PEST Analysis Of Suncor Energy Inc.

Question:

Discuss about the Buisness Administration Of Suncor Energy.

Suncor energy is the company that deals with three segments of business that are Oil sands, production and refining and marketing. In addition to all this, the company also serves the market with the crude oil by its production and marketing (Sustainability – Suncor, 2017). The business of petroleum and crude oil is basically in the Canada. The company also deals with marketing the products like crude oil for the third party.

PEST analysis of the company helps in analysing the impact of some of the external factors such as political, economic, social and technological on the functions and operations of the company. Below is the discussion of such factors and their impact on Suncor Energy Inc.

Political factors are the most important factor that has their impact on the functioning and the profitability of the company (Epstein & Roy, 2003). As the company operates in many countries along with Canada thus it has exposure to different types of political environment along with variety of risks. The major element of the political environment that affects the company’s functioning is the political stability of the county along with the trade facilities. Many countries have anti-trust laws related to use of oil and gas thus the company also needs to analyse the international market with legal legislations related to the industry before entering the new market (Holburn & Vanden Bergh, 2014).There are many other legal requirement such as tax rates, inflation, demand of oil and gas in the market, trading patterns etc.

Some of the factors such as inflation rate, tax rate, savings rate, foreign exchange rate, economic stability, etc. determine the limit of investment of the company in the country’s market. It has been analysed that the global economy is very much connected with the oil and gas industry of the world and thus this industry contributed a lot in the economy of the whole world as well as the country producing it (Victor, 2007). It has been identified that the oil and gas practices have collapsed in 2014 and thus resulted in loss of employment by the people in Canada. This suggests that the industryalsofocuses on employing the workers. It is one of the major source from which the Canadian government earns the profits and revenues. There are several factors of economy that can affect the companies like Suncor in the countries (Gaviria, Santos, Rivas & Luy, 2007). The first factor that needs to be considered in order to enter the new market is to check its economic stability. If the country is economically stable the only it can be the customers from the oil and gas products can allow the companies to produce the same in the country.

Economic Factors

The culture of the place and the way of doing business in a particular country varies and thus it affect the business functioning in that particular country. As Suncor Energy is into marketing of the crude oil products in addition to the production business thus it is very much required by the company to analyse the market and understand the social factors and the culture of the market so that stages can be made as per the market needs and requirements. There are many elements or areas that falls under the social factors (Sadorsky, 2001). One of the areas is demography of the place. Oil and gas industry is the industry that is not much affected by the social factors because the products are required by ay of the market and is considered as the basic need of the people and the other business, especially the manufacturing firms (Kelland, 2014). Thus, marketing of these products is generally done in the form of business to business operations. Most of the people are now focussing on using the fuels that are eco-friendly and thus the interest of people from crude oil to the eco-friendly products has affecting the marketing of such products. Thus, it is required by the company to consider all these points before framing the marketing strategies for the country.

Technology is supporting many industries to increase their efficiency but also disrupting some of the industries at the same time. As far as Oil and gas industry and the company like Suncor is considered, it has been analysed that the company use the latest technological tools for the manufacturing firms thus suggest that the company is techno savvy (Boyer & Filion, 2007). Oil and gas industry is also very competitive these days and thus updating the technological tools and updating the process of the company is very much required by the companies so that they can match up with the market and can compete with its competitors. In this industry of oil and gas, implementing new technology helps the company to enhance the pace of its processes and to maintaining the records in better way (Alazzani & Wan-Hussin, 2013). Production is the field that always require some of the innovations so that the speed of the process ion and the cost of the production can be changed.

CSR perspectives:

Suncor Energy is the company that focuses on being sustainable by its practices so that it can contribute for the society under the terms of corporate social responsibility. The corporate social responsibility of the company includes two activities majorly such as

• Ensuring health and safety of the employees
• Working closely with our stakeholders and aboriginal neighbours
• Building healthy communities

Social Factors

The company’s CSR policies suggests that sustainability is only the one aspect for the company but the company also focuses on maintaining the heath of their employees because they are the actual resource for the and thus they have to support the employees. Stakeholders are also a great and significant part of the company and thus it also has the responsibility towards them.

