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Indian Oil

Extracts from this document...

Introduction

ECONOMICES IV INDIAN OIL CORPORATION LIMITED TOPIC: "USING THE MICRO-MACRO ANALYSIS MODELS DEVELOPED IN THIS UNIT, CONDUCTING THE ENVIRONMENATAL ANALYSIS OF BUSINESS AND SUGGESTING THE COMPETITIVE STRATEGY TO COVER THE NEXT FOUR YEARS" BY SARABPREET SINGH STUDENT ID: 10015393 Executive Summary Indian Oil Corporation Limited (IndianOil) is the largest producer of oil and natural gas in India. IndianOil was formed in1964 through the merger of the Indian Oil Company and Indian Refiners Ltd. IndianOil is highest ranked company in the Fortune 'Global 500'and 21st largest petroleum company in the world . IndianOil is widening the horizons with international investments like Indian Oil (Mauritius) Ltd and subsidiary, Lanka IOC ltd. The economic environment for the company is favourable for the IndianOil. This project is the micro and macro analysis of the company's economic structure .The company has the oligopoly structure as the products are almost homogeneous and entry of the new competitor is limited. Macro-economic factors are affecting the business including the international market for the crude oil and policies of the Organization of Petroleum Exporting Countries (OPEC). TABLE OF CONTENTS Abstract........................................................................................2 Introduction...................................................................................4 Preliminary Business Analysis....................................... ..................4 Dimensions of the market..................................................................6 Cost Analysis..................................................................................7 Micro-economic Analysis...................................................................8 Competitors...........................................................................9 Closeness of Substitutes............................................................9 Barriers to Entry...................................................................10 Buyers................................................................................11 Suppliers.............................................................................1 Macroeconomic Analysis..................................................................13 Structural Risk.....................................................................13 Exchange Risk.....................................................................13 Policy Risk...........................................................................14 Cyclical Risk........................................................................15 Driving Force Analysis....................................................................16 Competitive Strategy..................................... ... ...............................17 References...................................................................................19 SPL Logs....................................................................................23 Introduction This project is analysing the company's performance under affects of economic as well as non economics factors .Under micro-economics analysis, how company is creating the value of its products and services in the market. The new substitute of the oil and gas like bio-gas, solar energy and electricity to replace the conventional products (Wikipedia, 2007).The closeness of the products are tightening and forcing the company to deliver better products .the limited entry is also affected with the government policy for foreign direct investment. Macro-economic analysing the different type of the risks in the business .the international trade polices and prices of the crude prices are discussed for the future growth of the company. ...read more.

Middle

The general environmental concern is the increases in the atmospheric temperature which due to burning of the fossil fuels which is really great contributor of the green house warming. Research and development centre has found bio-diesel extracted from certain tree spices which are common in many areas of the India, such as Jatropha, Karanja and Mahua. Another alternate is the mixture of sugarcane ethanol with diesel. (Peak theory is the shift to alternatives due increased of prices leads to shortage in supply).India and other large consumers are looking petroleum alternate as ethanol, hydrogen inter-combustion, natural gas, auto gas synthetic fuels and hybrid electric vehicles .natural gas has alternate such as kerosene ,solar energy ,wind energy and bio-gas which is limited to regional and agricultural areas . IndianOil has developed bio-fuels from rice bran, sunflower, palm and Jatropha and distributed the technology to benefit the community. Company is the first to experiment the Hydrogen-CNG. IndianOil is collaborating with KOSAS, Korea and NEDO, Japan to use CNG to reduce transport emission as the company is preparing itself to come with supply chain of alternate fuel by 2008.Rearsch and development centre is experimenting on gas-to-liquid/residue/biomass gasification (IndianOil, 2007). The company understand the proposed danger of loosing market due to substitute as IndianOil has proactive approach towards developing alternatives of the petroleum and gas. (www.fueleconomy.gov, 2007) Potential New Entrants The new company will tighten the market which will provide better services for the customers. The new entrant has numbers of barriers to enter such as huge investment, technological expertise, market share captured by the existing player, licence and tariff and very significant is the consumer perception about new product .apart from large initial investment, and new entrant must have patience and continuous improvement and compiling with quality standard .According to Shri Ram Naik (2) ,new entrant must have 11% of their outlet in the remote and rural areas which will be not be lucrative area for the companies to target. ...read more.

Conclusion

Domestic exploration technology is very important to substitute the import of the oil .the driving force in any industry is the competition which forces companies to improve their products and services and market their products. Governmental interference in the regulation of the industry plays very significant role as the policies and tax system o f the company affect the IndianOil. Product substitute is also forcing company to expand its horizons in both technological way and promotion methods. (http://www.tribuneindia.com/2005/20050118/edit.htm Competitive strategy IndianOil is very large retailing, E&P (exploration and production) industry leader. The cost efficiency is the best competitive strategy as the in the large production is done on the lower cost. In the oligopoly structure of the market for the IndianOil, the company has homogenous products in the market .the companies can capture the market by the creating the difference in the product by promotions and providing the value added services .value added services include extra care for the customers, providing services in the less explore areas Indian oil has drawn up comprehensive plan to tackle emerging competition in oil and gas retailing sector, by unveiling the new brand of 'Swagat' petrol pumps on high ways .the exploration of the rural market where company can expand .the company has adopted the two methods of the promotion to optimised the marketing strategy which are Thematic and Schematic .the promotion of the brands through print and television advertisements whereas ,Schematic approach involves dealer incentives and other sales promotion such as customer incentives and local communication. the problem in this the unorganized process in this strategy but if the company has targeted market .IndianOil has expensed Rs 89.98 crore in 2006-2007 as compared to 139.18 crore 2005-2006 as the PMO (Prime Minister Office) directed to cut unnecessary the advertising .the down stream companies has to follow the governmental polices while fixing the prices .the downstream companies has started to extend the refining capacities of the company .the company is extending the business to international market .overall, IndianOil is performing role of the public sector unit ,which is moving the whole industry upwards (Hiroyuki Ishida ,2007) (http://eneken.ieej.or.jp/en/data/pdf/388. ...read more.

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