All businesses operate under certain environments which directly or indirectly affect the business. The current world international business setting is faced by a number of contemporary issues (Angevine, 2010b). These issues are due to sensitivity to competition, the environment, global economy, political issues, and social responsibilities among many others according to the nature of business. Lake Oil NL is an international petroleum products exploration company which is focused to being one of the world's outstanding hydrocarbons producers (Cummins & Beasant, 2005). The company is the oldest oil exploration company in Australia with a number of new petroleum wells being discovered which makes them realize great revenues with a lot of expansion projections and strategies. The company was named after the Lakes District of the south eastern Victoria and holds exploration licenses and permits in South Australia, Queensland and United States of America. Their oil is sold the global markets while their gas is supplied to large industrial users like the steel industries on long term contractual basis (Hyne, 2001).
Although the road may seem smooth for Lakes Oil NL, being the pioneers in the petroleum mining in Australia, there are some business environmental issues to be considered and being incorporated into their market strategies since they constitute the condition within which the business is operating. The long term success and survival of a business is dependent on the impending situations and business environment, though external they are very crucial (Stecklow et al, 2010).
The Lakes Oil NL, like any other business has competitors. Competition in a business have got a direct effect, in that, the pricing and other marketing activities have to consider the existing competition in the target market served. Due to the increased populations which reflects a proportional increase in the need for basic wants or needs calls for entrepreneurial innovation and ventures that as a result imposing competition into the existing industries. These competitors include both domestic competitors and international competitors.
Domestic competition to the Lakes includes Bounty Oil, Rio Tinto, Empire Oil & Gas, BHP and other petroleum dealing firms (Hyne, 2001). The competition is stiff but with Lakes being pioneers has got a bestowed goodwill that makes them more marketable to their customers than their competitors. They have a long history before their current stability which explains their experience and market share in the industry.
In the larger world, there are many petroleum producer and especially from the Asia. The Arab world has been known to be rich in petroleum production and at cheaper prices than in any other part of the world (Cummins & Beasant, 2005). It is in the recent ages or political instabilities and wars on the Arab world that has brought to adverse effects in their oil production thus depriving most part of the recipient world the product and a corresponding shoot in the petroleum prices. This increase in prices by the competitors put Lakes in a better position in the market to serving its share at considerably lower prices.
Price issues and Economy
Petroleum is one of the widely used important natural resources in the entire earth. They are hydrocarbon compounds formed from various decompositions of organic matter and fossil. As a characteristic of natural resources they are bound to be exhausted with continual use especially when the consumption process is more rapid than the formation processes. This decrease in the quantities of petroleum yields with an increase in demand leads to a steep increase in their market prices (Mabro, 2006).
The Arab world has been supplying most parts of the world with fair crude oil. The decrease in their production due to war and embargoes leads to the increase in the fuel prices. This leaves the consumers with no better choices than looking for cheaper fuel in market and appropriate substitutes (Angevine, 2010a). The Lakes Oil NL tries to regulate the prices to their customers but with still the decrease in production there is all need to look for other alternatives.
The recent American- Arab wars has also contribute to global economic breakdowns since the rivalry decisions by OPEC to raise the petroleum price in retaliation to other bans by the US has resulted to unforeseeable economic shifts which have adversely affected businesses in the world. The global economy crisis is posing great threats to all international businesses. This issues leads to destruction of foreign markets and fall in demands. Although the petroleum products can not readily loose demand but with the depletion of the purchasing power there is no sales (Mabro, 2006).
In the past there has been a fast increase in the fuel demand globally (Ketteringham 7White, 2005). This has been due to the need for transportation with most people opting for private means of transportation and abandoning the public means (Mabro, 2006). This has increased the fuel consumption multiple times higher hence the demand and a resulting hike in petroleum prices. Due to this chain factor, there triggered the need for alternative sources of energy like the solar, wind panels and hydroelectricity. This has to an extent reduced the demand for petroleum products whereby more and more advancements are being put in place to be able to appropriately substitute the use of expensive petroleum product (Angevine & Cervantes, 2010).
Technological advancement has also brought the demand for the petroleum products down. The invention of electric trains, hybrid gas-electric automobiles and many others is giving people the hope of being delivered from the petroleum crisis. However, the same technological inputs are enabling the explorers to increase their yields and reduce the consumption through effective usage but still petroleum products may end up being substituted as fuel and remain to be only an effective lubricants and industrial reagents. This will have effect on Lakes and must develop proactive measures to the impending demand fall. In the meantime, global demand for oil is rising. 'The Energy Information Administration forecasts that worldwide demand for oil will increase 60 percent by 2020. This era of oil depletion will affect everything from transportation to food to medicine (Speight, 2006).
There have been a lot of environmental concerns been raised lately and more are very each day. Corporate, clubs, government and even the general society are taking the initiative to maintain and conserve the environment (Cummins & Beasant, 2005). Manufacturing businesses are being compelled to observe the safety of the environment in all their activities failure to which there are special enforcements or even the public might decide not to encourage such an entity (Committee on Oil in the Sea, National Research Council, 2003).
Lakes Oil company is involved in a number of activities that pose a direct threat to the environment (Bauer et al, 2005). The exploration processes leads to dereliction of land after mining while the heavy drilling machinery and explosive use to blast the rocks during the process cause tremor on the earth's core which in turn exposed the land to tremors and earthquakes (Angevine & Cervantes, 2010). The transportation of the oils via sea are also putting the aquatic life in danger due to oil spilling and a noticeable amount of sea dead zones have been realized due to these spillages.
The usage of petro-products leads to the release of carbon oxide the gases which have the tendency of damaging the ozone layer which shields suns harmful rays and bringing about the green house effect which is the core mechanism behind global warming (Maugeri, 2005). The campaign towards slowing down global warming is mainly advocating the abandonment of the use of petrochemical products which means that the potential customers are being advised to minimize or shun from consuming petroleum fuel. This is a possible threat to the oil companies who are now enjoying recording very high returns like the Lake Oil NL (Oil Spill Intelligence Report. 2000).
In conclusion, business environments are crucial element to any operational businesses. Both external and internal business environments must be studied and strategies applied suitable in accordance to them. Though international business environments are wide and have bigger impact as compared to the domestic business environment, both have to be accorded the necessary attention if a business has to operate in harmony.
The petroleum industry has a number of effects to its environment ranging from prices, exhaustion to environmental pollutions which have to be solved. The Lakes Oil company also has got the obligation to making sure that they are not only focused towards profit maximization without necessary concerns of the business environment which includes the public, customers, government, social responsibilities and the natural environment. All these are contemporary issues facing businesses both locally and internationally.