Petrobras Porter’s 5 Five Forces (2021)


Petrobras Company Overview:

 

In 2001, the Brazilian government began to work on a plan to offer shares of state-run oil company Petrobras on the stock market, offering 5% of its capital through an Initial Public Offering. This IPO attracted US$ 98 billion. Since then, the company has been operating and leasing oil and gas wells and infrastructure throughout Brazil and in over 50 countries around the world. In June 2013, then-CEO Maria das Gracas Foster announced that Petrobras would invest $224 billion in the five years leading to 2016, in order to double its oil and natural gas production. Below you can find the detailed Porter’s Five Forces Model Analysis of Petrobras.

 

 

Petrobras Competitive Rivalry:

 

A company can be affected by two types of competitive rivalry, differentiated and undifferentiated. Differentiation occurs when there are few companies that produce the same product or service with different characteristics. On the other hand, undifferentiated is when many companies compete to offer an identical product. The key competitors for Petrobras are Repsol YPF, ExxonMobil, Chevron Corp., Sinopec Group, and Shell. There are few companies that have the same characteristics as Petrobras since they offer products related to oil production.

 

 

Petrobras Bargaining Power of Suppliers:

 

When suppliers are strong enough, they can influence the price or even create other conditions for the sale. They are not forced to accept the offer of a company if their demands are not met, increasing competition among suppliers. This case is present since Petrobras has strong competitors that may interfere with price, affecting this industry too.

 

 

 

Petrobras Bargaining Power of Buyers:

 

Similar to suppliers, buyers can also affect prices. If there are many buyers, the best strategy is to search for a company that offers a product with certain characteristics and can meet their demands well.

 

 

Petrobras Threat of New Entrants:

 

One of the main problems for a strong company is to face new entrants. In some cases, new companies may enter with better quality products or more competitive prices, creating a threat to the current market leader. The industry has many players that have similar characteristics but Petrobras still remains as a strong competitor, facing this threat.

 

 

Petrobras Threat of Substitutes:

 

This occurs when one industry’s product is able to replace another. In this case, the company must have a good image and must be recognized by the public in order to keep its clients. One example can be milk and juice substitutes. If milk prices increase, people may search for other products that will fulfill their needs. This is not a big threat for Petrobras since its product doesn’t have substitutes at this moment.

 

 

Petrobras Porter 5 Forces Conclusion:

 

The Petrobras competitive rivalry is affected by a large number of competitors around the world. Their bargaining power of suppliers and buyers are low since they need to negotiate with many companies that offer similar products or services. The threat of new entrants is medium due to its strength as a company but the threat of substitutes is low since it operates in an industry with no substitutes.

 

 

 

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