INTRODUCTION

Chevron Corporation is an American multinational energy corporation. Headquartered in San Ramon,

California, and active in more than 180 countries, it is engaged in every aspect of the oil, gas,
and geothermal energy industries, including exploration and production; refining, marketing and
transport; chemicals manufacturing and sales; and power generation. Chevron is one of the world's six
"super major" oil companies; as of 2013, it ranked eleventh in the Fortune Global 500list of the world's
largest companies.

Chevron's downstream operations manufacture and sell products such as fuels, lubricants, additives and
petrochemicals. The company's most significant areas of operations are the west coast of North
America, the U.S. Gulf Coast, Southeast Asia, South Korea, Australia and South Africa. In 2010, Chevron
sold an average 3.1 million barrels per day (490×103 m3/d)of refined products like gasoline, diesel and
jet fuel.

Chevron's alternative energy operations include geothermal, solar, wind, biofuel, fuel cells,
and hydrogen. In 2011–2013, the company plans to spend at least $2 billion on research and acquisition
of renewable power ventures. Chevron has claimed to be the world's largest producer of geothermal
energy. In October 2011, Chevron launched a 29-MW thermal solar-to-steam facility in the Coalinga
Field to produce the steam for enhanced. The project is the largest of its kind in the world.

Chevron has been involved in several controversies and environmental and safety incidents. In 1950,
then "Standard Oil" was convicted of criminal conspiracy for their part in the Great American
streetcar scandal. From 1970 to 2000 they evaded $3.25 billion in federal and state taxes through a
complex petroleum pricing scheme. In 2012, a large fire due to aging equipment and lack of oversight
erupted at a Chevron refinery in Richmond, California. In Ecuador, Chevron has been involved in an
ongoing class action lawsuit filed by indigenous residents.

INDUSTRY ANALYSIS

In evaluating the industry, the environmental factors that are most important are; Demographic trends,
technological developments, socio-cultural influences, macro-economic impact and political and legal
pressure. (Exhibit 1). All these factors greatly influence the functionality of the industry. Somewhat
fortunately, the effect of these factors are favorable for the natural gas industry than the overall oil and
gas industry, due to greater market growth worldwide and increased consumer adoption due to the
efficient nature of the product in terms of less emission of harmful by-products and the cheaper rate it
comes at ( compared to other products, especially oil)

As much as the industry is impacted by regulations from government, it is well positioned to capitalize on
increasing demand for energy source worldwide.

UKKASHA UMAR I.
 FIVE FORCES ANALYSIS

A porter’s five forces analysis (Exhibit 2) further solidifies this reasoning.

Chevron Corporation has already established a strong industry presence in the oil and gas industry with
activity in more than 180 countries, it is engaged in every aspect of the oil, gas and geothermal industry,
including exploration and production, refining, marketing and transport, chemicals manufacturing and
sales, and power generation. With approximately 62,000 employees, it has more than 32,000 service
stations worldwide. While having the power of an international brand and strong industry positioning,
Chevron Corporation is poised to capture additional shares as it expands and diversifies, with alternative
energy operations including geothermal, solar, wind, biofuel, fuel cells and hydrogen. In 2011-2013 the
company spent at least $2billion on research and acquisition of renewable power ventures. In 2011,
Chevron launched a 29 MW thermal solar-steam facility in the Coalinga field to produce the steam for
enhanced oil recovery. The project is the largest of its kind in the world.

GENERIC COMPETITOR POSITION

Generic competitive position also solidifies the reasoning (exhibit 3).Chevron corporation has placed
itself strategically in the energy industry as a differentiator and a cost leader. Providing one of the best
products to its customer base at a relatively cheap price. It has accomplished such through investing
heavily in R and D and innovation, are careful about their product quality and have also done very well
in production and distribution through theу use of transportation pipelines and the use of state of the
art production and refining facilities.

