SWOT Analysis of ConocoPhillips

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SWOT Analysis
Strengths
One of the biggest strengths of ConocoPhillips is its huge size standing as second largest American oil company. With its operation expanded to more than 30 countries, the company owns about 10,000 outlets to distribute gasoline. This huge size financial size of the company also allows it to explore, extract, produce, refine, market and distribute at various sites thereby giving rise to the increasing income.
The company adopts the principle of diversifying risk. LUKOIL, which undertakes risky projects like exploration of Russian Blocs, is a company in which ConocoPhillips owns a 20 % stake. This 20% of investment in LUKOIL allows companies to reap the benefit by undertaking risky projects without has taken considerable amount of high risk. By providing technical expertise to LUKOIL, the company have maintained good and cordial relationship with the government of Russia.
Weaknesses
The major weakness of ConocoPhillips is not having a stable income or earnings. The oil price is highly affected by small change in economic phenomena of the world so this high volatility of price will often make the earning prediction wrong. The unlevered beta of the ConocoPhillips is comparatively higher than that of industry with 1.21, which shows that the company is highly susceptible to market conditions. When the economic conditions are well above the normal, then price of oil upsurges thereby increasing the profits above expectations while negative is the case in poor economic condition. This dependence of income on oil prices possess risk to company’s business model and shows that the business is exposed to a higher degree of risk. Having almost complete dependence on oil for business, there is no way that company ca...

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...itumen, lubricants, and solvents.
To remain competitive and increase profit margin, the company should focus on cost minimization techniques so that when the prices of oil goes down, then the company will still have high earnings as compared to others in the industry. This will bring the company into a superior position as compared to others, which will allow the company to undertake new profitable ventures even at the period of falling prices.
Petroleum mines are not sustainable and with the passage of time, the mines are exhausted. Therefore, with the passage of time, when the mines are exhausted, then the company will have negative earnings growth. To avoid this situation, the company must seek, identify and locate newer oil mines to extract. The company should be ready with the acquisition plans in case they get the opportunity to acquire high yielding mines.

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