Rivalry among existing firms ConocoPhillips is one of 23 Integrated Oil and Gas companies.

It has the highest rate of sales growth among the top five oil companies, averaging 37.78% over the past 9 years. While 23 companies may seem like a lot of competition, it is in fact relatively small when compared to the size of the industry. It is important to note that ConocoPhillips sales are on improvement after the crises of 2008-2009, so is likely to increase in the future years. Its main integrated oil competitors are ChevronTexaco, ExxonMobil, and BP. These companies deal in both up upstream and downstream operations. Upstream operations involve exploration and production while downstream operations include refining and marketing. ConocoPhillips has other competitors, whose entire business is focused on either downstream or upstream operations. ConocoPhillips has a competitive advantage over these companies because being involved in both downstream and upstream operations allows the company to remain profitable when one operation delays. If prices or competition in one operation becomes unfavorable, the other operation can cover the losses. ConocoPhillips is the third largest integrated energy company in the United States and second largest refiner in the United States. Worldwide, ConocoPhillips has the fifth largest proved reserves and is the fourth largest refiner. Because of this, ConocoPhillips is one of the major players in the 23 Integrated Oil and Gas companies and applies more pressure on competing firms than it receives. Because the energy business has very high demand and there are relatively few competitors in the industry, existing firms do not engage in price wars. Instead, they compete on non-price dimensions. One of the major non-price dimensions firms compete on is the size and reach to which they can offer their products. In the Oil and Gas Industry, size is king. The larger your operations become, the

higher probability your firm will prosper. This is evident by the constant mergers and acquisitions that might be observed in this industry. ConocoPhillips makes no exception to this trend. ConocoPhillips also offers products other than oil and gas. The degree of differentiation for ConocoPhillips and its competitors is low, so their customers are ready to switch from one competitor to the other based on price. ConocoPhillips has competitors in both the integrated and segmented energy industry, but has a competitive advantage over most of these companies due to their size, vertical integration, and scope of operations. Because existing firms do not engage in price wars, firms focus on increasing the size and reach to which they can offer their products and offer other products such as asphalts and chemicals. The degree of differentiation for ConocoPhillips and its competitors is low, so their customers are ready to switch from one competitor to the other based on price. Bargaining Power of Buyers When considering the bargaining power of buyers, we must consider two important factors: price sensitivity and comparative bargaining power. Price sensitivity is the extent on which ConocoPhillips cares to bargain on price and the bargaining power is how influential ConocoPhillips can be in forcing the price down. Keeping these two factors in check will ultimately lead to success in the oil and gas market. With the refinements of oil and gas, end- products of this refinement are undifferentiated. In a perfect case, buyers are more sensitive when the product they are consuming is undifferentiated with little substitute. However, the sensitivity of buyers is one of unique case in the oil and gas field. As Americans, consumers have an extreme dependence on oil and gas. The price sensitivity of consumers is at an all time high. Due to low alternatives and low switching costs (Chevron/Texaco, Shell, etc.); consumers are very dependent on current prices. The oil and

gas industrys lack of bargaining is a direct result of their dependence on this raw material. The price fluctuations that are experiencing day to day at the pump are a cost that consumers must pay in order to substitute or engage in daily life. With little alternative to fossil fuels and the increasing of Chinas economy, the number of buyers is reaching all time highs. The high numbers of buyers in combination with ample resources is the driving force pushing these prices. The bargaining powers of buyers in the oil and gas field are limited. Bargaining power is the cost of one party not doing business with the other party. One level of bargaining power that buyers have is legislation. With acts of Congress, legislation and bills, and social pressure, buyers have the ability to put pressure on the oil and gas industry to reduce their price per barrel down. Another option that consumers have is to take part in the upcoming trend of total electric or hybrid vehicles. Less dependence on gas would equal a consumption drop for oil and gas producers. This drop in consumption would reduce revenue and drive prices down. Overall, ConocoPhillps must maintain this fine line of price sensitivity and bargaining power. With such power being limited in the oil and gas industry, any adjustment towards the positive that ConocoPhillips could make would enhance their overall productivity and output. This increased productivity will provide beneficial in investors in the end. Bargaining Power of Suppliers Since ConocoPhillips is integrated oil and Gas Company, meaning it operates in both the upstream and downstream portions of the industry, most of its suppliers are countries with oil reserves. A major supply concern for ConocoPhillips is the politics in oil producing countries. A large portion of ConocoPhillips proved oil reserves come from foreign countries. Therefore, ConocoPhillips is highly affected by the prices of oil set by

organizations such as OPEC. ConocoPhillips is its own supplier for most of the major assets the company uses to explore, produce, refine, and marketing. ConocoPhillips attempts hard to have open lines of communication with its suppliers to eliminate problems. ConocoPhillips seeks suppliers that can uphold its core values and provide the quality and service needed for the best cost. In total, if ConocoPhillips can maintain the balance between itself and its suppliers, it will have lower costs and a leading edge in the industry .This leading edge could enhance the value of ConocoPhillips not only to itself, but also to its shareholders and investors. This investing increase could push ConocoPhillips to new heights.