COMPETITOR ANALYSIS

Further analysis of competitive forces reveals that Chevron Corporation is in good position to push back
against the encroaching invasion of market share (exhibit 4). Aside from new entrants, incumbent firms
who are Chevron Corporation’s main competitors are Exxon Mobil, Royal Dutch Shell plc, BP, and
ConocoPhillips.

Chevron Corporation has some certain competitive advantages as the 2nd largest energy
company in the industry worldwide. An objective analysis of the main competitors within the energy
industry suggests that a company like Chevron will need to constantly act defensively to maintain its
current position in the market and at the same time aggressively pursue new technologies to make
production, refining, and transportation of finished products more efficient and cheaper.

SWOT ANALYSIS

A close and objective analysis of Chevron’s strengths, weaknesses, opportunities and threats (exhibit 5)
really paints a clearer picture of how the company functions in the industry with plenty competitors who
have basically the same objective: maximizing profit in an imperfect market. Undeniably, the strategic
positioning of Chevron allows it to be successful. But one constant in an industry like the energy industry
is change, and therefore for a company to occupy a valuable position and maintain it, it has to recognize
its opportunities, vulnerabilities, strengths and threats.
 SUSTAINED COMPETITIVE ADVANTAGE

Across the oil and gas super majors, many plan to reduce future capital expenditures. Global
economic uncertainties have compelled several integrated majors, including BP and Royal Dutch
Shell to scrap projects and reduce their spending plans for next year. On the other hand, Chevron
has no such frugality in mind. This 2014. Chevron's spending plans remain firmly in place, and
management believes they will put the company in an advantageous position over the long term.
Here's why Chevron is on the right track.
Why continued spending is an advantage
Chevron makes no apologies for its capital expenditure levels, which some analysts see as bloated.
For example, Chevron is in the middle of a massive $6.4 billion natural gas project in China.
Chevron's efforts in China represent one of its largest capital projects for this year and beyond, and
for good reason. China is the world's fourth-largest gas consumer. The total potential of this project
is considerable. Chevron secured a 30-year deal to produce 7.6 billion cubic meters of gas per year,
and the project should come on-line in the latter part of 2014.

In all, Chevron intends to allocate between $33 billion and $36 billion to capital expenditures next
year. Chevron's 2013 spending is already on pace to eclipse the $33 billion projected earlier this
year, due to significant land acquisitions. Moreover, the company can't guarantee that its capital
expenditures will not increase even further, should the company find new, compelling projects. With
the way Chevron Corporation strategically positioned itself, it definitely has a sustainable competitive
advantage in the energy industry.

RECOMMENDATIONS

As a wholly owned subsidiary that develops and builds sustainable energy projects that increase energy
efficiency and production of renewable power, reduce energy costs, and ensure reliable, high quality
energy for government, education and business facilities worldwide, Chevron Corporation should take the
following course of action to ensure its sustainability and better performance:

1) Invest in biofuel energy sources.

2) Improve ethical operating standards
3) Invest more in exploration of gas wells in places with growing population.
4) Invest more in wind and solar energy.
5) Improve image of the company through advertising.
INDUSTRY/ENVIROMENTAL ANALYSIS (EXHIBIT 1)

