1.

Executive Summary

Chevron Corporations (CVX) core business provides their customers with fully
supportive administrative and financial management dealing with the integrated
petroleum, chemicals, and coal mining segment of the Integrated Oil sector.
Despite volatility in commodity prices, depressed financial and debt markets, and
political uncertainties, Chevron has been able to grow the business at a healthy
rate. The demands for the corporations products are largely a function of global
economic activity, weather patterns and governmental stability.The development
of projects is very crucial for a business within the energy sector in order to
maintain market share and bottom line growth.

Chevron Corporations (CVX) has many firms overseas that serve the companys
production and exploration needs. Within their upstream portfolio (commonly
known as the recovery and production of crude and natural gas) the CEO has
stated, that the strategy is to grow profitability in core areas, build new legacy
positions and commercialize the companys equity natural-gas resource base
while growing a high-impact global gas business. Discovery sites go from North
and South America, to Africa, Middle East, and Asia. The continued focus to
expand operational sites will be a key driver for the business going forward.

1. Strategy:
Strategy is a high level plan to achieve one or more goals under conditions of
uncertainty. Strategy becomes ever necessary when it is known or suspected there
are insufficient resources to achieve these goals. Strategy is also about attaining
and maintaining a position of advantage over adversaries through the successive

exploitation of known or emergent possibilities rather than committing to any

specific fixed plan designed at the outset.
2. Most Strategic Management Models:

1. PEST analysis
2. STEER Analysis
3. Five Forces Model
4. Strategic Group Map
5. SWOT analysis
6. Blue Ocean Strategies
7. Open innovation
8. seven S model

3. Company Detailed Profile including mission & vision and

Organogram

The Chevron Corporation is one of the worlds largest oil and gas companies. It is
headquartered in San Ramon, California and can trace its roots back 125 years

(chevron.com). Chevron is a leader both the upstream and downstream aspects

of the industry, thus controlling each step along the way. Chevron is known for its
broad span of gas stations around the world, but is also involved other refined
products, lubricants, and oil byproducts (chevron.com) Chevrons main
competitors include ExxonMobil,
ConocoPhillips, BP, and Royal Dutch Shell. These companies are some of the
largest and most powerful corporations in the world.

The world has a

dependency on oil and gasoline, so Chevron must make as much product

available to consumers at the lowest price. In an industry where the product is
relatively the same, companies must focus on cost leadership to maximize profits.
This is part of why Chevron is a fully integrated firm involved in each aspect of
the process. Chevron owns the rigs that drill for oil, the refineries that process it,
the tankers that ship it, and the stations that distribute it. There are some aspects
of product differentiation that Chevron uses to a point in order to increase sales.
These include fuel additives such as Techron, placing the product in the right
places, and offering incentives such as credit cards with discounts. Brand image
also plays small role, but most consumers realize there are no switching costs to
buy someone elses fuel. By decreasing costs, Chevron can use those profits to
buy more assets. This is the name of the game in the oil and gas industry.
Whoever can attain the most assets will bring in the most sales. Chevron still has
room to grow compared to a couple of firms in the industry, but it seems to be
moving in the right direction.
3.1Chevron Mission Statement

"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."

3.2Chevron Vision Statement

"At the heart of The Chevron Way is our vision to be the global energy company
most admired for its people, partnership and performance"

3.3Organogram

Chevron following this organogram in different countries

4.1Pestel analysis
Political

-Corporate political contributions are

centrally controlled.

Economical
-Economic growth
-Exchange rate

-Political support

Social

Technological

-Supporting Public Health

-

Creating Educational
Opportunities

Ecological
- Working to minimize the
environmental impact of petroleum
consumption.
- Awareness for environmental
protection

-Leading through innovation

- Venture Capital for Innovation

Legal
-Highest standards of ethics and
transparency.
- complying with the letter and spirit of
all laws and regulations
- Business Conduct and Ethics Code

