...An Anatomy of the Crude Oil Pricing System Bassam Fattouh1 WPM 40 January 2011 1 Bassam Fattouh is the Director of the Oil and Middle East Programme at the Oxford Institute for Energy Studies; Research Fellow at St Antony‟s College, Oxford University; and Professor of Finance and Management at the School of Oriental and African Studies, University of London. I would like to express my gratitude to Argus for supplying me with much of the data that underlie this research. I would also like to thank Platts for providing me with the data for Figure 21 and CME Group for providing me with the data for Figure 13. The paper has benefited greatly from the helpful comments of Robert Mabro and Christopher Allsopp and many commentators who preferred to remain anonymous but whose comments provided a major source of information for this study. The paper also benefited from the comments received in seminars at the Department of Energy and Climate Change, UK, ENI, Milan and Oxford Institute for Energy Studies, Oxford. Finally, I would like to thank those individuals who have given their time for face-to-face and/or phone interviews and have been willing to share their views and expertise. Any remaining errors are my own. 1 The contents of this paper are the authors’ sole responsibility. They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its members. Copyright © 2011 Oxford Institute for Energy Studies (Registered Charity, No. 286084) ...
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...2005 CLASS #3 What is Game Theory? In debriefing Oil Pricing, we will use terms borrowed from Game Theory. Game theory is the study of how people behave in strategic situations. These are situa‐ tions in which each person, when deciding what action(s) to take, must first consider how others might respond to that action. Decision‐making is a constant activity of managers and business. Strategic decisions have to be made every day. Making the wrong decision can have a negative effect not only on the manager’s career, but also on the company’s survival. Even the most successful executives make mistakes from time to time. This is in many cases due to the way in which executives process information coming from the outside world. Managers and business students study psychology and negotiation to avoid mind traps. Particular techniques can be used to facilitate the decision‐making process (brainstorming, simulations, etc). Oil Pricing is a so‐called ʺsocial trapʺ exercise, in which long‐term maximization requires mutual trust where significant short‐term gains are possible by breaking that trust. In most rounds, communication must be implicit, and is hence highly ambiguous and subject to misinterpretation, usually by the pro‐ jection of negative and adversarial intentions that donʹt actually exist. At certain points, the parties are given the opportunity to communicate explicitly, and may choose to reach pricing agreements or not (and subsequently, to honor those agreements...
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...Running head: BIG DRIVE AUTO Big Drive Auto Michelle International Economics August 29, 2011 Big Drive Auto In the automotive industry there is evidence that supports the future of economics within the automotive industry such as Big Drive Auto, a multi-manufacture of cars and trucks. Not only does the company conduct contributions in the coolant, tire replacement and motor oil industry, but Big Drive Auto, also, services parts for repairs and sales vehicles. Big Auto will have to forecast their prior records kept within the past ten years in order to remain successful as well as needing growth within the automotive industry if they are to stay ahead of the automotive industry. An evaluation, in spite of the fluctuations in the economy, of the revenue generated on service and auto sales and of the companies past sales of parts, this evaluation and/or information will assist Big Auto Drive’s management for the organization for future production plans. A future demonstration pricing strategy will be used from the data of previous years and in keeping the company moving forward, the management’s awareness of the economy in recent years will be considered in helping with product recommendations for Big Drive Auto. In moving forward, Big Drive Auto will need to assess in the upcoming years the mathematical equations and take into consideration operations, cost, economic analysis and productivity in order to create a strategy that is solid in dealing with the automotive...
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...global manager must develop systems and policies that address Pricing Decisions Price floor: minimum price Price ceiling: maximum price Optimum prices: function of demand Global Marketing Chapter 11 Must be consistent with global opportunities and constraints Global Marketing - Schrage Basic Pricing Concepts Market Price Strategy Law of One Price would prevail in a truly global market International trade helps keep prices low and low prices keep inflation in check Global markets exist for certain products—integrated circuits, crude oil National markets reflect costs, regulation, demand, competition— beer May make or break your profitability May not be able to use the same strategy Internationally as Domestically Global Marketing - Schrage 11-3 Global Pricing Objectives and Strategies 11-4 Global Marketing - Schrage Market Skimming and Financial Objectives Managers must determine the objectives for the pricing objectives Market skimming Charging a premium price May occur at the introduction stage of product life cycle Unit sales Market share Return on investment They must then develop strategies to achieve those objectives Regain investment in R&D and product development faster Penetration pricing Market skimming Global Marketing - Schrage Global Marketing - Schrage 11-2 11-6 11-5 1 Penetration Pricing and Non-financial Objectives Companion Products Products whose...
