An Analysis of the Joint Venture Between Petrochina and Ineos : Is It a Competitive Strategy Initiative by Petrochina?

4961 Words Oct 4th, 2012 20 Pages
ABSTRACT:

Petrochina, one of the largest companies in the world, has

established a joint venture with Ineos refining in 2011, with strategic motives to attain competitive advantage and core competence. From the context of corporate strategy and joint ventures, a joint venture is the best way to share and utilize the complementary assets from another company with low risk compared to any other process such as acquisitions. Using the resource based theories such as PESTEL and VRIN , the paper has derived that Ineos will contribute to build a core competence and competitive advantage through its distinctive capabilities. The several issues faced by the firm such as low market demand for oil products, threat of take over and complexities
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Major reasons for this decision can be several such as expectation of sustained growth of oil consumption, in spite of the deepening public debt crisis in the developed countries, continuous weakness of the global economy and turbulence of the world oil market and geopolitics (3E Information Development & Consultants, China Refining Capacity Survey (2011-2012)).To attain the goals of this decision Petrochina (PC), the largest oil and gas distributor in china and one of the largest companies in the world has put forward its development strategy in action i.e. the use of joint venture agreements. Due to the large scale nature of the industry JV's are the best ways to access the core competence of other companies. The aim of this report is to critically analyze the strategic opportunities of the JV between PC and Ineos using resource based theories. Therefore the paper follows the methodology of understanding the broad macro environment of Europe , market dynamics of Europe, and measuring the contribution of strategic capabilities that Ineos can provide. 1.1 COMPANY TEXT In the downstream sector, PC engages its refining operations in china through 26 refineries located in 8 provinces in the northern region of china. In 2011, the Company’s refineries processed 984.6 million barrels of crude oil and its crude oil processing load amounted to 92.0%. The Company produced 87.15 million tons of gasoline, kerosene and diesel in 2011…

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