IMPACT OF PEAK OIL

Impact of Peak Oil might have on the economy and on the organization

Abstract

Oil and gas are a vital part of any economy, affecting it in many mixed ways. It is important to note that the prices of these energy sources are based on global demand and supply, and fluctuates often due to vast demand and limited supply. The increases in the oil prices have a log rolling effect on a number of things, having an effect on the overall economy. This addition cost affects the organization seriously as it has to bear a higher cost in terms of utility expenses, overhead and transportation costs. Utilization of renewable energy and electrical equipment instead of equipment using fossil fuel can be effective. The demand of the company's products can be lower because of the hike in fuel prices. It should be noted that material and manufacturing cost increases with the hike in oil prices, in addition to transportation cost, resulting in a much higher cost of goods, which is in turn passed to the customer to bear.

Tesco

The company is the third-largest retailer in the world having its headquarters in Cheshunt, United Kingdom, is general merchandise and a global grocery and retailer. It is the grocery market leader in the UK, Thailand, Republic of Ireland and Malaysia, and operates in approximately 14 countries, having stores across North America, Europe and Asia. The company has to be adaptive and flexible enough to be able to survive and manage with the environmental changes in a competitive environment. One of the most influential issues that effect an organizational position is the effect of oil prices on the business. A SWOT is conducted on the company to see its current standing.

Strengths

Company may have limited dependency on fossil fuels.

The company does not rely too much on transportation, except supplies

The use of alternative energy and reusable energy allows the company not to be seriously affected by the oil price hikes (solar lights).

Weaknesses

The company faces additional costs as 95% of all transport energy is based on oil, which gets worst during peaks and crisis.

The company can be too dependent on the external markets in terms of managing its cost, which fluctuates depending on the oil prices, (fluctuation on prices from the supplier because of additional transportation cost).

The company's' products demand may fall as the cost of products and material may rise due to the increase in oil ...