(a). Porter’s 5-force model.

(b). (i) Political environment

(ii) Economic environment

(iii) Social and cultural environment

(iv) Technological environment

(v) Environmental/sociological influences

(vi) Legal environment

(c). (i) Political environment. Oil companies are affected by the politics of many of the oil-producing nations, and the use of oil supply and oil prices by the governments of some of these countries to exert pressure in world politics. There are also political disputes about the ownership by nations of rights to drill offshore in some parts of the world.

(ii) Economic environment. Oil companies, like all other commercial economies, are affected by the current and expected state of the world economy and national economies. However, the importance of oil is such that the decisions and activities of oil companies can have a significant effect on the world economy.

(iii) Social and cultural environment. Oil companies need to consider the attitudes of societies towards the consumption of oil. The ‘green’ movement is strong in some countries, and there is an increasing willingness among people to consider using alternative (non-oil) sources of energy.

(iv) Technological environment. Oil companies are affected by developments in technology, particularly developments in the technology for using alternative energy sources, and R&D into more fuel-efficient technology that uses oil.

(v) Environmental/sociological influences. Oil is at the centre of concerns about greenhouse gases. Oil companies are also affected by concerns for the protection of the environment and the ecology (for example, concerns about pollution from oil spillages). There are also concerns about how long supplies of oil will last.

(vi) Legal environment. Oil companies will be affected by continuing legislation to protect the environment and to punish companies found guilty of environmental pollution.