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...Application of Business Analytics in Pricing It is estimated that 30% of annual pricing decisions go wrong and do not generate the best price to maximize revenues and/or profits. The traditional methods of cost accounting can be used to arrive at the cost and a profit margin can be added to create a price. But the sheer vast number of products that a company may sell makes it an extremely complex task to calculate price based on cost inputs, price of alternatives, etc. The variables affecting price may also change continuously and it’s a daunting task to track them all. Traditional methods of pricing may therefore ignore potential for higher revenues or a need to cut costs to match buyer sentiment and willingness. This is where Business Analytics has a role to play. By mining such ‘Big Data’, pricing predictions and prescriptions can be automated and based on much granular information. Such predictions and prescriptions regarding price will be made basis continuous interpretation of data and will be more reflective of the dynamic market conditions in which the prices are set. Revenues can thus be maximized and/or cost can be better managed. Eg: Fortune.com carried an article on how Big Oil is turning to Big Data in times of volatile gas prices. Data tools such as algorithms, sensor networks etc are helping to lower costs and to improve efficiency in oil infrastructure. This application of business analytics in pricing, one of the most important 4Ps of Marketing is...
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...Executive Summary Chanel No.5 is one of the most popular perfume products on the market. The Chanel N5 has a constant mission to accomplish in satisfying it customers as well as the laws. It is crucial to keep a reasonable price and maintain high quality of the perfume product. Correspondingly, whenever the cost of the product decreases, it means the quality of the product lessens, and luxury product becomes ordinary. "The word perfume derives from the Latin perfumare, meaning to smoke through. Perfume is a mixture of fragrant essential oils or aroma compounds, fixatives and solvents used to give the human body a pleasant scent “(Wikipedia). Chanel N5 is one of the most popular out of the company perfumes. It dominates the market since early 1920 the reason for marketing that products changed dramatically over the years. Chanel No 5 is one of the most popular scents made by Chanel, and it wins over scents form competitors for many reasons. Because Chanel no 5 is one of the oldest perfumes, the marketing strategy for this product has to meets expectations of the consumers. Target Market The consumer demographic segmentation for perfume business includes wealthy individuals mainly woman in their late thirties and older. Perfumes tend to cost much more than any other fragrances. Therefore, not everyone can afford it. The customer driven, and increase in perfumes market is affected by demographic lifestyle. Some people use perfumes for special occasions and others wear it regularly...
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...Introduction Company description General Electric Co. is a technology and financial services company that develops and manufactures products for the generation, transmission, distribution, control and utilization of electricity. Its products and services include aircraft engines, power generation, water processing, security technology, medical imaging, business and consumer financing, media content and industrial products. The company operates through eight segments: Power & Water, Oil & Gas, Energy Management, Aviation, Healthcare, Transportation, Appliances & Lighting and GE Capital. The Power & Water segment serves power generation, industrial, government and other customers worldwide with products and services related to energy production. The Oil & Gas segment supplies mission critical equipment for the global oil and gas industry, used in applications spanning the entire value chain from drilling and completion through production, liquefied natural gas and pipeline compression, pipeline inspection, and downstream processing in refineries and petrochemical plants. The Energy Management segment designs technology solutions for the delivery, management, conversion and optimization of electrical power for customers across multiple energy-intensive industries. The Aviation segment products and services include jet engines, aerospace systems and equipment, replacement parts and repair and maintenance services for all categories of commercial aircraft; for a wide variety...
