man6726 team 4 bric country strategy paper part i & part ii v1 (1)

8/9/2019 MAN6726 Team 4 BRIC Country Strategy Paper Part I & Part II v1 (1)

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Team 4

Academic Honesty Policy

Richard Bullock ([email protected])

Maria Christian([email protected])

Michael Hodson([email protected])

Charles Schulze([email protected])

Adrian Boloix ([email protected])

CERTIFICATI! F A"T#R$#I%& 'e cerif ha *e are he auhors of his +a+er a,d ha a,assisa,ce *e recei-ed i, is +re+araio, is full ac,o*led/ed a,d disclosed i, he +a+er. 'e ha-ealso cied a, sources from *hich *e used daa ideas or *ords eiher uoed direcl or +ara+hrased.'e also cerif ha his +a+er *as +re+ared b us s+ecificall for his course.

Richard Bullock:

Maria Christian Maria Christian

Michael Hodson [email protected]

Charles Schulze Charles Schulze

Adrian Boloix Adrian Boloix

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International Acuisition Pro!osal

Team

$rae/ic 4a,a/eme, (4A! 5625)

%rofessor Charles 4. !e*ma, II %h.7.

16 Au/us 201

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"xecuti#e Summary

Team 8 recomme,ds ha Co,oco%hilli+s a maor muli,aio,al com+a, i, he

E,er/ i,dusr e,er he 9RIC mares i,iiall ar/ei,/ ::::::::::: as he firs

cou,r hrou/h a, acuisiio, or oi, -e,ure *ih o,e of he e local com+a,ies i,

he E,er/ i,dusr.

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Ta$le o% Contents

Purpose...................................................................................................................... 5

I. Background Information and Analsis....................................................................5

A. !lo"al #tructure $ %n&ironment of the %nerg Industr......................................5

B. 'nited #tates #tructure $ %n&ironment of the %nerg Industr..........................(

C. Importance of the B)IC Countries to the %nerg Industr.................................12

Bra*il.................................................................................................................. 13

)ussia.................................................................................................................13

India................................................................................................................... 15

China.................................................................................................................. 1+

II. ,etermination of the target B)IC countr for the Proposed Ac-uisition..............1

A. Comparati&e risk/ opportunit and o&erall "usiness climate of the B)IC

countries............................................................................................................... 1

B. Comparati&e industr market potential and structure of the B)IC countries.. ..1

C. )ecommendation.............................................................................................. 1

)eferences................................................................................................................20


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Pur!ose

This re+or +rese,s research a,d a,alsis o su++or co,suli,/ clie,

Co,oco%hilli+s (!;$E& C%) i, a srae/ic decisio, o mae a forei/, direc i,-esme,

o acuire or form a oi, -e,ure *ih a,oher com+a, i, o,e of he 9RIC (9ra


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+eroleum ,aural /as elecrical +o*er coal a,d ,uclear se/me,s. 4ore rece,

e,ra,s i,clude re,e*able e,er/ sources such as *i,d a,d solar (E,er/

de-elo+me, ,.d.). Addiio,all he E,er/ I,dusr is he lar/es i,dusr b mare

ca+iali08>201) *ih 9a,s comi,/ i, seco,d a 3.26

rillio, (Fideli ,.d.).

Toal e,er/ +roducio, is ofe, measured i, o,,e of oil (oe) eui-ale,s a,d is

used i, he /ra+hics belo*. As ,oed i, he follo*i,/ /ra+h oal +roducio, of e,er/

i,creased b 1.1 i, 2013 a,d has i,creased b a++ro=imael 3? si,ce 2000.

2013 lobal E,er/ %roducio, (E,erdaa ,.d.)

I is i,eresi,/ o ,oe from he /ra+hic ha as of 2013 9RIC cou,ries

accou,ed for 3? of *orld e,er/ +roducio, i, 2013. This *as ,o he case i, 2000

as sho*, i, he com+ariso,s belo*. $+ecificall si,ce 2000 Chi,aDs e,er/

+


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+roducio, has i,creased 12B RussiaDs 35 I,diaDs ?2 a,d 9ra


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2013 lobal E,er/ Co,sum+io, (E,erdaa ,.d.)

