StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Analysis of BG Group Plc - Coursework Example

Cite this document
Summary
"Analysis of BG Group Plc" paper focuses on one of the leading oil and gas producers in the United Kingdom. The company currently operates in 25 nations across the globe. The major business includes Liquefied Natural Gas (LNG). The company is the leading LNG supplier in the United States…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER95.9% of users find it useful
Analysis of BG Group Plc
Read Text Preview

Extract of sample "Analysis of BG Group Plc"

?Choose ONE product/service of a popular company or any company which is listed on a stock exchange market Contents Introduction 3 Demand and Supply Factors 3 Market Structure 3 Necessities to compete in the market 4 Elasticity Concepts 5 Efficient use of resources 5 Economic Growth 5 Unemployment 5 Inflation 5 Balance of Payments 6 Business Cycle 6 Reference 6 Introduction The company that has been taken in the essay is BG Group Plc, one of the leading oil and gas producers in United Kingdom. It has set its head quarters in Reading after the company came in the picture in 1996. The company currently operates in the 25 nations across the globe. The major business includes Liquefied Natural Gas (LNG). The company is the leading LNG supplier in the United States. BG Group is one of the listed companies in the London stock Exchange (LSE). The British Gas plc divested Centrica and the company was created. BG Group marks its presents in 5 continents. Demand and Supply Factors First consider the demand side factors which include weather, demographics, economic growth, consumption of fuel, storage of the products and exports. The cyclical pattern seems to be the demand pattern for natural gas. The demand follows the step path in the coldest months while the opposite is the nature of demand in the hotter months (EIA, 2008). The demand tends to rise slightly in summer to meet the demand of natural gas for electric generators. Demand also increases when there is growth in the economy. Cyclical pattern is the nature of the demand curve. Storage of the produced is difficult for the companies in this sector and so excess supply cause a fall in the price level. The supply side factors are the capacity of the pipeline through which the transportation of natural gas takes place, drilling of the gas and technological advancement. The price of electricity also has a major role to play in the demand and supply frameworks of natural gas. As several competitors compete in the market, the price is set at the equilibrium level. Recently there has been technological advancement in the demand for natural gas. The rising electricity prices are the main reason for this situation. The appliances operated through natural gas can now compete closely with the electrical appliances causing demand to shoot up. The short term barriers affecting the supply of natural gas are availability of skilled workers and equipment, permitting and well development, delivery disruptions. The barriers that affect in increasing the supply of natural gas are onshore and offshore access, the financial environment (Natural Gas, n.d.). Market Structure The consumers of natural gas are now exposed to choice and competition. The government does not regulate the price mechanism. The price is set by the demand and supply conditions. Generally the price is set at the level where demand equals supply. (Soligo and Jaffe, p.2). The figure above shows the demand for gas over the past 30 years. The nature of international gas market is experiencing change. Bilateral contracts between the buyers and sellers are the characteristic of markets outside the U.S. The increased liquidity in the market has called for the emergence of non-contract LNG market. The producer owns the gas at wellhead and sells to the marketers, less developed countries and sometimes to the end users. The market for natural gas faces a significant setback. The market for other commodities can immediately react to the change in demand and supply conditions but this type of market takes time to react to such situations mainly because to increase the supply of natural gas it is required to lease land and acquire the permission of the government. Seismic work and drilling the path towards the pipeline needs a lot of time. The lifetime of the existing wells will come to an end at some point and the amount of production they are capable to produce involves uncertainty. Necessities to compete in the market The company should have access to non-competitive facilities at non-discriminatory terms and conditions. Access to the pipeline network is one such facility. Attention needs to be diverted in structuring policies that will impact on the competition (OECD, 2000, p 9). The policies that will create discrimination needs to be regulated. Consistent policies is required to be implemented which will give space for secure and environment friendly infrastructure. As resources are scarce, optimal utilization will not only prevent waste of them but also ensures future use. The traditional regulations can be withdrawn and it will provide the opportunity to promote competitive motive among the competitors. The company should also ensure that it continues to provide the high quality services which will help to capture the market demand. Elasticity Concepts The elasticity concepts that can influence the pricing strategy or the competitiveness are price elasticity of demand and income elasticity. The price elasticity of demand is given by the change in the quantity demanded due to the change in price, taking into consideration only a particular product. Suppose the demand of the product of BG Group increased by 40% as the company decided to reduce the price of the same product by 20%. In this case the price elasticity accounted is 2(Biz/ed, 1998, p.14). The income elasticity is referred as the change in demand of the considered product due to change in income of the population in a situation of ceteris paribus. The income elasticity is positive for any normal good (natural gas in this case). Efficient use of