Operation and Competition Situation of UK Oil & Gas Industry Essay

Operation and Competition Situation of UK Oil & Gas Industry - Essay Example The major rationale for selecting this industry however is that, regardless of its important place in UK’s economy, growth in the sector has not been steady in the last few years as seen in figure 1 below. The paper therefore tries to critique the cause and finds solutions from the perspective of selected companies. BP was selected to be a general representation of larger oil and gas companies whose daily production is beyond 1,000,000 barrels a day. On the whole, the rationale behind the selection of BP is the diversity and differences it offers in its business and marketing approaches as a large company. The selection of Cairn was for the reason of the fact that the company gave a perfect representation of smaller oil and gas companies whose daily production is below 35,000 barrels a day. The company also uses a focus strategic option, which makes it possible to compare this strategic option with other companies to determine its effects. As depicted in figure 2, it will be seen that in terms of production units, it can be said that the selection of Premier have been made based on medium market size with production above 35,000 barrels but less than 100,000 barrels. This is an important rationale to pursue, given the fact that the individual growth of these companies will turn out to be collective growth of the oil and gas industry in the UK (Ferguson, 2004). Gross profit margin: This is a type of profitability financial ratio that measures financial health by estimating proportion of money left over from the company’s revenues after accounting for the cost of goods sold (COGS) (Weston, 1990). This gross profit margin is selected to determine how financially healthy the companies are, which is; Net profit margin: This is another profitability measure that determines how much each pound earned by the company is turned into profits (Houston and Brigham, 2009). This is selected in the study to