The 2013 Temasek Review, titled “Beyond Investing”, was launched on 4 July 2013.
Structure
- The Temasek Charter
- Performance Overview
- From Our Chairman
- Portfolio Overview
- Group Financial Summary
- Financing Framework
- Shaping Our Portfolio
- Shaping Our Institution
- Expanding Horizons
- Commitment to Community
- Major Investments
- Contact Information
- Temasek Portfolio at Inception
Visit www.temasekreview.com.sg for latest Temasek Review.
Follow @Temasek on Twitter at www.twitter.com/Temasek.
Greetings,
Attached FYI ( NewBase Special 12 April March 2016 ) , from Hawk Energy Services Dubai . Daily energy news covering the MENA area and related worldwide energy news. In today’s issue you will find news about:-
• UAE targets zero contribution from oil to GDP, minister says
• Saudi Arabia to supply Egypt with 700,000 tonnes of petroleum products a month Kuwait targets 3.2 MBD oil output at 43-year high
• Iraq: Kuwait Energy signs export oil sales agreement for Block9
• Oman: PDO Awadrs India’s L&T contracts worth $370m
• Senegal: Cairn Energy announces positive well results offshore
• U.S. biodiesel and renewable diesel imports increase 61% in 2015
• Oil prices holding above $40 ahead of producer meeting
• A Fake Freeze on Oil Is Good Enough
• The 30-year-old Saudi who could scuttle oil deal
we would appreciate your actions to send to all interested parties that you may wish. Also note that if you or your organization wish to include your own article or advert in our circulations, please send it to :-
khdmohd@hotmail.com or khdmohd@hawkenergy.net
Best Regards.
Khaled Al Awadi
Energy Consultant & NewBase Chairman - Senior Chief Editor
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME meme since 1995
Hawk Energy since 2010
Understanding factors effecting Crude Oil using Game Theory. The various factors effecting its demand and supply, overall behavior of crude oil and its effect on renewable energy.
Why the benefit of reduction in Crude oil prices has not been transferred to public? What are dynamics behind not reducing the Petrol and Diesel price significantly?
This document brings together a set
of latest data points and publicly
available information relevant for
Resources Industry. We are very
excited to share this content and
believe that readers will benefit from this periodic publication immmensely.
Freeport McMoran is one of the largest producers of copper and gold and the largest publicly traded copper producer in the world. Its headquarters are located in Phoenix, Arizona. The company has operations in North America, South America, Europe, Africa and Indonesia. The company was formerly based in New Orleans, before it acquired copper producer Phelps Dodge in 2007.
Over the last year or so, there has been much talk about another impending recession and how it could impact channel management. The recession theory is based upon historical trends, which suggest business cycles tend to last around five to seven years each. That means every five to seven years we experience some sort of a recession.
Running Head TOTAL OILING COMPANY18 Total O.docxagnesdcarey33086
Running Head: TOTAL OILING COMPANY 1
8
Total Oiling Company
Total oiling company
The Total Oiling Company is a known enterprise which having more than thousand branches spread all over the world. It is a French multinational which integrates Gas and Oil Company. Also to that, it is one among the six leading superior oil companies across the world which covers both oil and gas chain. These includes natural gas, crude oil products trade, and exploration of natural gas, production, refinement, petroleum product marketing and generation of power.
Total Oil Company has a clear, focused strategy which focus on the set goals by employing the distinctive capabilities and managing their quality portfolio actively.
The following are the key strategies that will realize the growth of Total Oil Company if it will be put to practice.
Quality Management
This comprises of planning, quality assurance, and steadfast improvement this is a crucial strategy in that customers always want to use top notch products of high quality. Also to this, this builds trust with the shareholders. Quality management, therefore, is an important strategy for forming a backbone to the success of the company. This intelligent strategy of offering careers to the people and many years of experience in the gas and oil industry provides confidence and skills which helps especially United Arab Emirates Countries to work successfully in the industry (Zook, 2004).
