Competing in the Energy Market; a GOIL Case.

CASE: 

GOIL, a state-owned petroleum company, competes with foreign brands like Shell and TotalEnergies. Fluctuating fuel prices, government policies, and the push for renewable energy present challenges.

• How can GOIL remain competitive against multinational fuel companies?
• Should GOIL invest in renewable energy solutions? why or why not?
• What pricing strategies should GOIL adopt in response to global oil price changes?
• How can GOIL improve its service delivery to enhance customer loyalty?

SOLUTION:

1.1 Introduction

The petroleum industry is a highly competitive and dynamic sector, characterized by fluctuating fuel prices, changing government policies, and the growing push for renewable energy. In Ghana, the state-owned petroleum company, GOIL, faces intense competition from multinational fuel companies such as Shell and TotalEnergies. To remain relevant and competitive, GOIL must adopt strategies that address the challenges posed by the ever-changing petroleum landscape.

According to Kumar, Singh, and Kumar (2017), companies operating in the petroleum sector must be adaptable and responsive to changes in the market. This requires a deep understanding of the factors that influence the industry, including global oil price changes, government policies, and shifting consumer preferences.

In this essay, we will explore the strategies that GOIL can adopt to remain competitive against multinational fuel companies. We will examine the question of whether GOIL should invest in renewable energy solutions, and discuss the pricing strategies that the company can adopt in response to global oil price changes. Finally, we will consider how GOIL can improve its service delivery to enhance customer loyalty.

2.1 How can GOIL remain competitive against multinational fuel companies?

To remain competitive against multinational fuel companies, GOIL must adopt strategies that address the challenges posed by fluctuating fuel prices, government policies, and the push for renewable energy. One approach is to diversify its operations and invest in renewable energy sources, such as solar and biofuels. This would enable GOIL to reduce its dependence on fossil fuels and capitalize on the growing demand for cleaner energy.

Another strategy is to focus on improving operational efficiency and reducing costs. GOIL can achieve this by investing in digital technologies, such as artificial intelligence and blockchain, to optimize its supply chain and logistics (Makarov & Sokolov, 2020). Additionally, GOIL can explore opportunities for partnerships and collaborations with other companies to share resources and expertise (Kolk & Pinkse, 2020).

Furthermore, GOIL must prioritize customer satisfaction and loyalty by offering high-quality products and services. This can be achieved by investing in staff training and development, as well as implementing customer-centric strategies, such as loyalty programs and rewards (Hallowell, 2018). By building strong relationships with its customers, GOIL can differentiate itself from its competitors and maintain a loyal customer base.

In terms of government policies, GOIL must engage with policymakers and regulatory bodies to ensure that its interests are represented. This can involve participating in industry associations and advocacy groups, as well as providing input on policy proposals that affect the energy sector (Kolk & Pinkse, 2020).

Finally, GOIL must invest in research and development to stay ahead of the competition. This can involve partnering with universities and research institutions to explore new technologies and innovations in the energy sector (Makarov & Sokolov, 2020). By staying at the forefront of technological advancements, GOIL can identify new opportunities and stay competitive in a rapidly changing market.

3.1 Should GOIL invest in renewable energy solutions? why or why not?

Yes, GOIL should invest in renewable energy solutions.

Firstly, the global energy market is experiencing a significant shift towards renewable energy. According to the International Energy Agency (IEA), global investment in clean energy has accelerated since 2020, with spending on renewable power, grids, and storage now higher than total spending on oil, gas, and coal (IEA, 2024). This trend indicates a growing preference for renewable energy sources, driven by the need to reduce greenhouse gas emissions and combat climate change. Investing in renewable energy would allow GOIL to align with global energy trends and reduce its carbon footprint, thereby enhancing its reputation and competitiveness in the market.

Moreover, the cost of renewable energy technologies has been decreasing over the years, making them more economically viable. The IEA reports that the cost of solar power is expected to decline by approximately 15% to 35% by 2024, which will drive companies to invest in renewable energy rather than allocating resources to oil (IEA, 2020). By investing in renewable energy, GOIL can take advantage of these cost reductions and diversify its energy portfolio, reducing its dependence on fossil fuels and mitigating the risks associated with fluctuating fuel prices.

Additionally, government policies and regulations are increasingly favoring renewable energy development. Many countries, including Ghana, have implemented policies to promote renewable energy and reduce reliance on fossil fuels. For instance, Ghana's Renewable Energy Act aims to increase the share of renewable energy in the country's energy mix and provide incentives for renewable energy investments (Ghana Energy Commission, 2011). By investing in renewable energy, GOIL can benefit from these government incentives and support the country's efforts to achieve its renewable energy targets.

Furthermore, the push for renewable energy presents an opportunity for GOIL to innovate and expand its business operations. As the demand for renewable energy technologies such as solar, wind, and biofuels increases, GOIL can leverage its existing infrastructure and expertise to develop and deploy these technologies. This strategic move would not only diversify GOIL's revenue streams but also position the company as a leader in the renewable energy sector.

Again, GOIL should invest in renewable energy solutions due to the global shift towards clean energy, the decreasing costs of renewable technologies, favourable government policies, and the opportunity for business expansion and innovation. By doing so, GOIL can enhance its competitiveness, reduce its carbon footprint, and contribute to Ghana's renewable energy goals.

