SOEs must identify and understand local market forces to realize greater value on investments
CALGARY, July 17, 2013 /CNW/ - State-owned enterprises (SOEs) need a well-planned and executed market-entry strategy to benefit from opportunities in Canada's oil and gas industry, EY said today as it launched a new report, Playing by the local rules: state-owned enterprise success in Canada's oil and gas industry.
"Over the last year we've seen a number of transactions take place that affirm foreign players' — especially Asian investors' — growing interest in Canada," says Barry Munro, EY's Canadian Oil and Gas leader. "But getting the green light to do business in Canada is just the beginning. The biggest barrier to success is not having a deep knowledge and understanding of the ongoing market forces in our country."
Whether a company is entering Canada in a complete-control capacity or pursuing non-operating transactions or joint ventures, success in the Canadian oil and gas market takes a lot more than compliance-based approach to minimum standards.
"SOEs must demonstrate that their interests are aligned with the interests of the Canadian economy and society as a whole," says Lance Mortlock, Partner in EY's Oil and Gas practice. "That's where a market-entry strategy comes into play. Thinking carefully about important issues and opportunities in the Canadian market can improve a company's brand and reputation, fuel collaboration and impact their ability to attract top talent."
The six building blocks of an effective market-entry strategy include:
- Canadian workforce development
- Government and IOC relationships
- Strategic business objectives
- Community and social responsibility
- Effective and transparent communication
- Canadian supplier use and development
"There's always work to be done when entering a new market," adds Munro. "SOEs should have strong foundational competitive advantages, including capital, international operations, cost-effective value chains and technical capabilities — all critical components to meet growth and profitability targets in Canada. But realizing real value demands a strong market-entry strategy."
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SOURCE: EY (Ernst & Young)
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