Market Penetration
This is an important strategy for any company to realize growth. Even large companies such as Total Oiling Company uses this strategy when for instance it tries to market its existing products and services that will boost its market share. Market share is the percentage of units and dollars sales in which a company holds in a market compared to all other competitors. This can only be done by the lowering of prices of the firm operational cost. I the markets in which there is small product differentiation, by lowering of the prices will help his company when increasing its market share.
Market Expansion
The market expansion growth strategy is also called the market development that comprise of selling of the current products and services in a new market. Some of the reasons why Total Oil Company may consider market expansion strategy. To start with, there may be stiff competition in which there is no longer any room for growth within the current market. In any case, if the business cannot find new markets for its products, it can be hard for it to increase the sales and the profits (Mearsheimer, 2010).
Product Expansion
Any company may expand its product line and add new features that will boost its sales and the profit margins. This is also known as product development. This is where it continues selling within the existing markets. The Total Oil Company for instance has capitalised on this strategy in that it started operating in different line that include the covering of gas and oi.
Exceptional Stock Market returns in Turbulent TimesAtul Khekade
This paper discusses historic patterns of Micro and Macro decisions and environment where the stocks have fetched exceptional returns in spite of the turbulent economic environment.
The 2013 Temasek Review, titled “Beyond Investing”, was launched on 4 July 2013.
Structure
- The Temasek Charter
- Performance Overview
- From Our Chairman
- Portfolio Overview
- Group Financial Summary
- Financing Framework
- Shaping Our Portfolio
- Shaping Our Institution
- Expanding Horizons
- Commitment to Community
- Major Investments
- Contact Information
- Temasek Portfolio at Inception
Visit www.temasekreview.com.sg for latest Temasek Review.
Follow @Temasek on Twitter at www.twitter.com/Temasek.
Greetings,
Attached FYI ( NewBase Special 12 April March 2016 ) , from Hawk Energy Services Dubai . Daily energy news covering the MENA area and related worldwide energy news. In today’s issue you will find news about:-
• UAE targets zero contribution from oil to GDP, minister says
• Saudi Arabia to supply Egypt with 700,000 tonnes of petroleum products a month Kuwait targets 3.2 MBD oil output at 43-year high
• Iraq: Kuwait Energy signs export oil sales agreement for Block9
• Oman: PDO Awadrs India’s L&T contracts worth $370m
• Senegal: Cairn Energy announces positive well results offshore
• U.S. biodiesel and renewable diesel imports increase 61% in 2015
• Oil prices holding above $40 ahead of producer meeting
• A Fake Freeze on Oil Is Good Enough
• The 30-year-old Saudi who could scuttle oil deal
we would appreciate your actions to send to all interested parties that you may wish. Also note that if you or your organization wish to include your own article or advert in our circulations, please send it to :-
khdmohd@hotmail.com or khdmohd@hawkenergy.net
Best Regards.
Khaled Al Awadi
Energy Consultant & NewBase Chairman - Senior Chief Editor
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME meme since 1995
Hawk Energy since 2010
Understanding factors effecting Crude Oil using Game Theory. The various factors effecting its demand and supply, overall behavior of crude oil and its effect on renewable energy.
Why the benefit of reduction in Crude oil prices has not been transferred to public? What are dynamics behind not reducing the Petrol and Diesel price significantly?
This document brings together a set
of latest data points and publicly
available information relevant for
Resources Industry. We are very
excited to share this content and
believe that readers will benefit from this periodic publication immmensely.
Freeport McMoran is one of the largest producers of copper and gold and the largest publicly traded copper producer in the world. Its headquarters are located in Phoenix, Arizona. The company has operations in North America, South America, Europe, Africa and Indonesia. The company was formerly based in New Orleans, before it acquired copper producer Phelps Dodge in 2007.
Over the last year or so, there has been much talk about another impending recession and how it could impact channel management. The recession theory is based upon historical trends, which suggest business cycles tend to last around five to seven years each. That means every five to seven years we experience some sort of a recession.
