Pestle analysis of the Timber Group

The timber group was founded in 1912 by Lumber and Davison that your company used for dispatch repair and marine engineering firm to services the fishing fleet. In 1970's olive oil & gas reserves were discovered in the North Sea and provided an ideal chance to convert marine executive experience into executive and support services. Through the late 1990s Hardwood Group Anatomist (North Sea) became a market innovator in the North Sea providing built in engineering, businesses and maintenance services to BP, Shell, Talisman, Amerada Hess, BG, Business Olive oil and ChevronTexaco. The business now is a leading independent services professional for the petrol & gas and vitality generation markets. Currently the main focus of the business is on the surroundings by creating the alternative energy services group and growing their range of operations within the choice energy industry.

Wood group also known as John lumber group can be an energy services service provider. The business is organised into to three divisions

1. Executive and creation facilities

2. Commercial gas turbines overhaul and repair services for engine oil & gas and electric power generation services.

3. Creation support

The core strengths of timber group are: service operations & maintenance, field service of pumps, wellheads and valves clients, procurement & structure management, deepwater topsides, revolving equipments and ability solutions, and green energy.

The real wood group operates mainly in European countries and North America. It really is headquartered in Aberdeen and utilizes about 29, 000 worldwide and working in 50 countries. In 2009 2009 the wood group recorded earnings of $4, 927. 1 million, the working income of $298. 5 million and the net profit of $164. 2 million.

Wood Group vision is to be a leading global energy services professional. The business global reputations has been built after decades by offering a wide range of integrated services across the asset lifecycle and effectively taking care of the most complex engagements for their clients. They constantly seek to provide services that are accepted as market-leading and attempt to surpass their customers' anticipations and deliver superior comes back. Hardwood group strategy is to attain long-term sustainable progress by adding value with their customers' operations with world-leading, highly differentiated products and services.

PESTLE

PESTLE analysis explains the macro-environmental factors found in environmentally friendly scanning the different parts of strategic management. It can be use for researching a situation, route of any company, a marketing proposition, or an idea. The research is a good tool when planning on taking benefit of the opportunities and reducing the risks. Without knowing what external factors have an effect on the company, it is difficult to control the business within an reliable manner.

Figure 1: Macro-Economic Environment

Summary of PESTLE:

Political

World energy product market segments have been increasing because of the risk of geopolitics instability.

Due to Co2 emission, federal government has place pressure on industry to improve and produce more lasting form of energy

There are trading polices with certain countries

Restriction to import and export to certain countries

Restriction employing certain countries.

Fines for industry that pollute the surroundings.

Government fees and price controls

Economics

Alternative high -quality energy technology escalates the company's income as customers seek for less greenhouse gas emissions

Companies benefit producing certain products from expanding countries due to its cheaper labour cost.

Market is unpredictable as world economy is appearing out of a world recession

Global economies are anticipated to develop within few years and energy demand will expand again.

Social/culture

Lately the country has become more concern about the surroundings and their view has been more motivating for renewable energy product.

Life expectancy is relevant to the business's labour pressure. Company advantage in countries with higher life span.

Health workplaces for coal and oil industry services are crucial for permanent success.

Technological

Renewable energy solutions have been increase to reduce the fossil fuels. E. g. Technologies such as breeze power, tidal wave, hydroelectricity etc,

Many government authorities are providing tax advantages and other subsidies to make substitute energy sources more competitive against oil and gas.

Lots of research and development took location to promote further alternative energy.

Legal

The insurance policy includes strong new security standards for offshore drilling including presentations of potential to react to future blowouts.

Heavy penalties for basic safety violations.

Carbon taxes i. e. penalties polluting the environment at a certain level.

Legislative measures are being used in order to induce business into behaving in a more environmentally acoustics manner

Environmental

Due to concern over the risk of global warming, lots of countries have followed regulatory frameworks to lessen greenhouse gas emissions

High quality technology been research for better substitute energy performance

Industries been using program to identify ways to lessen carbon by

managing waste better, using piloting carbon footprint measurements and checking out potential alternatives for saving energy.

Description and comprehensive information of PESTLE are found in Appendix (A).

5 forces analysis

5 forces of model evaluation is commonly used tool for competitive environment and its attractiveness of a market.

Figure 2- 5 makes of research: (http://2. bp. blogspot. com/_GuvqAqJmGHc/THH1QwMnWaI/AAAAAAAAAlo/0-4r9UfL67s/s1600/porters-five-forces2. jpg)

Barriers to Entrance (High)

This force represents the amount of entry of other companies to enter this kind of industry. In the event the entry of the business is high the business would lose it profitability. Barrier to entry to these kind of industry are high anticipated to

Large usage of the suppliers and vendors ensuring common energy provision.

