysis plays
crucial role in making important decisions, for example in which country company should open
new plant. Wrong decisions can result in major financial loss to the firm (Inoni, Salami and
Olannye, 2019).
MAIN BODY
Background of Oil industry
Oil industry perform activity of exploring, extracting, refining and marketing of oil
products. Royal Dutch shell, ExxonMobil and Chevron are few major players of this industry.
They sell gasoline, LNG (Liquefied natural gas), Jet fuel and Diesel. This sector was facing
going through difficult time before 2017 but last 2 years were decent for the Oil companies.
Enterprises enhanced their capital expenditure by around 7%. The demand and supply of
products also get more balanced as OPEC decided to cut their production. Recently, a new war is
expected to start as Russia and Saudi Arab may hurt whole industry by increasing their Oil
production.
Micro factor analysis
Competitors and Customers are the two factors that are considered for Micro factor
analysis of Royal Dutch Shell and Chevron.
Factor Royal Dutch Shell Chevron
Customers Different nations and corporates
are main customers of this
organisation.
Chevron provide raw material to
different industry and they are
companies key customers
Competitors Shell company in named among
top 5 Petroleum firms. Aramco and
Sinopec Group is their main rivals.
Chevron does not compete with
top organisation and domestic
rivals like Valero Energy and
Exxon Mobil are their main
competitors.
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Positive impact: Royal Dutch Shell and Chevron have loyal customers and they help
them in providing, much needed, stability. Competitors force organisation to innovate new
products and services, it indirectly improves firm's sales by keeping them relevant in market
(Bartlett and et.al., 2017).
Negative impact: More competitors provide more bargaining power to customers and it
reduces profit margin on both organisations.
MACRO factors Analysis
Political – Price war between different hurts industry growth. Increasing demand from
Asian countries is positive signal for Oil industry.
Economical – Global economic slowdown is decreasing profits of major players.
Increasing demand of oil and gas in emerging countries is improving total revenue of Petroleum
industry.
Social – Emerging trend of Electric vehicle is reducing demand of petrol and diesel. The
idea of pollution free environment is decreasing overall growth of whole sector. Many
developing and underdeveloped countries are now buying more petrol and diesel as they cannot
afford development of electric vehicle ecosystem (Gleim, Smith and Cronin, 2019). They are
providing growth of overall industry.
Technological – Innovative production technology is reducing cost of production and
improving profit margin. Latest technology requires huge capital investment i.e. putting extra
burden of cost on Oil industry companies.
CONCLUSION
At the end, it can be concluded that Oil industry is going to face some serious challenges
in upcoming time as more countries are now promoting production and use of Electric vehicles.
Oil companies has to get out of the price war if they want decent growth in upcoming time.
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REFERENCES
Books and Journals
Bartlett, G.D. and et.al., 2017. Factors influencing recruitment of non-accounting business
professionals into internal auditing. Behavioral Research in Accounting. 29(1). pp.119-
130.
Gleim, M.R., Smith, J.S. and Cronin Jr, J.J., 2019. Extending the institutional environment: the
impact of internal and external factors on the green behaviors of an individual. Journal of
Strategic Marketing. 27(6). pp.505-520.
Inoni, O.R., Salami, C.G.E. and Olannye, A.P., 2019. Effects of Internal and External Factors on
Organizational Buying Behaviour: A Review of Extant Literature. Izvestiya. (3). pp.216-
237.
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