Expanding Opportunities For Egdon Resources In The Renewables And Offshore Wind Sector – A Market Evaluation Report

Core competencies of Egdon Resources that illustrate its capability for capturing the market

In the present business environment of Oil and Gas Industry, it has become essential for the small organisation to have a strategic plan for expanding their business (Chima, 2011). Evaluating business environment has become highly important for expanding its business in other parts of world.  A company has to analyse market entry opportunities as well as the situation of the industry so as to achieve higher profits (Yusuf, et. al., 2014). Egdon Resources is one such UK based small scale company in this industry. It is having higher potentials for expanding its business of renewable and off shore wind sector. This report highlights the ways in which Egdon can utilise its cross sector capabilities so as to become Energy Company for the future. It also illustrates the business condition of the oil and gas industry as well as the environment that is present there for expanding their business.

This company was established in the year 1997. It is a small business firm that has the potential to expand its business in others sectors related to energy.  Core Competencies of this company will help it in expanding its business in other sectors also. Some of its core competencies are as follows:

• This company has expanded its business at much faster rate as compared to that of many bigger firms.
• Successful records of past for integrating complementary firms through the strategies like Merger and Acquisition (Edgon Resources Plc, 2017).
• A strong use of technological advancements has helped company in managing its present and future business activities.
• It is having highly reliable supply chain which will be the key factor in expansion into new sectors.
• Highly trained and skilled employees have been developed through series of training and learning program. They add value to the product and services that the cited company is offering to its consumers.
• Higher consumer satisfaction has been achieved by the company through the use of dedicated CRM.
• Good returns on capital expenditure have been trade mark for the company. They were relatively successful in executing new projects and hence generating good returns.
• This firm has strong free cash flow that gives resources in the hands of organisation to expand into new projects.

It is essential that company take care of competitiveness in the industry so as to understand whether company can enter into a new sector or not (Shuen, Feiler and Teece, 2014). Porter’s five force analysis is very effective in this regards.

• Competition: There are many big competitors in the market such as British Petroleum. They are highly capable to change the market trends which are harmful for the firm who did not have high amount of resources.
• Threat of new entrants: There is large amount of investment that is needed by the companies for setting up their plant. It is difficult for the new firms to make such a large investment and gain profits. It makes this threat less harmful for Edgon Resources. Prices of refining of fuels have increased a lot which further reduces the profit margins and hence it is difficult for the companies to raise its funds.
• Bargaining power of suppliers: This Company has made strong bonds with their suppliers. There are lot of suppliers in the market and hence resulting in the reduction of their bargaining power. Edgon Resources is a smaller firm and hence it needs to take proper care of its suppliers so as to maintain their operational standards.
• Bargaining power of consumers: There are lot of companies that is operating within the industry some are big and some are small (Inkpen and Moffett, 2011). This ultimately results in the reduction of bargaining power of consumers as they have large choices to make. In the future also the competition is going to increase and hence they will have to be ready for it.
• Threat of substitute: Renewable resources are the only future of the oil and gas industry as the non-renewable resources are depleting at a much faster rate. This threat is on the higher side. It has become essential for Edgon Resources to make sure that they use their competencies for entering into the business of new renewable resources.

There is large amount of market opportunity available with this company and they are very capable to grab them. These opportunities are in the field of renewable energy sources like the offshore wind (The future of oil and gas, 2017). Apart from this it is also essential for the company to make some advancement in the field of harnessing solar energy.

It is also to be understood that there are many changes that are taking place in the industry (Ng and Donker, 2013). This has reduced the profitability of the company as it has to make many changes in its organisation especially in the field of use of technology. This requires a whole lot of investment which is a challenge for the company.

If this company aims to enter into new cross sector of business then they have to make strategies for transforming their business. In the due process they have to make sure that their focus does not deviates from what their business goals are. On the other hand it is also essentially to be noted that Egdon has seen a considerable decline in its performance due to the various political and economic instabilities in UK (Eikeland, 2011).