4.2 Five Forces Model

The five forces model is a framework that analysts use to evaluate the
interior factors affecting competition and the external factors affecting bargaining
power. This helps to understand the industry and what strategies are needed to

gain a competitive advantage. The interior factors of the industry are defined
through the rivalry of existing firms, the threat of new entrants, and the threat of
substitute products.
1. Rivalry Among Existing Firms (Low)
2. Threat of New Entrants (Very Low)
3. Threat of Substitute Products (Low)
4. Bargaining Power of Customers (Low)
5. Bargaining Power of Suppliers (Moderate)
Bargaining Power of Suppliers
High competition among suppliers
Diverse distribution channel
Volume is critical to suppliers
Bargaining Power of Customers
Low buyer price sensitivity
Product is important to customer
Large number of customers
Intensity of Existing Rivalry
Government limits competition
Large industry size
Fast industry growth rate
Exit barriers are low

Threat of Substitutes
Substitute is lower quality
Substitute has lower performance
Substitute product is inferior
High cost of switching to substitutes
Limited number of substitutes
Threat of New Competitors
Strong distribution network required
High capital requirements
Strong brand names are important
Advanced technologies are required
Geographic factors limit competition
High learning curve
Entry barriers are high

4.3 SWOT analysis

Strengths
Spending on alternative energy.
Investment in high profile project.
Outstanding earning in 2011.
Achieve hart energy publishing refiner of the year award in 2009.
Weaknesses

 Declining sales of refined products, resulting in lowering top line

growth.
Slight declines in oil and gas reserves (in mature plants).
Declining replacement rates in recent years.
Opportunities
Growing Asian-Pacific population and expansion of their economy will
lead to greater demand for energy
Continued field discoveries in areas like North Duri and Bangladesh
Increases in capital expenditures is a trend that is equating to higher
margin growth
Bio-fuels and alternative energy methods
Threats
Prolonged global recession
Slow demand for oil in BRIC countries
International Union Strikes and other global political events
(Environmental issues).
5.1 SWAN Analysis

Strengths
Spending on alternative energy
Investment in high profile project
Outstanding earning in 2011
Achieve hart energy publishing refiner of the year award in 2009

Weaknesses

 Declining sales of refined products, resulting in lowering top line

growth
Slight declines in oil and gas reserves (in mature plants)
Declining replacement rates in recent years.
Attractiveness

Operational Excellence Management System

Leadership Accountability
Management System Performance
OE Expectations
OEMS Implementation

Next step

Develop OE targets and action plans with Completion dates and

milestones and incorporate into business plans.
Identify and allocate resources to successfully complete the OE action
plans.
Communicate metrics, target s and action plans.
Assign accountabilities and develop necessary
Performance agreements.

5.2 TWOS Matrix

CPM

Strength

Weakness

Spending on alternative energy

Investment in high profile project
Outstanding earning in 2011

Declining sales of refined products, res

top line growth

Achieve hart energy publishing refiner of the year award Slight declines in oil and gas reserves (i
in 2009

Declining replacement rates in recent y

Opportunities
Increase usage for energy
Increasing price of energy
Demand shifts for renewable energy
Increasing propensity of people to spend

Threats
Depletion of natural energy resources
More rival coming in this industry

Regulation restricted excessive emissio

Civil war and natural disaster
Credit crisis in financial recession

EFE

6.0Value Chain Analysis

Chevron Corporation continues to be a leader in all aspects of the industry.

Chevron is adding to its value by continuing to expand its assets all over the
world, and creating a more efficient process upstream and downstream. By
focusing on economies of scale and scope, lower input costs, and differentiation,
Chevron creates value for the firm.Chevron is exemplary in its control of cost
leadership in the industry.

7.1 ViSA Model

Vi=At the heart of The Chevron Way is our vision ... to be the global
energy company most admired for its people, partnership and performance.

Vision means
i.

safely provide energy products vital to sustainable economic

progress and human development throughout the world;

ii.

people and an organization with superior capabilities and

commitment

iii.

Earn the admiration of all our stakeholders investors,

customers, host governments, local communities and our employees

not only for the goals we achieve but how we achieve them;
iv.

Deliver world-class performance.

S = Their Strategic Plan sets direction, aligns our organization, and

differentiates us from the competition. It guides our actions to successfully
manage risk and deliver shareholder value.
Enterprise Strategies
People
Invest in people to strengthen organizational capability and develop a talented
global workforce that gets results the right way
Growth
Grow profitably by using our competitive advantages to maximize value from
existing assets and capture new opportunities.

Major Business Strategies

Upstream
Grow profitably in core areas and build new legacy positions.
Gas
and
Midstream
commercialize our equity gas resource base while growing a high-impact global
gas business.
Downstream
and
Improve returns and grow earnings across the value chain.