High technology cost

Dominated by major players

Mature market

Strict government coverage and environment regulation requirements to operate in oil and gas services industry.

Large economies of scale necessary to achieve cost command which is essential in energy provision.

Large capital requirements to set-up operations

Importance of honest brand personal information because of character of market (loyalty as a barrier).

Existing players have close customer relationships. e. g. from a long-term service associates.

High proprietary learning curve anticipated to technological give attention to different energy industry.

Competitive Rivalry - (medium)

This force details the intensity of competition between existing companies. Within the engine oil & gas and energy services provider your competition rivalry between existing players are medium because of

High exit barriers.

Not many major players in this kind of industry.

High capital costs

Companies with similar strategies

High industry progress as choice energy is essential for the long term future of the industry.

Various competitors in rationale for ways of invest and type in industry.

High transitioning cost

Threat of substitute - (low)

Threat of replacement is available if there are different products with lower prices of better performance variables for the same goal. This would decrease the demand for a specific product and therefore would be a risk of consumers switching to alternatives.

Threat of replacement is low because insufficient alternative green energy and only large industry are able the green energy products.

Threat of alternative would be high in case a company provides the most advanced technology and specialised services.

Bargaining ability of purchasers - (low)

Bargaining power of customers establishes how much customers can impose pressure on margins and amounts. The potential buyers for energy service industry hunt for excellent quality product but with lower prices as well as for a better deal term. Bargaining of power for these market sectors is low because

The brand loyalty is high

Availability of substitutes is low

Buyer incentives is high, in terms of taxes breaks and energy provider buy-backs

Buyers amount are low

Low bargaining drive of buyers

Depends service standards

Low elasticity

Switching to alternative product is difficult

Bargaining electricity of suppliers - (high)

Bargaining of provider is the suggestions required to be able to provide the goods. The bargaining vitality of suppliers is high because

The market is dominated by few large suppliers

The transitioning cost are high

There is not much substitute for providing field service of pumps, wellheads, revolving equipments, power solutions, renewable energy etc.

The energy services are mostly dominated by major companies. For these sectors large amount of capital investment required significantly to reduces the amount of companies and boost the ability of existing players in the industry.

The suppliers in UK are threatened by large companies in a position to source their product overseas at cheaper discounts.

Appendix (A) -PESTLE

Political

The coal and oil services industry must follow a string of both provincial and federal government regulations when it comes to the development of energy resources. A couple of potential fines and sanctions that may be established by various governmental.

Wood group operating in a globalized environment with establishments around the globe (now works in 46 countries internationally in continents such as Australia, European countries, Midsection East and the U. S. ); its performance is highly inspired by the politics and legislative conditions of these countries as it pertains to development of energy resources.

Their functions can adversely affect by political or regulation improvements which can be

Access limitations - A number of countries limit access to their oil and gas resources, or may place resources off-limits from development overall. Many countries also restrict the import or export of certain products based on point of origins.

Fines - There may be potential sanctions and fined by the government authorities if they don't follow their legal procedure. Government wants to be sure their product is environmentally friendly.

Restrictions on conducting business - To be a British company, wood group is subject to laws prohibiting United kingdom companies from doing business in certain countries, or restricting the kind of business that may be conducted.

Regulatory - Even in countries with well-developed legal systems where Solid wood group will business, they stay exposed to changes in laws that may adversely affect their results, such as increases in taxes or government royalty rates (including retroactive boasts); price settings; or other laws that increase their cost of compliance.

Economics

Economic factors are of matter to wood group, because they're likely to influence demand, costs, prices and gains. One of the most important factors on the current economic climate is the global engine oil market prices that are mainly influenced by demand and supply forces. Supply scarcity causes an upwards movement in the purchase price pressure. This may perhaps be scheduled to factors such as

Unplanned refinery shortage

Unexpected demand increases

Pipeline problems

Company's revenue increase if indeed they provide good quality sources of alternative energy as government seeks environmentally free power source. Market is unpredictable as world current economic climate is appearing out of a world recession and lower oil and gas prices added to a decrease in global E & P costs of around 15% in 2009 2009. However global economies are expected to develop within few years time and energy demand will grow again.

Social/cultural

The company entails in many countries where society age, health and attitude differ. By identifying differences and similarities in culture to get a better knowledge of the culture issues related to the industry. Currently the nation got are more concern about the surroundings and their view has been more stimulating for renewable energy product.

Health and security are one of the primary goals of lumber group's business rules. Achieving and preserving high criteria of performance in health insurance and safety plays an intrinsic role in the sustainability of their long-term reputation and success. As health is part of wood group's vision, their goal is to improve the quality of occupational health management by

Maintaining a wholesome workplace

Controlling more effectively the health risks arising from their activities

Promoting the benefit for healthy lifestyles for his or her employees via campaigns and health fairs

Life expectancy is relevant to the company's labour power. In developed countries their life expectancy are high and therefore the work force labour would be greater compare to the expanding countries.

