Global Business Context Environmental Report - Petrochemical Industry

Throughout the following report you will read about UK based company, Global Ventures Plc and their ongoing expansion into international markets. Global Ventures has no prior involvement in the target petrochemical industry and therefore it is essential that the environmental audit covers as much detail to ensure the expansion is a success.

The report will cover several key areas, namely the Product Market to be Investigated, Scope of Entry into the Market, The Opportunities and Threats Facing Companies and Possible Barriers to Entry. These areas should provided good coverage of the key areas which will affect the viability of development in the countries specified.

Product Market to be Investigated

Global Ventures is currently looking at expanding into the Aviation Fuel Industry, namely the supply of fuels to expanding and developing countries. This will include investment and research into refinement, distribution channels and storage facilities. The demand for aviation fuels has grown progressively over the past decade and this trend looks set to continue with the expansion of emergent countries across the globe. Global Ventures is looking to fill these markets through superior supply networks, increased reliability and enhanced distribution facilities.

Solely focusing on the supply of fuel and avoiding the extraction and refinement processes means Global Ventures will reduce initial costs, making entry easier.

The market is not exclusively limited to leisure flights such as holidays, major demand also lies in commercial use for export and imports and also increasingly in business travel. All three areas build on each other and are a source of continuous development; this is a prime situation for a new business to be set up.

Recommendations of International Scope of Entry into the Market

South America – Chile

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Chile has a market-oriented economy characterised by a large quantity of foreign trade. As can be seen above Chile is heavily dependant on its foreign imports, the majority of which are oil to cover its shortfall in production, in particular petroleum products are required, alongside crude oil for chemical manufacture. Chile’s demand for imports equates to 212,900 bbl/day or 4.7 barrels per inhabitant, making the supply crucial for the sustained development of South America’s fastest growing economy.

Chile is one of South America's most stable and prosperous nations. It has been relatively free of the coups and arbitrary governments that have blighted the continent (BBC News, October 2008), which in turn has prompted exceptional growth.

Chiles GDP has risen at a constant rate around 4.5% for the last 10 years, accompanying this there has been an increase in GNI allowing a greater disposable income and rising prosperity.

Royal-Dutch Shell operates at the following 3 locations within Chile; Santiago, Punta Arenas and Iquique but there are 59 airports able to accommodate a Boeing 737 / Airbus A320. The majority of the airports are supplied by independent, local companies that do not have the capital of the petroleum giants. This makes entry into the market substantially easier than competing with well established companies due to fewer entry barriers.

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