Porters five force analysis for analyzing competitiveness

In the coming Five years, Edgon Resources aims to optimise its profitability through various kinds of investments in many fields of energy. This will help company in ensuring its long term profits and hence marking a considerable success in the future. There is large scope of generating higher profits in switching to the new fuel industry especially the renewable resources (Darbouche, 2011). This is due to the fact that the cost of production or refining of renewable resources is less and the hence larger profits can be generated.

This is a framework that helps to determine whether there is a chance of entering into new market (Masini and Menichetti, 2012). This situation deals with the study of variables that could affect the profitability of the company.

• Product: It is equipment which is having fewer amounts of substitutes that is as successful as it is. Life cycle of product is very large.
• Customer: Every section of the society is dependent on the goods that are produced by the company in some or the other way. Each segment is dependent on the distribution channel named gas or oil stations (Tietenberg and Lewis, 2016). It is easier to avail their products as there are larger numbers of distributors present in the market.
• Company: Cited firm is doing good business but in the last few years it has seen a considerable decline in its performance. Its financial situation has been good but due to the hiccups in the UK economy it has become essential for the firm to make sure that they invest by making a comparative study of the market.
• Competition: There is a competition in between the firms within this industry (Strantzali and Aravossis, 2016). It helps to understand the fact that there is larger number of companies that have come in the supply of Oil and gas Industry.

The strategies need to be made with proper analysis of all the variables. In this regard PWC strategy can be highly beneficial for the firm and will help in achieving higher growth rates.

Conclusion

From the above based report it can be concluded that there are many small and large firms that are operating in the Oil and Gas Industry. Edgon Resources is one such smaller firm but is having a large capability to grow. It can take use of core competencies for grabbing the market opportunities present in the field of renewable resources or offshore wind energy. It is crucial that firm understands the competition it is facing in the market from its big competitors. They are having larger amount of resources and hence having greater potential for changing the trends of the market. It is not an industry that is attracting the new investors due to the decline in the performance of many old firms. This makes the chances of Edgon resources generating higher profits larger as well as ensuring long term profits for the company. The future of the Industry revolves around the renewable resources. Companies needs to invest after making a complete evaluation of the trends in the market as well as the profitability it can ensure in the coming five years or so.

References

Chima, C.M., (2011) Supply-chain management issues in the oil and gas industry. Journal of Business & Economics Research (JBER), 5(6).

Darbouche, H., (2011) The implications of the Arab uprisings for oil and gas markets.

Edgon Resources Plc, (2017) Annual Report and Financial statement. [Online]. Available at: https://www.egdon-resources.com/wp-content/uploads/2017/11/Egdon-Resources_AR17.pdf [Accessed on: 27^th February 2018].

Eikeland, P.O., (2011) The Third Internal Energy Market Package: New Power Relations among Member States, EU Institutions and Non?state Actors?. JCMS: Journal of Common Market Studies, 49(2), pp.243-263.

Inkpen, A.C. and Moffett, M.H., (2011) The global oil & gas industry: management, strategy & finance. PennWell Books.

Masini, A. and Menichetti, E., (2012) The impact of behavioural factors in the renewable energy investment decision making process: Conceptual framework and empirical findings. Energy Policy, 40, pp.28-38.

Ng, A. and Donker, H., (2013) Purchasing reserves and commodity market timing as takeover motives in the oil and gas industry. Energy Economics, 37, pp.167-181.

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Strantzali, E. and Aravossis, K., (2016) Decision making in renewable energy investments: a review. Renewable and Sustainable Energy Reviews, 55, pp.885-898.

The future of oil and gas, (2017) Why we still need oil and gas in the future. [Online]. Available at: https://www.siemens.com/innovation/en/home/pictures-of-the-future/energy-and-efficiency/the-future-of-oil-and-gas-trends.html. [Accessed on: 27^th February 2018].

Tietenberg, T.H. and Lewis, L., (2016) Environmental and natural resource economics. Routledge.

Yusuf, Y.Y., Gunasekaran, A., Musa, A., Dauda, M., El-Berishy, N.M. and Cang, S., (2014) A relational study of supply chain agility, competitiveness and business performance in the oil and gas industry. International Journal of Production Economics, 147, pp.531-543