Running Head TOTAL OILING COMPANY18 Total O.docxagnesdcarey33086
Running Head: TOTAL OILING COMPANY 1
8
Total Oiling Company
Total oiling company
The Total Oiling Company is a known enterprise which having more than thousand branches spread all over the world. It is a French multinational which integrates Gas and Oil Company. Also to that, it is one among the six leading superior oil companies across the world which covers both oil and gas chain. These includes natural gas, crude oil products trade, and exploration of natural gas, production, refinement, petroleum product marketing and generation of power.
Total Oil Company has a clear, focused strategy which focus on the set goals by employing the distinctive capabilities and managing their quality portfolio actively.
The following are the key strategies that will realize the growth of Total Oil Company if it will be put to practice.
Quality Management
This comprises of planning, quality assurance, and steadfast improvement this is a crucial strategy in that customers always want to use top notch products of high quality. Also to this, this builds trust with the shareholders. Quality management, therefore, is an important strategy for forming a backbone to the success of the company. This intelligent strategy of offering careers to the people and many years of experience in the gas and oil industry provides confidence and skills which helps especially United Arab Emirates Countries to work successfully in the industry (Zook, 2004).
Market Penetration
This is an important strategy for any company to realize growth. Even large companies such as Total Oiling Company uses this strategy when for instance it tries to market its existing products and services that will boost its market share. Market share is the percentage of units and dollars sales in which a company holds in a market compared to all other competitors. This can only be done by the lowering of prices of the firm operational cost. I the markets in which there is small product differentiation, by lowering of the prices will help his company when increasing its market share.
Market Expansion
The market expansion growth strategy is also called the market development that comprise of selling of the current products and services in a new market. Some of the reasons why Total Oil Company may consider market expansion strategy. To start with, there may be stiff competition in which there is no longer any room for growth within the current market. In any case, if the business cannot find new markets for its products, it can be hard for it to increase the sales and the profits (Mearsheimer, 2010).
Product Expansion
Any company may expand its product line and add new features that will boost its sales and the profit margins. This is also known as product development. This is where it continues selling within the existing markets. The Total Oil Company for instance has capitalised on this strategy in that it started operating in different line that include the covering of gas and oi.
Exceptional Stock Market returns in Turbulent TimesAtul Khekade
This paper discusses historic patterns of Micro and Macro decisions and environment where the stocks have fetched exceptional returns in spite of the turbulent economic environment.
IntroductionThe company that has been researched is the Toyota .docxmariuse18nolet
Introduction:
The company that has been researched is the Toyota motor Corporation
Ticker symbol
TM
Exchange
New York Stock Exchange (NYSE)
No of common shares outstanding
1,583,714,334
Industry
Consumer goods
Country
Japan
Toyota Motor Corporation is considered to be a leading automaker headquartered in Japan. The human resources vertical employed 317,734 people and was the largest automobile manufacturer by production. Founded in 1937, the automaker has grown and has its presence in all countries of the world .the Toyota motor corporation group is considered to be one of the largest conglomerates in the world
A. Provide a rationale for the U.S. publicly traded company that you selected, indicating the significant factors driving your decision as a financial manager
Some financial highlights of the company which favorably incline towards investing in this company:
1. The third quarter result of the financial results of the firm showed that on a consolidated basis,
a. net revenues for the period totaled 19.12 trillion yen, an increase of 17.8 percent compared to the same period last fiscal year.
b. Operating income increased from 818.5 billion yen to 1.85 trillion yen,
c. Income before income taxes was 2.02 trillion yen.
d. Net income increased from 648.1 billion yen to 1.52 trillion yen
e. Operating income increased by 1.03 trillion yen.
Some of the major contributors to the increase in income were cost reduction efforts and favorable currency fluctuations. The global sales of automobiles under the group registered a 25% increase globally.
