Market analysis and entry mode choice for subsurface consultancy into Brazil

Abstract

The Norwegian oil and gas market is slowing down and companies have to look for new ways to grow in alternative markets locally or go abroad. This is the situation for First Geo (Formerly Aker Geo). The company has been market leaders within subsurface consulting services and G&G products for 20 years. However, the market is not the same as it was and cost cuts mean that consulting services are no longer in such high demand. The only way for continued growth, as defined by management, is to look outside Norway or to tap into alternative markets locally. First Geo are looking for oil and gas markets that are still developing and growing. In these markets First Geo can offer advanced consultancy services and products that others within the same that market cannot offer. Brazil has been an attractive market for Norwegian oil and gas services companies due to strong growth and potential future development of the oil and gas industry. Norwegian companies are also considered attractive partners due to 40 years of oil and gas experience. In addition, Petrobras’ investment plans for exploration and production for the next few years is an indication that the Brazilian market will continue to grow and develop (Petrobras). This report will evaluate whether First Geo should enter the Brazilian market. The report will use relevant market attractiveness evaluation theory and market entry theory to evaluate the issue. The report will also look at the cultural differences between the two nations to give a better understanding of what challenges and opportunities First Geo might encounter if deciding to enter the Brazilian market. The theory selected is manly based on external factors; an internal analysis has yet been conducted, as the macro-economic and cultural indicators will be the base for whether or not First Geo should consider entering.