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...Marketing mix is the set of controllable tactical marketing tools–product, price, place, and promotion–that the firm blends to produce the response it wants in the target market Company Background Found in 1938, Kee Wah Bakery has grown from a small grocery shop to a household name renowned for its bakery products in over half a century, with outlets and business filaments that stretch from Hong Kong to Mainland China, Taiwan, North America and Japan. The brand now has now become a household name among locals, as well as other Asian communities around the world. In terms of product range, aside from traditional bakery products such as mooncakes and bridal pastries, Kee Wah has also been continuously pushing the envelope of modern Chinese pastries by re-invention old-day favorites with modern touches, by incorporating new ingredients and tastes into a wide variety of traditional and innovative new products. Mission Statement Kee Wah is a traditional family operated company with modern management style that strives to preserve the long tradition of Chinese pastries while at the same time adheres to the philosophy of high quality and hygiene standard demanded by modern day customers. All packaging we carefully designed to be both functional and stylish, by incorporating nostalgic oriental essences with modern elegance. The recently introduced Kee Gift series is a stepforward in design and marketing concept which caters to visiting tourists in an effort to introduce...
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...products for example: crude oil, commercial aircraft, diamonds, and integrated circuits, the rest are all equal. Because of the differences in national markets, a global marketer has to develop pricing systems and pricing policies that take into account price floors, price ceilings, and optimum prices. The pricing systems and policies must also be consistent with other uniquely global opportunities and threats. The other important internal organizational consideration besides cost are the many interest groups within corporations that conflict price objectives. The director of global marketing seeks competitive prices in world markets. The controller and financial vice president are concerned about profits. The manufacturing vice president seeks long production so that manufacturing can be efficient. The tax manager is concerned about compliance with government transfer pricing legislation. Finally the company counsel is concerned about the antitrust implications of global pricing practises. Thus, pricing reflects the goals set by members or the sales staff, product managers, corporate division managers and the company’s chief executive. 2. Market Skimming and financial objectives – price can be used as a strategic variable to achieve specific financial goals. When financial criteria such as profit and maintenance of margins are the objectives, the product must be part of a superior value proposition for buyers; price is thus an integral part of pricing strategy. The market skimming...
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...successful organizational team, especially in knowledge-based enterprises, is that they are invested with a significant degree of empowerment, or decision-making authority. With more companies moving toward ways of implementing employee empowerment, it can help change things and give managers more time for visioning and nurturing their company. Running Head: APPLICATION OF THEORIES Application of Theories Introduction Most decisions at a company should be based on using critical thinking than on non-critical thinking. In general, critical thinking is a process that helps evaluate situations or problems and then leads to the best solution possible that will give one’s organization the best results. Employee empowerment culture GE Oil and Gas is committed to find ways to achieve an incident-free workplace (Veazie, B., Knode, T., 2010). Human Resources is one of the most critical in this implementing process because they will help train, and communicate to employees how important safety is. Good effective leaders will help empower all employees towards safety excellence (Veazie, B., Knode, T., 2010). In addition, all employees assume the responsibility of their own safety and the safety of those around them arises only out of discretionary behavior (Veazie, B., Knode, T., 2010). Discretionary behavior is simply a choice made by each employee every day; employees cannot be mandated to comply (Veazie, B., Knode, T., 2010). It is what they do all day, every day, when no one...
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...What implication do fluctuations in foreign exchange rates have on the pricing decisions of export marketing managers? Globalization is no longer an abstraction but a stark reality that virtually all firms, large and a small, face. Firms that want to survive in the 21st century must confront all encompassing force that pervades every aspect of business. However, exchange rate fluctuation is an issue that affects the decisions marketing managers make about pricing. Management faces different decision situations, depending on whether currencies in key markets have strengthened or weakened relative to the home country currency. If the home country currency is weakened this would be an opportunity as exchange would be in a favourable position. A producer in a weak-currency country can choose to cut export prices to increase market share or maintain its prices and reap healthier profit margins. When revenues are translated into home country, the returns would be substantial. On the other hand it is a different situation when a company’s home currency strengthens, management would see this as unfavorable for exportation as overseas revenues would be reduced when translated to home country currency. Management in making there decision must consider currency fluctuation even though the degree of exposure varies among companies. In an example, Honda is heavily dependent on the North American market, which accounts for more than half of its operating income. In trying to reduce currency...
