DON HONORIO VENTURA STATE UNIVERSITY

Cabambangan, Villa de Bacolor, URL: http://dhvsu.edu.ph

Pampanga Philippines Tel No. (6345)458 COLLEGE OF ENGINEERING AND ARCHITECTURE OFFICE OF THE DEAN
0021; Fax (6345)458 0021 Local 211 cea@dhvsu.edu.ph

IOM 213 –
INDUSTRIAL
ORGANIZATION AND MANAGEMENT ACTIVITY 3

Name: Date:
Course & Section: Score:

I. Environmental Scanning Analysis (100 points each):

1. Select a well-known company that will serve as your study locale. Identify the external factors that
might affect the organization. Use proper citation and references.

Work Allocation:
- K. Navarro - PESTEL Analysis: #1 and #2; Porter’s Five Forces Analysis: #3 and #5
- L.J. Abarte - PESTEL Analysis: #3 and #4; Porter’s Five Forces Analysis: #4
- J. Yanga - PESTEL Analysis: #5 and #6
- V. Pamintuan - Porter’s Five Forces Analysis: #1 and #2

PESTEL Analysis
External Factors Name of Company Opportunity/Threat Effect to the
Organization

1. Political Factor Petron Although it's not always These kinds of

the case, regulation is corporations
the main method that adopt
politics can impact the bureaucratic
oil market. An oil and regulations with
gas firm is typically few direct
 subject to a number of financial
laws that place incentives for
restrictions on the employees to
where, when, and how follow the
of extraction. State to principal's
state variations in how preferred course
laws and regulations are of action. These
interpreted are also limitations,
possible. However, nevertheless,
when oil and gas might cause
corporations are rigidity and
working on reserves delays.
abroad, political risk
tends to rise.

2. Economic Factor Petron In the past, factors Oil and gas

driving up pricing prices will
included geopolitical drastically drop,
unrest, hurricane and credit
seasons, Mississippi availability will
River flooding, and decrease, as a
increased demand for result of the oil
travel during the and gas
summer driving season. industry. Oil
Each of us spends more and gas
at the pump as a result companies will
of increasing gas costs, see a decrease
which leaves us with in revenue as a
less money to spend on result of the
other goods and price downturn.
services. However, Due to
increasing gas prices restrictive credit
 have an impact on the circumstances
economy as a whole, brought on by
not simply on how the financial
much it will cost to fill crisis, many
up at the gas station. explorers and
producers may
In contrast, when gas be forced to pay
prices drop, both high interest
individuals and rates when
companies may fill up acquiring cash,
their tanks for less which may hurt
money, which their ability to
significantly lowers generate future
expenses for profits.
transportation-related
firms like truckers and
airplanes, but also has a
negative impact on the
domestic oil sector.

3. Socio-Cultural Factor PETRON Petron Corporation is Our growing

the largest oil refining retail presence
and marketing company means new
in
opportunities to
the Philippines and is a our countrymen
leading player in the to
Malaysian fuel industry.
We participate in
the downstream
have a combined business
refining capacity of
268,000 barrels-per- with a company
day, producing they can trust,
and in
a full-range of world-
class fuels and doing so,
petrochemicals to fuel generate more
the lives of employment
and
millions of Filipinos
and Malaysia. economic
activity. Our
logistics
upgrades

also drive
progress in our
communities as

we partner with
local
businesses.

the single
largest
investment
made by a

Filipino
company in the
country, powers

key industries
 and testifies to
the Filipino’s

innate ingenuity
and talent.

