Industry Analysis

1438 words - 6 pages

Industry Analysis

Petro Oil

Berkeley College

J. Kerr, S. Powder. T. Lopez

Background
An industry analysis is a useful tool for business strategists. It helps businesses understand various pieces of the marketplace and how these various pieces may be used to gain a competitive advantage. Analyzing an industry you would have to know the industry SWOT.
It is important for Petro oil to identify the threats and opportunities facing their business and also to focus their resources on developing unique capabilities that could lead to a competitive advantage. Analyzing Petro Inc., and the heating companies overall will give the ...view middle of the document...

Heating Oils is mainly used through the months of October through March. Commercial and Community buildings also use heating oil.
It is expected that most American households will save a lot of money this coming winter since the heating bills are going to drop. The heating bills are going to drop due to a combination of lower energy prices and warmer weather across the country. This will impact the heating industry since the demand of the heating service will be lower, and approximately 70% of homes in the north of the country rely on heating oil services. The bad news for the heating industry is that they are expected to make less than the previous years because they will be less demand of the heating service this winter. The good news is that the production costs (mainly cost of raw materials) has gone considerably down lately.
The heating oil industry is working on eliminating the sulfur content of heating oil by the year 2018 from 1,500 parts per million to 15 parts per million. According to the U.S. Department of Labor the heating oil industry has increased since 1980 about half as much as prices for other consumer products. Also the heating oil industry has eliminated its total greenhouse gas emissions by one third since 1970. Heating oil burns cleaner than it did in 1970 by about 95%.
Each year the estimated size of the heating oil industry is $20 billion in sales and $1.9 billion in payroll for 49,000 Americans. According to the Better Business Bureau the consumers that are more likely to choose heating oil are senior citizens and people with low and fixed income.
Analysis
Major competitors for Petro Oil are Shell Oil Company and Exxon Mobil Corporation. In 2014 Shell Oil Company had a sales revenue of $421.05 billion and Exxon Mobil Corporation has a sales revenue of $394.105 billion. Government regulations in the oil industry are before drilling for oil drillers must obtain permits. Companies that want to drill on federal or Native American lands have to obtain leases from the Bureau of Land Management within the Department of the Interior. The Bureau of Land Management has authority over development and production on lands and along with state government it offers leases at auctions. Refineries must follow regulations related to nitrous oxide emissions and that of other byproducts as well as regulations on the products they can manufacture and sell. The PHMSA inspects pipelines to ensure that they comply with safety regulations. Inspections could include making sure the line’s pressure is not too high, testing for corrosion along the line and checking water crossings.
The kinds of competitive forces the industry members are facing are competitive pressures from maneuvering among industry rivals, associated with the market inroads being made by the sellers of substitutes, associated with the threat of new entrants into the industry, supplier bargaining power and supplier...

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