As the financial manger of a company, my instincts towards advising a client to invest in a company are grounded by strong fundamentals. Toyota Motor Corporation has been very strong in its financial fundamentals. Companies whose financial fundamentals are very strong make good investments portfolios.
Such firms are called blue chip companies and trades very selectively on the stock markets are can be studied in depth for any investment purposes. Such firms rarely indulge themselves in any kind of compliance issues are generally favored by investors.
Toyota Motor Corporation is one such stock that as a finance manager I would recommend to buy and hold because the firm has been in the news for all the right reasons and for its future plans of expansion with very strategic mergers and acquisitions. The firm’s product ranges especially the new line of green automotive ranges have caught the fancy of al countries and it is expected that the company will be giving a return of more than 22% to its shareholders (toyotaglobal.com).
B. Determine the profile of the investor for which this company may be a fit, relative to that potential investor's investment strategy. Provide support for your rationale.
The profile of a suitable investor for the company would be a conservative risk taker. The investor would like to buy the stock and hold it for long periods so as to partake of the .
1984: Chairman Emeritus,
Paul Stebbins, and CEO,
Michael Kasbar, founded
Trans-Tec, a marine fuel
brokerage company
1986: International Recovery
becomes a publicly-traded
company
1990: Signicant organic
growth prompts expansion with
ofces in key global markets
1995: International Recovery
acquires Trans-Tec and charges
company name to World Fuel
Services Corporation
1999: Bunkerfuels acquisition
enhances market share in
Marine Energy
2000: PAFCO joint venture
expands Aviation services
2001: Marine Energy, Norse
Bunkers, Oil Shipping Group
acquisitions expand Marine
2004: Tramp Oil to expand
Marine business
1998: BaseOps adds
ight-based services
2007: AVCARD expands
Business & General Aviation
transaction processing capabilities
2008: Texor expands branded
distribution
2009: TGS Petroleum expands
branded distribution
2010: Henty Oil expands
Marine and Land presence
in United Kingdom
2010: Lakeside Oil expands
branded gas/diesel distribution
in Midwestern US
2010: Western Petroleum
expands Land and Avitaion
distribution
2011: Hiller and Ascent expand
Business & General Aviation
and add deicing
2011: NCS expands
government Aviation business
2012: Carter Energy expands
branded gas/diesel distribution
in Midwestern United States
2012: Multi Service Technology
Solutions expands paymentprocessing capabilities
2012: MH Aviation and totalFBO
expand Aviation
2013: U.S. Energy Services
adds natural gas, compressed
natural gas and electricity
consulting services
2016: Associated Petroleum
Products (APP) to provide fuel
& related services to agricultural automotive, construction,
and commercial and industrial
customers in the Pacic
Northwest
2016: Acquisition of ExxonMobil aviation fueling operations at
34 airports in Canada and
France
2014: Watson Petroleum
expands fuel and lubricants
distribution in United Kingdom
2016: PAPCO expands fuel and
lubricants distribution in the
Eastern U.S.
2015: Pester Marketing Company
with its Alta Fuels to expand
terminals and distribution of
biofuels and lubricants to wholesale, commercial, and agricultural
customers in the U.S.
2015: BP's former Statoil Fuel
& Retail Aviation business at 4
general & business aviation
airports in Scandinavia to
expand global presence
2015: Bergen Energy grows
energy & sustainability practice
across Europe
2015: KTM expands energy &
sustainability practice in North
America
2014: Colt International and
Avinode expands presence in
Business & General Aviation
2016: Utilities Exchange Ltd. To
expand consultancy & energy
management services to
commercial and industrial
customers across Europe
2017: Orchard Energy, UX
Energy Services, Professional
Utility Board acquired
2018: OnDemand Energy
Solutions acquired
2019: Our land fuels division
and Kinect Energy division to
converge to become World
Kinect Energy Services
2019: UVair further expands
Aviation
2019: WFS joins UN Global
Compact
2020: Our Aviation division
acquires FBO One
2021: Lykins acquisition
2022: Flyers acquisition
2021: Flyers a
study case / business analysis of Saudi aramco. Project contains:
Part I: COMPANY’S OVERVIEW
· Firm Presentation (name - location - type – size, history…):
Company Name: The Saudi Arabian Oil Company
Type of business: Energy and Petrochemical industry
Date of creation: 29 May 1933 (90 years)
Type of Company: Public for-profit company
Founder(s): The Government of Saudi Arabia
Current CEO: Amin Hassan Nasser
Head office address: Dhahran, Eastern Province, Saudi Arabia
Main products/services: Exploration, production, refining and distribution of oil and natural gas / Petrochemicals / Solar and wind energy
Number of employees: 70000 (2023)
Main Markets: Asia & Far East
Export percentage: Asia (76%), Western Europe (11%), North America (8%), etc.
