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TABLE OF CONTENTS
A. Case abstract ......................................................................................................................................... 2
b. Vision statement .................................................................................................................................... 3
c. External audit: ....................................................................................................................................... 4
a. Opportunities ......................................................................................................................................... 4
b. Threats .................................................................................................................................................. 4
c. Factor evaluation (EFE) matrix ............................................................................................................. 4
d. Internal audit ......................................................................................................................................... 5
a. Strengths ........................................................................................................................................... 5
b. Weaknesses ........................................................................................................................................... 5
c. Internal factor evaluation (IFE) matrix ............................................................................................. 6
e. Financial analysis .................................................................................................................................. 8
a. ROE (return on equity) ..................................................................................................................... 8
b. ROA (return on assets) ...................................................................................................................... 8
f. Swot strategies: ..................................................................................................................................... 9
g. Grand strategy matrix...................................................................................................................... 11
h. The internal-external (IE) matrix .................................................................................................... 12
i. QSPM .................................................................................................................................................. 13
j. Recommendations ...................................................................................................................................
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CHEVERON CORPORATION
A. Case Abstract
Chevron the 3
rd
position in fortune five hundred companies began with an oil discovery north
of Los Angeles in 1879 followed by the formation of the Pacific Coast Oil Company, the oldest
predecessor of Chevron Corporation. Standard Oil Company (owned by John D. Rockefeller)
subsequently bought Pacific Coast Oil in 1900, and six years later the merged name became
Standard Oil Company (California). But in 1911, the Sherman Antitrust Act resulted in the
breakup of the parent Standard Oil and created Standard of California as an independent
company. After the war ended, the company merged with Pacific Oil Company, becoming
Standard Oil Company of California (Socal). In 1930 it made a joint venture with Caltex.
By the end of 1930s, the Aramco partnership was formed in the Middle East, composed of
Socal, Texaco, Exxon, and Mobil. Following World War II, the additives and petroleum-based
chemical invented for the war were quickly turned to peacetime uses. The age of petrochemical
had arrived, and with it came Chevron Chemical Company. By 1980, Aramco was entirely
owned by Saudis, and in 1988the name was changed to Saudi Arabian Corporation. In 1984, the
merger between Standard Oil of California Gulf Oil was the largest merger in history at that time
nearly doubling the company's world wide proved oil and gas reserves.
This merger, Socal changed its name to Chevron Corporation. Through the purchase of
Tenneco Inc.'s U.S. Gulf of Mexico crude oil and natural gas properties in 1988, Chevron
became one of the largest gas producers in the United States. Chevron merged with NGC
Corporation in the area of natural gas to from Dynegy in 1998. In 1993, Chevron formed
Tengizchevroil, a joint venture with the Republic of Kazakhstan, becoming the first major
Western oil company to enter newly independent Kazakhstan.
In 2001, Chevron acquired Texaco for $37.5 billion and changes its name yet again to
Chevron Texaco Corporation. But after sizable amounts on changing the name/logo on
everything from letterhead to the credit union's legal name, on May 9, 2005, the name returned to
the Chevron. In 2005, Chevron had another name changed opportunity through its acquisition of
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Unocal Corporation. But this time it opted to leave the brand unchanged and reduced confusion.
The Unocal acquisition made Chevron the world's largest producer of geothermal energy.
Now in present Chevron is the second-largest energy company in the United States and
among the largest corporations in the world, based on market capitalization as of December 31,
2008. Headquartered in San Ramon, California, with the stock ticker symbol CVX, it conducts
business in more than 100 countries. Chevron engages in every aspects of the crudes oil and
natural gas industry, including exploration and production, manufacturing, marketing and
transportation, chemicals manufacturing and sales, geothermal, power generation and renewable.
Its global workforce consisted of 66,000 employees at year-end 2008.
In 2008, Chevron produced 2.53 million barrels of net oil-equivalent per day. About 75
percent of that volume occurred outside the United States in more than 20 different countries.
Chevron had a global refining capacity of more than 2 MM barrels of oil per day at the end of
2008 and invested $22.8 billion in capital projects last year. The marketing network supports
more than 25,000 retail outlets on six continents, with investment in 13 power-generating
facilities in the United States and Asia. Of the 10,000 retail outlets in the United States
Chevron has had 21 consecutive annual increases in dividends, with dividends growing at an
average annual rate of 12 percent over the 5 past years. The growth rate is 7 percent for the last
21 years. At the end of March 2009, the dividend yield was about 4 percent. Over the last five
years, cash returned to the stockholders has totaled more than $46 billion, $ 25 billion in share
buybacks and over $21 MM in dividends. In March 2009, Chevron was presented with the
HART Energy Publishing Refiner of the year award, which is based on achievements in the
following categories: cleaner environment, investment and corporate growth and lastly vision.
B. Vision Statement
To be the global energy company most admired for its people, partnership and performance.
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C. External Audit:
a. Opportunities
Marketing development by starting operating in untapped countries.