Chemicals

Technology
Differentiate performance through technology.
Renewable
Energy
and
Energy
Efficiency
Invest in profitable renewable energy and energy efficiency solutions.

A = Execute with excellence through rigorous application of our

operational excellence and capital stewardship systems and disciplined cost
management

8.0 The BCG chart

In this circumstance we can say chevron is the star in our BCG chart
because they have excellent market position and concentration on alternative
project.

9.1 PURE Objectives

Achieve an injury- free work place.

Promote a healthy workplace and mitigate significant health risks.
Eliminate spill s and environmental incidents. Identify and mitigate key
environmental risks.
Operate incident- free with industry-leading asset reliability.
Maximize the efficient use of resources and assets.

9.2 GREAT Model

To achieve and sustain high level s of performance, we must develop

strong capability in operational excellence throughout Chevron. This requires
active leadership and all employees to be engaged. We must develop a culture
where everyone believes that all incidents are preventing able and that zero
incidents " are possible.

10.0 Market Analysis including Market Segmentation

Chevrons market segmentation depends on the natural recourses in the

different countries.

11. EFE Matrix

Key External Factors

Opportunities
1.
2.
3.
4.

5.

Increase usage for energy

Increasing price of energy
Demand shifts for
renewable energy
Increasing propensity of
people to spend
Threats
Depletion of natural
energy resources

Weight

Rating

0.2
0.1

4
2

Weighted
score
0.8
0.2

0.15

0.45

0.05

0.1

0.15

0.45

6.
7.

8.
9.

More rival coming in this

industry
Regulation restricted
excessive emission of co2
Credit crisis in financial
recession
Civil war and natural
disaster
Credit crisis in financial

0.05

0.1

0.1

0.3

0.05
0.15
1.00

4
3

0.2
0.45
3.05

Score Systems
4 = Major Strength

3 = Minor Strength

2 = Minor Weakness

1 = Major Weakness

12. CPM Matrix

BP

Chevron
Critical success
factors
Advertising
Product quality
Management
Product capacity
logistics
Financial position

Petroba

weight

Rating

Score

Rating

Score

Rating

0.05

0.1

0.1

0.05

0.15

0.15

0.15

0.6

0.45

0.15

0.6

0.45

0.15

0.6

0.45

0.2

0.8

0.8

0.15

0.6

0.45

Global expansion

Customer loyalty
Market share
Total

0.05

0.15

0.15

0.05
1.00

0.2

0.15

3.8

3.15

2.15

Score Systems

4 = Major Strength

3 = Minor Strength

2 = Minor Weakness

1 = Major Weakness

In this circumstance, we can say chevron have better situation than other
in CPM matrix.

13.QSPM Analysis

Key factors

Alternative 01
Market Development
Total
score

Alternative 02
Technology
Development
weight scores Total
score

weight

scores

0.2
0.2
0.25

3
4
3

0.6
0.8
0.75

0.25
0.2
0.15

3
4
3

0.75
0.8
0.45

0.1

0.2

Strengths
Spending on alternative energy
Investment in high profile project
Outstanding earning in 2011
Achieve hart energy publishing
refiner of the year award in 2009

Weakness
Declining sales of refined
products, resulting in lowering
top line growth
Slight declines in oil and gas
reserves (in mature plants)

0.1

0.1

0.1

0.1

0.05

0.1

0.15

0.3

0.06
0.04
100%

2
1

0.12
0.04

0.1
0.05
100%

2
3

0.2
0.15

0.2
0.1

4
2

0.8
0.2

0.1
0.15

4
3

0.4
0.45

0.15

0.3

0.2

0.6

0.1

0.3

0.15

0.3

0.15

0.3

0.15

0.3

0.1
0.05

2
1

0.2
0.05

0.05
0.1

3
2

0.15
0.2

0.1
0.05

1
3

0.1
0.15

0.1

0.4
0

Declining replacement rates in

recent years
Income decrease slowly
Opportunities
Increase usage for energy
Increasing price of energy
Demand shifts for renewable
energy
Increasing propensity of
people to spend
Threats
Depletion of natural energy
resources
More rival coming in this
industry
Regulation restricted excessive
emission of co2
Civil war and natural disaster
Credit crisis in financial
recession

100%
5.11

100%
<

Score:
1= not acceptable, 2= possible acceptable, 3=probably acceptable
4=most acceptable, 0=not relevant.