DEMOGRAPHIC TRENDS SOCIO-CULTURAL INFLUENCES

1) The world population will 1) Growing concerns for the industry to

increase to 8.5 billion by 2030 find solutions to help the world meet
about 20% higher than what it energy needs cleanly, safely and cost
is now, and will be more effectively
prosperous and energy hungry.
2) While population is a key to
projecting energy demand,
demographics matter too. Of
particular importance is a
country's working-age
population (people between
15-64 years old) because this
group is the engine for
economic growth and energy
demand.
3) India is forecasted to see
significant growth in its
population and its working-age
group as well as the Middle
East, Africa and Latin America.
These demographic trends will
help India and the regions I
have just mentioned become
areas of the strongest of
growth of GDP in the world
4) Energy demand growth will
slow then, as economies
mature, efficiency gains
accelerate and population
growth moderates.
5) The need for energy to make
electricity will remain the
single biggest driver of
demand. By quarter of a
century from now, electricity
generation is expected to
account for more than 40% of
global energy consumption as
most of the 1.5 billion people
 who currently have no access
to electricity are expected to
be connected to the grids.
6) The demand for coal will peak,
and then begin a gradual
decline, in part, because of
increasing concern for global
warming and emerging policies
to curb emissions by imposing
a cost on higher carbon fuels.
7) Natural gas supply will grow
fast enough to overtake coal
for the number two position
behind oil. Demand for natural
gas will rise by more than 60%
in two decades. By then, oil
and natural gas will be the
world's top two energy sources
accounting for about 60% of
the global demand, compared
to about 55% today.

8) The new oil and natural gas,

which will constitute an
increasing share of global
supply, will come from
unconventional sources, such
as those produced from shale
formations.
9) It is expected that the use of
renewable energies will grow
significantly, particularly solar
and wind power.
10) Gains in efficiency through
energy saving practices and
technologies, such as hybrid
vehicles and new high
efficiency natural gas power
plants hopefully will retard
demand growth and curb
emissions.
TECHNOLOGICAL DEVELOPMENT MACRO-ECONOMIC IMPACT

1) The constant need to find
more efficient and Eco- friendly
ways to extract ( as there is
need to dig deeper for crude oil
these days), transport, and
refine the crude oil.
The oil and gas industry is especially
susceptible to the business cycle. When the
world economy goes into recession, the prices
of oil shoots high further causing high cost of
production.

2) The need to increase the

quality value of energy output
(Hydrocarbons), through more
efficient conversion processes.

GLOBAL TRADE ISSUES

1) In the oil industry, there is a

strong link that connects the
demand for oil and the rate of
global economic growth.
2) Uncertain energy policies: Energy
policy is in a continued state of flux
in many key geographies.
Meanwhile, the consequences of
last year’s oil spill in the Gulf of
Mexico continue to be felt in the
debate over deepwater regulations.
3) Worsening fiscal terms: The use by
governments of tax claims, real or
not, as a pressure point to coerce
oil companies appears to be
increasing.
4) Health, safety and environmental
issues have risen on the oil and
gas industry’s agenda, reflecting
both increased public pressure and
more complex operational
challenges.
FIVE FORCES ANALYSIS (EXHIBIT 2)

THREAT OF NEW ENTRANTS INTENSITY OF RIVALRY

1-As the capital for entry is too high, and the level 1-Governments limit competition: government
of knowledge required is also high and advanced, policies and regulation can dictate the level of
there is a high barrier to entry for new entrants. (+) competition within the industry. (+)

2-Heavy regulations by governments and
environmental public safety organizations make
entry less likely because it makes it harder to
maneuver within the industry. (+)
Strong distribution network required: Weak
distribution means goods are more expensive to
move around and some goods don’t get to the
customer end.(+)
3-. High capital requirement: means a company
must spend a lot of money in order to compete in
the market. (+)
4- Strong brand name: if strong brand names are
critical to compete, then new competitors will have
to improve their brand value in order to efficiently
compete. (+)
2-Large industry size: large industry allows multiple
firms and producers to prosper without having to
steal market share from each other. (+)
3-Fast industry growth rate: when industries are
growing revenue quickly, they are less likely to
compete because the total industry size is also
growing. The only way to grow in slow growth
industry is to steal market shares from competitions.
(+)
4-Low exit barriers: when exit barriers are low,
weaker firms are more likely to leave the market,
which will increase the profit for the remaining
firms. (+)

5-. Advanced Technologies are required: advanced

technologies make it difficult for new entrants to
enter the market because they have to develop the
technologies before effectively competing.(+)

