EMDV8008 Research Proposal | External Business Environment

Customers- describe their behavior, needs, and decision-making process

Introduction

As we review the macro environment in which Petrotrin operates in, conducting a PESTLE analysis is a strategic tool used for industry analysis and business strategy. This section will also look at other situational factors such as the company’s competitors and customers to determine its impact on the company.

PESTLE Analysis

A PESTLE analysis, sometimes referred to as a PEST analysis, consider matters related to Political, Economic, Social, Technological, Legal and Environmental factors. (Gupta, 2013) Research study emphasizes that a PEST analysis is a critical component for strategic management and allows organizations to understand pertinent external factors in determining market growth or decline and as such provides an outlook for the future.

Political-

• It is a republic country, with parliamentary democracy system based on the UK systems.
  
  
• Political stability persists since 1962, when the country gained independence. There is no such incidence of political violence, except in 1990, caused by an Islamist group that attacked the parliament to take over the government (gov.uk, 2018).

Economic-

• It is the most industrialised country among the English speaking nations in the Caribbean Islands and second wealthiest in terms of GDP and GDP per capita among the Caribbean (Brereton, Robinson & Watts, 2018)
  
  
• The economy is based on oil and natural gas reserves and it is 6^th largest exporter of liquid gas (gov.uk, 2018)
  
  
• It has open market driven economy, promoting FDI, trade liberalisation and public sector reform.

Social-

• The society comprises of two ethnicities: the native black descendents of the slaves, and the Indo-Trinidadians, or East Indians, whose ancestors were mainly migrated labourers (Brereton, Robinson & Watts, 2018).
  
  
• There is poor work ethics, high corruption, laid back attitude, crime and security issues in the society, gender based violence and high level of domestic violence creating problems for business (gov.uk, 2018).

Technological-

• Being an economically developed country, Trinidad and Tobago has an advanced technological environment, that supports the ICT and the exploration and production of oil and natural gas industry.
  
  
• Internet governance has been implemented to have a better control on the nation (gov.uk, 2018)
  
  
• Cyber security issues are a concern

Legal-

• Path to justice is slow (gov.uk, 2018)
• Government regulations are favourable to business but it inefficient to reduce the social crimes

Environmental-

• Exploration of crude oil is itself a damage to the environment, however, it uses sustainable techniques to reduce the impact.
• Supports many environmental projects as part of CSR (Petrotrin.com, 2018).

Opportunities: political stability, developed economy and advanced technology

Threats: social crimes and corruption, cyber crime and inefficient legal system

Competition

Direct competitors: National Gas Company of Trinidad and Tobago Limited, National Energy Corporation, The Trinidad & Tobago National Petroleum Marketing Company Limited and The Trinidad & Tobago National Petroleum Marketing Company Limited (energy.gov.tt., 2018)

Indirect competitors: various auxiliary service companies and domestic liquid gas companies

The cost of establishment or set up cost, economies of scale, supply of technology and equipment; and environment and legal regulation compliance cost are the existing barriers to entry for a new competitor.

Due to the barriers, especially the high set up cost, it can be expected that no new small scale competitor will enter the market immediately. However, a large scale, domestic or multinational Oil and Gas Company, can enter the market, if it gets backing from the Trinidad and Tobago government.

 Customers

The customer profile for Petrotrin consists of both the public and private large scale industries as well as the foreign governments. It is 6^th largest liquid gas exporter to other neighbouring countries (gov.uk, 2018).

All types of private and public industries require oil and gas for production, especially the transport industry. These customers purchase oil from oil and gas companies, like, Petrotrin when the oil price is lower than its competitors, exchange rate is favourable or the supply is guaranteed and constant. However, if production falls, oil price increases, and the supply gets crippled, resulting in uncertain supply, as in case of Petrotrin. Thus, following the theory of reasoned action, the large scale customers will move away from producers that cannot guarantee a stable supply or asks for a higher price (Montano & Kasprzyk, 2015)

References

Brereton, B. M., Robinson, A. N. R. & Watts, D. (2018). Trinidad and Tobago. Encyclopaedia Britannica. and Retrieved from https://www.britannica.com/place/Trinidad-and-Tobago#ref275756

energy.gov.tt. (2018). Ministry of Energy and Energy Industries. Retrieved from https://www.energy.gov.tt/for-investors/companies/

gov.uk. (2018). Overseas Business Risk – Trinidad & Tobago. Retrieved from https://www.gov.uk/government/publications/overseas-business-risk-trinidad-tobago/overseas-business-risk-trinidad-tobago

Montano, D. E., & Kasprzyk, D. (2015). Theory of reasoned action, theory of planned behavior, and the integrated behavioral model. Health behavior: Theory, research and practice, 95-124.

Petrotrin.com. (2018). Petrotrin - Key Statistics. Retrieved from https://www.petrotrin.com/en/About%20Us/Key%20Statistics.aspx