Pestle analysis of the Wood Group

Pestle abstract of the forest conferenceThe forest separate was founded in 1912 by Wood and Davison which the keep bon ton utilise for ship accelerate and marine applied science firm to go the fishing fleet. In seventies oil drift reserves were discovered in the North sea and presented an ideal opportunity to convert marine engineering experience into engineering and support serve. During the late 1990s Wood Group Engineering (North Sea) became a market leader in the North Sea providing integrated engineering, craft operations and maintenance work to BP, Shell, Talisman, Amerada Hess, BG, Enterprise Oil and ChevronTexaco. The company now is a leading independent services provider for the oil accelerator and office generation markets. Currently the main focus of the company is on the environs by establishing the renew able-bodied push services collection and expanding their scope of operations within the complete(a) cleverness patience.Wood concourse also cognize as John woods mite instrument mathematical collection is an readiness services provider. The company is organised into to three divisions1. Engineering and harvestingion facilities2. Industrial gas turbines restoration and repair services for oil gas and function generation services.3. issue supportThe core strengths of wood group be facility operations maintenance, field service of pumps, wellheads and valves clients, procurement construction management, deepwater topsides, rotating equipments and power solutions, and renewable cogency.The wood group expires mainly in Europe and North America. It is headquartered in Aberdeen and employs near 29,000 worldwide and operating in 50 countries. In 2009 the wood group recorded revenues of $4,927.1 million, the operating income of $298.5 million and the net profit of $164.2 million.Wood Group vision is to be a leading international muscularity services provider. The company world(prenominal) reputations has been built upon decades by offering a patient of contrive of integrated services across the asset lifecycle and successfully managing the or so complex engagements for their clients. They consistently seek to provide services and harvests that are accepted as market-leading and attempt to exceed their nodes expectations and deliver superior returns. Wood group strategy is to achieve long-term sustainable arrestth by adding cherish to their customers operations with world-leading, full(prenominal)ly differentiated products and services. castPESTLE analysis describes the macro- environmental factors social occasiond in the environmental s targetning components of strategic management. It washbowl be consumption for reviewing a situation, at onceion of a company, a marketing proposition, or an idea. The analysis is a useful tool for taking advantage of the opportunities and reducing the threats. With issue crafty what external factors affect the organisation, it is severe to manage the transaction in an mellow-octane manner.Figure 1 Macro-Economic EnvironmentSummary of PESTLEPolitical field dexterity product markets founder been increasing because of the threat of geopolitics inst cleverness. cod to speed of light dioxide emission, government has set pressure on manufacturing to improve and get down much sustainable form of zipperThere are trading polices with certain countriesRestriction to import and merchandise to certain countriesRestriction doing business with certain countries.Fines for application that pollute the environment.Government taxes and price controlsEconomics substitute(a) high -quality might applied science increases the companys revenue as customers seek for little greenhouse gas emissionsCompanies reach producing certain products from developing countries due to its cheaper undertaking cost.Market is unstable as world economy is coming out of a world recedingGlobal economies are expected to senesce within few geezerhood and energy demand leave alone grow again.Social/ gardeningLately the nation has become more than use up rough the environment and their view has been more encouraging for renewable energy product.Life expectancy is relevant to the companys labour effectiveness. Company benefit in countries with higher life expectancy. health black marketplaces for oil and gas industry services are essential for long term success. proficientRenewable energy technologies contrive been increase to slenderise the fossil fuels. E.g. Technologies such(prenominal) as vagabond power, tidal wave, hydroelectricity etc, umpteen governments are providing tax advantages and opposite subsidies to make secondary energy roots more competitive against oil and gas.Lots of research and phylogenesis have taken place to promote further renewable energy. level-headedThe policy includes strong new safety standards for offshore drill including demonstrations of ability to respond to future blowouts .Heavy penalties for safety violations.Carbon taxes i.e. penalties polluting the environment at a certain level.Legislative measures are used in redact to perpetrate business into behaving in a more environmentally hold out mannerEnvironmentalDue to bear upon over the risk of global warming, a number of countries have adopted regulatory frameworks to castrate greenhouse gas emissionsHigh quality technology been research for purify substitute energy performanceIndustries been using program to identify ways to reduce snow bymanaging waste more cost-efficiently, using piloting carbon stones throw measurements and exploring authorisation solutions for saving energy.Description and detailed information of PESTLE are found in Appendix (A).5 forces analysis5 forces of model analysis is comm solitary(prenominal) used tool for competitive environment and its hypnoticness of a market.Figure 2- 5 forces of analysis (http//2.bp.blogspot.com/_GuvqAqJmGHc/THH1QwMnWaI/AAAAAAAAAlo/0-4r 9UfL67s/s1600/porters-five-forces2.jpg) breastworks to Entry (High)This force describes the level of entry of other companies to enter this type of industry. If the entry of the company is high the company would lose it profitability. Barrier to entry to these type of industry are high due to round admission fee to the suppliers and distributors ensuring widespread energy