1st December 2011 Munsura Rahmatullah Lecturer Course Instructor, Global Trade Faculty of Business Administration, American International University- Bangladesh Subject: Submission of the report for Global Trade. Dear Madam, In accordance to your advice to our group for preparing an Industry analysis of a country. In preparing this report, we have followed your guidelines to spread up our focus on the entire requirement. As per your direction, we have added a lot of information regarding the macro environmental factors, country swot analysis, competition analysis etc. From this report we have achieved a lot of knowledge industry analysis and we think our selves that it will help us a lot in our future career. We sincerely hope this report will fulfill the requirements suggested by you under the course of global trade. We truly appreciated this report. We hope it will be accepted to you. Sincerely yours, NAME RAHMAN MD MOSTAFIZOR IMTIAZ, MD ASFAQ SUMIT MAHAMUD ZAMAN MOHON FAKHRUL ISLAM ID 09-14084-2 09-13938-2 08-11853-2 08-12101-3
Executive summery
First of all we made a country profile to know about the country. then we discuss the macro environmental factors of country such as political, legal,tecghnological,social,and environmental analysis. these factors can affect the country industry. we also discuss regional economic integration for uk in oil industry. we have also discuss the country SWOT analysis in term of their economic condition. With GDP expected to grow at near 7% in the long-term, the energy sector would benefit from the same, going forward that means strength. Rules regulation and restriction regarding trade is also discussed in our report. And at last we have an analysis of our nearest competitors with graph and relative data. Each country has some lacking in their respective industry; similarly UK has also some lacking. So we gave some recommendations and we believe if UK follows these recommendations they can recover their lacking. We tried to make our writing easy and rich by information.
Table of Contents
Introduction Body of the report: Country profile Macro-environmental Factors Goods that are traded in between Regional Economic Integration Country SWOT analysis in terms of their economic condition Trade Rules and Regulations and Restrictions International HRM Policies Competition Analysis (within industries) Conclusion Recommendation Reference and Bibliography Appendix 5-7 8-10 11-14 15 15-18 19 19-21 21-23 24 24 25 26-27 Page no. 4
INTRODUCTION:
United Kingdom was the world's first industrialized country. Its economy remains one of the largest, but it has for many years been based on service industries rather than on manufacturing. It has the sixth-largest economy in the world, has the secondlargest economy in the European Union, and is a major international trading power. A highly developed, diversified, market-based economy with extensive social welfare services provides most residents with a high standard of living. Major industries are heavy engineering and metal manufacturing, textiles, motor vehicles and aircraft, oil, construction etc. The United Kingdom is one of the United States' closest allies, and British foreign policy emphasizes close coordination with the United States. Bilateral cooperation reflects the common language, ideals, and democratic practices of the two nations. The United Kingdom is the fifth-largest market for U.S. goods exports after Canada, Mexico, China, and Japan, and the sixth-largest supplier of U.S. imports after China, Canada, Mexico, Japan, and Germany. U.S. exports of goods and services to the United Kingdom in 2010 totaled $48.5 billion, while U.S. imports from the U.K. totaled $49.8 billion.
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People
Nationality: Noun--Briton(s). Adjective--British. Population (July 2011 est.): 62,698,362. Annual population growth rate (2011 est.): 0.557%. Major ethnic groups (2001 census): White 92.1% (of which English 83.6%, Scottish 8.6%, Welsh 4.9%, Northern Irish 2.9%), black 2%, Indian 1.8%, Pakistani 1.3%, mixed 1.2%, other 1.6%. Major religions (2001 census): Christian (Anglican, Roman Catholic, Presbyterian, Methodist) 71.6%, Muslim 2.7%, Hindu 1%, other 1.6%, unspecified or none 23.1%. Major languages: English, Welsh, Irish Gaelic, Scottish Gaelic. Education: Years compulsory--12. Attendance--nearly 100%. Literacy--99%. Health: Infant mortality rate--4.62 deaths/1,000 live births. Life expectancy (2011 5
EST.)--males 77.95 years; females 82.25 years; total 80.05 years. Work force (2009, 31.25 million): Services 80.4%; industry 18.2%; agriculture 1.4%.
