International Business Analysis: Venezuelan Oil Industry

Introduction

This paper has been undertaken from the perspective of an International Business looking for potential entry into the Venezuela Oil Industry. A variety of resources have been utilised and extensive research has been carried out in order to make as accurate a summation as possible into this potential marketplace.

This Report has followed a specific three part structure:

1. Firstly the country itself was looked at in great depth focusing upon major macro environment influences.

2. This was followed by a more industry specific focus, identifying key opportunities in the Oil Industry.

3. Finally, overriding risks to the potential success of our business in this country and sector were identified and a final decision was reached as whether to enter into this specific market or not.

Executive Summary

Based on the findings of this report the following analysis can be made with respects to the feasibility of market entry into the Venezuelan Oil Industry. This will be broken into three strands as set out in the introduction. A similar breakdown may be found in our SWOT Analysis (Appendix 5).

1. Overview of Venezuela:

 Economic instability due to H. Chavez’s unorthodox economic stewardship.

 Very limited levels of Internationalisation because of the current Government’s hostile policies, i.e. aggressive nationalisation.

 Small private sector due to extensive ‘Capital flight’.

 Growing and unstable public debt.

 Widespread corruption. Stemming from a lack of respect for democratic institutions.

 Degenerated infrastructure and poorly managed national transport system.

2. Potential Opportunities in the Oil Industry:

 Nationalised under the main government controlling organisation: PDVSA.

 Third largest proven oil & gas reserves in the world.

 Tenth largest producer of oil in the world.

 Huge investment in the infrastructure of this industry planned in the near future.

 Already private companies are in partnership...