Annual Revenue: Est. 2022 annual revenue 552.25 billion$
Market capitalization: 1.927 Trillion $ (2023)
Strengths :
Second-largest proven crude oil reserves at more than 270 billion barrels => Large resources
Largest daily oil production of all oil-producing companies => Efficient production process
Most valuable company in the world by market cap, surpassing Apple in May 2022
New market acquisition : Kenya through Valvoline (local presence)
Large global presence with offices in Asia, Europe and the Americas.
Important research investments : Funding global research centers - Lately a 14 million$ investment on drones
· Missions, Values, goals…
· Performance indicators: Revenues, market share, result……
- Presentation of the sector (industry) in which the company operates:
- External analysis in terms of opportunities and threats using:
swot analysis (strength,weakness, opportunity,threats), porter's five forces, Product Mix (4PS: product lines , price , promotions, place) ,PESTEL analysis, STP analysis (segmentation , targeting and positioning ).
Emerging themes in oil and gas industries slide shareGudyne Wafubwa
Oil and gas companies are among the major firms in the world. In the emerging market, the rising demands of oil and gas have put stress on the available market. Additionally, with a daily increase of population, one wonders if the fuel supply at the current state will be in a position to handle the rising demand. On the other hand, major National Oil Companies are in a rush to compete for the dominance of the market in the world. These are among the current themes that are emerging in these firms. Finding ways to cope with them will be of high importance to the market and the world at large. Every part has its themes that are emerging in this field. For instance, it is not common to find that those themes from Russia are the same as those in North and South America
1. Odum 1
Name: Francis Odum
Teacher: Professor Chip Izard
Course: IBUS 1305
5 May 2010
InternationalBusiness Project
Company Name:
Safety Oil Exploration Corporation
Company Description –
Safety Oil Exploration Corporation is a Dallas, Texas-based oil exploration company operating
in the Gulf of Mexico. Although most of its success has come from drilling in shallow waters,
the company has become increasingly involved in riskier, but potentially more rewarding,
deepwater plays. The company has a massive 3-D seismic database of the Gulf of Mexico, one
suitable for a business far larger in size, which has created a competitive advantage for Safety
Oil. From its start in late 2000 until early March 2009, the company has drilled 200 successful
wells out of 270 attempts. As a result, Safety oil boasts proven reserves of 543.6 million barrels
of oil. The company is publicly traded on the New York Stock Exchange. It also looked beyond
the Gulf of Mexico for the first time, announcing in early 2010 that it would be looking into
taking a 12.5 percent stake in a deepwater play in Nigeria. Currently Safety oil has 200 full time
employees and 1000 seasonal/part-time employees, who come on stream anytime we hit a rich
oil well. Most of all our products which are mainly crude oil are meant for domestic
consumption only but with the increase in our production capacity we are targeting the
2. Odum 2
international market – mostly emerging economies such as India and China. We are also
considering developing nations like Nigeria and South Africa.
Country under consideration:
Nigeria.
Current Political Environment:
Nigeria is very important to the region, the continent, yet it remains unsettled as a result of their
President’s uncertain medical condition. Since his return home from Saudi Arabia, the President
has not been seen publicly, generating additional unease about the stability of the country and
physical capacity of the president to lead the government.