Government
Type: Constitutional monarchy. Constitution: Unwritten; partly statutes, partly common law and practice. Branches: Executive--monarch (head of state), prime minister (head of government), cabinet. Legislative--bicameral Parliament: House of Commons, House of Lords; Scottish Parliament, Welsh Assembly, and Northern Ireland Assembly. Judicial-magistrates' courts, county courts, high courts, appellate courts, House of Lords, Supreme Court. Subdivisions: Scotland, Wales, Northern Ireland (municipalities, counties, and parliamentary constituencies). Political parties: Conservative, Labour, Liberal Democrats, UK Independence Party, British National Party, Green Party. Also, in Scotland, Scottish National Party; in Wales, Plaid Cymru (Party of Wales); in Northern Ireland, Ulster Unionist Party, Social Democratic and Labour Party, Democratic Unionist Party, Sinn Fein, Alliance Party, Progressive Unionist Party. Suffrage: British subjects and citizens of other Commonwealth countries and the Irish Republic resident in the U.K., at 18.
Economy
GDP (at current market prices; International Monetary Fund (IMF), 2010): $2.247 trillion. Annual growth rate (IMF, 2010): +1.25%. Per capita GDP (at current market prices; IMF, 2010): $36,120. Natural resources: Coal, oil, natural gas, tin, limestone, iron ore, salt, clay, chalk, gypsum, lead, silica. Agriculture (0.8% of GDP; U.K. Office for National Statistics (ONS), 2009): Products-cereals, oilseed, potatoes, vegetables, cattle, sheep, poultry, fish. Industry (15.9% of GDP; ONS, 2009): Types--steel, heavy engineering and metal 6
manufacturing, textiles, motor vehicles and aircraft, construction (23.8% of GDP), electronics, chemicals. Services (83.3% of GDP; ONS, 2009): Types--financial, business, distribution, transport, communication, hospitality. Trade (at current prices, 2010 exchange rates; ONS, 2010): Exports of goods and services--$664.3 billion. Major goods exports--manufactured goods, fuels, chemicals, food, beverages, tobacco. Major export markets--U.S., European Union. Imports of goods and services--$740.8 billion. Major goods imports--manufactured goods, machinery, fuels, foodstuffs. Major import suppliers--U.S., European Union, and China.
Political:
European union policy Free trade agreement (FTA) North American free trade agreement(NAFTA) Support from the government
Economic:
Globalization Outsourcing Global financial crisis, and Increased competition
Social:
rate, society attitude, Growing knowledge population growth
Technological:
Communication Internet E-commerce Access to technology Licensing ,patent & intellectual property issues
Cultural issues.
Legal:
International and national
Environmental:
International and national
Environmental Regulation Implementation of ISO 14001
POLITICAL:
UK political factors focuses on different action by local and national political parties together with the international bodies such as world trade organization,European union.Eu focuses on thre external policy by protecting oil market and improving the access to the third countries on the import system.Fta is another factor to be consider because it enable uk to have free trade and fair access to the market.FTA is rulling different countries , UK having different problem with Russia and germany which include anti import export bias,unfair regulation and certification , unfair tax and tarrif structure and manipulation of currency.
ECONOMICAL:
Economical factors that might affect a business can be world economy or national economy of the environment where the business is running.Some experts believe that this incident could be the trigger of the UK economic collapse.Economy is supported fundamentally by its energy industry markets producers .Energy industry markets will face to increasing demand s about 60 percent, with the higher rate in fossil fuels,petrol nuclear and replacement energy industry markets having restricted comparative contribution . Discovering new substitute energy is growing and is replacing a percentage of total energy production. From 2 percent in 2002 towards 6 percent in 2030.
SOCIAL:
Social factor may include the population growth rate, society attitude, average society age and cultural issues. After any big disaster, and due to huge political and legal pressure by the UK Government and local authorities, oil company BP set up its $20bn Gulf spill claims fund to Compensate those who have been affected, without court intervention, however, many lawyers and Judges in the UK, have rolled out that this fund is not acting neutral. This not Only did not recover the bad image of BP, but I believe it made oil industry image worse.The amount of environmental damages 9
destroyed BPs brand image, thus maybe the consumers Avoid bp products in the Uk market. During this decades refer to the statistic shows People's Consuming patterns completely are changed especially in the oil industry market which is notable to a concern over the sustainability of the future.
TECGHNOLOGICAL:
Technology is another environmental and external force that affects a business. In case of UK, as we can see on many sources of information, such as websites and newspapers, we can find out uk has the advantage of having advanced technology in deep water exploration of the oil; they are concentrating on energy efficiency,investing in low carbon future and production of more efficient energies.