Suncor Energy is the company that believes in giving importance to the stakeholders. This is because stakeholders of the company are the most essential and the important part of the process of how the company do its business. The company is serving the market along with maintaining the sustainability and this has been possible only because the company has earned trust of the employees and the communities (Tordo, Warner, Manzano & Anouti, 2013). Suncor is the company that deals with developing and maintaining positive relationship with the stakeholders. In order to achieve these goals, the company focuses on understanding the needs, interests and requirements of all the stakeholders. The major aim of understanding these needs is to develop the relationship with the stakeholders and developing the mutual respect and transparency (Frynas, 2010). As far as the stakeholders of Suncor’s are considered, it has been analysed that some of the stakeholders of this company are employees, community landowners, trappers, government, non-government organisations, business groups, customers, suppliers etc. several rights has been given to all these stakeholders and the major right for them is the right to be informed. Any activity that has been implemented in the company needs to be informed to all the stakeholders (Karl, 2007). The transparent process of engagement has been introduced. From the stakeholder’s business perspective, following are the principles that have been implemented in the relation policy of the company:

• Respect: It is the principle that deals with the process of giving respect to the culture of the stakeholders.
• Responsiveness: It is the principle that deals with the responsibility of fulfilling all the needs of the stakeholders of the company.
• Responsiveness: It is the principle that deals with taking the regular feedback from the stakeholders.
• Transparency: the company provide transparency to the stakeholder by showing them every process and activities.
• Timeliness: the engagement of the stakeholders is done on timely basis.
• Mutual benefit: the company always takes the decision that helps the stakeholders as well as the company to earn mutual profit or benefit (Sustainability – Suncor., 2017).

It has been analysed that the company not only deals with production of oil and gas but also deals with marketing of the products. It has been analysed that the company also helps the third party producers to market their products as well. The products of the company are marketed and sold to the retailers, commercial customers and industrial customers who require this material for producing their products. The retail business of the company is managed in the name of Sunoco brand and through the joint venture business or brands (Hall & Vredenburg, 2003). The site that has been used to market the products is Phillips 66 branded sites. Pipelines are also used to transport the crude oil.

Above all the points suggests that the company operates with different business perspectives and the operation so the company has different phases from different perspectives but each of the perspectives that has been discussed above enhance the value of the business in the market.

References:

Alazzani, A., & Wan-Hussin, W. N. (2013). Global Reporting Initiative's environmental reporting: A study of oil and gas companies. Ecological Indicators, 32, 19-24.

Boyer, M. M., & Filion, D. (2007). Common and fundamental factors in stock returns of Canadian oil and gas companies. Energy Economics, 29(3), 428-453.

Epstein, M. J., & Roy, M. J. (2003). Making the business case for sustainability. Journal of Corporate Citizenship, 9(1), 79-96.

Frynas, J. G. (2010). Corporate social responsibility and societal governance: Lessons from transparency in the oil and gas sector. Journal of business ethics, 93, 163-179.

Gaviria, F., Santos, E., Rivas, O., & Luy, Y. (2007, January). Pushing the Boundaries of Artificial Lift Applications: SAGD ESP Installations at Suncor Energy, Canada. In SPE Annual Technical Conference and Exhibition. Society of Petroleum Engineers.

Hall, J., & Vredenburg, H. (2003). The challenge of innovating for sustainable development. MIT Sloan Management Review, 45(1), 61.

Hojjati, N., Horsfield, K., & Jordison, S. (2017). Where in the World are Canadian Oil and Gas Companies? An Introduction to the Project.

Holburn, G. L., & Vanden Bergh, R. G. (2014). Integrated market and nonmarket strategies: Political campaign contributions around merger and acquisition events in the energy sector.  Strategic Management Journal, 35(3), 450-460.

Karl, T. L. (2007). Oil-led development: social, political, and economic consequences. Encyclopedia of energy, 4, 661-672.

Kelland, M. A. (2014). Production chemicals for the oil and gas industry. CRC press.

Sadorsky, P. (2001). Risk factors in stock returns of Canadian oil and gas companies. Energy economics, 23(1), 17-28.

Sustainability – Suncor. (2017). Suncor.com. Retrieved 3 November 2017, from https://www.suncor.com/sustainability

Tordo, S., Warner, M., Manzano, O., & Anouti, Y. (2013). Local content policies in the oil and gas sector. World Bank Publications.

Victor, N. M. (2007). On measuring the performance of national oil companies (NOCs). Program on Energy and Sustainable Development working papers, WP64, Stanford University.