Strategic Analysis

STRATEGIC ANALYSIS OF PETROCHINA Student’s Name Course Name of Professor University Date Strategic Analysis of PetroChina Introduction The competitive nature of the international business environment necessitates that organisational leaders put in place measures to ensure success and prevent failures. Setting up such measures and orienting the business for success requires a careful examination of the forces within and without the organisation that shape operations. Managers in organisations thus have to employ several tools in order to understand how their operations are influenced by changes in the business environment. While there are many tools employed by organisations to examine the business environment, PESTEL analysis is a framework that is extremely valuable for such an analysis. This paper presents a strategic analysis of PetroChina, using the PESTEL analysis tool. Background of PetroChina PetroChina is a China-based state-owned company incorporated in 1999 after the China National Petroleum Corporation (CNPC) was restructured (PetroChina, 2022). The company is a major distributor and producer of oil and gas not only in China but also in the global market. In this sense, the company carries out the exploration and production of oil and gas in many countries around the world. Specifically, the company has operations in the Middle East, Central-Asia Russia, Latin America, Africa, and Asia Pacific (PetroChina, 2022). Other key activities of the company include refinery of crude oil, transportation of oil and gas, and trading of refined oil and non-oil products (PetroChina, 2022). The operations of the company are aided by about 398,400 employees distributed across the company’s divisions (PetroChina, 2022). Given the large-scale operations of the organisation, it must constantly monitor different elements of its business environment to ensure continued success. PESTEL Analysis PESTEL analysis is a valuable framework that can be used to understand the forces in the environment that shape the operations of an organisation. According to Gamble et al. (2021), PESTEL analysis is a useful tool for assessing the components of an organisation’s macro-environment. These components include political, economic, sociocultural, technological, environmental, and legal forces (Gamble et al., 2021). The sections below examine how these components affect PetroChina's environment. Political Analysis The political analysis component of the tool is concerned with the political processes and policies that are shaped by the government and can include aspects such as fiscal policy, tax policy, and political climate (Gamble et al., 2021). As a firm with operations in many parts of the world, it is important for the organisation to be aware of how political situations in different places can affect its activities. Political instabilities in various regions in which it operates can significantly hamper its operations. As determined before, one of the areas in which the company has operations is the Middle East, which is one of the most politically unstable regions of the world. In the recent past, the region has been plagued with civil unrest and war. According to a 2035 forecast of the region by Ismail (n.d.), political instability in the region is likely to continue due to increasing authoritarianism. If governments in the region do not combat inequality, corruption, and economic hardship, there is a high likelihood that protests and war will continue (Ismail, n.d.). In essence, the political instability that characterises the key operational regions of PetroChina can impact significantly the exploration, distribution, transportation, and sale of oil and gas. It is important to recognise that the Middle East is a key source of oil and gas, which are the main products the company deals with. In essence, PetroChina must closely monitor the events in the Middle East and develop an informed approach. Another political force that can influence the operations of the organisation is the potential war with Taiwan that could be intervened by the US. According to Beckley and Brands (2024), China is amassing planes, ships, and missiles, with the country planning to take over Taiwan. If indeed China invades Taiwan, the action is bound to shake the politics of the globe in the sense that countries will take sides. As a state-owned corporation, the operations of PetroChina could be severely impacted particularly because it has operations in many countries. Countries allied to the US could interfere with the operations of the organisation. Political instability in Myanmar has also had damaging effects on the activities of PetroChina. According to Petrol Plaza (2023), Petro-China’s acquisition of service stations in Mnyanmar was marked by attacks by a local guerilla group targeting Chinese-backed projects. Furthermore, Petro Plaza (2023) reported that the guerilla group attacked oil and gas pipelines funded by the Chinese government. With such attacks on the infrastructure that support the operations of the company, its ability to grow is limited. Economic Analysis Economic analysis is the second element under the framework. It involves examining the general economic climate as well as key economic factors such as economic growth rate, unemployment rate, exchange rates, inflation rate, and per capita domestic product (Gamble et al., 2021). In addition, economic analysis also encompasses the assessment of stock and bond markets, market size, and market g...