In the President’s absence, the Vice President has been holding the country together and has
taken steps to restore confidence in the country’s political system while adhering to democratic
principles. One of the main reasons why the economy is unstable is the unstable nature of the
Niger Delta, where all the oil wells are located – although the government has created an
Amnesty programs which had brought peace to the Niger Delta region without which there can
be no drilling. But this peace initiative could be seen to be very fragile as there are too many
factions to deal with talking about the militants fighting for the lands and water-ways. As you are
making peace with one faction, another faction is breaking away, blowing up oil wells and oil
pipelines as they go. Nigeria has had a democratic government for the past ten years and could
be seen as stable due to the hatred of the military by the people, so there is good reason for the
military to stay in their barracks and not get involved in governance. But there are no guarantees
3. Odum 3
on this issue as was the case when the military took over in a bloodless coup in 1983 after just
four years of civilian rule under President Shehu Shagari.
Financial Stability of Country and Market.
The country of Nigeria in the past few months has had a lot of political and market situations that
has made both the market and the country unstable, such as the up and down swing of the value
of the Naira because of the crack down on commercial banks recently by the Central Bank of
Nigeria (CBN), who fired the board of directors and their CEOs of six of the biggest banks in the
country, but since the beginning of the year when the Vice President became the acting President
the country and market has enjoyed a huge amount of stability. This could be seen as a country
risk because it seems the country does not have a stable government as no one has seen the
President in public since he came back from his medical trip. And because of all the changes in
leadership, this could invariably lead to social and political unrest and instability, government
intervention, bureaucracy, red tape and economic failure.
Products to be sold:
Since we are an oil drilling company, we will be sticking with what we know best and that is
Petroleum products and its derivatives such as lubricating oil, diesel and kerosene.
Our Competitors:
Shell Oil, Chevron, Exxon Mobil, Unipetrol, Total Oil and Nigerian National Petroleum
Corporation (NNPC).
4. Odum 4
Entry Strategy:
Based on my research I have come up with two options when talking about entry strategy –
1. Establishing a company-owned subsidiary. This involves bringing together a Global team
from our Global talent pool made up of diverse person with experience, knowledge, and
skill. These people can later be sent to Nigeria as Expatriate who will then be in charge of
training the host-country personnel. This is a very attractive mode of entry because of the
potential high yield on investment as oil prices just keeps rising.
2. Entering into a joint venture agreement with another established Oil Company or the
Nigerian government itself. This will be an alternative to the above and below are the
advantages with choosing this entry method:
1. Provide Safety Oil with the opportunity to gain new capacity and expertise from
our joint venture partners.
2. Allow Safety Oil to enter related businesses or new geographic markets or gain
new technological knowledge.
3. Access to greater resources, including specialized staff and technology.
4 Sharing of risks with a venture partner.
5 Joint ventures can be flexible. For example, a joint venture can have a limited life
span and only cover part of what you do, thus limiting both your commitment and
the business' exposure.
6 In the era of divestiture and consolidation, JV’s offer a creative way for
companies to exit from non-core businesses.
5. Odum 5
7 Companies can gradually separate a business from the rest of the organization,
and eventually, sell it to the other parent company. Roughly 80% of all joint
ventures end in a sale by one partner to the other.
Marketing Strategy:
Because this type of business requires decision to be made on a country by country basis,
the best marking strategy would be the Multidomestic marketing strategy. In this oil
exploration business its best to create our marketing strategy on the facts that are
available on ground and not by a generally acceptable strategy being practiced worldwide
known as Global Industry. Multidomestic can also be linked to Local Responsiveness,
which has to do with meeting the specific needs of buyers in the host country being
Nigeria. This means we would have to concentrate our production on three major
products which are in very high demand – Petrol, Diesel and Kerosene.
