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BUMGT6935 Business Strategy Assignment Solutions
The oil and gas industry in New Zealand is a blooming sector. Along with the technological advancement, the country is also witnessing high demands in the usage of natural gas and oil in order to support the process of industrialization. In addition to this, it has also been noticed that the country is fulfilling the needs of oil by exporting from foreign countries. In the year 2015, the country was able to produce around 30% of its oil needs (Papavinasam, 2013). The rest of the demands have to be fulfilled by importing. In this regard, it can also be said that the country can be proved as a significant and potential market for foreign MNCs that deal in the oil and natural gas industries. Moreover, New Zealand is a rich country in terms of natural human resources. Hence, the Kiwi market can be proved a profitable one for importing oil and petroleum products. In contrast to this, Australia is marked and recognized as one of the most remarkable producer of oil and natural gas. Australia is not only a giant producer of oil and petroleum products but the country is also marked as the giant supplier of these products. The present report focuses on an Australian oil and natural gas explorer and producer, Brookside Energy Limited that is planning for the expansion in New Zealand. In this regard, an analysis of the Kiwi market is to be done and a thorough analysis of the strategies that are necessary in order to enter in the new market.
Having high natural resources and well-constructed industry, Australia is considered as one of the major producers and exporters of oil and natural gas products. It is also to be mentioned that the country is a member of the Organization for Economic Cooperation and Development, which caters to the economic and social needs of the countries around the world (Abad, 2013). As an active member and giant producer of natural gas and petroleum products, Australia is marked as the largest exporter of coal. In addition to this, the country is also recognized as a giant exporter of natural gas. However, it is marked as the importer of oil. The natural energy resources of the country varies from natural oil, gas, uranium to various nonrenewable modes as well. In this regard, it can be said that the Brookside Energy Limited can find an ample scope of business in this market (Fink, 2015). Over the decades, it has been noticed that the Australian organizations have invested significantly in the oil and energy industry. This practice has helped the country immensely supporting the continuous growth and demand of the local as well as international market (Gorodnichenko, Svejnar & Terrell, 2014). In this regard, it is also to be mentioned that the petroleum and oil industry in Western Australia is the primary contributor of the country’s entire production of petroleum products.
In this regard, it can be said that Brookside Energy Limited is one of the giant explorer and producer of oil and natural gas products in Australia. The MNC is taking significant role in the process of exploration as well as appraisal of natural gas and oil. In addition to this, the organization is also considered as one of the giant producers of oil and petroleum products. Presently the organization is planning to make its expansion in New Zealand.
Goods and Services
Brookside Energy Limited was formerly known as Red Fork Energy Limited. The organization is segmented into the exploration of oil and gas resources and the corporate. In addition to this, the oil and gas exploration segment is further segregated into assets, deciding the expenses for acquisition and regulations of the necessary licensing policies. Over the span of ten years, the company has maintained its successful activities in the mid-continent region of the United States. The company, which deals in the exploration of oil and natural gas resources and production of petroleum products, aims at successful acquisition as well. Moreover, the company also aims at development of oil and gas assets and their byproducts. In this regard, it is also to be mentioned that the organization has primarily focused in the American market in order to achieve highest possible exploration and production of natural gas and petroleum products. In Oklahoma, the organization holds royalties of oil and gas resources of approximately 100 acres.
In order to understand the necessary strategies of entering into the new market, Ansoff Growth Matrix can be regarded as an effective tool. The matrix provides multiple insights about the strategies that would be effective in understanding the new market (Kaynak & Baker, 2013). In addition to this, Ansoff Matrix will be helpful in deciding the effective strategies for the business expansion. The strategy incorporates Market Penetration, Market Development, Product Development and Diversification.
In the context of expanding an existing business in a new country, it can be said that the market development strategy is to be considered as the most effective one. Market development is to be considered of having highest importance in the existing scenario. The organization needs to achieve higher sale and market share of their petroleum products in the Kiwi market. In this regard, it can be said that the organization can focus more in marketing their existing products. It should also focus on the blooming industries of New Zealand, so that they can use the energy produced from the natural gas resources as well as use the petroleum products (Urde, Baumgarth & Merrilees, 2013). In this regard, it can be said that in the primary phases the organization needs to focus on the process of exporting the products to New Zealand. However, it has to focus on the research and development in order to find new sources of natural gas and oil. The organization hence can focus on setting up new oil refineries in the country.
Market penetration is the strategy that an organization takes up in order to expand the current market and to its current items (Hussain, Khattak, Rizwan & Latif, 2013). Hence, in this regard it can be said that the oil and gas exploring organization is planning for its expansion in a new market. Hence, market penetration should not be considered as important aspect in the process of expansion to New Zealand (Kim & Mauborgne, 2014). In addition to this, it can be said that the other strategies can also not be considered as effective in the process of Brookside’s expansion strategy for New Zealand.
