Oil and Gas Field Machinery in Denmark: A Strategic Reference, 2007
ICON Group International, July 2007, Pages: 196
How to Strategically Evaluate Denmark
Perhaps the most efficient way of evaluating Denmark is to consider key dimensions which themselves are composites of multiple factors. Composite portfolio approaches have long been used by strategic planners. The biggest challenge in this approach is to choose the appropriate factors that are the most relevant to international planning. The two measures of greatest relevance to oil and gas field machinery are “latent demand” and “market accessibility”. The figure below summarizes the key dimensions and recommendations of such an approach. Using these two composites, one can prioritize all countries of the world. Countries of high latent demand and high relative accessibility (e.g. easier entry for one firm compared to other firms) are given highest priority. The figure below shows two different scenarios. Accessibility is defined as a firm’s ease of entering or supplying from or to a market (the “supply side”), and latent demand is an indicator of the potential in serving from or to the market (the “demand side”).
Framework for Prioritizing Countries
Demand/Market Potential Driven Firm
Relative Accessibility
Accessibility/Supply Averse Firm
In the top figure, the firm is driven by market potential, whereas the bottom figure represents a firm that is driven by costs or by an aversion to difficult markets. This report treats the reader as coming from a “generic firm” approaching the global market - neither a market-driven nor a cost-driven company. Planners must therefore augment this report with their own company-specific factors that might change the priorities (e.g. a Canadian firm may have higher accessibility in Canada than a German firm).
Latent Demand and Accessibility in Denmark
This report provides a detailed overview of factors driving latent demand and accessibility for oil and gas field machinery in Denmark. Latent demand is largely driven by economic fundamentals specific to oil and gas field machinery. This topic is discussed in Chapter 2 using work carried out in Denmark on behalf of American firms and authored by the United States government (typically commercial attachés or similar persons in local offices of the U.S. Department of State). I have included a number of edits to clarify the information provided. Latent demand only represents half of the picture. Chapter 2 also deals with micro-accessibility for oil and gas field machinery in Denmark. I use the term “micro” since the discussion is focused specifically on oil and gas field machinery.
Chapter 3 is also a stand-alone report that I have authored. It covers proxy pro-forma financial indicators of firms operating in Denmark. I use the word “proxy” because the provided figures only cover a “what if” scenario, based on actual operating results for firms in Denmark. The numbers are only indicative of an average firm whose primary activity is in Denmark. It covers a vertical analysis of the maximum likelihood balance sheet, income statement, and financial ratios of firms operating in Denmark. It does so for a particular Standard Industrial Classification (SIC) code. That code covers “oil and gas field machinery and equipment”, as defined in Chapter 3. Again, while “oil and gas field machinery and equipment” does not exactly equate to “oil and gas field machinery”, it nevertheless gives an indicator of how Denmark compares to other countries for a proxy adjacent category along various dimensions.
Chapter 4 deals with macro-accessibility and covers factors that go beyond oil and gas field machinery. A country may at first sight appear to be attractive due to a high latent demand, but it is often less attractive when one considers at the macro level how easy it might be to serve that entire potential and/or general business risks. While accessibility will always vary from one company to another for a given country, the following domains are typically considered when evaluating macro-accessibility in Denmark:
Openness to Trade in Denmark
Openness to Direct Investment in Denmark
Local Marketing and Entry Strategy Alternatives
Local Human Resources
Local Risks
Across these domains, a number of not-so-obvious factors can affect accessibility and risk. These are covered in the Chapter 4, which is a general overview of investment and business conditions in Denmark. Chapter 4 is also presented from the perspective of an American firm, though is equally applicable to most firms entering Denmark. This chapter is also authored by local offices of the U.S. government, as is Chapter 2. Likewise, I have included a number of edits to clarify the provided information as it relates to the general strategic framework mentioned earlier.
