JWI515 Week 5 Assignment 2
Assignment 2: The Five Forces that Shape Strategy
Zannia S. Carty
Dr. Droll
JWMI 515: Managerial Economics
November 9, 2014
Awareness of the five forces can help a company understand the structure of its industry and stake out a position that is more profitable and less vulnerable to attack. By understanding how the five competitive forces that shape strategy influences profitability in a particular industry, executives can develop a strategy for enhancing their company’s long-term profits (Porter, 2014).
Define the relevant industry: The Oil Service Industry
The oil/energy industry is one of the largest industries in the United States. According to the Department of Energy (DOE), fossil fuels (including co4tral, oil and natural gas) makes up more than 85% of the energy consumed in the U.S. as of 2008. Oil supplies 40% of U.S. energy needs (DOE, 2014). There are two major sectors within the oil industry, upstream and downstream. Upstream is the process of extracting the oil and refining it. Downstream is the commercial side of the business, such as gas stations or the delivery of oil for heat. Oilfield service companies assist the drilling companies in setting up oil and gas wells. In general, these companies manufacture, repair and maintain equipment used in oil extraction and transport. More specifically, these services can include: Seismic Testing which involves mapping the geological structure beneath the surface; Transport Services is operative given both land and water rigs need to be moved around at some point in time; Directional Services becomes relevant because not all oil wells are not drilled straight down, some oil services companies specialize in drilling angled or horizontal holes. The Organization of Petroleum Exporting Countries (OPEC) is an intergovernmental organization dedicated to the stability and prosperity of the petroleum market. OPEC has 11 member countries. The world's top exporters of petroleum are Saudi Arabia
Zannia S. Carty
Dr. Droll
JWMI 515: Managerial Economics
November 9, 2014
Awareness of the five forces can help a company understand the structure of its industry and stake out a position that is more profitable and less vulnerable to attack. By understanding how the five competitive forces that shape strategy influences profitability in a particular industry, executives can develop a strategy for enhancing their company’s long-term profits (Porter, 2014).
Define the relevant industry: The Oil Service Industry
The oil/energy industry is one of the largest industries in the United States. According to the Department of Energy (DOE), fossil fuels (including co4tral, oil and natural gas) makes up more than 85% of the energy consumed in the U.S. as of 2008. Oil supplies 40% of U.S. energy needs (DOE, 2014). There are two major sectors within the oil industry, upstream and downstream. Upstream is the process of extracting the oil and refining it. Downstream is the commercial side of the business, such as gas stations or the delivery of oil for heat. Oilfield service companies assist the drilling companies in setting up oil and gas wells. In general, these companies manufacture, repair and maintain equipment used in oil extraction and transport. More specifically, these services can include: Seismic Testing which involves mapping the geological structure beneath the surface; Transport Services is operative given both land and water rigs need to be moved around at some point in time; Directional Services becomes relevant because not all oil wells are not drilled straight down, some oil services companies specialize in drilling angled or horizontal holes. The Organization of Petroleum Exporting Countries (OPEC) is an intergovernmental organization dedicated to the stability and prosperity of the petroleum market. OPEC has 11 member countries. The world's top exporters of petroleum are Saudi Arabia
References: Cross, L. (2014, March 9). Trends and Challenges for the Oil and Gas Industry | Stout Risius Ross. Retrieved November 10, 2014, from http://www.srr.com/article/trends-and-challenges-oil-and-gas-industry. Energy.gov. (2014, January 1). Retrieved November 10, 2014, from http://www.energy.gov/ JWMI515: Competitive Markets: Winning in the Marketplace. Week 4 Lecture 2. 2014. Planning for a Sustainable Future. (2014, January 1). Retrieved November 10, 2014. The Oil Services Industry | Investopedia. (2014, January 1). Retrieved November 10, 2014, from http://www.investopedia.com/features/industryhandbook/oil_services.asp