Topic > SWOT Analysis of ConocoPhillips - 1563

SWOT Analysis StrengthsOne of ConocoPhillips' greatest strengths is its enormous size, being America's second largest oil company. With its operations spanning more than 30 countries, the company owns approximately 10,000 petrol distribution outlets. This enormous financial size of the company also allows it to explore, extract, produce, refine, market and distribute at various sites, thus giving rise to growing revenues. The company adopts the principle of risk diversification. LUKOIL, which undertakes risky projects such as exploring Russian blocks, is a company in which ConocoPhillips owns a 20% stake. This 20% investment in LUKOIL allows companies to benefit by undertaking risky projects without taking on a significant amount of high risk. By providing technical expertise to LUKOIL, the company has maintained good and cordial relations with the Russian government. Weaknesses ConocoPhillips' main weakness is not having stable revenue or earnings. The price of oil is strongly influenced by small changes in the economic phenomena of the world, so this high price volatility will often make the earnings forecast wrong. ConocoPhillips' unlevered beta is comparatively higher than that of the industry at 1.21, which shows that the company is highly sensitive to market conditions. When economic conditions are well above normal, the price of oil increases, thus increasing profits above expectations, while negative is the case in bad economic conditions. This dependence of income on oil prices poses a risk to the company's business model and demonstrates that the company is exposed to a higher level of risk. Having an almost total dependence on oil for its operations, there is no way the company can… half of paper… tool, lubricants and solvents. To stay competitive and increase the profit margin, the company should focus on cost minimization techniques so that when oil prices fall, the company will still have high earnings compared to others in the industry. This will put the company in a superior position compared to others, which will allow the company to undertake new profitable ventures even in times of declining prices. Oil mines are not sustainable and over time the mines become depleted. Therefore, over time, when the mines are exhausted, the company will have negative earnings growth. To avoid this situation, the company must search for, identify and locate new oil mines to extract. The company should be ready with acquisition plans in case it has the opportunity to acquire high-yield mines.