Study On Vertical Integration Expansion Strategy Of ZS Natural Gas Company

In recent years, the development of China’s natural gas industry was rapid and the competition in the natural gas industry was becoming increasingly fierce. This paper focused on the research of the expansion strategy of ZS Natural Gas Company, which was a company that was engaged in long distance pipeline industry.At the change period of breaking the monopoly of the natural gas industry, under the condition that the company’s industrial chain was relatively single, and the company was limited by the upstream gas’ s reservation and supply, and faced the severe situation that new competitors had seized the market,and the condition that the market size was subject to the development of the downstream market, and the company’s profitability began to decline, at the same time,the company faced with the threat of new competitors to seize the market, such as the grim situation, That adjusting the company’s development strategy to solve these problems was the purpose of this paper.In this paper,the specific situation of ZS natural gas company was analyzed in order to explore the reasons for the development’s limits of ZS natural gas company, and to find out the strategy to promote the long-term development of the company. Some strategic management theory and analysis methods was used,such as the PEST analysis, the Porter’s five forces model analysis method and SWOT analysis, and the main analysis was around the internal and external environment of ZS company.The main findings were:Firstly, the external environment of ZS natural gas company was analyzed, and politics, economy, society, technology and other aspects had positive effect on the development of natural gas industry.At present, the whole structure of the industry competition was that the monopoly has been broken, the middle reaches of the gas pipeline network company was facing a great opportunity to expand the upstream and downstream sectors.The location of the company was determined that it was necessary to expand the industrial chain to occupy the market and improve the survival ability of the company. Secondly, the internal environment of ZS natural gas company was studied, which was analyzed from human resources, organizational management, corporate culture, gas supply, operational capacity and financial resources and other aspects. The necessity and possibility of implementing vertical integration strategy of ZS company were proposed. Finally,according to the analysis results, the vertical integration theory was used on the research that how the company could expand forward or backward the business to the industrial chain, and finally it was put forward that were the backward integration strategy and the forward integration strategy. At the same time, it was put forward which were the strategic implementation of the specific way, risk aversion and security measures.The practical significance of this paper is that the natural gas industry is an emerging industry, and the research on the vertical integration strategy is less, and the research of this paper was helpful to the ZS natural gas company to realize the internal and external environment, and put forward the development strategy of vertical integration for the future development of the company, which had important practical significance for the company to break up the single business model and to enhance the future competitiveness, and made the company sustain and develop healthily in the fierce competition market.