Free Custom «Abraxas Petroleum Corporation» Essay Paper

Free Custom «Abraxas Petroleum Corporation» Essay Paper

The prospects for the world’s largest energy companies remain variable and mixed. They depend on numerous factors, ranging from geopolitics global energy supplies to prevailing global demand. Abraxas Petroleum Corporation has experienced tremendous growth in the last decade. As for the oil industry, the Organization of Petroleum Exporting Countries’ (OPEC) world market rose from 36% to 40% immediately after the Gulf war. The global industry is dominated by a few publicly traded companies and a handful of state-owned companies. As the private sector aims at achieving the desired profit outlay for the organization in the short-run, the need for expansion of the organization’s operations will be imminent. However, the political turmoil and economic instability that has been experienced in the oil manufacturing nations have hindered the growth in the industry. Needless to say, a demand growth or a radical change in OPEC policy in the near future will either harm oil production or increase its level. However, in the case of a drastic lower annual production due to adversity of the OPEC polices, the economy will experience energy crisis.

Abraxas Petroleum Corporation (AXAS) competitors include Apache Corporation (APA), Chesapeake Energy Corporation (CHK), and Chevron Corporation (CVX). AXAS is the least dominant industry among its competitors in the economy with a market capitalization of 323.34M. This is attributed to the small size of the company. Indeed, the company has a total of 74 employees as compared 4450, 10000, and 62000 for APA, CHK, and CVX respectively. Ideally, the revenue growth has been experienced in the oil industry of approximately 63.97%; attributed to the high demand for the product and industrialization of most of the countries. Abraxas Petroleum Corporation has been exposed to tight competition in the economy, and this has affected its reported revenue outlay. The summary for the competitor’s for AXAS is given below:

Market Cap. 323.34M 36.14B 17.14B 204.46B 61.94B
Employees 74 4450 10000 62000 44
Qrtly Rev. Growth 13.70% 45.40% 64.90% 26.20% 19.00%
Revenue 58.99M 14.56M 9.49M 229.60M 10.58M
Gross Margin 56.16% 82.91% 42.33% 32.06% 63.97%

Marketing mix for Abraxas Petroleum Corporation

In a given scenario, whether oil industry or not, a successful marketing mix should incorporate price, product, place, and promotion. The company has benefitted from well-designed marketing mix as it has enhanced the implementation and achievement of coherent goals for the company’s marketing strategy. The actual products include brand packaging, name and quality of the products that are offered in the economy. Ideally, in order to attract high market share, the company needs to recognize the interest of consumers in the economy. For effectiveness, Abraxas Petroleum Corporation has unique oil products that are distributed in the economy. The product positioning strategy aims at providing a constant cash inflow for the company by creating a product-price position that is attractive to consumers.  Attracting a large market share is crucial for the company and it highly depends on the marketing efforts and product positioning for Abraxas Petroleum Corporation. In developing the product positioning for the company, the company needs to provide superior products than that of its main competitors. Lowering price is usually sensitive for the markets that respond highly to the price changes in society. The vital goal for product positioning is to achieve the desired customer value that will enhance the organization to achieve its strategic goals.

The current price for the oil products that the organization has articulated in the economy is in-line with the industrial market price. Lowering the prices will not necessitate an increase in the customer outlay but will imply that the costs and expenses incurred will not be met with the available resources. The company needs to focus on the pricing strategy as the economy is normally price-sensitive. The pricing decision for the company has been affected by the political instability and the economic activities in the economy. For consistency, the organization need not have to increase its prices or lower them below the competitor’s level as this will affect the profit outlay and the performance of AXAS. Pricing decisions are highly sensitive, and management has considered all the factors that may, if not well undertaken, affect the overall performance and operation in the economy. The price will depend on the industrial regulation and the limit set for the product’s price in the economy.

The distribution or place strategy will be vital in determining the perfect marketing mix. As the economy is characterized by globalization, information technology, and trade liberalization, formation of complex network in distributing the product is vital. The strategies include co-branding, outsourcing, internet distribution, and product development in enhancing increased delivery of the products and capture potential consumers in the economy. Abraxas Petroleum Corporation has set a distribution channel that will cover most parts of the United States and the adjacent markets. The firm will gain a competitive advantage by realizing a lower cost. This has been combined with the company’s competencies and has enhanced it to maintain a stronger global position in realizing success for the future markets. The organization promotes its products through internet services and undertaking advertisement in the media. Promotion is relevant in any organization’s product as it ensures that the company can market its products. The consumers need to have knowledge on the existence of its brand in the economy.

Host Country Analysis

The company’s products need to be initiated in the France economy. France has a political and economic stability and it will enhance the company to perform its business operations with ease. The perfect mode of entry into the French economy is through licensing. In addition to the profits the company received in the domestic market, it can also generate profits from external markets. These profits may be additional revenues from a single process in which the company cannot utilize at home. Licensing enhances the company to extend the life cycle of AXAS product beyond that which it would experience in the local markets. Additional revenues also represent a return on a product or process that is ancillary to the strategic core of the firm in its domestic market. The firm could have developed a method of production that is marketable as a separate product under a licensing agreement.



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