PEST analysis of IOC (Indian Oil Corporation)

Political and Legal factors

 Removal of regulation on foreign trade by delisting oil and gas company from restricted list given the oil
and gas majors in India an opportunity to serve global customers. But it has also increased competition,
as now global players are free to enter in India. This industry will see increased competition in India in
near future.
 With the environment norms not being as stringent as the western countries, foreign companies are more
likely to set up new manufacturing facilities in India.
 With the insufficient counter valley duties and duty free export and import from countries from Nepal
will see dumping of plastic goods in India. This unless act upon by the government will means a
decrease in demand for oil and gas which have derived demand for plastic industry.
 A reduction on custom duty will bring down the realization.
 A strong employment law is probably on factor that may deter foreign oil and gas manufacturer from
setting up unit in India.
 Unstable governme5nt may also affect the disinvestment plan of industry like oil and gas.

SOCIO-CULTURAL FACTORS

 Life style changes like demand for lighter automobiles had lead to increase the demand for oil and gas
products and in probably a reason for high market growth rate.
 Again higher level of education had lead to demand for mineral water and other. This in turn has
increased the demand for oil and gas which are derived demand.

Economical factor

 Oil and gas industry is one of the chief consumer of energy in India so energy conservation has been top
priority issue for the perspective of reducing overall cost and also from point of view of national priority.

Technological factor

 Govt. has continuous emphasis on research and development of new technologies to develop processes,
which are environmental friendly.
 In recent years this industry has a general trend of importing the technologies and them setting up
manufacturing and marketing indigenously.
 SWOT Analysis of IOC (Indian Oil Corporation)

Strengths

 Oil and Gas is a capital intensive industry. So it is impossible for new players to enter this market
overnight.
 There are only a few major players in India i.e. it is more of a oligopolistic market.
 This is an industry where different export markets are available through competition is intense.
 Market growth rate of 12 to 13 % which is relatively high compared to world market growth rate of
5 to 6 %.
 Products of this industry have wide applications and these products have particularly no substitutes
as of now.
 Specific infra structure requirements like vicinity of refinery, vicinity of other resources etc so it is
not possible to set up new projects just anywhere.
 Long term relationships developed with both suppliers and buyers over a period of time.

Weakness

 It is not always possible to sell the entire production, as the demand may be low on depressed and hence
high levels of inventory have to be maintained. This leads to high inventory carrying costs.
 Subject to cost push inflation; i.e. if cost of raw materials increase then to maintain margins cost of oil
and gas are also increased.

Opportunities

 Do a lot of research and Development and develop friendly products to sell in global market.
 Sell products to global customers and achieve economies of scale by selling volumes i.e. companies are
trying to transform themselves in global players.
 In India, huge potentials exist because oil and gas consumption is low.
 Value added products could be looked into as chemical industry has very diverse applications.
 Lowering of prices of raw material has led to substitution effect ; raw materials replacing the traditional
packing materials a good opportunity for Indian oil corporation.

Threats

 As basic raw material is crude oil the increasing oil prices by OPEC countries adversely affects the
industry.
 This industry has derived demand and so fall in demand of products made by ancillary units leads to a
fall in demand for its products.
  Oil and Gas is a polluting industry and with increase in environment awareness throughout the world, it
is likely to face serious opposition from environmental protection groups.
SWOT Analysis of BPCL

Strengths

 BPCL has will-established network which forms company’s backbone.

 The company has focused its business in oil and gas
 BPCL being a pioneer in these products in India, has tremendous goodwill in the market.
 BPCL has a large base of trained and experienced personnel who are well suited for this industry
 Company is financially sound.

Weakness

 It is a public sector undertaking and hence a typical beaurocratic structure where decisions get
unnecessarily prolonged which is a disadvantage in present scenario.
 It is often said “if you just sit, you might be runover “. This might become a reality for BPCL as in
last yeas, BPCL has not made capacity additions and hence it is vulnerable to a possible loss of
economies of scale especially since other private sector players are expanding.

Opportunities

 With India moving into the WTO regime BPCL can take the advantage of growth taking place in
domestic as well as exports markets.
 BPCL can increase its debt-equity ratio in future as allowable ratio in this industry is 4:1 and so can
generate a lot of debt funds for future expansions.

Threats

 Opening up of market means that international players coming to India and eating away BPCL’s market
share
 Insufficient Govt. protection means that foreign manufacturers will dump their products into Indian
markets and hence a fall in demand of BPCL’s market share.
SWOT Analysis of HPCL

Strengths

 Project implementation is done on time and according to the scheduled plan. So there are no costs
overruns.
 Cost of production is kept in check and other costs are also kept under check. So only optimum cost
is incurred
 HPCL has a large capacities and industry size does matter this is one industry where small is not
beautiful.
 HPCL has capability of integrating both forward and backward as and when needed.

Weakness

 Highly diversified business. In such case, focus can be lost i.e. trying bite more than one chew
 HPCL has very large manpower i.e. it is facing a problem of over employment.

Opportunities

 Lowering of excise duty from 24.5 to 16% has led to substation of traditional packaging materials
 In this industry lowering of prices leads to increase in demand and so low prices of polymers has
given additional impetus to demand. HPCL with its huge capacities can take advantage of this
factor.
 Growing domestic and international markets.

Threats

 Overseas oil and gas players mainly from middle east and asia pacific region setting up
manufacturing gases in India leading to increased competition.
 Dumping of products especially plastics by foreign companies.
 Cheaper imports can pose a threat to HPCL