N.BOTE GASOLINE STATION VS.
BRENT CALIX GASOLINE STATION
CHAPTER I
INTRODUCTION
Petrol gasoline station is in a monopolistic competition where many producers are competing against
each other, but selling products that are differentiated from one another. Our research topic is the
comparison of two (2) businesses in General Tinio, Nueva Ecija, N. Bote Gasoline Station and Brent Calix
Gasoline Station on how they implement pricing strategy. These two firms had proven their standing in
the industry over competition and unwanted circumstances. Along the study, we conducted a thorough
research in which encompass annual objectives, resource allocation, policies, action plans, and
functional strategies.
N. Bote Gasoline Station provides gasoline, oil, and lubricants, which are commonly necessary in a
gasoline station, making it a complete in need. Brent Calix, on the other hand, provides the same
service. Customers' usual necessities in a gas station. Narrowing down, consumers pay close
attention to gas prices; with television, radio, and print media presenting numerous reports on the
subject on a daily basis, and websites associated with gas price searches proliferating in recent years.
Furthermore, and perhaps as a result of its importance to consumers, the government follows and
regulates the gasoline industry through its relevant agencies. The use of oil in fuels remains the
primary reason why it is a high-demand commodity around the world, but how are prices
determined? The two primary factors that impact the price of oil are; supply and demand, and market
sentiment. These two determinants drives oil prices. Supply and demand of oil is divided into four
factors which propel the price. One of these is the OPEC, whereupon comes the 44% of the oil
supply from thirteen countries. Whether OPEC maintain the 2021 production in a certain percentage
level despite lower demand in other countries which cause an oil excess and a falling price. This
group of producers affects the price of oil by setting production quotas for each member country.
Another factor is natural disaster, it affects the price if circumstances likewise occur. Causing greater
demand and higher prices. Production cost also drives the oil price. Extracting oils for example, from
Middle East is much cheaper than extracting in Canada. Lastly, political instability is included
factors, wars and unrest in some other countries. Resulting to a higher demand and lower prices.
Oil prices, unlike most other commodities, are not solely determined by supply, demand, and market
sentiment toward the physical product. Rather, supply, demand, and sentiment toward oil futures
contracts, which are heavily traded by speculators, drive price determination. Commodity market
cyclical trends may also play a role. Regardless of how the price is ultimately determined, it appears
that oil will continue to be in high demand for the foreseeable future due to its use in fuels and
countless consumer goods.
At the end of the research, we are able to distinguish the difference of the two given businesses and
to recognized the pricing strategy in the oil industry. Additionally; annual objectives, resource
allocation, policies, action plans, and functional strategies are all required to carry out such plans.
Related Literature
(Shell and Engen, Joshua Streng, 2020 ) The price of petrol is determined by the government. The
regulation for the pricing is changed on the first Wednesday of the month. The Central Energy Fund
(CEF) does the calculation on behalf of the Department of Energy (DOE). How the pricing of
petroleum is done by using internal and external factors. The external factors are what the Dollar
price on the world market multiplied by the Dollar/Rand exchange rate which is done at 11:00 South
African time. This moves constantly and because the world market price for oil and the exchange rate
are outside of South Africa’s control the cost of oil changes regularly. The internal factors for all oil
companies in South Africa are marketing/wholesale margins, transport costs, taxes & levies and
service costs. Most of internal factors are controlled by the government of South Africa. The
government tries to make it profitable enough for companies like Shell and Engen to operate while
ensuring customers are not being overcharged. This is a difficult task for any government. Hence,
because the price is strictly controlled, Shell and Engen has had to adjust in other areas to become
more profitable for example convenient stores and car wash facilities.