LEGAL:
Legal factors are those legislations that affect a business, such as employment law, antitrust law and etc.The uk oil spill, we can observe the new legislations, forced uk to be more accountable for Health and safety rules and paying compensation to those who have been affected. Another applicable rule that has affected UK is the so called oil pollution act.
ENVIRONMENTAL:
Environment is very important and environmental activists are playing more important roles in the Country. Sometimes the environmental activist can put pressure to the government and make new Legislations. The oil spill disaster on the UK has caused many environmental activists to oppose exploration of oil under the sea, which might seriously affect some legislation as its consequences. New laws UK government, EU Pollution standards, International Environment Organizations, Change in consumer patterns, consumer behavior, global demands to
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alternative energy and discovering new energy sources could be considered as macro environmental forces on UK oil market.
BP's Refining and Marketing division is responsible for the supply and trading, refining, marketing and transportation of oil, gas and petroleum products.
Air BP
A self-service Air BP fuelling station at the Kalamazoo/Battle Creek International Airport. Air BP is the aviation division of BP, providing aviation fuel, lubricants & services. It has operations in over 50 countries worldwide.
BP Shipping
BP Shipping provides the logistics to move BP's oil and gas cargoes to market, as well as marine structural assurance [63] on everything that floats in the BP group. It manages a large fleet of vessels most of which are held on long-term operating leases. BP Shipping's chartering teams based in London, Singapore, and Chicago also charter third party vessels on both time charter and voyage charter basis. The BP-managed fleet consists of Very Large Crude Carriers (VLCCs), one North Sea shuttle tanker, medium size crude and product carriers, liquefied natural gas (LNG) carriers, liquefied petroleum gas (LPG) carriers, and coasters. All of these ships are double-hulled.[64]
Castrol
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Castrol is a brand of industrial and automotive lubricants which is applied to a large range of BP oils, greases and similar products for most lubrication applications.
Aral
An Aral service station in england In Germany and Luxembourg, BP operates its petrol retail chain under the name Aral after acquiring the majority of Vebal AG in 2001 and rebranding almost all of its BP filling stations to Aral.
ARCO
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Main article: ARCO ARCO is BP's retail brand on the US West Coast in the seven Western states of California, Oregon, Washington, Nevada, Idaho, Arizona, and Utah. BP acquired ARCO (formerly the Atlantic Richfield Company) in 2000. ARCO is a popular "cash only" retailer, selling products refined from Alaska North Slope crude at the Cherry Point Refinery in Washington, a plant in Los Angeles, and at other contract locations on the West Coast.
BP Connect
BP Connect is BP's flagship retail brand name with BP Connect Service stations being operated around the UK, Europe, USA, Australia, New Zealand and other parts of the world. BP Connect sites feature the Wild Bean Cafe, which offers cafe-style coffee made by the staff and a selection of hot food as well as freshly baked muffins and sandwiches. The food offered in Wild Bean Cafe varies from each site. BP Connect sites usually offer table and chair seating and often an Internet kiosk. In the US, the BP Connect concept is gradually being transitioned to the ampm brand and concept. Some BP Connect sites around the UK ran in partnership with Marks & Spencer with the onsite shop being an M&S Simply Food instead of a BP Shop. The resource potential of these projects will provide a secure source of oil supply to consumers in North America. We recognize that oil sands projects raise environmental challenges and we are actively seeking ways to undertake these projects in a way that minimizes the environmental footprint. United kingdoms crude oil exports to China surged 20.2 percent in October from a year earlier to 1.08 million tones, equivalent to around 302,000 barrels per day (bpd), latest official data by the Chinese government shows. United kingdom provided 2.1 percent of China's total crude oil imports, compared with 5.1 percent in the same month of last year, according to the General Administration of Customs. 14
A joint venture with Husky Energy to develop the Sunrise oil sands lease in the northeastern Athabasca region of Alberta. A joint venture with Devon Energy to develop the Pike oil sands lease in the southern Alberta region of the Athabasca oil sands deposit. A partnership with Value Creation Inc. to develop the Terre de Grace oil sands lease in the northwestern Athabasca Region of Alberta.