Market penetration to increase market share in developing countries(Pakistan, India)
Increase in CNG usage
Increasing demand for liquefies natural gas.
Capital investment
Bio fuels initiatives
b. Threats
Political threat
Risk associated with conducting business outside U.S like WTO regulations risk
Economic or industry downturn.
Environmental regulation
Tax regulation in the U.S
Competitor (ExxonMobil, ConocoPhillips, Shell, British Petroleum)
c. Factor Evaluation (EFE) Matrix
Opportunities Weight Rating Weighted
score
1. Marketing development by starting
operating in untapped countries. 0.1 3 0.3
2. Market penetration to increase market share
in developing countries(Pakistan, India) 0.08 3 0.24
3. Increase in CNG usage 0.07 2 0.14
4. Increasing demand for liquefies natural gas. 0.07 2 0.14
5. Capital investment 0.05 3 0.15
6. Bio fuels initiatives 0.1 4 0.4
5
Threats Weight Rating Weighted
score
1. Political threat 0.04 2 0.08
2. Risk associated with conducting business
outside U.S like WTO regulations risk 0.06 3 0.18
3. Economic or industry downturn. 0.15 5 0.75
4. Environmental regulation 0.05 2 0.1
5. Tax regulation in the U.S 0.03 3 0.09
6. Competitor (ExxonMobil, ConocoPhillips,
Shell, British Petroleum) 0.2 3 0.6
Total 1 3.17
D. Internal Audit
a. Strengths
Strong brand portfolio
Worlds largest producer of geothermal energy.
Second largest integrated energy company.
Business in more than 100 countries, having 66,000 employees.
Global refining capacity of more than 2 MM barrels of oil per day.
Negative debt position.
No one gasoline brand in united states for the consecutive 5
th
year
Number one convenience store brand.
Chevron was presented with a HART energy publishing refiner of the year award.
b. Weaknesses
Out of the 10,000 outlets in the United States, chevron only owns hundreds till 2008.
Reduction in profits.
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Chevrons total revenues fell 51% to $40 billion from $81billion a year ago.
Stopped drilling new gas wells due to loss
Stopped buy back its own stocks due to loss
c. Internal Factor Evaluation (IFE) Matrix
Strengths Weight Rating Weighted
score
1. Strong brand portfolio 0.1 5 0.5
2. World's largest Producer of geothermal
energy. 0.15 5 0.75
3. Second largest integrated energy company. 0.1 4 0.4
4. Business in more than 100 countries
having 66,000 employees. 0.05 4 0.2
5. Global refining capacity of more than 2
MM barrels oil per day. 0.05 3 0.15
6. Negative debt position. 0.05 3 0.15
7. Number one gasoline brand in united state
from last five years. 0.05 2 0.1
8. Number one convenience store brand 0.07 4 0.28
9. Chevron was presented with a HART
energy publishing refiner of the year award 0.05 4 0.2
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Weaknesses Weight Rating Weighted
score
1. Out of the 10,000 outlets in the united states,
chevron only owns hundreds till 2008. 0.05 2 0.1
2. Reduction in profits. 0.07 3 0.21
3. Chevrons total revenues fell 51% to $40
billion from $81billion a year ago. 0.08 3 0.24
4. Stopped drilling new gas wells due to loss
0.06 2 0.12
5. Stopped buy back its own stocks due to loss 0.07 2 0.14
Total 1 3.54
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E. FINANCIAL ANALYSIS
a. ROE (Return on Equity)
2006 2007 2008
Net Income
17,138,000 18,688,000 23,931,000
Shareholders Equity
68,935,000 77,088,000 86,648,000
ROE
0.25 0.24 0.28
b. ROA (Return on Assets)
2006 2007 2008
Net Income
17,138,000 18,688,000 23,931,000
Total Assets
132,628,000 148,786,000 161,165,000
ROA
0.13 0.13 0.15
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F. SWOT STRATEGIES:
Strengths Weaknesses
1. Strong brand portfolio.
2. World's largest Producer of
geothermal energy.
3. Second largest integrated
energy company.
4. More than 100 countries
having 66,000 employees.
5. Global refining capacity of
more than 2 MM barrels oil
per day.
6. Negative debt position.
7. Number one gasoline brand
in united state from last five
years.
8. Number one convenience
store brand.
9. Chevron was presented with
a HART energy publishing
refiner of the year award.
1. Out of the 10,000 outlets in
the united states, chevron only
owns hundreds till 2008.
2. Reduction in profits.
3. Chevrons total revenues
fell 51% to $40 billion from
$81billion a year ago.
4. Refining and marketing
operations actually lost
$95million in the second
quarter.
5. Declining oil and gas
reserves
Opportunities S-O Strategies .W-O Strategies
1. Marketing
development by
starting operating in
untapped countries.
