Rivalry in the Oil and Gas Field Service Industry

Topics: Strategic management, Marketing, Vertical integration Pages: 2 (639 words) Published: April 4, 2011
Rivalry being present in any industry is obvious. Some industries have more than others and for different reasons. With over 12,000 different companies in the Oil and Gas Field Services industry competition is high and is projected to only continue to increase. This is due to the demand of oil and gas in the United States and the world. It is also because international firms are beginning to come in the United States to compete with US firms for business. In comparison, US firms operating internationally generally make a significant amount more revenue from the business activity that goes on worldwide. “Price competition is often the primary factor in determining which contractor is awarded a contract, although quality of service, operational and safety performance, equipment suitability and availability, reputation, and technical expertise are also factors.” (IBIS WORLD) Most of the contracts for service are awarded through competitive bidding. In order to compete for profits it is imperative that companies in this industry look to create a competitive advantage and proper business strategy. “Large companies can offer a broad range of services. Small firms can compete effectively by specializing in a particular type of service or geographic area.” (First Research) The Oil and Gas Field Service industries concentration is low. Even though their biggest companies do possess what seems to be considerable percentages of the market share they do not create a monopoly situation. The majority of the industry is small companies. “About 78.7% of the industry firms employ fewer than 20 people, and 95.6% of firms employ fewer than 100 people.” (IBIS WORLD) The overall level of strength for intensity of competitive rivalry in the Oil and Gas field services industry is high. The fact that it is hard to exit the industry creates higher rivalry. “Due to the fact that oil and gas operations are highly energy and labor intensive, fixed costs are high and market is hard to...
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