6-. Geographic factors limit competition: if existing

competitors have the best geographical location,
new competitors will have a competitive
disadvantage.
 THREAT OF SUBSTITUTES
1-Substitute products are lower quality: a lower
quality product means a customer is less likely to
switch from Chevron corporation product to
another product or service.
2-Substitute has lower performance: a lower
performance product means a customer is less likely
to switch from Chevron Corporation to another
product ro service.
BARGAINIG POWER OF BUYERS
1). Lower buyer price sensitivity: when buyers are
less sensitive to prices, prices can increase and
buyers will still buy the product. Inelastic demand
positively affects Chevron corporation.
s
2). Product is important to customer: when
customers cherish a particular product, they end up
paying more for that one product.

3). Large number of customers; when there are large

3- Substitute product are inferior: an inferior number of customers, no one customer tends to
product means customers are less likely to switch have bargaining leverage.
from Chevron Corporation product to another
product or service.

4-High switching costs: limited number of

substitutes means that a customer cannot easily
switch to another product or service of similar price
and receive the same benefits.

5-Limited number of substitutes: a limited number

of substitute product means that customers cannot
easily find other products or service that fulfill their
needs.

BARGAINIBNG POWER OF SELLERS

1). High competition among suppliers: high levels of

competition among suppliers acts to reduce prices
to producers

2).Diverse distribution channel: the more diverse

distribution channel becomes the less bargaining
power a single distributor will have.

3-Volume is critical to suppliers: when suppliers are

reliant on high volume, they have less bargaining
power, because producers can threaten to cut
volumes and hurt the supplier’s profit.

UKKASHA UMAR I.
 GENERIC COMPETITOR POSITIONING (EXHIBIT 3)

COST LEADERSHIP DIFFERENTIATION

EXXON MOBIL CHEVRON CORPORATION

CHEVRON CORPORATION BP
ROYAL DUTCH SHELL
EXXON MOBIL

FOCUSED LOW COST NICHE

CONOCOPHILLIPS OIL

COST UNIQUENESS

COMPETITOR ANALYSIS (EXHIBIT 4)

COMPETITORS PERFOMANCE CAPABILITIES OBJECTIVES/ STRATEGY

METRICS VALUES

CHEVRON 1) Full year 1) Ability to produce 1) Safely From the past several
earnings different sources provide years, Chevron’s
(2013) were of energy; wind, energy strategy is more
$21.4 billion geothermal. products focused on upstream
2) Annual 2) Global market vital to and downstream
revenue of presence. sustainabl strategy. Upstream
$257.3 billion 3) Recognized brand e strategy is focused on
3) 23% increase worldwide. economic their energy
in previous 4) Convenient oil progress production, while
fiscal year. and gas and downstream strategy
distribution human is used in their
channels developm refining and chemicals
(pipelines) ent sector. While Chevron
5) Cost leadership worldwide is more focused on
6) 33,000+ service . the exploration and
stations. 2) Deliver production of energy,
worldwide they also remain
class committed towards
performan the marketing of
ce. electricity and natural
3) Strive to gas, and shipping and
 be a cost transportation of
leader in chemicals and oil
the oil and products.
gas
industry.

ROYAL 1) Total equity 1) Produces around To engage Aims to improve

DUTCH $180.047 3.1 million barrels efficiently, energy efficiency in
SHELL billion. of oil equivalent responsibly and operations, support
2) Revenue /day. profitably in oil, customers in
$451.235 2) Global market gas, chemicals and managing their energy
billion presence. other selected demands and
3) Profit 3) Worldwide brand businesses and to continue to research
$16.371 recognition. participate in the and develop
billion (2013) 4) 44,000+ service search for and technologies in the
stations development of production of liquid
worldwide. other sources of products and natural
5) Approximately energy to meet gas.
90,000 evolving customer
employees. needs and the
6) Vertical world’s growing
integration. demand for
energy.
1) Revenue 1) 72 billion barrels Meeting the
EXXON $453.123 of oil equivalent world’s growing 1) Consistent
MOBIL billion reserves. demand for energy focus on
2) Net income 2) 37 oil refineries in in an delivering
$44.88 21 countries. economically, operational
billion. 3) Daily refined environmentally, excellence.
3) Totol equity capacity of 6.3 and socially 2) Building
$165.863 million barrels. responsible technology
billion. manner. leadership.
4) Daily refined 3) Benefit from
capacity of integration.
6.3 million 4) Invest with
barrels. intelligence
and discipline.