provision.High technology costDominated by major players spring up marketStrict government policy and environment regulation requirements to operate in oil and gas services industry.Large economies of scale call for to achieve cost leadership which is essential in energy provision.Large slap-up requirements to set-up operationsImportance of ethical brand identity because of temperament of market (loyalty as a barrier).Existing players have close customer relations .e.g. from a long-term service contacts.High proprietary discipline curve due to technological focus on alternative energy industry.Competitive Riva lry (medium)This force describes the intensity of competition between vivacious companies. Within the oil gas and energy services provider the competition rivalry between animate players are medium because ofHigh fail barriers.Not many major players in this type of industry.High enceinte costsCompanies with similar strategiesHigh industry growth as alternative energy is vital for the long term future of the industry.Various rivals in rationale for strategies to invest and enter industry.High switching cost nemesis of substitute (low) curse of substitute exists if there are alternative products with start out prices of better performance parameters for the same purpose. This would reduce the demand for a busy product and therefore would be a threat of consumers switching to alternatives. little terror of substitute is low because lack of alternative renewable energy and only large-scale industry can afford the renewable energy products.Threat of substitute would be high if a company provides the latest technology and specialised services.dicker power of buyers (low)Bargaining power of customers determines how much customers can impose pressure on margins and volumes. The buyers for energy service industry run for for excellent quality product but with lower prices and for a better contract term. Bargaining of power for these industries is low becauseThe brand loyalty is highAvailability of substitutes is lowBuyer incentives is high, in terms of tax breaks and energy provider buy-backsBuyers volume are lowLow bargaining force of buyersDepends service standardsLow elasticitySwitching to alternative product is difficultBargaining power of suppliers (high)Bargaining of supplier is the input involve in order to provide the goods. The bargaining power of suppliers is high becauseThe market is rule by few large suppliersThe switching cost are highThere is not much substitute for providing field service of pumps, wellheads, rotating equipments, power so lutions, renewable energy etc.The energy services are for the most part dominated by major companies. For these industries large amount of capital enthronement required importantly to reduces the number of companies and increase the power of existing players in the industry.The suppliers in UK are threatened by large companies able to source their product abroad at cheaper deals.Appendix (A) -PESTLEPoliticalThe oil and gas services industry has to follow a string of both tyke and federal government regulations when it comes to the production of energy resources. There are authority fines and sanctions that can be set by various governmental.Wood group operating in a globalized environment with industries around the globe (now operates in 46 countries globally in continents such as Australia, Europe, Middle vitamin E and the U.S.) its performance is highly influenced by the political and legislative conditions of these countries when it comes to production of energy resources.Th eir operations can adversely affect by political or regulation learnings which areAccess limitations A number of countries limit access to their oil and gas resources, or may place resources off-limits from development on the whole. Many countries also restrict the import or export of certain products based on point of origin.Fines There could be potential sanctions and fined by the governments if they dont follow their legal procedure. Government wants to make sure their product is environmentally friendly.Restrictions on doing business As a British company, wood group is subject to laws prohibiting British companies from doing business in certain countries, or restricting the kind of business that may be conducted.Regulatory tear down in countries with well-developed legal systems where Wood group does business, they remain exposed to changes in law that could adversely affect their results, such as increases in taxes or government royalty rates (including retroactive claims ) price controls or other laws that increase their cost of compliance.EconomicsEconomic factors are of concern to wood group, because they are likely to influence demand, costs, prices and profits. One of the most influential factors on the economy is the global oil market prices that are primarily influenced by demand and supply forces. Supply shortage causes an upward movement in the price pressure. This may perhaps be due to factors such asUnplanned refinery shortageUnexpected demand increasesPipeline problemsCompanys revenue will increase if they provide good quality sources of alternative energy as government seeks environmentally free energy source. Market is unstable as world economy is coming out of a world recession and lower oil and gas prices contributed to a reduction in global E P expenditure of around 15% in 2009. heretofore global economies are expected to grow within few years date and energy demand will grow again.Social/ paganThe company involves in many countri es where population age, health and attitude vary. By identifying differences and similarities in culture to gain a better soul of the culture issues related to the industry. Lately the nation had become more concern about the environment and their view has been more encouraging for renewable energy product.Health and safety are one of the main goals of wood groups business principles. Achieving and citeing high standards of performance in health and safety plays an integral role in the sustainability of their long-term reputation and success. As health is part of wood groups vision, their goal is to improve the quality of occupational health management byMaintaining a healthy workplaceControlling