4. Technological Factor PETRON Honeywell UOP will This is a major

provide the basic expansion of
engineering design, refining
licensing and services capacity in the
for a condensate Philippines, and
fractionation unit, it will help the
naphtha , and UOP  , country satisfy
LPG and kerosene  and its growing
distillate units. These demand for
technologies will enable cleaner-burning
Petron to meet growing gasoline and
domestic demand for diesel with
motor fuels by domestic
upgrading 100,000 production,
barrels per day of "The expansion
condensates and light also adds a
crude oils to aromatics second
and automotive fuels. aromatics train
for Petron so it
can better meet
the growing
demand for
those products
in the region."
 5. Environmental Factor

6. Legal Factor

Porter’s Five Forces Analysis

External Forces Low/High Effect to the Organization

1. Bargaining Power of Suppliers If the buyer does The possibility for profit in a sector is
not account for a diminished by the presence of strong
significant amount suppliers. Threatening to increase prices
of the supplier's or lower the quality of goods and services
sales, the supplier helps suppliers enhance competition.
has strong They therefore lower profitability in sectors
bargaining where businesses are unable to pass on
leverage. When cost increases to consumers through
completing an higher prices.
examination of
supplier power in https://strategiccfo.com/
an industry, low
supplier power
produces a more
appealing industry
and boosts profit
potential because
customers are not
bound by suppliers.
Of course, if the
contrary is true for
any of these
criteria, supplier
power is high.
Because
 customers depend
more heavily on
suppliers,
industries with high
supplier power are
less desirable and
have lower profit
potential.

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2. Bargaining Power of Buyers Buyer power is The pressure that customers can apply to
high if buyers and enterprises to persuade them to offer
sellers are more better products and customer service at
closely clustered cheaper prices is referred to as "buyer's
than if there are bargaining power." Strong customers can
many buyers and therefore exert pressure on vendors to
 few vendors. reduce costs, enhance the quality of their
Conversely, if goods, and provide more and better
switching costs— services.
the expense of
moving from one https://strategiccfo.com
seller's product to
another seller's
product—are low,
consumers have
greater bargaining
power.

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3. Threat of New Entrants The risk of new This causes the industry to be appealing
entrants is thought when there is little risk of entry from
to be low in the oil new players because entry barriers are
industry. This high. As a result, already-existing
viewpoint is businesses can benefit from greater
justified by the profit potential. Oil industry loses appeal
fact that if there are many potential competitors
establishing a and minimal entry barriers.
petroleum
company in an
area requires a
sizable capital
investment, along
with the
construction of
extraction
facilities and the
establishment of
 global supply
chain systems.

4. Threat of Substitute The oil industry When new competitors enter into an
is viewed as industry offering the same products or
having low threat services, a company’s competitive
to new entrants. position will be at risk. Therefore, the
The reason behind threat of new entrants refers to the ability
this is that setting of new companies to enter into an
up a petroleum industry. It is afunction of both barriers
company requires to entry and the reaction from existing
massive capital competitors.The major barriers to entry
investment. in the industry are economics of scale,
Therefore, new consumer switching costs, government
entrants find it regulations, product differentiation,
difficult to capital requirements and access to
establish business distribution channel.
in the oil industry.

5. Industry Rivalry Given the Intense competition in the oil and gas
enormous sector can reduce earnings and spur price
incentives for reductions, higher advertising costs, and
conflict, there is investments in service/product
some evidence that innovation and improvement.
competition in the
oil and gas sector
is particularly
intense.

References: https://www.investopedia.com/articles/fundamental-analysis/12/5-biggest-risks-faced-by-gas-
and-oil-companies.asp
https://www.investopedia.com/financial-edge/0511/how-gas-prices-affect-the-economy.aspx
https://corporatefinanceinstitute.com/resources/knowledge/strategy/threat-of-new-entrants/#:~:text=A%20low
%20threat%20of%20new,are%20low%20barriers%20to%20entry.
https://www.porteranalysis.com/porters-five-forces-of-oil-industry/
https://liu.cwp.libguides.com/5forces/CompetitiveRivalry
https://www.researchgate.net/publication/
332632145_Competitive_Analysis_of_the_Global_Oil_and_Gas_Industry_using_Porters_Five_Forces_Mod
el