CONOCO 1) Revenue 1) 1.6 million barrels Safety Collaboration with key

PHILLIPS $62.004 of oil equivalent Integrity stakeholders to
billion. /day. Responsibility increase capacity for
2) Operating 2) Specialize in Innovation biodiversity
income exploration and Teamwork protection, internally
$15.423 production of oil. and in related
billion. 3) 16,900 institutions and
3) Net income employees. communities.
$8.428 4) 8.6 billion of oil Use of widely
billion. equivalent in available and effective
reserves. planning tools such as
 those developed by
IPIECA, energy and
biodiversity initiative
and the international
association of oil and
gas producers to
facilitate biodiversity
conservation.

1) Market 4) 3.3 million 1) Safety 1) Maintain

capitalization Barrels of oil 2) Respect momentum
of $141.234 a day of oil 3) Excellence on safety
billion. equivalent. 4) Courage and risk
BP 2) Revenue 5) 17 billion 5) Teamwork reduction.
$396.217 barrels of oil 2) Develop and
billion equivalent apply new
3) Operating reserves. technologies
income 6) 20,700 that access
$31.310 service new
billion. stations hydrocarbon
worldwide. s or extract
7) Vertically and process
integrated. them more
efficiently.

UKKASHA UMAR I.
 SWOT ANALYSIS (EXHIBIT 5)
STRENGTHS
1) Financial stability
2) Global market presence
3) Big Global brand
4) Diverse and highly skilled workforce
consisting of approximately 62, 000
employees including more than 36,000+
service stations.
5) Marketing network supports retail outlet
on 6 continents.
6) massive oil reserves (11 billion barrels)
OPPORTUNITIES
1-Increasing fuel/oil prices
2-Increasing natural gas market
3-Capital investment in sector
4-CSR activities
5-To reposition itself as energy company
WEAKNESSES
1-Cost of environmental hazards
2-Declining products and reserves
3-Legal issues
4-Susceptible to business cycle.
THREATS
1-Government regulations
2-High competition
3-Decline and lose of oil fields
4-Competition from new technology: in addition to
new technologies for exploration and production,
the sector is impacted by broader technological
advancement such as alternative power
generation and
UKKASHA UMAR I.
 References

http://www.chevron.com/documents/pdf/corporatefactsheet.pdf

http://en.wikipedia.org/wiki/Chevron_Corporation

http://www.fool.com/investing/general/2013/12/09/why-chevrons-investment-strategy-places-it-
ahead-o.aspx

http://en.wikipedia.org/wiki/File:Reservespie.png

http://en.wikipedia.org/wiki/Petroleum_industry#Industry_structure

http://en.wikipedia.org/wiki/Petroleum_industry#Environmental_impact_and_future_shortages

http://www.chevron.com/chevron/pressreleases/article/03122013_chevronreaffirms2017production
targethighlightsfuturegrowth.news

http://www.hoovers.com/company-information/cs/company-
profile.Exxon_Mobil_Corporation.07cc70931047bfd5.html

http://ru.wikipedia.org/wiki/ExxonMobil

http://ru.wikipedia.org/wiki/ConocoPhillips

http://topics.nytimes.com/top/news/business/companies/conocophillips_inc/index.html

http://ru.wikipedia.org/wiki/Royal_Dutch_Shell

http://quotes.wsj.com/RDSB

http://www.shell.com/

UKKASHA UMAR I.