2. Market penetration to
increase market share
in developing
countries(Pakistan,
1. Company should focus
on unexplored
countries, which can
provide a good market,
as they have good
brand image, financial
position. (S1, S2, S3,
O1)
1. By going unexplored
countries, company
can increase its profit
and revenues. (W2,
W3, O1, O2)
2. By Market
development and
penetration company
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India)
3. Increase in CNG usage
4. Increasing demand for
liquefies natural gas.
5. Capital investment
6. Bio fuels initiatives
2. As CNG sector is
considered as cheap
fuel, so company
should take a step for
this side (S1, S2, S3,
O3)
3. Company should take
more interest to Bio
fuel line by using its
team, finance, and
strong brand image
(S1, S2, S3, O4, O6)
can increase its outlets
which ultimately leads
to increase revenue
and profits. (W1, W2,
W3, O1, O2, O6)
Threats S-T Strategies
W-T Strategies
1. Political threat
2. Risk associated with
conducting business outside
U.S like WTO regulations risk
3. Economic or industry
downturn.
4. Environmental regulation
5. Tax regulation in the U.S
6. Competitor (ExxonMobil,
ConocoPhillips, Shell, British
Petroleum)
1. By good brand image and
market position and team
company can reduce the
possible political impact on it.
(S1, S2, S3, S4, T1)
2. Company can compete
more, as it has a good brand
image, good financial health.
(S1, S2, S3, S4, S6, S7, T6)
1. by exploring the new
markets, company can
increase its revenue and profit
which can reduce political
threat compete well. (W2,
W3, T1, T6)
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G. Grand Strategy Matrix
Slow market growth
Rapid Market Growth
Quadrant I
Quadrant III
Quadrant IV
Quadrant II
Strong
Competitive
Position
Weak
Competitive
Position
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H. The Internal-External (IE) Matrix
The IFE total weighted score
Strong
3.0 to 4.0
Average
2.0 to 2.99
Weak
1.0 to 1.99
The EFE
Total
weighted
score
High
3.0 to 3.99
I
CHEVRON
Corporation
II
III
Medium
2.00 to 2.99
IV
V VI
Low
1.00 to 1.99
VII VIII IX
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I. QSPM
Company should
focus on
unexplored
countries, which
can provide a
good market, as
they have good
brand image,
financial
position.
Company should
take more interest
to Bio fuel line by
using its team,
finance, and
strong brand
image.
Key Factors Weight AS TAS AS TAS
Opportunities
1. Marketing development by starting operating
in untapped countries. 0.1
4 0.4 3 0.3
2. Market penetration to increase market share in
developing countries(Pakistan, India) 0.08
4 0.32 2 0.16
3. Increase in CNG usage 0.07 - - 1 0.07
4.Increasing demand for liquefies natural gas. 0.07 - - 2 0.14
5. Capital investment 0.05 2 0.1 - -
6. Bio fuels initiatives 0.1 - - 2 0.2
Threats
1. Political threat 0.04 3 0.12 2 0.08
2.Risk associated with conducting business
outside U.S like WTO regulations risk 0.06
2 0.12 1 0.06
3.Economic or industry downturn. 0.15 3 0.45 3 0.45
4.Environmental regulation 0.05 - - - -
5.Tax regulation in the U.S 0.03 - - - -
6.Competitor (ExxonMobil, ConocoPhillips, 0.2 3 0.6 3 0.6
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Shell, British Petroleum)
Total 1
Strengths
1. Strong brand portfolio 0.1 4 0.4 3 0.3
2. World's largest Producer of geothermal
energy. 0.15
4 0.6 3 0.45
3. Second largest integrated energy company. 0.1 3 0.3 2 0.2
4. More than 100 countries having 66,000
employees. 0.05
2 0.1 2 0.1
5. Global refining capacity of more than 2 MM
barrels oil per day. 0.05
1 0.05 1 0.05
6. Negative debt position. 0.05 - - - -
7. Number one gasoline brand in united state
from last five years. 0.05
1 0.05 1 0.05
8. Number one convenience store brand 0.07 1 0.07 1 0.07
9. Chevron was presented with a HART energy
publishing refiner of the year award 0.05
2 0.1 1 0.05
Weaknesses
1. Out of the 10,000 outlets in the united states,
chevron only owns hundreds till 2008. 0.05
3 0.15 2 0.1
2. Reduction in profits. 0.07 1 0.07 1 0.07
3. Chevrons total revenues fell 51% to $40
billion from $81billion a year ago. 0.08
1 0.08 1 0.08
4. Stopped drilling new gas wells due to loss 0.06 2 0.12 1 0.06
5. Stopped buy back its own stocks due to loss 0.07 1 0.07 1 0.07
Total 1 - 4.27 - 3.71
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J. Recommendations
Company should search and explore untapped countries which will rise companys
growth
As Iraq is a good opportunity for oil reserve leasing, so company should focus on that, it
will reduce the risk of declining oil reserves
Company should invest in energy technologies, it will give a new market as this is going
be a popular source of energy
Company should look on Bio fuel as it is cheaper one source of fuel.
As demand of liquefies natural gas is increasing, so company should focus on that area,
it will give a big rise to company.