'hile he su++l has mached dema,d he mi= a,d ma/,iude of cou,ries i,

dema,d has cha,/ed si,ce 2000 as sho*, i, he follo*i,/ ables. $+ecificall *hile

he ".$. e,er/ co,sum+io, acuall *e, do*, from 2000 o 2013 co,sum+io, i,

Chi,a *e, u+ b 1?B i, Russia b 16 i, I,dia b 80 a,d i, 9ra


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-erall e,er/ co,sum+io, i, he 5B cou,ries co-ered b he Eco,omis

I,elli/e,ce ",i forecas is e=+eced o /ro* from 115? 4oe i, 2010 o 1?311 4oe

b 2020. Chi,a *ill liel remai, he leadi,/ e,er/co,sumi,/ eco,om i, 2020 *ih

co,sum+io, risi,/ o 3621 4oe b 2020. I, co,ras i, he "$ he ,e= lar/es

forecased co,sumer e,er/ use *ill remai, fairl co,sa, /ro*i,/ o abou 20

4oe b 2020. Fi,all I,dia a,d Russia *ill liel remai, i, hird a,d fourh +lace

res+eci-el due o heir co,i,ued ra+id eco,omic e=+a,sio, (EI" 2012).

B. United States Structure & Environment of the Energy Industry

As ,oed i, he /ra+hics abo-e he ".$. is he 2

,d

lar/es +roducer of e,er/ i,

he *orld. The ".$. los he o+ s+o o Chi,a i, 200?. $imilarl he ".$. is he 2,d

lar/es co,sumer of e,er/ i, he *orld. A/ai, he ".$. los he o+ s+o o Chi,a i,

200B. A, i,eresi,/ +oi, o ,oe from he abo-e /ra+hics is ha ".$. e,er/

co,sum+io, has acuall /o,e do*, () *hile he res of he *orldDs co,sum+io, is

/oi,/ u+. The +roducio, side ells a similar sor *ih o,l a 12 i,crease i, ".$.

+roducio, (E,erdaa ,.d.).

The ".$. E,er/ I,dusr is curre,l i, a sae of flu=. %olicies desi/,ed o

im+ro-e e,er/ efficie,c reduce relia,ce o, forei/, e,er/ im+ors a,d i,crease

e,er/ ca+aci re,e*able e,er/ sources *ih he aim of reduci,/ emissio,s of

/ree,house /ases are *idel acce+ed (E,er/ i, he ",ied $aes ,.d.). Addiio,all

i, 2011 he ".$. became a ,e e=+orer of +eroleum +roducs as sho*, i, he /ra+hic

belo*.

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".$. !e il Im+ors. $ource& America, %eroleum I,siue 2013

$ome of he e fi,di,/s from he ".$. E,er/ I,formaio, Admi,israio,Ds 201

A,,ual E,er/ uloo are as follo*s (".$. E,er/ I,formaio, Admi,israio, 201)&

Growing domestic roduction of natural gas and oil continues to reshae

the U.S. energy economy

Industrial roduction e!ands over the ne!t "# to "$ years as the

cometitive advantage of low natural gas rices rovides a boost to

the industrial sector with increasing natural gas use

%here is greater uside uncertainty than downside uncertainty in oil and

natural gas roduction higher roduction could sur even more

industrial growth and lower the use of imorted etroleum

Evolving natural gas mar'ets sur increased use of natural gas for

electricity generation and transortation( as well as e!anded e!ort

oortunities.

Imroved efficiency of energy use in the residential and transortation

sectors and a shift away from more carbon)intensive fuels such as

coal for electricity generation hel to stabili*e U.S. energy)related

carbon dio!ide +,-/ emissions.