resources BG group is more inclined in extraction of natural gas than oil. The nations where the company operates are Australia, Brazil, Egypt, India and Norway, just to name a few. The year 2010 saw significant progress in achieving the largest growth opportunities in the history of the company. In the year itself the company launched the BG Group behavior. It consisted of nine core of working that can be applied into everything where the company is in and will also integrate the processes of recruitment, induction. Policies have been measured to ensure that all employees have clear idea about the roles of them. The company also updated the HR policy. The up gradation of resource planning models took place and actions towards succession planning were undertaken (BG Group, 2010, p.4). Economic Growth Economic Growth brings increased income for the population. BG Group is likely to be benefited from such growth as increased income will allow the consumers of the company to demand more. The high demand indicates more revenue and profits will display in the balance sheet. The export possibilities will rise which allows the company to acquire the steep rising path. Economic growth is a phase of the business cycle and so BG Group should prepare itself from the conditions when the slag in demand occurs. Unemployment In a situation of unemployment there is shortage of skilled, efficient worker. As a result the efficiency of the company will not be able to match the optimal efficiency and utilization of resources will get hampered. The semi-skilled or unskilled labor will not the required training and so they will operate at the below efficiency level. This is an unwanted situation for the company. The revenue will get affected and back up plans of the company needs to be implemented. Inflation Inflation has the effect in raising the rates of interest. The input prices will also take the steep uprising path. The most serious effect of inflation is on trade. Exports will be severely hampered and excess supply will drive away the accrued benefits (Bowett n.d.). The resultants will shed the shadows on the revenue forecasted. The process of attracting investments will see the darker side as firm will lose the ability to borrow money. The opportunities of creating new jobs and employment will face a setback. This would mean unavailability of personnel (Amendment 1, 2008). Balance of Payments One of the most serious incentives in taking the growth path for the company is investments. The balance of payments is the track will guide investments in the company. Investments are necessary for technological up gradation which will act to take the advantage for the company against the other competitors in the industry. The continuous flow of investments will shed its impact in the long run. Ups and Downs in the balance of payments will hurt the confidence of the investors as the aggregate demand will get reduced and the company will lose its foothold in the market and in the industry. Business Cycle The four phases of business cycle are prosperity, recession, recovery and depression. The demand shoots up in the phase of prosperity. The opening up of trade possibilities and rise in the productive capabilities will show took off situation for the company if they are able to use the situation in their favor. Reduction in the levels of demand is one of the significant effects of recession. Trade possibilities are likely to be affected. Exports will fall significantly and the difference between forecasted and observed revenues will grow. However as recovery is the next phase in business cycle, the situation arising from situation is partly compensated. Investments will slowly begin to come in the company but a lot depends on the performance of the company in the phase of recession. If the company is on the verge of closing down then it will not be able to attract the investors. Reference EIA, 2008, Natural Gas Demand. [online]. Available at: http://www.naturalgas.org/business/demand.asp. [Accessed: 19th March, 2012]. Natural Gas, n.d., Natural Gas Supply.[online]. Available at: http://www.naturalgas.org/business/supply.asp. [Accessed: 19th March, 2012]. Soligo. R. and Jaffe, A. 2004. Market Structure in the New Gas Economy: Is Cartelization Possible? [pdf]. Available at: http://iis-db.stanford.edu/pubs/20705/Gas_OPEC_final.pdf. [Accessed: 19th March, 2012]. OECD. 2000. Promoting Competition in the Natural Gas Industry.[pdf]. Available at: http://www.oecd.org/dataoecd/34/23/1920080.pdf. [Accessed: 19th March, 2012]. Biz/ed, 1998, Price Elasticity and Pricing Policy. [online]. Available at: http://www.bized.co.uk/learn/business/accounting/busaccounts/notes/pl.htm?page=14. [Accessed: 19th March, 2012]. BG Group, 2010. Sustainability Performance Report.[pdf]. Available at: http://www.bg-group.com/sustainability10/Documents/1.%20Performance%20Report/2010%20Sustainability%20Performance%20Report.pdf. [Accessed: 19th March, 2012]. Bowett R., External environment-business and inflation.[online]. Available at: http://tutor2u.net/business/external/economy_inflation.htm. [Accessed: 19th March, 2012]. The Natural Gas Supply Association, 2008. U.S. Natural Gas Market.[pdf]. Available at: http://www.ngsa.org/assets/docs/issues/USNaturalGasMarketsFinal.pdf. [Accessed: 19th March, 2012]. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“BG Group Plc Analysis Coursework Example | Topics and Well Written Essays - 1500 words”, n.d.)
BG Group Plc Analysis Coursework Example | Topics and Well Written Essays - 1500 words. Retrieved from https://studentshare.org/logic-programming/1445351-choose-one-product-service-of-a-popular-company-or
(BG Group Plc Analysis Coursework Example | Topics and Well Written Essays - 1500 Words)
BG Group Plc Analysis Coursework Example | Topics and Well Written Essays - 1500 Words. https://studentshare.org/logic-programming/1445351-choose-one-product-service-of-a-popular-company-or.
“BG Group Plc Analysis Coursework Example | Topics and Well Written Essays - 1500 Words”, n.d. https://studentshare.org/logic-programming/1445351-choose-one-product-service-of-a-popular-company-or.
  • Cited: 0 times

