Oil and gas is no longer the industry it used to be. With intense innovation and sustained demand, it’s important for all aspects of the industry to follow suit. Looking at the oil and gas industry from a broad perspective, many of its key components haven’t changed.
Here are the common characteristics of the oil and gas industry according to the experts
It’s well known that large teams are highly inefficient. Somehow, there always ends up being a few individuals who slack off while other complete the work. It also increases the threat of “groupthink” and other social phenomena. Recently, we have seen a shift towards smaller team sizes, with usually a group of ten people or less.
In an industry where prices are highly flexible and vulnerable to changes in supply and demand, there’s a sustained emphasis on cost management. This can be seen throughout the planning processes and the general approach to business throughout the industry. Unlike large consumer packaged goods corporations (CPGs) or auto manufacturers, the oil and gas industry is more subdued and less extravagant in nature. Although every project is unique to some degree, the process by which it’s approached is fairly standardized.
Following the emphasis on cost management, the oil and gas industry is all about finding efficiencies. The project management process has clearly defined roles and relies on the specific expertise of every individual involved. Typically, there’s a project manager, who oversees the whole process, a discipline engineer, and an inspector for each discipline.
Low Threat of New Entrants
Due to the high upfront costs and long tail of knowledge required the threat of new competitors entering the oil and gas industry is extremely low. That being said; there currently are thousands of companies within the industry itself.
Rivalry among existing competitors is fairly high, which is credited to a low industry growth overall. The growth rate the industry has experienced is shared among all of these competitors leading to a smaller slice of growth for each.
The industry is changing, however in the sense that buyers have more control than ever before. They are actively seeking lower prices and better terms within contracts
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