Study On Vertical Integration Expansion Strategy Of Z Natural Gas Company

Under the pressure of global climate change and Low-Carbon Economic, asa clean high-grade and low-cost and less-pollution energy, the natural gashas been approbated by our country and international society. Withestablishment of a series programming and encourage-policy, the industryof our country has developed at very fast speed, which made the industryof long distance natural gas pipeline faced with the huge developmentpotential, at the same time also faced with complex and ever-changingexternal environment and increasingly fierce competition in the market.This paper focus on how to select an appropriate vertical integrationstrategy of Z Natural Gas Company which as a long distance pipeline industry,in order to make it break through the single chain and reduce the risk inthe process of development and achieve stable development.In this paper, the study established on the basis of fully investigationof Z Natural Gas Company and the vertical integration theory and analysistools, combined with Z Natural Gas Company’s specific situation research.Firstly, we obtains opportunities and threats of Z Natural Gas Companyfacing according to using the PEST and Five Forces Model analysis methodon macroeconomic environment of natural gas industry and situation of longdistance natural gas pipeline industry and market competition structureof the long distance natural gas pipeline industry in Yantai. Then we cometo conclusion the advantages and disadvantages of Z Natural Gas Companythrough analysis of the internal resources. On the basis of the above, weperform a comprehensive analysis using the SWOT analysis method to theinternal and external environment. Based on the analysis of the results,we study how to carry out expansion in the industrial chain of forward and backward through the application of the theory of vertical Integration.Then we work out the development strategy of backward vertical integrationbased on Strategic Alliance and the development strategy of forwardvertical integration based on Merger and Acquisition. And put forward thespecific way of implementation of the strategy and the measures of riskaversion and supporting.At present, there are a few researches in vertical integration strategyfield because the industry of long distance natural gas pipeline is anemerging industry. The study of this paper not only contributes to thedevelopment of Z Natural Gas Company, but also contributes to other similarlong distance natural gas pipeline company. In addition, there are somepractical significance to promote the healthy development and the structureoptimization of industry chain of our country’s natural gas industry.