4.1 What pricing strategies should GOIL adopt in response to global oil price changes?

To mitigate the impact of global oil price changes, GOIL should adopt pricing strategies that balance its profitability with customer affordability. One approach is to implement a dynamic pricing strategy, which involves adjusting prices in response to changes in global oil prices (Chen, Zhang, & Zhang, 2019). This strategy can help GOIL maintain its profit margins while remaining competitive in the market.

Another approach is to adopt a price-smoothing strategy, which involves maintaining stable prices despite fluctuations in global oil prices (Kumar, Singh, & Kumar, 2017). This strategy can help GOIL build customer loyalty and maintain market share, as customers are less likely to switch to competitors in search of lower prices.

GOIL can also consider adopting a value-based pricing strategy, which involves setting prices based on the perceived value of its products to customers (Kumar, Singh, & Kumar, 2017). This strategy can help GOIL differentiate itself from competitors and maintain a premium price position in the market.

Furthermore, GOIL can explore the use of price hedging strategies, such as futures contracts and options, to manage its exposure to global oil price volatility (Chen, Zhang, & Zhang, 2019). This strategy can help GOIL reduce its price risk and maintain a stable profit margin.

In a nutshell, GOIL should adopt a combination of dynamic pricing, price-smoothing, value-based pricing, and price hedging strategies to respond to global oil price changes. By doing so, GOIL can maintain its profitability, build customer loyalty, and remain competitive in the market.

5.1 How can GOIL improve its service delivery to enhance customer loyalty?

To improve its service delivery and enhance customer loyalty, GOIL can adopt several strategies. Firstly, GOIL can focus on providing excellent customer service by training its staff to be friendly, courteous, and responsive to customer needs (Kumar, Singh, & Kumar, 2017). This can be achieved by implementing a customer-centric approach, which prioritizes customer satisfaction and loyalty.

Secondly, GOIL can invest in technology to enhance its service delivery. For example, it can implement a mobile payment system, which allows customers to pay for fuel and other services using their mobile phones (Kim, Lee, & Kim, 2018). This can improve the speed and convenience of transactions, reducing waiting times and improving customer satisfaction.

Thirdly, GOIL can improve its service delivery by expanding its range of services. For example, it can offer additional services such as car washing, oil changes, and tire repairs (Kumar, Singh, & Kumar, 2017). This can provide customers with a one-stop-shop experience, increasing their loyalty and retention.

Fourthly, GOIL can focus on building strong relationships with its customers. This can be achieved by implementing a loyalty program, which rewards customers for their repeat business (Harris & Goode, 2017). For example, GOIL can offer discounts, free services, or other rewards to customers who reach certain milestones or thresholds.

Finally, GOIL can improve its service delivery by seeking feedback from its customers. This can be achieved by implementing a customer feedback system, which allows customers to provide feedback on their experiences (Kim, Lee, & Kim, 2018). This feedback can be used to identify areas for improvement, allowing GOIL to make targeted changes to its service delivery.

GOIL can improve its service delivery and enhance customer loyalty by focusing on excellent customer service, investing in technology, expanding its range of services, building strong relationships with customers, and seeking feedback from customers.

6.1 Conclusion

Overall, GOIL's ability to remain competitive in the petroleum industry hinges on its ability to adapt to the challenges posed by fluctuating fuel prices, government policies, and the push for renewable energy. And in the face of increasing competition from multinational fuel companies, GOIL must be proactive in its approach to remaining competitive. By adopting the strategies outlined in this essay, GOIL can position itself for success in the rapidly changing petroleum industry. Ultimately, GOIL's ability to adapt and evolve will determine its long-term viability and competitiveness in the market.

References

Chen, L. Z. (2019). Dynamic pricing and inventory management in a supply chain with competing retailers. European Journal of Operational Research.

Ghana Energy Commission. (2011). Renewable Energy Act. Retrieved from Ghana Energy Commission: https://ghalii.org/akn/gh/act/2011/832/eng@2011-12-31

Hallowell, R. (2018). The relationships of customer satisfaction, customer loyalty, and profitability: An empirical study. International Journal of Service Industry Management, 2-23.

Harris, L. C. (2017). The four levels of loyalty program benefits. Journal of Marketing Management, 1-15.

International Energy Agency (IEA). (2020). How Growth In Renewable Energy Will Affect Petroleum And Gas Markets. Retrieved from International Energy Agency (IEA): https://www.iea.org/reports/renewables-2020

International Energy Agency (IEA). (2024). Overview and key findings – World Energy Investment 2024 – Analysis. Retrieved from International Energy Agency (IEA): https://www.iea.org/reports/world-energy-investment-2024

Kim, J. L. (2018). The impact of mobile payment on customer loyalty. Journal of Business Research, 123-131.

Kolk, A. &. (2020). Multinationals and climate change: A review of the literature. Journal of International Business Studies, 537-555.

Kumar, N. S. (2017). Price and service competition in a supply chain with value-added services. Journal of Retailing and Consumer Services, 101-111.

Makarov, I. &. (2020). Digitalization of the oil and gas industry: A systematic review. Journal of Petroleum Science and Engineering.

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