Integration or specialization? Impacts of current trends on the Dutch oil downstream industry

Abstract

Due to the changing market structure of the downstream oil industry it is important for oil companies to gain more insight in how the oil downstream value chain works and how current trends affects them and their competitors. This article facilitates the need for insight by giving a clear picture of the oil downstream value chain and the different business models in the value chain and showing how these business models are affected by the changing market dynamics, global competition and other trends in the Netherlands. Based on the vertical integration theory and a case study into the Dutch downstream oil industry current trends were assessed. The main findings of the research are that due to the effects of the trends business models will polarize in their vertical integration strategy, focusing either on their core network through fully vertically integrating over the downstream value chain. Whilst the other found strategy focuses more on the core activities of the business model through vertical specialization over one or two industry sectors. This polarization in the market landscape in 2020 is driven by the underlining vertical integration motivations that are either based on the Economies of Vertical Integration approach or Transaction Cost Economies approach. Article: Polarization in the downstream industry: Impacts of the current trends on the Dutch oil downstream industry