Technological

Renewable energy systems have been increase to lessen the fossil fuels. Many government authorities are providing tax advantages and other subsidies to make different energy options more competitive against coal and oil. Government authorities are also promoting research into new technologies to reduce the cost and raise the scalability of alternate energy sources. Lumber Group delivers answers to maximize the availability of wind turbines, wave energy systems and other green energy projects. Wood Group is increasing its reach in to the alternative energy industry and offers a dynamic set of specialized specialized consultancy services to meet up with the needs of these global customers.

Wood Group is the world's leading solution-independent executive and management services specialist for subsea trends and pipelines. Their reputation is built upon strong complex excellence and efficient project delivery. Real wood group are technology market leaders in a number of areas such as cryogenic pipelines, distant sensing, pipeline stabilisation and move assurance.

Legal

Various government legislations and procedures have a direct impact on the performance of Lumber Group. National government authorities are nervous about environmentally friendly issues so therefore legislative measures are being used in order to power business into behaving in a more environmentally acoustics manner. The insurance plan includes strong new basic safety standards for just offshore drilling including demonstrations of capability to respond to future blowouts and heavy penalties for safeness violations.

Environmental

Due to concern over the risk of global warming, lots of countries have implemented regulatory frameworks to reduce greenhouse gas emissions. These include carbon fees, increase efficiency benchmarks and incentives for green energy. These requirements could make Timber Group products more costly and reduce demand for hydrocarbons, as well as moving hydrocarbon demand toward relatively lower-carbon options such as gas.

Wood group has attempted to minimise negative environmental impacts because of their operations. In 2009 2009, they presented a carbon footprint pilot program to help a better knowledge of carbon management and identify ways to lessen carbon use throughout their procedures. This program includes managing waste material better, piloting carbon footprint measurements and explore potential solutions for saving energy.

http://www. economywatch. com/energy-economy/crude-oil-prices. html

http://www. investegate. co. uk/Article. aspx?id=20100302070000P5044

APPENDIX B - 5 forces

Barrier to accessibility (high)

There are numerous essential oil & gas industry services companies on earth, but obstacles to type in to these kinds are enough to avoid the serious companies. Obstacles to entrance are high due to the high capital cost, significant regulatory environment and lifetime of scale economies must operate within the industry.

Recently an coal and oil service industry keeps growing at a very strong rate which is of interest to new entrants as alternative energy is vital at this time of the world. However credited to present economic difficulty has added a large decrease in attractiveness in these companies which deterrent the entrants. To keep with the main players in the industry strong research and development functionality is required.

http://energybusinessdaily. com/electric power/barriers-of-entry-into-the-energy-industry/

Competitive Rivalry - (medium)

Analyzing a power company it is really important to look at this region where the company operating. The customers can choose their product by companies' services standard and swiftness of delivery with their product. Technology can change the type and the basis of rivalry among existing competitors in several ways. It can dramatically modify the price structure and hence affect pricing decisions. The role of technology in product differentiation and moving over costs are also important in rivalry. Another potential impact of technology on rivalry is through its effect on exit obstacles.

Wood group rivalries are Aker Alternatives, AMEC, KBR, Technip, Worley Parsons, and Baker Hughes. Wood Group is the leading coal and oil services in the North Sea. (ref). Real wood Group global reputation has been built by effectively controlling the most intricate engagements for their customers, offering a wide range of integrated services over the property life has noticeably increased the success of Timber Group business.

http://www. woodgroup. com/about-us/doing-business-with-us/pages/default. aspx

Threat of substitute - (low)

The risk of substitutes for energy services are low as they are generally gas, wind power, solar power, coal and hydroelectricity. Therefore they are not much substitute for renewable energy and only big company can have those products credited to an extremely high capital cost. The dangers of substitute of these types companies are generally with those who offer better technology and specialised services such as directional drilling. (http://www. investopedia. com/features/industryhandbook/oil_services. asp)

Bargaining ability of customers - (low)

The bargaining ability of buyers for Timber Group has increased by growing strong relationships by giving reliable job delivery and cost-effective. Their success in these areas is made by the carrying on relationships with the built-in operators, national engine oil companies, independent operators and ability companies across the world.

http://www. woodgroup. com/about-us/doing-business-with-us/pages/default. aspx

Bargaining electricity of suppliers - (high)

The energy services are usually dominated by major companies. For these kind of industries massive amount capital investment required significantly to reduces the number of companies and boost the electricity of existing players in the industry. The oil and gas services suppliers in UK are threatened by large companies able to source their product in another country at cheaper deals.

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