1 INTRODUCTION & METHODOLOGY 1
1.1 What Does This Report Cover? 1
1.2 How to Strategically Evaluate Denmark 1
1.3 Latent Demand and Accessibility in Denmark 3
2 OIL AND GAS FIELD MACHINERY IN DENMARK 5
2.1 Latent Demand and Accessibility: Background 5
2.2 Latent Demand: Market Composition 5
2.3 Latent Demand: Market Data 7
2.4 Latent Demand: Leading Segments 7
2.5 Key Suppliers 8
2.6 Prospective Buyers 8
2.7 Accessibility: Market Entry 10
2.8 Accessibility: Trade Event 10
2.9 Key Contacts 10
3 FINANCIAL INDICATORS: OIL AND GAS FIELD MACHINERY AND EQUIPMENT 12
3.1 Overview 12
3.1.1 Financial Returns and Gaps in Denmark 13
3.1.2 Labor Productivity Gaps in Denmark 16
3.1.3 Limitations and Extensions 16
3.2 Financial Returns in Denmark: Asset Structure Ratios 17
3.2.1 Overview 17
3.2.2 Assets - Definitions of Terms 17
3.2.3 Asset Structure: Outlook 20
3.2.4 Large Variances: Assets 21
3.2.5 Key Percentiles and Rankings 24
3.3 Financial Returns in Denmark: Liability Structure Ratios 39
3.3.1 Overview 39
3.3.2 Liabilities and Equity - Definitions of Terms 39
3.3.3 Liability Structure: Outlook 41
3.3.4 Large Variances: Liabilities 42
3.3.5 Key Percentiles and Rankings 45
3.4 Financial Returns in Denmark: Income Structure Ratios 58
3.4.1 Overview 58
3.4.2 Income Statements - Definitions of Terms 58
3.4.3 Income Structure: Outlook 61
3.4.4 Large Variances: Income 62
3.4.5 Key Percentiles and Rankings 65
3.5 Financial Returns in Denmark: Profitability Ratios 80
3.5.1 Overview 80
3.5.2 Ratios - Definitions of Terms 80
3.5.3 Ratio Structure: Outlook 82
3.5.4 Large Variances: Ratios 83
3.5.5 Key Percentiles and Rankings 86
3.6 Productivity in Denmark: Asset-Labor Ratios 101
3.6.1 Overview 101
3.6.2 Asset to Labor: Outlook 102
3.6.3 Asset to Labor: International Gaps 103
3.6.4 Key Percentiles and Rankings 106
3.7 Productivity in Denmark: Liability-Labor Ratios 121
3.7.1 Overview 121
3.7.2 Liability to Labor: Outlook 122
3.7.3 Liability and Equity to Labor: International Gaps 123
3.7.4 Key Percentiles and Rankings 126
3.8 Productivity in Denmark: Income-Labor Ratios 139
3.8.1 Overview 139
3.8.2 Income to Labor: Outlook 140
3.8.3 Income to Labor: Gaps 141
3.8.4 Key Percentiles and Rankings 144
4 MACRO-ACCESSIBILITY IN DENMARK 159
4.1 Executive Summary 159
4.2 Economic Fundamentals and Dynamics 159
4.2.1 Government Intervention Risks 159
4.2.2 Infrastructure Development 160
4.3 Political Risks 160
4.3.1 Economic Relationship with the United States 160
4.3.2 Politics and the Business Environment 161
4.3.3 The Political System 161
4.4 Marketing Strategies 163
4.4.1 Distribution and Sales Channels 163
4.4.2 Agents and Distributors 163
4.4.3 Franchising 163
4.4.4 Direct Marketing 163
4.4.5 Joint Ventures and Licensing Options 164
4.4.6 Creating a Sales Office 164
4.4.7 Selling Strategies 164
4.4.8 Advertising and Trade Promotion 165
4.4.9 Broadcasting 167
4.4.10 Pricing Issues 168
4.4.11 Public Sector Marketing 168
4.4.12 Intellectual Property Risks 169
4.4.13 Hiring Local Counsel 169
4.5 Import and Export Regulation Risks 169
4.5.1 Trade Barrier Risks 169
4.5.2 Valuations on Imports 169
4.5.3 Licenses Required for Imports 170
4.5.4 Controls on Exports 170
4.5.5 Documentation Required for Trade 170
4.5.6 Temporary Entry of Goods 170
4.5.7 Labeling Issues 170
4.5.8 Adherence to Free Trade Agreements 172
4.6 Investment Climate 172
4.6.1 Conversion and Transfer Policies 172
4.6.2 Expropriation and Compensation 173
4.6.3 Dispute Settlement 173
4.6.4 Investment Incentives and Performance Requirements 173
4.6.5 Right to Private Ownership and Establishment 174
4.6.6 Protection of Property Rights 174
4.7 Transparency of the Regulatory System 175
4.7.1 Capital Market Risks 175
4.7.2 Political Violence 176
4.7.3 Corruption 176
4.7.4 Bilateral Investment Agreements 176
4.7.5 OPIC and Other Investment Insurance Programs 176
4.7.6 Labor 177
4.7.7 Free Trade Zones and Free Ports 177
4.7.8 Country Data 178
4.8 Trade and Project Financing 178
4.8.1 Foreign Exchange Control Risks 178
4.8.2 General Financing Availability 178
4.8.3 Financing Export Strategies 178
4.8.4 Types of Available Export Financing 179
4.8.5 Financing Projects 179
4.8.6 Banks with Corresponding U.S. Banking Arrangements 179
4.9 Travel Risks 179
4.9.1 Local Business Practices 179
4.9.2 Travel Advisory and Visas 180
4.9.3 Infrastructure for Conducting Business 180
4.9.4 Housing 181
4.10 Key Contacts 181
4.10.1 Danish Government Agencies 181
4.10.2 Trade Associations and Chambers of Commerce 182
4.10.3 Commercial Banks 183
4.10.4 U.S. Embassy Contacts 184
4.10.5 Contacts in Washington D.C. 184
4.10.6 U.S.-Based Multipliers 185
5 DISCLAIMERS, WARRANTEES, AND USER AGREEMENT PROVISIONS 187
5.1 Disclaimers & Safe Harbor 187
5.2 Icon Group International, Inc. User Agreement Provisions 188
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