5.55

In this circumstance, we have to focus more on theTechnology Development

(Alternative 02)
14. Financial Analysis
Particulars
Current ratio

2012
1.6

2011
1.6

2010
1.7

2009
1.4

2008
1.1

Interest coverage

191.3

165.4

101.7

62.3

166.9

Debt ratio

8.20%

7.70%

9.80%

10.30%

9.30%

Return on stockholders equity

20.30%

23.80%

19.30%

11.70%

29.20%

18.70%

21.60%

17.40%

10.60%

26.60%

Cash dividends/net income

(payout ratio)

26.10%

22.80%

29.80%

50.60%

21.60%

Return on total assets

11.80%

13.60%

10. 9%

6.40%

15.40%

Cash dividends/cash from

operations
Total stockholder return

17.60%

14.90%

18.10%

27.40%

17.40%

5.00%

20.30%

22.30%

8.10%

(18.40%)

Return on capital employed

Return on Assets (ROA): Return on asset means net profit/total assets.

It shows the ability ofmanagement to acquire capital and liabilities at a
reasonable cost and invest them in profitableinvestments. This ratio indicates
how much net income isgenerated per taka of assets. Higher the ROA more
profitable the Organization. From the graph it is clear that ROA is fluctuating, but
it is still better than the year of 2009 and 2010.

Return on Equity (ROE): Return on Equity is calculated by net profit/ total

equity.ROE is one the most important indicator of an organizations profitability
and growth potential. It is the rate of return to shareholders or the percentage
return on each $ of equity invested in the organization. From the graph we see
that ROE is also fluctuating and it is downward sloping. But ROE is still in a
secure condition.

The interest coverage ratio (ICR) is a measure of a company's ability

to meet its interest payments. Interest coverage ratio is equal to earnings before
interest and taxes (EBIT) for a time period, often one year, divided by interest
expenses for the same time period. The interest coverage ratio is a measure of the
number of times a company could make the interest payments on its debt with its
EBIT. It determines how easily a company can pay interest expenses on
outstanding debt. Interest coverage ratio is also known as interest coverage, debt
service ratio or debt service coverage ratio. From the graph we can say that
Chevrons interest payment ability is increasing year by year. It indicates the
prospect of getting loan is increasing.

A ratio that indicates what proportion of debt a company has relative to its
assets. The measure gives an idea to the leverage of the company along with the
potential risks the company faces in terms of its debt-load. Here Chevrons debt
against the assets is decreasing year by year. So we can say that, Chevrons total
equity against asset is increasing.

The Current Ratio is probably the most widely used liquidity ratio. It measures the
ability of a business to meet its current liabilities out of current assets. Current
assets/liabilities are those that will be realized within a year.The higher the current ratio is
the better. A result of 2 generally indicates a strong financial position. There are
exceptions to having a high current ratio. A high result may mean an inefficient use of
assets. Also some large businesses with a very high turnover of inventory can meet its
liabilities with ongoing sales. From the graph it is clear that Chevrons current ratio was
in between 1.11 to 1.7. It indicates Chevron use its asset efficiently.

Competitor Analysis
In the competitor analysis chevron has competitive advantages that are
given below:

1. Good market share

2. Spending on alternative energy
3. Investment in high profile project
4. Global expansion
5. Customer loyalty
6. Using Advanced technology
7. Utilization the capacity properly
8. Control over the suppliers and distributors

Breakeven Analysis

Development and exploration cost are their total cost.

15.KSF Analysis (Industry Key Success Factors)

1. Technology-related KSFs
Expertise in a Particular technology
Ability to improve production processes

2. Manufacturing-related KSFs

 Quality Control Know-How

Low-cost product design and engineering
Access to attractive supplies of skilled labor

3. Distribution-related KSFs
A strong network of dealers

4. Marketing-related KSFs
Brand Name
Fast, accurate technical assistance
Clever Advertising

5. Skills & Capability-related KSFs

A talented workforce
Supply Chain Management Capabilities
Strong e-commerce

6. Other types of KSFs

A strong balance sheet and access to financial capital

Patent. Trademarks, CopyrightProtection.