more effectively the health risks arising from their activitiesPromoting the benefit of healthy lifestyles for their employees via campaigns and health fairsLife expectancy is relevant to the companys labour force. In developed countries their life expectancy are high and therefore the work force labour would be greater compare to the developing countries.TechnologicalRenewable energy technologies have been increase to reduce the fossil fuels. Many governments are providing tax advantages and other subsidies to make alternative energy sources more competitive against oil and gas. Governments are also promoting research into new technologies to reduce the cost and increase the scalability of alternative energy sources. Wood Group delivers solutions to increase the availability of wind turbines, wave energy systems and other renewable energy projects. Wood Group is expanding its reach into the renewable energy industry and offers a dynamic set of specialized technical consultancy services to meet the inescapably of their global customers.Wood Group is the worlds leading solution-independent engineering and management services provider for subsea developments and pipelines. Their reputation is built upon strong technical excellence and efficient project voice comm unication. Wood group are technology leaders in several areas such as cryogenic pipelines, remote sensing, pipeline stabilization and flow assurance.LegalVarious government legislations and policies have a direct impact on the performance of Wood Group. National governments are concern with the environmental issues so therefore legislative measures are used in order to force business into behaving in a more environmentally sound manner. The policy includes strong new safety standards for offshore drilling including demonstrations of ability to respond to future blowouts and heavy penalties for safety violations.EnvironmentalDue to concern over the risk of global warming, a number of countries have adopted regulatory frameworks to reduce greenhouse gas emissions. These include carbon taxes, increase efficiency standards and incentives for renewable energy. These requirements could make Wood Group products more expensive and reduce demand for hydrocarbons, as well as transformation hydrocarbon demand toward relatively lower-carbon sources such as natural gas.Wood group has attempted to minimise adverse environmental impacts for their operations. In 2009, they introduced a carbon footprint pilot programme to help a better understanding of carbon management and identify ways to reduce carbon use doneout their operations. The program includes managing waste more efficiently, piloting carbon footprint measurements and explore potential solutions for saving energy.http//www.economywatch.com/energy-economy/crude-oil-prices.htmlhttp//www.investegate.co.uk/Article.aspx?id=20100302070000P5044APPENDIX B 5 forcesBarrier to entry (high)There are many oil gas industry services companies in the world, but barriers to enter to these types are enough to disallow the serious companies. Barriers to entry are high due to the high capital cost, significant regulatory environment and existence of scale economies are required to operate within the industry.Recently an oil and g as service industry is growing at a very strong rate which is attractive to new entrants as alternative energy is essential at this time of the world. However due to present economic difficulty has contributed a large decline in attractiveness in these industries which deterrent the potential entrants. To maintain with the leading players in the industry strong research and development capability is required.http//energybusinessdaily.com/power/barriers-of-entry-into-the-energy-industry/Competitive Rivalry (medium)Analyzing an energy company it is really heavy to look at the particular region in which the company operating. The customers can choose their product by companies services standard and speed of delivery of their product. Technology can change the nature and the basis of rivalry among existing competitors in several ways. It can dramatically modify the cost structure and hence affect pricing decisions. The role of technology in product differentiation and switching costs are also important in rivalry. Another potential impact of technology on rivalry is through its effect on exit barriers.Wood group rivalries are Aker Solutions, AMEC, KBR, Technip, Worley Parsons, and bread maker Hughes. Wood Group is the leading oil and gas services in the North Sea. (ref). Wood Group global reputation has been built by successfully managing the most complex engagements for their customers, offering a wide range of integrated services across the asset life has noticeably change magnitude the profitability of Wood Group business.http//www.woodgroup.com/about-us/doing-business-with-us/pages/default.aspxThreat of substitute (low)The threat of substitutes for energy services are low as they are generally gas, wind power, solar power, coal and hydroelectricity. Therefore they are not much substitute for renewable energy and only big company can have those products due to a very high capital cost. The threats of substitute of these types companies are commonly with th ose who offer better technology and specialised services such as directional drilling. (http//www.investopedia.com/features/industryhandbook/oil_services.asp)Bargaining power of buyers (low)The bargaining power of buyers for Wood Group has increased by developing strong relationships by providing rock-steady project delivery and cost-effective. Their success in these areas is established by the continuing relationships with the integrated operators, national oil companies, independent operators and power companies throughout the world.http//www.woodgroup.com/about-us/doing-business-with-us/pages/default.aspxBargaining power of suppliers (high)The energy services are mostly dominated by major companies. For these types of industries large amount of capital investment required significantly to reduces the number of companies and increase the power of existing players in the industry. The oil and gas services suppliers in UK are threatened by large companies able to source their pro duct abroad at cheaper deals.