CHECK THESE SAMPLES OF Analysis of BG Group Plc

Financial Reporting Analysis: French Connection Group Plc

The paper "Financial Reporting Analysis: French Connection group plc" discusses that the latest press releases about the French Connection group only bring good news.... French Connection group plc specializes in fashion clothing and accessories for men, women and children as well.... The Annual Report of French Connection group plc outlines many duties of the Audit Committee.... o achieve these objectives, French Connection group plc designs its stores and warehouses while taking into consideration the health and safety of its staff and customers....
10 Pages (2500 words) Essay

Macroeconomics Analysis of N Brown Group Plc

The paper "Macroeconomics Analysis of N Brown group plc" aims at providing an environment and industry analysis of N Brown group plc using PEST analysis and Porter's five forces as tools.... N Brown group plc is one of the key market players in the e-based home-shopping retailing industry.... The basic idea that N Brown group plc adopts, is the marketing and distribution of its offerings through catalogs, emails, e-marketing tools, etc....
5 Pages (1250 words) Essay

Business Analysis and Corporate Strategy of BP GROUP Plc

From the paper "Business Analysis and Corporate Strategy of BP group plc" it is clear that BP company ensures that its products are produced to suit the ever-growing technology by developing products that are capable of reducing the consumption of power.... BP group plc is a multinational company that deals with petroleum products and has a branch in at least every country in the world.... The bargaining power of the supplier is low regarding BP group plc since the suppliers of petroleum products are few....
6 Pages (1500 words) Essay

Performance of the Share Prices of BP PLC

The report "Performance of the Share Prices of BP plc" notices the share price of the company fluctuated in 2000-2013.... BP plc is divided into two segments, namely refining and marketing; and exploration and production.... nalysis of raw dataThe share price movement of BP plc is examined to determine the trend that is reflected.... Technical analysis Share Price Movement The figure below elaborates the share price movement of BP plc from 2010 to 2013....
8 Pages (2000 words) Essay

Financial Strength of Lonmin Plc

The company that is the subject of this paper "Financial Strength of Lonmin plc " is Lonmin plc, a UK-incorporated company established in 1999, first as an affiliate of a company registered under the name of London and Rhodesian Mining in 1909, which also became popularly known as Lonrho plc.... The paper tells how affiliate-formed to handle the mining business that eventually became renamed Lonmin plc in 1999 (4-traders, 2014:n....
7 Pages (1750 words) Essay

Natural Gas Supply

The paper "Analysis of BG Group Plc Activity" states that The company is the leading LNG supplier in the United States.... bg group is one of the listed companies on the London Stock Exchange.... bg group marks its presents in 5 continents.... The British Gas plc divested Centrica....
6 Pages (1500 words) Case Study

Financial Ratio Analysis of BT Group Plc

The paper "Financial Ratio Analysis of BT group plc" is a perfect example of a case study on finance and accounting.... The paper "Financial Ratio Analysis of BT group plc" is a perfect example of a case study on finance and accounting.... The paper "Financial Ratio Analysis of BT group plc" is a perfect example of a case study on finance and accounting.... Listed in both London and New York stock exchanges, BT is a wholly-owned subsidiary of BT group plc and provides services and network products to more than 1400 communication providers in the UK....
8 Pages (2000 words) Case Study

Equity Analysis of Dairy Crest Group PLC

The paper "Equity Analysis of Dairy Crest group plc" is a perfect example of a case study on finance and accounting.... The paper intends to provide a thorough review of Dairy Crest group plc to evaluate the investment opportunities from the perspectives of the investors.... The paper "Equity Analysis of Dairy Crest group plc" is a perfect example of a case study on finance and accounting.... The paper intends to provide a thorough review of Dairy Crest group plc to evaluate the investment opportunities from the perspectives of the investors....
10 Pages (2500 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us