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As sho*, i, he able belo* he E,er/ $ecor is o,e of he lar/es

re+rese,i,/ o-er 2? of he mare ca+iali


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The able abo-e clearl sho*s he domi,a, ".$. +laers are also he domi,a,

'orld +laers. Co,oco%hilli+s is a leader i, he E,er/ I,dusr bu far behi,d he

su+er maors lie Che-ro, a,d E==o,4obil. The follo*i,/ secio, *ill e-aluae +ossible

areas for /ro*h o hel+ Co,oco%hilli+s reach he ,e= le-el.

,. Imortance of the B0I, ,ountries to the Energy Industry

The acro,m 9RIC sa,ds for 9ra


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9ra


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facors *ill dri-e e,er/ co,sum+io, i, Russia u+ b 26 i, he comi,/ ears as ,oed

i, he /ra+h belo*.

Russia E,er/ Co,sum+io,. $ource& (G%4 200B EI" 2012)

I is im+ora, o ,oe Russia has he *orldJs lar/es ,aural resource reser-es

Russia also has he seco,d lar/es coal reser-es a,d he se-e,h lar/es oil reser-es.

Russia e=ceeded $audi Arabia as he *orldJs leadi,/ oil +roducer i, $e+ember 200B

for he firs ime si,ce he colla+se of he $o-ie ",io,. Abou 5? of RussiaJs e=+ors

are com+rised of oil a,d ,aural /as. 4ore ha, 60 of Russia crude oil +roducio, is

e=+ored a,d he res is a-ailable for local co,sum+io,. The oil a,d ,aural /as

i,dusr accou,s for 30 of RussiaDs 7% a,d 50 of is e=+or re-e,ues. RussiaDs oil

a,d ,aural /as secor aracs maor muli,aio,al a,d local com+a,ies. Furher

RussiaDs e,er/ i,dusr is domi,aed b sae ru, firms. Addiio,all mos Russia, oil

com+a,ies ha-e co,rol o-er he e,ire +roducio, ccle ra,/i,/ from e=+loraio, o

ra,smissio, (EI" 2012). Fi,all he *orldJs lar/es ,aural /as com+a, accou,s for

83 of RussiaJs ,aural /as +roducio, a,d 16 of /lobal /as +roducio,. 'ih he

e=ce+io, of a


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I,dia

I,dia is he seco,d mos +o+ulaed cou,r (behi,d Chi,a) *ih 1.1 billio, +eo+le

*hich is a++ro=imael 16 of he *orld +o+ulaio, (EI" 2012). I,diaDs +o+ulaio,

/ro*h is arou,d 1.6 *hich is he hi/hes of a, of he 9RIC cou,ries. If his hi/h

/ro*h rae co,i,ues i could /i-e I,dia a bi//er +o+ulaio, ha, Chi,a i, he earl

2020s. I is im+ora, o ,oe ha o-er 60 of his +o+ulaio, curre,l li-es i, rural

areas bu +o+ulaio,s i, urba, areas are e=+eced o double i, si


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'es Africa. I,diaJs e,er/ +olic i, he +eriod o 2020 *ill focus o, i,creasi,/ e,er/

su++l. Arou,d o,ehalf of oal /as co,sumed i, I,dia *ill co,i,ue o be used i,

elecrici /e,eraio,. ro*h i, /as co,sum+io, *ill also be dri-e, b he i,creasi,/

use of com+ressed ,aural /as (C!) as a, auomoi-e fuel +aricularl i, urba, areas

(EI" 2012).

Chi,a

'ih a++ro=imael 20 of he *orldDs +o+ulaio, Chi,a is he mos +o+ulaed

cou,r *ih 1.3 billio, +eo+le (EI" 2012). Chi,aDs +o+ulaio, /ro*h rae is o,l .5

*hich is belo* he /lobal a-era/e of 1. 7ue o Chi,aDs +olicies his /ro*h rae *ill

remai, sable i, he fuure /i-i,/ Chi,a a +roeced +o+ulaio, of 1. billio, b 2020

(G%4 200B). The curre, labor force is arou,d 808 millio, a,d is e=+eced o /ro* o

8? millio, as he labor force mo-es o*ards urba, ce,ers (CIA ,.d.). Co,cer,i,/

eco,omics Chi,aDs eco,om is s+eciali


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II& (etermination o% the tar'et BRIC country %or the Pro!osed Acuisition

