A market environment analysis using PEST and Porter’s five forces
A market environment analysis using PEST and Porter’s five forces 1
Description of the company-Subsea 7 3
A PESTEL analysis 3
Political, a critical factor in energy industry 3
Economy, the versatile market 4
Social factors, a diversified workforce 4
Technological research and advancement 4
A Porter’s five forces analysis 5
Bargaining power of the customers 5
Intensity of existing rivalry 5
Threats of substitutes 5
Threat of new competitors 6
Strategic recommendations 6
A better management and react to market fast 6
Focus more on deep-water development 6
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A PESTEL analysis
Political, a critical factor in energy industry
In the offshore energy industry, political factors are the biggest factors in the energy industry, and they are usually not controlled by the market or its players. For example, in the Mediterranean sea, political issues is a continual obstacle to the development of the projects in this region. This is the similar case in the south china sea, despite of the multiple important Deepwater projects are available to explore and work, the international tension between Philippines, Chinese and Vietnamese poses much uncertainty to the development in this region. Company like Subsea 7 are the international player and is always worried about the instability and disputes over the territories because this potentially put its fleet in great risk.
Moreover, the sanctions over certain nations due to other political reasons can be very damaging to the performance of the company. For example, the tension between the superpower US and Russia has indirectly pushed the oil price down and hurting the players in this market heavily. Other cases like Iran’s oil is similar despite of a smaller effects in the global market. All these policies and international relationships are the unavoidable risk and challenge to Subsea 7’s business.
Economy, the versatile market
Besides political, economy performance is greatly affecting Subsea7 in its project orders and operation revenue. As subsea 7 is a upstream player in the offshore energy sector, the performance of the global economy can directly relate to the business projections in Subsea 7. During 2008-2010, the great economic recession also hits the Subsea 7 badly, and after the recession, it quickly recovers as the oil prices rises up. This year, Subsea 7 is again facing the hard times as the oil prices continue to dip, and the company has to cut its cost by cutting up jobs in UK and other parts of the world. Hence, the up and downs of the oil industry is the most determining factor to Subsea 7’s growth or loss.
Social factors, a diversified workforce
For the energy market, social factors are often not critical because energy is a universal demand to everyone in the world. No matter where you live, what kind of culture you have, everyone is demanding for more energy as the standard of living gradually improving in overall. However, there is one important social factor that affects the Subsea 7, which is the corporate social responsibility. As the world largest player in offshore construction and installation, Subsea 7 has its presence all over the world. This inevitably put Subsea7 to a close connection to all kinds of races, cultures and religions. The most obvious aspect is the diversity of workforce. The global scale of projects execution requires the employee force with varieties in races, and putting them together to achieve excellence and teamwork is the biggest social factor that Subsea 7 needs to focus on.
Technological research and...