Question

Assignment-2

A. Analyse the functions of Organization of Petroleum Exporting Countries and identify OPEC member nations influence and maintain the price of oil through the control of production levels and to generate revenue in recent years. [1000 – 1200 words] 4 Marks.

B. Compare and analyse the effect of Multi-National Companies (MNCs) in Fast Food Chain Outlets with Saudi Based domestic Fast Food Outlets.

Consider one MNC Fast Food outlet (McDonalds / KFC / Pizza Hut / Baskin-Robbins) with one Saudi based domestic Fast Food outlet (Al Tazaj / Al Baik / Kudu / Herfy). [900-1000 words] 3 Marks.

Prepare a short report with the help of following points:

1. Present the study report with clear Introduction and Conclusion including your own views.

2. Analyze your study with micro and macro environmental forces by using SWOT analysis.   

3. Analyze the Political and Economic challenges.

4. Analyze the Legal and Cultural challenges of each country.

Answer 1

OPEC:

Introduction:

The Organization of the Petroleum Exporting Countries (OPEC) also called a “cartel”, manipulates the price of oil for the profit of its country members. Supply/demand balance is huge price benefit

As of 2016, OPEC has more than 80% control of the world’s crude oil reserves, 65% based in the Middle East. OPEC member countries have a production of about 33 million barrels of crude oil per day, which is around 40% of global supply

SWOT:

Strength: They hold majority of decision making regarding price and supply of crude oil, hence a kind of monopoly, giving them huge advantage

Weakness: Too much of price sensitivity against other countries can create a chaos

Opportunities: they can continue expanding in other countries, with the financial and technological aid they have gained so far

Threats: Alternative sources of energy like wind, solar, electric will give a tough fight in coming years

Political and Economic Challenges:

The continued adoption of Renewable and Electric energy sources have given significantly dropped prices in past for OPEC, rising as a major alternative source of energy. OPEC is not ready for such fight with its limited resources. Civil war in Libya, conflicts in Iraq, and ongoing recession issues in Saudi and UAE have become major hurdles for OPEC oil business

Legal and Cultural Challenges:

Cultural mix is present in OPEC with variety of professionals and skilled/ unskilled labour from different countries, cultures. Still they need to expand it, if they want to grow significantly globally

Migration laws, rules of stay/ transfer in countries, visa issues, relevant taxes etc. are yet to be made smooth in countries like Saudi. UAE is still better among all, followed by Oman