A SWOT starts with an external analysis of the business environment and then looks at the organization's internal strengths and weaknesses, relative to internal factors such as prior performance and also to external factors. The final stage is to combine the analyses to look at opportunities and threats facing the organization and to draw up plans to take advantage of the opportunities and to counter the threats.
Strengths: Developing economy: Historically, demand for petroleum products has traced the economic growth of the country. With GDP expected to grow at near 7% in the longterm, the energy sector would benefit from the same, going forward. To put things in perspective, diesel sales grew by nearly 12% (which constitutes 40% of the entire petro-products basket), petrol sales by 9% and a double-digit growth in LPG (liquefied petroleum gas) in 1QFY05. While this rate is not likely to sustain, we expect the industry to witness a 4% growth in the entire product basket in FY05 and beyond.
Consumption growth (MMT) Diesel (%) change Petrol (%) change LPG (%) change 7 6.6 FY01 FY02 FY03 FY04 38 36.5 36.6 37.3 -3.9% 0.3% 1.9% 7 6.1% 7.7 7.6 7.9
Government decisions: The recent price increases and also the decision to allow oil companies to increase prices within a band of 10% augurs well for the industry. This step is likely to reduce government interference and provide some autonomy to oil companies when it comes to increasing petrol and diesel prices in order to protect margins. Further, the duty cuts are also likely to result in reduced under-recoveries by way of subsidies on LPG and kerosene.
Customs duties Excise duty old (%) new (%) Petrol 26 23
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Diesel Kerosene
11 16
8 12
Excise duties Customs duty old (%) new (%) crude oil petrol diesel LPG Kerosene 10 20 20 10 10 10 15 15 5 5
Weakness:
Crude prices: Nearly 70% of UK crude requirements are fulfilled by imports and this figure is likely to increase going forward. Crude prices have breached the $45 barrier again and are likely to remain at around $40 per barrel range. As per IEA, uk is inefficient countrie among developing nations as far as energy usage is concerned. Such high crude prices are likely to impact margins of oil marketing companies. Given the political implications, retail prices may continue to lag the rise in input cost. Lack of freedom: Although the government has decided to provide autonomy to oil companies to increase petrol and diesel prices within a 10% band, other products such as LPG and kerosene continue to remain under the government controlled price mechanism. As per the current estimates, the subsidies on LPG amount to Rs 90 per cylinder after factoring in duty cuts and that on kerosene is over Rs 6 per litre. While the government has managed to reduce its share in subsidies, select oil companies are being forced to absorb the losses. Government: Hands-off
Year (Rs) Subsidies LPG/cylinder Kerosene/litre
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Opportunities:
Equity Oil: Major oil marketing companies are now venturing into upstream exploration and production activities so as to secure crude supply. To put things in perspective, BP and OIL India are likely to jointly bid for oil fields aboard. At the same time, ONGC's wholly owned subsidiary, ONGC Videsh (OVL) has acquired stakes in over 9 countries in its quest to attain the 20 MMT (million metric tonnes) by 2020. This backward integration is an opportunity for BP to secure at least 25% of its basic oil requirements for the refineries. Natural Gas: Natural gas has the potential to be the fuel of the future with demand outpacing supply by more than two times. Such high scarcity of natural gas provides a big opportunity for oil companies. The below mentioned table indicates the allocation to the various core sectors and the shortage faced by them, thereby giving an idea of the potential for growth.
Supply as a (%) age of allocation Supply Power 52.0%
Threats: Competition: Until FY04, oil-marketing companies had complete control over the downstream marketing business while private sector players were restricted to only refining.
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However, with entry of private players such as Reliance, Essar Oil and Shell (in the waiting), the sector is likely to witness increased competition going forward. The oil PSUs had hitherto developed a fortnightly pricing mechanism, which is likely to discontinue. The price of petrol and diesel is artificially kept high so as to cross-subsidize LPG and kerosene. Since private players will not be bound to provide for these subsidies, PSU marketing players are likely to suffer from lower throughput per outlet. Continuing government interference: During the first six months of the current fiscal year, the oil marketing companies were refrained from increasing product prices due to political reasons. This affected margins of downstream players. Going forward, if the government interference continues, oil-marketing companies will be at a disadvantage.
