The existence of a relationship between

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Unformatted text preview: e publicly available financial data to indicate business success. The existence of a relationship between organisational performance and use of decision analysis in investment appraisal will then be analysed statistically. 2.6 CONCLUSION In seeking to explore the investment decision-making processes of companies, the literature review for the current study has examined the academic literature on investment decision-making. The source of each of the three research questions proposed in Chapter 1 was explored and a hypothesis advanced for empirical testing. 37 The next chapter examines the context for the current study. It will show how the oil and gas industry is such an extreme example of investment appraisal decision-making under conditions of risk and uncertainty that it provides a useful environment in which to study investment decision-making. 38 Chapter Three The Oil Industry in the U.K. 39 3.1 Introduction This chapter draws on the oil industry literature to present a brief description of the industry that highlights the main challenges facing it in the 21 st century. Since the current study focuses on oil and gas companies that operate in U.K., the effects of these global changes on the U.K. industry are examined. This indicates the growing complexity of the business environment of those companies operating in the upstream oil and gas sector and highlights why decision analysis is beginning to receive increasing attention in the industry and, consequently, why it provides such a useful context in which to study investment decision-making. 3.2 Current challenges in the global oil industry For over a century and a half, oil has brought out both the best and worst of our civilisation. It has been both boon and burden. Energy is the basis of our industrial society. And of all energy sources – oil has loomed the largest and the most problematic because of its central role, its strategic character, its geographic distribution, the recurrent pattern of crisis in its supply – and the inevitable and irresistible temptation to grasp for its rewards. Its history has been a panorama of triumphs and a litany of tragic and costly mistakes. It has been a theatre for the noble and the base in the human character. Creativity, dedication, entrepreneurship, ingenuity, and technical innovation have coexisted with avarice, corruption, blind political ambition, and brute force. Oil has helped to make possible mastery over the physical world. It has given us our daily life and, literally, through agricultural chemicals and transportation, primacy. It has also fuelled the global struggles for political and economic primacy. Much blood has been spilled in its name. The fierce and sometimes violent quest for oil – and for the riches and power it conveys – will surely continue so long as oil holds a central place since every facet of our civilisation has been transformed by the modern and mesmerising alchemy of petroleum. 40 The above paragraph has been adapted from the closing remarks made by Daniel Yergin in his book, The Prize (...
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