The process of globalization, the constant search for economies of scale and the more efficient allocation of scarce resources are some of the commonly identified drivers of internationalization. The opening of more and more economies worldwide to foreign capital
and international trade leads us to the question if any economy could still exist as an autarkic market without sacrificing prosperity.
Expanding into foreign markets does not simply mean for a firm to benefit from growth opportunities, it also implies accepting the challenge to compete with firms in a completely diverse country.
As regards the specific case of Energy firms, we have to consider that these kinds of industries differ significantly from other sectors of the economy. Taking this into consideration, it is crucial for us to analyze the differing corporate strategies of these firms in order to figure out the decisive underlying values, processes and aims. Despite the fact that the choice of the suitable entry mode is one of the most frequent empirically analyzed topics in International Business, it is often not possible to follow exactly
a theoretical Internationalization theory. Firms rather combine different approaches in order to figure out an individual strategy – most suitable for the corporation.
This thesis will analyze how Energy companies find out this perfect approach, which criteria they take into account, how these criteria are ranked according to the individual importance and in general,
what motives exist for expanding abroad. Furthermore, the author will analyze the development of energy firms in the past as well as
current and future trends by drawing comparisons with other companies in the extractive industry.
Table of Contents
1 Background / Introduction
1.1 Academic relevance – Research Gap
1.2 Objective of the thesis
1.3 Structure of the thesis
2 Development of the energy sector in the past
2.1 Early activities, early organization. Energy firms start to internationalize.
2.2 Energy market liberalization
2.2.1 Benefits of and barriers to the liberalization of the market
2.2.2 Consequences for European energy companies as well as for global big-players
2.3 Managing governmental energy policy - the role of the state in the energy sector
3 The global, liberalized energy industry of today
4 Identification of current trends in the energy sector
4.1 The wave of M&A and strategic alliances
4.2 The evolution of “National Champions”
5 Analysis of the expansion strategy of global players in the energy sector
5.1 British Petroleum
5.2 Royal Dutch Shell plc.
5.3 Gazprom
5.4 To what extent do companies follow theoretic Internationalization Theories?
6 The energy industry as one part of the extractive industry
6.1 Extractive Industries – Definition and Characteristics
6.1.1 The obsolescing bargain in the extractive industry
6.1.2 Foreign-Investor host-country bargaining
6.2 Motives for Internationalization in extractive Industries
6.3 The global mining industry with regard to the Expansion Strategy of the MNC BHP Billiton
6.3.1 Definition
6.3.2 Structure of the global mining industry
6.3.3 Business Strategies in the global mining industry
6.3.4 FDI in the global mining industry
6.3.5 BHP Billiton – The Internationalization Strategy of a Small-country firm
6.3.6 The Internationalization Model – A suitable underlying theoretical framework for Expansion Strategies in the mining Industry?
Objective and Research Focus
This thesis examines the internationalization strategies of energy firms, analyzing how these companies navigate market entry challenges, corporate strategies, and the influence of government policies. The primary research objective is to determine how global energy players align their expansion strategies with established internationalization theories, while identifying similarities and differences in their operational approaches.
- The impact of energy market liberalization on corporate strategy.
- Trends in M&A, strategic alliances, and the evolution of "National Champions."
- Comparative analysis of expansion strategies for major global players (BP, Shell, Gazprom).
- Application of the Uppsala Model to the energy and mining sectors.
- The influence of governmental policy and resource-seeking motives in extractive industries.
Excerpt from the Book
2.2 Energy market liberalization
Since 2004, when the first EU directive entered into force, industries and private households are in theory able to choose their energy and gas supplier freely in a competitive market place. The second directive was adopted in 2007. However, many obstacles remained, with a single European energy market still far from reality. Consequently, corrective action was promised by the European Commission, which made further legislative proposals:
• The Commission obliged companies, which control both energy generation and transmission, to sell parts of their assets. Shareholders would be able to keep their participation in the group via a system of “share-splitting”, whereby two shares are offered for each existing share.
• The ISO (Independent System Operator) option was a kind of compromise introduced from the Commission, which states that companies involved in energy production and supply would be allowed to retain their network assets, but would lose control over the management of these assets. Important decisions would be left to an independent company (ISO), to be designated by national governments with the Commission’s prior approval.
• The ITO (Independent Transmission Operator) reflects basically the same idea of the ISO option: In order to retain ownership of their gas and electricity grids, companies have to give up daily management to an independent transmission operator. However, by setting up a framework for ensuring the independent operation of the transmission network, they are able to retain important decision-making.
Summary of Chapters
1 Background / Introduction: Defines the scope of the thesis, outlines the research gap regarding internationalization processes of energy firms, and presents the core objectives.
2 Development of the energy sector in the past: Analyzes the historical evolution of the oil industry, the impact of the energy crisis, and the subsequent liberalization of energy markets.
3 The global, liberalized energy industry of today: Identifies key determinants influencing contemporary energy firms, including globalization, technology, and supply/demand dynamics.
4 Identification of current trends in the energy sector: Discusses the prevalence of M&A, the convergence phenomenon, and the rise of state-backed "National Champions."
5 Analysis of the expansion strategy of global players in the energy sector: Provides a detailed case study analysis of BP, Royal Dutch Shell, and Gazprom, assessing their internationalization trajectories.
6 The energy industry as one part of the extractive industry: Compares energy strategies with the broader mining industry and evaluates the applicability of the Uppsala Model to extractive resource firms.
Keywords
Internationalization, Energy Sector, Liberalization, M&A, Strategic Alliances, National Champions, British Petroleum, Royal Dutch Shell, Gazprom, Extractive Industries, Uppsala Model, Foreign Direct Investment, Market Entry, Corporate Strategy, Resource-seeking.
Frequently Asked Questions
What is the primary focus of this thesis?
The work focuses on the internationalization strategies of global energy firms and examines how they adapt to changing regulatory environments and global market dynamics.
What are the core research areas of the document?
The core areas include the history of the oil industry, energy market liberalization, M&A trends, the role of National Oil Companies, and the strategic expansion of companies like BP, Shell, and Gazprom.
What is the primary objective or research question?
The thesis aims to classify existing literature on energy firm expansion to identify similarities in strategy, motivations, and the extent to which these firms follow standard internationalization theories.
What methodology is employed by the author?
The author performs a literature review and a comparative analysis of corporate expansion strategies, drawing parallels between energy firms and the mining industry.
What does the main body of the work cover?
It covers the evolution of the energy sector, the impact of EU directives on liberalization, the rise of M&A as a growth driver, and specific case studies of global oil and gas majors.
Which keywords best characterize the work?
Key terms include Internationalization, Energy Sector, Liberalization, M&A, National Champions, Extractive Industries, and the Uppsala Model.
How does Gazprom's strategy differ from private oil majors?
Gazprom’s strategy is heavily influenced by state-centric policies and its status as a monopolist in Russia, whereas private firms like BP and Shell prioritize profit, ROI, and performance-based international expansion.
Why is the Uppsala Model discussed in the context of the mining industry?
The model is used to assess whether mining companies follow a gradual expansion path; the thesis concludes that because mining is resource-seeking, companies often deviate from this model to secure specific assets.
- Arbeit zitieren
- Martina Geistberger (Autor:in), 2011, The Internationalization of Energy firms, München, GRIN Verlag, https://www.grin.com/document/186865