This strategy will be very different from our current one because this will be our first
attempt at breaking into the international oil market, and this will be so because of the
major reason stated above: different country, different environment, different
government, different customers, different mentality, hence the difference in marketing
strategy.
Financing Method:
Since establishing a company-owned subsidiary or a joint venture is our entry strategy,
we would need a huge upfront infusion of cash which we can get from three options:
6. Odum 6
a. Withdrawing cash from our reserves.
b. Getting a loan from a commercial bank with a very good interest rate or
partnering with one in this venture. Or
c. Initial public offering (IPO): Referred to simply as an "offering" or
"flotation," is when a company (called the issuer) issues common stock or
shares to the public for the first time. They are often issued by smaller,
younger companies seeking capital to expand, but can also be done by
large privately-owned companies looking to become publicly traded.
Staffing:
This involves bringing together a Global team from our Global talent pool made up of
diverse persons with experience, knowledge, and skill. These people can later be sent to
Nigeria as Expatriates who will then be in charge of training the host-country personnel
who will be hired on the commencement of drilling operations.
Pricing Strategy:
There are certain factors that have to be looked into before fixing of prices can be
implemented, such as:
Nature of the product
Location of the production facility
Type of distribution system
Foreign market considerations
7. Odum 7
After all of the above has been considered price fixing can then be implemented. From
my research the best pricing strategy would be for Safety oil to enter the market just
below the current market price of oil, so that we can corner a percentage of the market
and after a few months of doing business gradually increase prices to the competitive
levels with other companies in the same business.
Expected Revenue Growth:
Below is the projected sales revenue for four products that we will be producing in
Nigeria. Since Petrol generates the highest revenue for us, I would suggest we concentrate most
of our resources in its production. All monies generated in the chart below are in millions of
dollars.
$0
$1
$2
$3
$4
$5
$6
$7
$8
Petrol Kerosene Diesel Lubricants
1st 6mth
2nd 6mth
3rd 6mth
4th 6mth
8. Odum 8
Conclusion:
An extensive research was carried out to bring this report to this board and my findings as listed
above has a lot of reasons why we should invest in the Nigerian oil market, but after further
evaluation I will advice this board to hold off on going into this emerging market for the
following reasons:
Country risk: Nigeria, it seems has a very unstable political government which could
change at any time and this could lead to social, political unrest, red tape, corruption,
economic failure and legislation unfavorable to foreign firms. Currently the country is
having issues with its current President who no one has seen in public since November
23, 2009. This might give the military an opportunity to seize power and as they always
do, they scrap all the democratic laws and bring in military decrees which no one can
contest in a court of law. Some of these decrees will not be in favor of any foreign firm
as they would be seen as interfering especially in the oil sector which is their “bread and
butter” in Nigeria. Another problem we might encounter if there is a change in
government would be repatriation of our revenue back to the home office, as a new
government would freeze all repatriation of funds through the local banks to maintain
their local foreign current supply.
Currency Risk: As a new oil firm in Nigeria, we would also face currency risk because
Nigeria’s currency, the Naira is known to be never stable; hence most foreign companies
9. Odum 9
do their business transactions in dollars or any other stable currency (convertible
currencies). This is basically caused by the fluctuating exchange that occurs in Nigeria on
a very regular basis. In the 80s the naira was exchanging against the dollar at a rate of
1:1, but today it’s going for 1:150. This means that any service, supplies or raw materials
we have to pay for in dollars will be really expensive.
Cross-Cultural Risk: This is a situation or event where a cultural miscommunication puts
some human value at stake. And in Nigeria such stakes usually involves someone losing
their live as could been seen with the situation in the Niger delta area of the country
where all of the oil is being produced. The situation there has degenerated so bad that
all the oil companies were ordered to leave or be bombed by the local militants. We
really don’t want to send our employees into such a tense and volatile situation that
could explode at any moment. We know that there is a cessation of hostilities right now
due to the Amnesty program initiated by the government but from our research we
know that this has been broken a few times. This would be too dangerous a place to
start our international branch off.