An Analysis of the Joint Venture Between Petrochina and Ineos : Is It a Competitive Strategy Initiative by Petrochina?
4960 WordsJul 26, 201220 Pages
Petrochina, one of the largest companies in the world, has
established a joint venture with Ineos refining in 2011, with strategic motives to attain competitive advantage and core competence. From the context of corporate strategy and joint ventures, a joint venture is the best way to share and utilize the complementary assets from another company with low risk compared to any other process such as acquisitions. Using the resource based theories such as PESTEL and VRIN , the paper has derived that Ineos will contribute to build a core competence and competitive advantage through its distinctive capabilities. The several issues faced by the firm such as low market demand for oil products, threat of take over and complexities…show more content…
Also they have already
laid the initial foundations in the Asian market after acquiring stakes in the Osaka refinery in Japan, Singapore Petroleum Co in Singapore and the energy company's agreement to form a new trading and refining joint venture (JV) in Europe with Ineos Group Holdings Plc of the UK. This will help the Chinese company to gain a foothold in the European market (Yan.Z, 2011). Ineos is an international player in the field of manufacturing petrochemicals, specialty chemicals and oil products. Its production network spans 60 manufacturing facilities in 13 countries throughout the world (Ineos, 2012).
JOINT VENTURES IN THE CONTEXT OF OIL INDUSTRY
JVs aﬀord unique opportunities to study howﬁrms assert property rights over jointly
used assets because parents clearly delineate control (Hege.U, 2009). JVs are more on contractual basis or take the form of an agreement which helps the parties involved to access each other's assets and expertise to achieve or exploit synergies. These are also called equity alliances. During 2010 and 2011, the number of mergers and acquisitions in the oil and gas industry was very high. Total transactions in the world during 2010 hit the highest with a value of $226 billion. The main reasons for JV's to be considered in this industry are capital intensive, high risk, access to technology, access to resources, supply chain optimization, market positioning and portfolio