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...typical life cycle in Colgate-Palmolive is a (S) curve of introduction, growth, maturity, and saturation stages. Colgate-Palmolive current product and branding relationships Evaluation of current product and branding relationships in the oral care segment, the personal care line offers deodorant, body wash, liquid hand soap, bar soap, and toiletries. Their tagline is “We make the brand you love for the ones you love.” (Colgate World of Care, 2011) and brands include Speed Stick, Softsoap, Irish Spring, Afta, and Skin Bracer. The Home Care line focus on ³Making the brands that makes a home (Colgate World of Care, 2011) includes dishwashing products, fabric conditioner, and household cleaner brands include Palmolive, Ajax, Suavitel, Murphy Oil Soap, and AJAX. Finally, pet nutrition is branded under Hills Science Diet and offers cat and dog care products, offering canned and dry food for dogs and cats.Colgate’s vision is to use ³Trusted Oral Care products and expert information to keep your smile bright, beautiful, and healthy. (Colgate World of Care, 2011) The Oral Care Center focus on popular oral care topics, videos and interactive guides, dental health at any age, and...
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...ACKNOWLEDGMENT My first and foremost humble and gratitude to “ALLAH” the Almighty for giving me the valor to remain dedicated to make this term report. This underlying term report is based on the analysis of different marketing functions of Lever Brothers Pakistan Limited. Applied on “Sunsilk”. In making this term report, we collected the whole data from publications, internet and various international business magazines. Apart from it I take the opportunity to acknowledge the real efforts of: Mr. Reza A. Syed, for guiding us, Ms. Ayesha Khan (Assistant Product Manager of Sunsilk) and Mr. Khurram (Product Manager) without whose support this report wouldn’t have been possible. As a final word, my sincere dedication is to the other students of “BAHRIA INSTITUTE”, they are the future managers in every field of life, they have my good wishes for their future success in management. TABLE OF CONTENTS CONTENTS PAGE # 1. Lever Brothers Pakistan Limited. 03 2. Company Objectives. 04 3. Sunsilk Mission Statement. 05 4. Product 06 5. Price 10 6. Promotion 12 7. Distribution 15 8. S.W.O.T Analysis 16 9. Recommendations 18 LEVER BROTHERS PAKISTAN LIMITED LBPL, the largest consumer goods producing company in Pakistan, was incorporated here in 1948 and started building their factory at Rahim Yar Khan. This factory was inaugurated formally in 1951 by the then Governor...
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...Part 1: Ethical Behavior The first matter would be that the hiring and firing decisions made by the managers of MKD be based on a person’s ability to perform the job. Their managers should not discriminate against race, gender, national origin, or age, to name a few. The second matter would be that MKD should ensure that each employee is paid fairly and that their working conditions meet the legal standards. The third matter would be the matter of privacy and respect. The ethical behavior of MKD should be to respect each employee and their privacy. Part 1: Environmental Responsibilities The public opinion of MKD could be greatly tarnished as a result of this instance. Much like the case of the BP oil spill that happened more than four years ago in the Gulf of Mexico. As a result, much of the public saw BP as being irresponsible and not very careful. (Swanson, 2013) Part 1: Obstructionist Stance If MKD adopts an obstructionist stance in this situation, their response to the media would be one that would likely deny or even try to cover up any wrongdoing. They may even try to place the blame on someone else as in the case of the Enterprise car rental company in 2004. Enterprise refused to be held accountable for the deaths of two girls that were involved in a deadly accident while driving one of their rental cars that was knowingly faulty and defective. Enterprise went as far as even placing the blame on the two innocent girls who were not even aware of the defect. (Emison...
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...marketing manager concentrates on four major decision areas while planning the marketing activities, namely, (i) products, (ii) price, (iii) place (distribution) and (iv) promotion. These 4 ‘P’s are called as elements of marketing and together they constitute the marketing mix. All these are inter-related because a decision in one area affects decisions in other areas. In this lesson you will learn about the basic aspects relating to these 4‘P’s viz., product, price, place and promotion. OBJECTIVES After studying this lesson, you will be able to : • • • • • • • • explain the concept of marketing mix and its components; explain the meaning of product and its classification; state the various factors affecting pricing decisions; describe different methods of pricing; state the meaning of channels of distribution; identify the various channels of distribution; state the factors affecting choice of a channel of distribution; and explain the concepts of promotion and promotion mix. 101 Business Studies MODULE -5 Marketing 20.1 CONCEPT AND COMPONENTS OF MARKETING MIX Notes Marketing involves a number of activities. To begin with, an organisation may decide on its target group of customers to be served. Once the target group is decided, the product is to be placed in the...
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