“SWOT analysis is a historically popular technique through which managers can create a quick overview of a company’s strategic situation” (Pearce, II & Robinson, 2011, p. 140). Using this model, we will look at the external factors of the energy industry that affect Range Resources Corporation.
Range Resources has a strong position in the Marcellus Shale. It has close to one million net acres with resource potential of 545 million barrels of liquids and 32 trillion cubic feet of gas (Strategy, 2012). Range has a wide customer base. The company sells its gas production to customers including pipelines, utilities, gas marketing firms, industrial users, and local distribution. Its natural gas liquid (NGL) production is primarily sold to customers engaged in petrochemical, refining and heavy oil blending activities. A wide customer base enables the company to insulate itself from the risk of being affected by downswings in a particular customer group. Range has a strong financial position. The company expects a production growth of 25%-30% in 2012, and is projected to be self-funding in 2013 (Strategy, 2012).
The company lacks the scale to compete with large players in which it operates. Several of its competitors are much larger, such as Exxon Mobil Corporation, with recorded $370 billion in revenues and employed about 80,000 people in FY2010 (ExxonMobil, 2010); Chevron Corporation, which recorded 198 billion in revenues and employed about 58,000 people during the same period (Corporate Fact Sheet, 2011). Range, on the other hand recorded revenues of approximately one billion and employed about 700 people in FY2010. Lack of scale limits the company’s ability to compete, both domestically a...
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...mestic market and therefore minimizing the risk to shareholders. By choosing not to enter the international market where the rewards and risks are high, they can continue on their eight year track record of low cost growth.
Corporate Fact Sheet. (2011, March). Retrieved January 20, 2012, from Chevron.com: http://www.chevron.com/documents/pdf/corporatefactsheet.pdf
Strategy. (2012, January 1). Retrieved January 10, 2012, from Range Resources: http://www.rangeresources.com/Our-Company/Strategy.aspx
ExxonMobil. (2010). 2010 Financial Operating Review. Irving: Exxon Mobil.
Kendell, J. M. (2008, June 28). EIA. Retrieved January 20, 2012, from Global Gas Outlook: http://www.eia.gov/pub/oil_gas/natural_gas/presentations/2008/globalgas/index.html
Pearce, II, J. A., & Robinson, R. B. (2011). Strategic Management. New York: McGraw-Hill Irwin.
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