Project On Strategic Analysis Of Chevron Corporation

Introduction to the Chevron Corporation

Chevron Corporation is the world leading and emerging corporation in USA (United States of America). It was established in 1879 and was known as Chevron Texco Corporation and after a long time its name was changed to Chevron Corporation in 2005. Its headquarter is located in San Ramon in California. This corporation deals with the energy producing and development. Briefly, it deals with the chemicals, petroleum, power and energy activities in the world. This Corporation is working in about 180 countries around the world. This Corporation is about that they believe that their success is driven by the people and their commitment to getting conclusions in the right way. The chevron is operating responsibly, executing with excellence, applying the innovative ways to the technologies and the identifying the new opportunities and acquiring those opportunities for most profitable and growth in the business.

The chevron corporation is working in to the two sections which are the upstream section and downstream section from the business operation point of view. The function of the upstream section is to deal with the investigation and development as well as performing the function of production of the natural gas and crude oil. This upstream section also performs the activities of transportation, liquefaction and processing and regasification of LNG. In this section crude oil is transported via pipelines, storages. Other, the downstream section is performing the function of refining the crude oil in which they convert the crude oil into the usable product such as gasoline and petroleum products. This corporation is also performing the activities of insurance, real estate and transportation and so many other activities.

Vision Statement of Chevron

At the heart of The Chevron Way is our vision … to be the global energy company most admired for its people, partnership and performance.1.4 Mission Statement of Chevron:"Our Company's foundation is built on our Values, which distinguish us and guide our actions. We conduct our business in a socially responsible and ethical manner. We respect the law, support universal human rights, protect the environment, and benefit the communities where we work."

Strategic model analysis of Chevron Corporation

PESTEL Analysis

The PESTEL Analysis is tool to analyze the macro environment of an organization which also used to identify the external environment of corporations as well as this analysis is based on the Analysis of political, economical, social, technological as well as environmental and legal. The Chevron Corporation has the following the PESTEL Factors which are given in conclusive way:

Political

There is great impact of political stability in the integrated oil and gas sector.

• Government restriction in the Oil and Gas industry.
• The impact of heavy taxation.
• OPEC restrictions
• Heavy trade regulations and Tariffs.

Economical

The economic system prevailing in the state has the great influence on the business of the country. There is great impact on the business because of exchange rates and stability by host country.

The high level of productivity in this oil & gas sectorImpact of economic growth rate and inflation rate.

The effect of interest rate over the economy and business.

Social/Socio-Cultural

• The entrepreneurial spirit is high in America.
• Demographic and skilled level of population.
• Cultural standards and values in the state matters to the business.Impact of diversified culture while operating in the different countries.

Technological

Chevron corporation is highly developed by the technology. Corporation is highly involved in the research and development to innovationProduction and operation function is highly automatic. Chevron has the great influence on the competitors because of advanced technology.

Ecological/Environmental

The chevron is always believed to remain eco-friendly in the state. They always follow the laws related to the environmental pollution. They have an eye over the recycling of the waste material. They always support for renewable energy.

Legal/ Regulatory

The chevron follows the all the employment laws and laws about the compensation

• Avoid the discrimination on the basis of race, gender, sect, religion etc.
• They are very much careful for the implementation of the health and safety laws given the US government.

Porter`s Five Forces Model of Corporation

The five forces model given by Michael E. Porter which is tool for the environmental scanning and industrial analysis of organization and is used to develop the strategies to get effective presence in the industry while sustaining the competitive position of the organization. In this model one can get the information about the bargaining power of suppliers and buyers, Threats of substitute and Competitor and Rivalry among the industry.

Portal’s Five Forces of Chevron

Bargaining Power of Suppliers: High level of competition among the suppliers. Highly diversified distribution channel which shows positive impact in long term on entity. More and heavily relying on high volumes by suppliers.

Bargaining Power of Buyers: Inelasticity of demand of Chevron products positively affects Chevron Corporation but it is possibly when buyers are less sensitive to price. Quality of product is highly matter to the demand of product. Buyers always tried to bargain on price, their demands are high for the bargaining on prices. If one company will not satisfy, they will switch to other.

Intensity of Existing Rivalry: The government should support the domestic industries. There must the tight rules and regulations by government to support the local industries. It is will be the positive for Chevron Corporation that there must be the large size of industry in the state. It is positive for chevron when the exit barriers are low because weak firms will leave the current market which is beneficial for the remaining firms.

Threat of Substitutes: A high quality product compared to the substitute will restrain the customers to switch from chevron. Highly satisfying products by Chevron will enhance the level of retention of customers to be the loyal to the Corporation. It is advantage to the Chevron Corporation when there is limited number of substitute in the industry.

Threat of New Competitors: The strong distribution network of chevron in terms of downstream operation resists the competitors. The high positioning of the Chevron petroleum products and gasoline products enhance the value of the brand. The more entry barriers in the industry of oil and gas will positively affect the Chevron Corporation.

EFE Matrix: This is the external factor evaluation matrix which is tool to identify the external environment in the current industry and also scan the environment on the basis of the existing opportunities and threat and purpose of this matrix is to highlight the level of response by the Corporation to all those key external factors for availing that opportunities and neutralizing the threats under the formulation of strategy.

External Factor Evaluation (EFE)

This matrix is basically reflecting the external environment of chevron corporation and it is scanning of the environment or it is an industrial analysis in which we are analyzing the plausible key external factors which have the influence on the operations of corporation because the opportunities can be the part of success for the any organization if they are responding to them at the expedite and corporations and organizations are taking the threats as the serious matter for the success of the organization. This matrix shows the weighted score of Chevron Corporation which is 3. 14 where as optimum level for the EFE matrix is 2. 5 which is normal and above it is growing stage and the chevron corporation which has EFE matrix weighted score is 3. 14 which is showing that corporation is highly responding to the external factors and consider these factors as cause for their success because organizations can`t work in isolation they have to work with integration to all other stakeholders.

The Competitive Profile Matrix

The Competitive profile matrix is tool used to perform the comparative analysis between the competitors of same industry. In this comparative analysis of corporations the key success factors of organization are taken to analyze the strength and weak issues of the organization and purpose is to design the strategies to overcome the flaws which will be highlighted in the matrix through the total score.

IFE Matrix: This is the internal factor evaluation matrix which is used to conduct the internal audit of an organization and indentify the strength and weakness of the corporation for devising the strategies to overcome the weak points and sustain the competitive position of the organization. For practicing the IFE matrix of the Chevron Corporation we have undergone the following areas for the internal scanning of the organization and assumed the follwing related strength and weakness in this Corporation.