Diversification Strategy Research On Petrol China Zhejiang Company

The rapid growth of China’s economy and greatly enhance the yearly demand for refined oil makes the future of China’s oil consumption has become the focus of consumer concern. With joining WTO, China’s commitments-" open retail for three years and release wholesale for five years "-weaken the protection of state-owned oil company from national macro-policy. The history of the monopoly of State-owned petroleum and petrochemical corporations in refined oil retail market will gradually cease to exist. Oil market will face increasing competition.According to foreign research data, it shows four stages of the development process of the gas station industry. First stage:the market is not liberalized. Performance characteristics as follows:there is an obvious monopoly of resources and prices; and market demand rapidly growing; the tension of oil sources; high operating margin level; and the rapid expansion of retail outlets. Second stage:Market opening stage. Performance characteristics as follows:The monopoly of oil source and price showed a loose trace, but it still maintained a high gross margin performance. Market entrants continued to increase, meanwhile the market demand continued to enlarge. The rapid expansion of the terminal and the total amount of gas stations began to appear in the competition within the industry. Third phase:the market is fully opened. Performance characterized as follows:There was an intense competition, rapid slowdown in demand growth, margin performance declined. The total number of terminal stations to stop increasing competition resulting in not all stations can be profitable outlets, while part location and management level are good stations to earnings. The fourth stage:maturity market. Features are:with fierce competition, there were excess resources, and continued to decrease in gross profit. The market demands tended to be stable. Gas stations need to have good location, good management, and low-cost and provide integrated services can be profitable. Adjust the number of stations remain competitive with the market decline gradually until close to or reach equilibrium. According to the trend of foreign oil market, domestic gas station will eventually enter the market mature stage, and then refined product sales margins are getting lower and lower. Only develop alternative business, and diversify business operations in order to ensure effective risk aversion and maintain normal development.In this paper, it starts with the theory of diversification, and then studies the history of foreign stations diversified operation and its representative model. Moreover, this paper combines the development and current situation of the diversification of domestic gas station industry. Through comparative analysis can predict the diversification of gas stations still in its infancy, but has great potential. It takes China National Petroleum Corporation Zhejiang Company for example, through several management analysis methods (pest, swot) to exam the feasibility of the diversification strategy. With reference of adverse factor of the impact of diversification in model analysis, this paper combine with the present situation of Zhejiang company and put forward the existing difficulties. Finally, this paper will come up with optimization scheme.