A. ,omarative ris'( oortunity and overall business climate of the B0I, countries

B. ,omarative industry mar'et otential and structure of the B0I, countries

,. 0ecommendation

The follo*i,/ a,alsis a,d subseue, recomme,daio, is based solel o,

+oe,ial i, erms of mare si


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This char sho*s ha b boh absolue si


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he /ro*i,/ middle class. 9ased o, solel o, mare si


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Re%erences

America, %eroleum I,siue. (2013). E,er/ i, chars E,er/ I,dusr $aisics.Rerie-ed Au/us 1 201 from h+&>>***.a+i.or/.

CIA. (,.d.) The 'orld Facboo. Rerie-ed Au/us 15 201 fromh+s&>>***.cia./o->librar>+ublicaio,s>he*orldfacboo>

EI". (20121120). Eco,omis I,elli/e,ce ",i 'orld& E,er/ ouloo. %ro-ided asFlorida I,er,aio,al ",i-ersi $rae/ic 4a,a/eme, (4A! 5625) coursemaerial.

E,erdaa. (,.d.). lobal E,er/ $aisical ;earboo 201. Rerie-ed Au/us 11 201from h+&>>earboo.e,erdaa.,e>Ke,er/+rimar+roducio,.hml

E,er/ de-elo+me,. (,.d.). I, 'ii+edia. Rerie-ed Au/us 11 201 from

h+&>>e,.*ii+edia.or/>*ii>'orld:e,er/:+roducio,

E,er/ i, he ",ied $aes. (,.d.). I, 'ii+edia. Rerie-ed Au/us 13 201 fromh+&>>e,.*ii+edia.or/>*ii>E,er/:i,:he:",ied:$aes

Fideli. (,.d.). $ecors L I,dusries -er-ie*. Rerie-ed Au/us 11 201 fromh+s&>>eresearch.fideli.com>eresearch>mares:secors>secors>secors:i,:mare.hml

oldma, $achs. (20100?20). 9RICs 4o,hl. Issue !o& 10>03 Rerie-ed o,li,e&h+&>>***./oldma,sachs.com>ourhi,i,/>archi-e>archi-e+dfs>bricsdecade+df.+df

ra, R. (2012) Co,em+orar $rae/ A,alsis& Te= Ediio, 8h Ediio,. Hoh, 'ileL $o,s "G.

I#$. (,.d.) 201 I#$ E,er/ ?0. Rerie-ed Au/us 13 201 from& h+&>>***.ihs.com.

G%4. (200B). Thi, 9RIC. G%4 Com+arai-e $ud. Reire-ed o, Au/us 15 201from h+&>>***.+m/.de>docs>Thi,:9RIC:Com+arai-e:$ud.+df

Thomas 'hie I,er,aio,al (2011). il L !aural as $ecor i, Russia Fueli,/ ro*h.Rerie-ed From& h+&>>***.homas*hie.com>/lobal+ers+eci-es>oil,aural/assecori,russiafueli,//ro*h>

".$. E,er/ I,formaio, Admi,israio,. (2013062?). I,er,aio,al E,er/ uloo2013. Rerie-ed Au/us 12 201 fromh+&>>***.eia./o->forecass>ieo>i,de=.cfm.

20


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".$. E,er/ I,formaio, Admi,israio,. (2010?06). A,,ual E,er/ uloo 201.Rerie-ed Au/us 1 201 fromh+&>>***.eia./o->forecass>aeo>e=ecui-e:summar.cfm

'orld Eco,omic Forum. (2013) E,er/ Misio, 2013 E,er/ ra,siio,s& %as a,d

Fuure. e,e-a $*i

man6726 team 4 bric country strategy paper part i & part ii v1 (1)

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