Sustainable Strategy - from Planning to Implementation M002LON
Afren plc’s Management Report
Itipat Therdchitpaisarn 6157391
Dr. Jonathan Groucutt
Words Count : 1285/1769
Submission Date: 23 MAy 2015
Executive summary The purpose of this report is to identify the key factors that affect in
Afren plc in the term of macro and micro environment, and to evaluate company position and strategic direction to make a recommendation to the company. By using PESTEL framework and Porter’s five force to analyze company external factors and SWOT analysis, VRIO framework and TOWS for internal factors that base on The company’s annual reports in years 2013 and 2014.
Contents
Introduction 1
EXTELNAL ANALYSIS 2
PESTEL Analysis 2
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Threat of Substitute (LOW)
Substitute products in the Porter’s model are referred to products from others industry. In this case, substitute products are the renewable energy sources such as nuclear power, solar power, coal, and wind power, which have high production cost and sunk cost. Therefore, the threat of substitute to Afren is still low.
Bargaining Power of Buyers ( HIGH )
As the growth in the shale, oil market is continuously increased the input of oil supplies in the market by 11 per cent, which make an oil price fall cause of overwhelming supply (Meyer,2013).As a result of this, the buyer has more choice to seek a supplier , which has a lower prices and better contract condition. Thus, these forces become a high threat to Afren.
Bargaining Power of Supplier (LOW)
The main supplier of Afren referred to the oil-rich country in Africa such as Nigeria, which is the main business unit of Afren (Afren plc.,2014). As Nigeria is supportive for foreign investment (Rice, 2014).
Rivalry Among the Existing Competitors (HIGH)
The international energy agency (IEA) report that global upstream expenditure and development in oil and gas industry has a strong growth by averaging 11 percent per year in 2000 – 2012 and
the case of a warning. It can be vital to make a person’s quality of life
In 2016, the crude oil price movement prices were unpredictable. The OPEC reference basket dropped 10 percent to $43.22 per pound. The ICE Brent and NYMEX WTI both went down by 8.4 percent with ICE Brent at $47.08 per pound and NYMEX WTI at $45.76 per pound. This showed that there were uncertainties in the petroleum market. The future prices were predicted for 2017 that it would move higher. The World’s economic growth predictions was the same at 2.9% for 2016 but increased to 3.1% for 2017. Because of the 3rd quarter of 2016 in Japan and US, the OCED growth went from 1.6% to 1.7%. The demand for oil growth in 2016 has been increasing slightly to 1.24 mb/d. In 2017, the demand will be predicted with a decrease to 1.15 mb/d. OECD will
Example of a well structured essay. The content isn’t that exiting and the conclusion is quite weak, but there are many good points to make on the way the essay is structured and the way the information is put across. All my comments are highlighted thus.
The United States consumes more than 25% of the world’s petroleum products which is a large percentage, considering only 3% of the world’s oil reserves are produced by the United States. Given the demand for petroleum products such as gasoline, understanding why Crude oil prices have skyrocketed in recent years, is not hard. According to the article “Ending America’s Oil Addiction,” the surge in crude oil prices can be reduced in large part to the simple concepts of supply and demand. (Cooper, 2008)
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| Argentina can produce one ton of meat (beef) using 0.1 years of labor. It can also produce one automobile using two years of labor. In order to produce one ton of beef, the United States uses 0.2 years of labor. It can produce an automobile using 1.5 years of labor. Argentina has
Some emergent countries have put a lot of effort to find new reservoir or find the best way to recover oil from deep seas such as The pre-salt in Brazil. America has high projections for the future with fracking. However, lower prices would put at risk investments in unconventional sources. For example, tar sands, shale oil, deep sea and fracking. Our forecast is that the crude oil price tend to slowly rise until the market balance it self to avoid oversupply especially because of the weakening in the global oil
The currently world, based in a capitalistic system, has a huge concern of in the economy growth. With the increase of the economy, a government can bring several benefits to the society. This big bother to the development made the oil and gas industry one of the largest
The U.S. was supposed to be the world’s new swing oil producer, able to nimbly open and close the taps in response to market forces, thanks to its bounty of shale fields.” In the past a barrel of oil has been one hundred dollars, recently it has dropped to thirty dollars. Though some wells can be profitable at low prices it puts a serious strain on the oil industry as explained in this article.
From 2014, the crude oil price has dropped in a sudden since the global economic downturn, oversupply of crude oil and the appearance of new energy. Global economy fatigued, and thus the demand of crude oil was not strong,
Since June 2014, oil price has fallen by more than 70 percent. Price has recovered few times last year. However, it has sunk this year to levels not seen since 2003 (New York Times, 2016). This drop of price has affected several firms in the industry which we can mention Chesapeake (CHK). In fact, Chesapeake was quoted at more than $20 until late 2014. Today, it is priced below $5. The oil industry is known for its history of booms and busts. It is not the first time that this industry is shaken. In the 1985-86, supply-driven mainly caused the fall of prices. In 2008-2009, price fallen was entirely due to the collapse in demand. However, this reason behind this recent crisis is a little bit special: “price decline appears
According to current estimates, more than 80% of the world's proven oil reserves are located in OPEC Member Countries, with the bulk of OPEC oil reserves in the Middle East, amounting to around 66% of the OPEC total (OPEC Share of World Crude Oil Reserves, 2014). Competition amongst the U.S. and the Middle East has never reached this level before. There is a constant tension between the two countries and refuse to collaborate in dividing the market share equally. Furthermore, as both nations refuse any bipartisan agreement, there is no limiting the production of oil. Each nation is looking to drive out competition by any means. What they don’t realize is if they cooperated and reached an agreement amongst the international community, oil will remain profitable just as it was a few years ago. Though, this is unlikely to happen any time soon, but will eventually cause Saudi Arabia and other Middle Eastern countries to take a drastic decision when their main source of capital plummets due to the current price of oil. Profits are no longer seen in the oil industry. The Price of oil has been selling at around $50-$60 per barrel, not enough to cover production cost. The United States is able to withstand any contraction within the oil sector, as their financial portfolio is diversified, not solely reliant on the price of
Oil prices hike or drop is normally a major concern to researchers, industries as well as the government. Oil majorly affects the operations of all sectors of economy in any nation. From analysis and monitoring of oil prices, it has been observed that oil prices went down from the second half of 2014. This was unexpected because oil prices had stabilized for about four years with each barrel costing 105 US Dollars (Miller 11). According to a research and simulation done by researchers in 2014, there was a prediction speculating oil prices would remain low in 2015 and marginally rise in 2016. However, in 2015 there has been a very sharp decline of oil prices. It is out of this concern that this papers the aims at addressing the following questions.
Recent discoveries of oil and gas deposits in some African countries, such as Ghana, Ethiopia, Sierra Leone, Uganda etc. present new opportunities to chart a sustainable growth and development path that facilitates poverty reduction.