Recommended Entry Mode
In order to enter in the New Zealand’s industry of oil and gas, Brookside Energy Limited can choose strategic alliance with a local business of New Zealand belonging from the same industry. Hence, Swift Energy New Zealand Limited will be partnered with Brookside Energy Limited. The strategic alliance between Swift Energy New Zealand Limited and Brookside Limited will involve contractual agreement in order to assure that both the companies cooperate with each other towards fulfillment of the common purpose of business expansion (Cassar, Grosjean & Whitt, 2013). It can be stated that strategic partnership will be beneficial since Swift Energy New Zealand Limited is already an established company in the oil and gas industry of New Zealand. Based in Wellington, the company develops, acquires and explores oil and gas properties the company. Over the 10 long years, the company has been able to achieve reputation in the industry experience of oil and gas of New Zealand with revenue of $ 101,537 as of 2016 (Laufs & Schwens, 2014). Thus, it can be understood that the company holds a strong position in the industry, which would be helpful for Brookside Energy as the alliance of the two companies has potential for generating revenue at a considerable rate.
Potential International Market for Expansion
For the purpose of international market expansion, Brookside Energy Limited can choose New Zealand since it the nearest market of Australia. The economic condition of New Zealand is also stable as the real GDP of the country marked NZD 230.628 billion (Anil, Tatoglu & Ozkasap, 2014). However, the GDP in the previous year marked NZD 261.12 billion which shows a slight decrease in GDP growth of the country (Statista.com., 2018). The government revenue of the country on the other hand increased from NZD 89.219 billion to NZD 90.833 billion denoting positive economic growth of New Zealand. As per the records, the oil and gas industry of New Zealand generated 30% of its overall production in New Zealand while the rest 70% is generated from exporting (Von Hochstetter, 2013). Hence, it will be profitable for Brookside Energy Limited if it expands in the New Zealand oil and gas industry for the below mentioned reasons. The major treason for which the expansion can be successful is that the companies dealing in the oil and gas industry are less in number. On the other hand, the exporting of oil gas from other countries involves high expenditure and high exchange of foreign currency. Generally a lack of will from the governmental side since government needs to spend a lot of foreign currency from their reserve. In such scenario, the expansion of Brookside Energy Limited will minimize the government’s expense of foreign exchange as it would conduct the production in the country. In addition, the 5.075% unemployment rate of New Zealand as per 2016, denotes a high employment resource if the company sets up its business in New Zealand (Collings, Wood & Szamosi, 2018). Thu, from the above analysis, it can be understood that the Brookside Energy Limited will be able generate a high profit margin provided the company carries out an effective market expansion strategy.
Considerations While Choosing the Locations for Subsidiaries
Since the Brookside Energy Limited deals in oil and gas industry, especially in production, the company must keep the less populated areas in order for the locations of subsidiaries. For example, the refining centers needs to be set in the coastal areas, while the oil production centers should be set up in the areas according to the locations of oil fields of the country. The most important oil fields of New Zealand are Pohukura, Maui, Kanpuni and Kupe (Bratton & Gold, 2017). Hence, these locations needs to take under consideration while locating the drilling centers. The distribution centers needs to be located in the areas like outskirts and suburbs as large areas will be required for the purpose of distribution. Densely populated areas area is generally non-favorable for distribution and storage as oil and gas are the two most flammable resources (Cassar, Grosjean & Whitt, 2013). Hence, for storage and distribution, the outskirt wide areas will be chosen in that are less populated as to even if any disaster occurs, generally public of the country will not harmed. On the other hand, it must be kept in mind that the areas from the drilling site to refining site and the distribution sites are well connected with broad roadways so that the transportation and distribution of oil and gas can be done smoothly.
Recommended HR Approach
The company Human Resource department of Brookside Energy Limited must conduct an effective Human Resource approach considering both the skilled and unskilled labors available in the country. The engineers in relation with the concerned filed will be recruited in order to supervise and mind mapping of the drilling process (Nasirpouri et al., 2014). Under these engineers, unskilled labors from the rural sites will be recruited for the purpose of oil drilling. The unskilled labors will be found mainly in the rural and coastal areas where employment as well as educational opportunity is less. At the same time, the engineers will be hired from the urban areas. While recruiting the employees irrespective of engineers or workers, it needs to be assured that they are willing to work in such a field that involves life risks. Meanwhile, employees need to be hired for the whole management of the business process of the company. Thus, talents can be pooled from the best management institutes of the country (Rudnicki & Vagner, 2014). Timely payment and other benefits need to be given highest attention since the oil and gas company demands extreme hard work. The workers at the root level like drillers, transporters and others can be paid on a daily basis instead of monthly basis since these people remain from poor financial background will a financial need. In case of over work, it must be assured that the employees are paid of the over time they serve.
In conclusion, it can be said that Brookside Energy Limited can achieve a potential growth in Kiwi market. As the country is recognized as a major importer of petroleum and natural gas, it can easily be understood that the organization has potential chances of winning the market over. In its initial phases of expansion, the company can aim at exporting the products to New Zealand. From the analysis it can also be understood that the energy resources of the country are still not been used extensively. Along with that the oil and gas refining market is not well constructed. Hence, it can easily be understood that Brookside can easily achieve success in New Zealand.
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