The Research On The Develop-Ment Strategy Of Shanghai Fuel Company

Generally speaking, the province grade oil circulation companies were established in early 1950s, the purpose of the companies is supplying coal and its products for the use of industry and public, along with the gradual change of national energy structure,fuel oil becomes the main product. The same circumstance occurs in Shanghai Fuel Company. When the government sets up Sinopec and China Oil (so called south company and north company ), the overall oil industry is mostly occupied by them, and with the changing from planned economy towards market economy, more private companies set up, these two factors caused big problem to the province grade companies who were working with planned supply mode. But Shanghai Fuel Company is still alive, now the net asset of the company is valued as 27 million Yuan, turnover in 2006 is 5 billion Yuan, Market share for fuel oil is 60% in Shanghai area, total sales volume is more than 2 million tons, and the company occupies a leading position in Shanghai even East China fuel oil market. However, despite the fast domestic economy growth brings Shanghai Fuel historical development opportunity, Shanghai Fuel still meets strong competition due to the fully opened oil market after WTO agreement. Thus, how to seize the opportunity? How to well consider the situation then adjust own strategy in time to make the company better is the main content of this article. In the meantime, I hope the conclusion of this article will help the other province grade circulation companies who have similar situation.There are five chapters in this article, the first two chapters analyze the external environment of fuel oil industry and the internal environment of Shanghai Fuel. This analysis is the basis for making the strategy, and it points out that both the external and internal environment are ideal for Shanghai Fuel, Shanghai Fuel should choose some aggressive strategies.In the third chapter, The fuel oil business value chain of Shanghai Fuel and the Fuel oil industry five forces which Shanghai Fuel is facing are well analyzed. For value chain analysis, the purchasing of fuel oil cargo, processing and blending, distributing are the key links, these factors must be well considered when making the final strategy; Regarding the five force analysis, Shanghai Fuel is under a good situation too, the entry barrier for potential competitors does exist, the bargaining power of suppliers is relatively weak, in the local fuel oil industry, competitors are not so strong, but if those big companies like Sinopec, Sinochem etc. want to share the market seriously, Shanghai Fuel will meet very strong challenge. For the buyers, the bargaining power at the present is not strong, but it's in an up-trend as well as the threat of substitute products.In the fourth chapter, this article firstly apply the TOWS matrix to make some development strategies for Shanghai Fuel, then apply the SPACE matrix and Grand Strategy matrix to further choose the proper strategies, at last, the QSPM matrix is used to give the final decision, which is Shanghai Fuel should position to Industry Fuel Circulation and professional logistics service, merge the upper stream and downstream of the supply chain by strategic alliance method, develop the capability of delivery and storage by JV or setting up new unit, build the distribution network, provide all-around logistics services with IT mode, try to make the customers satisfied with more specification of the products and more choices of services.After the development strategy is confirmed, the final chapter gives the detail of the strategy target system with three aspects: strategy, finance and organization. The solution on how to carry out the strategy and how to evaluate the result are followed to end the article.