Strategy Evaluation and Contingency Plan

The Nature of Strategy Evaluation

The strategic-management process results in decisions that can have
significant, longlastingconsequences. Erroneous strategic decisions can inflict
severe penalties and can beexceedingly difficult, if not impossible, to reverse.
Most strategists agree, therefore, thatstrategy evaluation is vital to an
organizations well-being; timely evaluations can alertmanagement to problems
or potential problems before a situation becomes critical.Strategy evaluation
includes three basic activities: (1) examining the underlying bases of afirms
strategy, (2) comparing expected results with actual results, and (3) taking
correctiveactions to ensure that performance conforms to plans.

Adequate and timely feedback is the cornerstone of effective strategy

evaluation.Strategy evaluation can be no better than the information on which it
is based.Strategy evaluation can be a complex and sensitive undertaking. Too
much emphasison evaluating strategies may be expensive and counterproductive.
The more managers attempt to evaluate the behavior of others, the lesscontrol
they have. Strategyevaluation is essential to ensure that stated objectives are
being achieved.In many organizations, strategy evaluation is simply an appraisal
of how well an organization has performed. Strategy evaluation must have both a

long-run and short-run focus. Strategies often donot affect short-term operating
results until it is too late to make needed changes.It is impossible to demonstrate
conclusively that a particular strategy is optimal oreven to guarantee that it will
work. Strategy evaluation is important because organizations face dynamic
environments inwhich key external and internal factors often change quickly and
dramatically. Successtoday is no guarantee of success tomorrow! An organization
should never be lulled intocomplacency with success.

Contingency Planning

A basic premise of good strategic management is that firms plan ways to

deal withunfavorable and favorable events before they occur. Too many
organizations prepare contingencyplans just for unfavorable events; this is a
mistake, because both minimizingthreats and capitalizing on opportunities can
improve a firms competitive position.Regardless of how carefully strategies are
formulated, implemented, and evaluated,unforeseen events, such as strikes,
boycotts, natural disasters, arrival of foreign competitors,and government
actions, can make a strategy obsolete. To minimize the impact of potentialthreats,
organizations should develop contingency plans as part of their strategyevaluationprocess. Contingency plans can be defined as alternative plans that
can be put into effect ifcertain key events do not occur as expected. Only highpriority areas require the insurance ofcontingency plans. Strategists cannot and
should not try to cover all bases by planning for allpossible contingencies.

We suggested that effective contingency planninginvolves a seven-step

process:

1. Identify both beneficial and unfavorable events that could possibly

derail thestrategy or strategies.

2. Specify trigger points. Calculate about when contingent events are likely
to occur.

3. Assess the impact of each contingent event. Estimate the potential

benefit or harmof each contingent event.

4. Develop contingency plans. Be sure that contingency plans are

compatible withcurrent strategy and are economically feasible.

5. Assess the counterimpact of each contingency plan. That is, estimate

howmuch each contingency plan will capitalize on or cancel out its
associatedcontingent event. Doing this will quantify the potential value of each
contingencyplan.

6. Determine early warning signals for key contingent events. Monitor the
early warningsignals.

7. For contingent events with reliable early warning signals, develop

advance actionplans to take advantage of the available lead time.

Recommendations
Should have to sale its chemical than it becomes star.
Should invest in wind and solar energy.
Start exploration of gas wells.
Get help from technology.
Should invest in bio-fuel energy sources.
Should have to improve ethical operating standards.

Limitation
Lack of information
Short time to complete the term paper

Conclusion
Chevron is 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 in the United States.
References
www.chevron.com
2012 supplement annual report
2012 annual report
Strategic Management , Fred R. David (12th edition)
Strategic Management , Fred R. David (13th edition)

American International University-Bangladesh

(AIUB)

Term paper
ON

The Chevron Corporation

An Assigned Report Submitted to:
Professor
Dr. M. Mahmudul Hasan,
Faculty of Master of Business Administration

Submitted By

Serial
no.
1.
2.
3.
4.
5.
6.

Name

Id

Mahamud Mohammad
Salauddin
Day Samarandra

11-95001-3
11-94989-3

Uddin Minhaj

11-95074-3

Hassain Shawon

11-94990-3

Md Sadiquzzaman

10-94075-2

Sumi Susmita Kundu

11-94783-2

Posted 16th April 2013 by Sadiq Zaman Rahin

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