5 Juni 2002
PhD thesis defence Erik Jarlsby, faculty of Technology and Management:
‘Competing in Commodities: The Markets for Hydrocarbons and Strategies for Advantage'
Oil, natural gas and the various products that can be made from them are mainly commodities, i.e. they are globally traded bulk products with only limited differences in quality. Conventional theory on competitive strategy then posits that competitive advantage can be obtained mainly through cost reductions and concentration. This study makes a different point: Markets for physical commodities offer a wider range of opportunities for firms to position themselves uniquely for competitive advantage. This has relevancy for the understanding of industry structure and the nature of competitive strategy particularly in the hydrocarbon sector, but also in other physical commodities.
Two aspects of such markets were analysed: The geographical dimension that is associated with transport costs, and the ways in which firms interact in the marketplace. Theory of locational economics is advanced to include the flexibility associated with site locations for benefitting from dynamic price differences between distant markets. An empirical study was made of thirteen markets in the hydrocarbon sector, based on interviews with market operators and trade reports. It identified differences in how products are traded between firms and relating such differences to the characteristics of the products. It was shown that companies that operate in these markets can develop unique and long lasting resources in dealing with the dynamic optimisation of production and logisitics. Such resources include production assets and organisational capabilities. This helps to explain why industries such as oil production and refining remain highly fragmented even after the large mergers that took place in recent years.
prof. dr. ir. E.J.de Bruijn
prof. dr. W. van Rossum
drs. B. Meijering, telefoon (053) 489 4385