Regulations: Petroleum Act 1998 Petroleum Act (Commencement No. 1) Order 1999 Petroleum (Current Model Clauses) Order 1999 Gas Directive implementing regulations in force Environmental regulation / legislation
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International HR Policies
To run any organization internationally everyone need some international HR policies to make their staff effective and efficient. This effectiveness and efficiency ensure the ultimate productivity of the organization. It is also important in case of Uk oil industry. In oil industry there are two major operations 1. Raise Petroleum and 2. Refine it. A critical work to raise the Petroleum with minimum wastage and refine it skillfully. For this we need not only efficient staff but we also should know efficient use of them. After that they can figure out the ultimate productivity. Uk oil industry is a renown and popular oil industry all over the world and they always deeply concerned about their international HR policies. Below we discuss those in points: 1. Human Resource Planning Human Resource Planning is the group of techniques which enables the manager to plan the staffing for the organization. Organizations especially large ones, need to forecast their staffing needs. In oil industry managers must keep extra care. Human resource planning is aligned with the strategic objectives of the organization for it to be successful. 2. Job Analysis Job analysis is a complementary activity, where it refers to a group of techniques that are used to determine the content of jobs. And the knowledge, skill, and abilities which jobholders require when carried them out. In oil industry there are several kinds of jobs which need different skills for different operations. 3. Recruitment and Selection Once Job analysis is done the organization can proceed to recruit staff to fill the jobs. Recruitment and selection is a group of techniques used to recruit and select staff to carry out the jobs identified within the organization.
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4. Performance Management and Appraisal After the recruitment and selection the performance of the staff has been monitored by managers. To ensure the quality of the performance managers help the those employees who can not work properly and skillfully. It is so necessary for oil industry. 5. Career Development Career development refers to the individual development of the organization. Such as a oil factory there are different sectors for different actions. Manager can shift an employee from one sector to another. Through this the employee able to learn many things. Through this process he can develop his career. 6. Pay Management Pay management is how much and what way staff should be paid is a major part of Human resource policies. Pay decisions are based on employee performance. 7. Employee Relations To ensure the productive employee relations, HRM practitioners must deal with the management of the relationship between the organization and the staff as a whole. 8. Training and Development To increase the workers skill, manager use to arrange some training programs. These training programs teaches the workers how to work more appropriately, how to use new machines etc. In oil industry it became very helpful.
8.Competition Analysis
UK Oil and Petroleum Companies with refining Distribution and Exploration Facilities British Petroleum BP is one of the world's leading international oil and gas companies, providing its customers with fuel for transportation, energy for heat and light, retail services and 21
petrochemicals products for everyday items. Their Sales and other operating revenues $297,107 million (year 2010). The core British Petroleum Brands are Castrol, Arco, Aral, Ampm etc. In 2010, BP reported sales from operations of $66.26 billion, compared to $57.6 billion in 2009.
Chevron Texaco Chevron is one of the largest integrated energy companies in the world. Headquartered in San Ramon, California, and conducting business in approximately 180 countries, the company is engaged in every aspect of the oil and natural gas industry, including exploration and production; refining, marketing and transportation; chemicals manufacturing and sales; and power generation. Total Total is a leading multinational energy company with 95, 000 employees and operations in more than 130 countries. Total is the fourth largest publicly-traded integrated oil and gas company in the world. Campany Bp plc Exxon Mobil Corporation Cheron Corporation This charts shows us the big companies price, market share etc. These three organiztion always try to compete each other and all have strong position in the market. Symbol BP XOM CVX Price 43.55 80.44 102.82 Cahnge 6.22% 4.56% 5.58% Market Capture 137.60B 385.5B 204.76B P/E 6.03 9.71 7.62
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CONCLUTION:
UK is the 14th largest oil and gas producer in the world (10th largest gas producer and 19th largest oil producer). In EU terms, the UK is the largest producer of both oil and gas and, within Europe as a whole, is second only to Norway in each case.In conclusion we can say that UK oil industries play n important rule in their economy.they can earn currecy by exporting oil.There are many oil company in UK such as BP, Total etc .they follw their own competition strategy.
RECOMMENDATION:
In order to be successful in terms of international business, organizations must create a positive attitude in understanding international government and politics. The OIL industry of UK is quite developed due to large number of textile industries, increased number of vehicles in the country every month. They need highly skilled workforce to meet the ever growing needs of the industry.
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www.ukpia.co
www.ukooa.c
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www.peakoil.
APENDIX:
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S ales
bp mobil chebron total
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