The title of the case study is “How Technology is reshaping supply and demand for natural resources”?
The emergence of a multi-polar world in the new millennium has driven the world to a mad rush for oil and other non renewable sources of fuel in the emerging economies of the world. The presence of a large number of companies in the emerging economies of the world and their control over the majority of the World’s oil and hydrocarbon reserves has changed the global outlook. A large number of neutral studies by different companies on the same subject has shown the period between 2010 and 2020 to be the theme for the transformation and the growth of a new culture in oil production. The following report has been formulated to critically evaluate the emerging themes of the company as well as gain an insight into the macro-economic environment of the mentioned sector. The report has started with the following introductory part and will take its course with the critical evaluation of a case study that is based totally on the new age determinants of the oil sector. The critical evaluation has been completed by means of a thorough study and determination of different authors on different types of elements in the oil sector industry. A detailed analysis of the different themes has also contributed to the make the study more compact and effective in nature.
The following case study has dealt with the reshaping of the energy sector using the most modern forms of technology to adapt to the sustainable needs of the future. The case study throws light on the use of renewable sources of energy as well as the use of modern technologies like drones, robotics and many more as such by McKinsey and Company to make it more ready to the future technological challenges (trailblazerssforum.com. 2018). The world of commodities over the past 15 years has undergone a massive change in terms of price and demand. It first saw the rise in the prices of oil, gas and other metals and also experienced a sudden crush in the prices of these commodities over the next few years. Now as the resource companies and the exporting countries are gradually picking up the pieces, a disruptive future lies ahead in the coming few years. The adoption of the robotics technology, use of the artificial intelligence, Internet of Things and use of complex yet accurate data analysis techniques including the macroeconomic trends in the market have led to the chang4 in the consumer behavior. Such a change in the behavior of the consumers has transformed the process by which the resources are consumed and produced. The case study has also highlighted on the demand side of the consumers where a reduction in the consumption of the energy and use of more energy efficient and renewable sources of energy are being constantly preferred by the different organization. The use of such energies has been recently seen in homes, commercial purposes, transportation and other similar uses (Appiah-Adu 2016). The innovation in the technological field is also helpful to bring down the cost of the renewable sources of energy.
Throwing light on the supply side the authors clearly describes the increasing capability of the producers and the companies to put the different range of premium technologies into common use by effectively and efficiently using the mines and wells, raise the efficiency of the drilling and extraction technique, predictive maintenance and many more as such. The following case study clearly focuses on these trends and finds out that they have the capability to unlock around $900 billion to $1.6 trillion within the year 2035 in view of the global economy (Ariweriokuma, 2009). The largest portion of the following savings amount will be generated from the reduced demand for traditional energy sources. However the study predicts the abrupt rise in the price of the oil in the coming decade. However the following totally depends on the capability of the oil producers to adapt themselves with the new technological challenges in the industry. The research however concludes with the fact that changes in the coming years will be very much complex in nature. However the more the changes are complex, the more is their chances of higher returns.
Figure 1- Annual Oil and Gas Venture Investment
Source: (Bessant Kaplinsky and Lamming, 2003)
As said earlier, Perrons and Jensen (2015) has mentioned that technological advancements is aimed to pick up by a large amount in the coming years and the figures may stand out at a whooping amount of $1.6 trillion. The rising demand for the non renewable sources of energy have provided the platform for the development of different forms of other sources of energy and their utilizing sources in different fields. In contrary Reinhardt and Gurtner (2015) says that, there has been a sudden increase in the efficient energy use in the world which includes energy saving home appliances, energy saving cars and many other kinds of similar items. The advancements in the technological sector will lead to the fall in the cost of the non renewable sources of energy which in turn will lead to both the rise in the demand and price of the renewable sources of energy. Thus the study clearly explains the rising trend of the renewable energy sources in the globe.
Figure 2- Comparison of US and UK oil sector
Source: (Appiah-Adu 2016)
The Main themes that can be utilized by other business houses of the modern era are as follows;
Political- The gradual shift of the political powers to the hands of the new emerging economies of the world are changing the oil and gas industry of the world. The consumption of most of the produced oil has seen a shift from the developed to the developing countries of the world. Thus political factors contribute a great deal to the emerging themes of the mentioned industry (Appiah-Adu 2016).
Technological- As mentioned earlier the advancement of technology in the modern times has changed the way the companies approach the policies. The management of the companies have implemented the latest set of technologically advanced approaches to get the best results.
Demographic- The changes in the demographic factors have highly contributed to the change in the oil and gas industry. The rise in incomes, change in gender policies, migratory aspects has all contributed greatly to the current state of the global oil and gas industry.
Social Trends and Shifts- The rise in income has led to the increase in the demands of the people as each of them wants to lead a better life (Vecchiato 2017). There has been a sudden increase in the demand for automobiles which has increased the carbon footprint of the globe. Thus there has been a rise in the production of electric vehicles which has been influential to the change of the industry outlook.
Industry Globalization- Globalization of the industry and the application of new technologies has been a successful venture in the overall change in the market trends.
Figure 3- Global CAGR
Source- (Vecchiato 2017)
A thorough analysis of the total report can provide some recommendations for the oil and gas sector. They are as follows;
References
Appiah-Adu, K., 2016. Governance of the Petroleum Sector in an Emerging Developing Economy. Routledge.
Ariweriokuma, S., 2009. The political economy of oil and gas in Africa. London and New York: Routledge.
Bessant, J., Kaplinsky, R. and Lamming, R., 2003. Putting supply chain learning into practice. International Journal of Operations & Production Management, 23(2), pp.167-184.
Lee, I. and Lee, K., 2015. The Internet of Things (IoT): Applications, investments, and challenges for enterprises. Business Horizons, 58(4), pp.431-440.
Muralidhar, K., 2010. Enterprise risk management in the Middle East oil industry: An empirical investigation across GCC countries. International Journal of Energy Sector Management, 4(1), pp.59-86.
Perrons, R.K. and Jensen, J.W., 2015. Data as an asset: What the oil and gas sector can learn from other industries about “Big Data”. Energy Policy, 81, pp.117-121.
Reinhardt, R. and Gurtner, S., 2015. Differences between early adopters of disruptive and sustaining innovations. Journal of Business Research, 68(1), pp.137-145.
Trailblazerssforum.com. (2018). Oil and Fluid Capacities – Trailblazer SS 6.0 Forum. [online] Available at: https://www.trailblazerssforum.com/forum/viewtopic.php?t=170 [Accessed 23 Apr. 2018].
Vecchiato, R., 2017. Disruptive innovation, managerial cognition, and technology competition outcomes. Technological Forecasting and Social Change, 116, pp.116-128.
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