INTRODUCTION
The oil and petroleum industry in Malaysia operates under an oligopolistic market structure. Both PETRONAS and Shell are renowned firms that produce and sell petroleum in Malaysia. Incorporated on 17 August 1974, PETRONAS is Malaysia’s national oil company, assigned with complete ownership and control of the petroleum resources in Malaysia. Throughout the years, PETRONAS grew into a “completely integrated oil and gas corporation and is ranked among FORTUNE Global 500® largest corporations in the world” (PETRONAS, 2014).
Since 1981, Shell has been in Malaysia for over a hundred years. 19 years later, Shell produced Malaysia’s first barrel of oil. In 1910, Shell discovered Malaysia's first oil well. During 1914, Shell built Malaysia's first refinery in Miri and in 1963. Shell was also the first to take oil exploration offshore and discovered oil and gas in East Malaysia waters. Shell has become the petroleum retail market leader in Malaysia today, catering to one-third of West Malaysia and half of East Malaysia’s market requirements (Shell, 2014).
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PETRONAS and Shell are both in the petrol industry and they operate in an oligopolistic market structure and are competitors to one another. An oligopoly market structure is a market structure where there are only a few suppliers in the market. Thus, they dominate the whole industry. PETRONAS and Shell are among the few major firms in the oil and petroleum industry in Malaysia and they each hold a huge percentage of the market share in the industry. Also, firms in an oligopolistic market produce either similar or differentiated products. PETRONAS and Shell produces and sell petroleum and are considered as a perfect oligopoly. As PETRONAS and Shell sells homogenous prod...
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Exxon and Mobil were two big competitors in the oil industry. In the 20th century, Exxon and Mobil operated with relatively low-price, and in low-margin environments. The market in the United States and Europe have grown and matured, allowing them both to grow with great success. The competitiveness has tightened worldwide in the crude oil business. Both companies have continued to advance new technologies, introducing new marketing innovations. They have extend there reach into high-growth markets. The two companies became more efficient, reduced costs, and increased shareholder’s value by there merge.
This organization belongs to the oligopoly market structure. The oligopoly market structure involves a few sellers of a standardized or differentiated product, a homogenous oligopoly or a differentiated oligopoly (McConnell, 2004, p. 467). In an oligopolistic market each firm is affected by the decisions of the other firms in the industry in determining their price and output (McConnell, 2005, P.413). Another factor of an oligopolistic market is the conditions of entry. In an oligopoly, there are significant barriers to entry into the market. These barriers exist because in these industries, three or four firms may have sufficient sales to achieve economies of scale, making the smaller firms would not be able to survive against the larger companies that control the industry (McConnell, 2005, p.
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This paper focuses on the oil industry, limited to crude oil and refineries U.S. based companies, is identified as oligopoly in U.S. market due to their market shares and powers.
ExxonMobil is a multinational oil and gas company with its headquarters offices in Irving, Texas. It was formed in 1999 through a definitive agreement between Exxon Corporation and Mobil Oil Corporation to merge and create a new company. In essence, the corporation produces, distributes and sells oil and natural gas across the world. The structure and culture help it survive the price burst which often occurs in the global oil market. Notably, among its largest competitors, ExxonMobil generates high revenue and produces large volumes of oil for every penny it spends. Besides, the company publicizes the highest price of natural gas and oil, both in absolute terms and for every employee it hires. Significantly, even in good years, the top managers
finding new ways to drill for oil and also refine it more efficiently to ensure that
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