chevron - rakshit upadhyay

8/7/2019 CHEVRON - Rakshit Upadhyay

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ASSIGNMENT

on

BUSINESS STRATEGIES

of

CHEVRON

SUBMITTED By: Submitted To:RAKSHIT UPADHYAY Dr. R.J.BhattMBASEM 4 (SFI)Roll No: - 11

Department of Business Administration,Bhavnagar University,

Bhavnagar.


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Company Roots:

They trace their earliest roots to an 1879 oil discovery at Pico Canyon, north of Los

Angeles, Calif., which led to the formation of the Pacific Coast Oil Co. That company

later became Standard Oil Co. of California and, subsequently, Chevron. They took on

the name "Chevron when they acquired Gulf Oil Corp., in 1984, nearly doubling their

worldwide proved oil and gas reserves. Their merger with Gulf was at that time the

largest in U.S. history.

Another major branch of the family tree is The Texas Fuel Company, which was formed

in Beaumont, Texas, in 1901. It later became known as The Texas Company and

eventually Texaco. In 2001, their two companies merged. The acquisition of UnocalCorporation in 2005 strengthened Chevron's position as an energy industry leader,

increasing their crude oil and natural gas assets around the world.

Global Scope

Our diverse and highly skilled global workforce consists of approximately 60,000

employees and about 4,000 service station employees.

In 2009, Chevron produced 2.7 million barrels of net oil-equivalent per day, 7 percent

higher than in 2008. About 73 percent of that volume occurred outside the United States.

Chevron had a global refining capacity of more than 2 million barrels of oil per day at the

end of 2009.

Our marketing network supports retail outlets on six continents. And we have invested in

13 power-generating facilities in the United States and Asia.


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SWOT ANALYSIS:

Strengths

Steady financial performance

Cash generator

Presence across entire energy value chain

Strong market position - upstream (exploration and production) and downstream

(refining, marketing & transportation)

Weaknesses

Declining sales of refined products

Declining oil and gas reserves

Legal action by the Iraqi Government

Employee unrest in Nigeria

Opportunities

Increasing demand from China, India

Increasing demand for liquefied natural gas (LNG)

Capital investments

Biofuels initiatives

Threats

US and EU economic slowdown

Environmental regulations

Tax regulations in the US

Increasing focus of green fuels & automobiles in the US

Competitors


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STRATEGIES

GENERAL STRATEGY:

Chevron's goal is to be No 1 in total stockholder return relative to its peers and to achieve

a minimum 12 per cent return on capital employed while continuing to grow. Success

requires profitable earnings-per-share growth greater than their competitors', and they are

convinced that they have the organization and the will to succeed.

Achieving the goal will require superior performance in four areas: operational

excellence, cost reduction, capital stewardship and profitable growth - all driven byorganizational capability.

1. Operational excellence: Safe, reliable, efficient operations companywide are essential

to achieving their objectives. They are, in fact, the foundation for growth. This is Job No.

1 for all of them day in and day out. They are committed to ensuring continued and

sustainable improvements in their operations.

2. Cost reduction: they will build on last year's $500 million cost-reduction effort, muchof which will continue to show rewards in the coming years. For example, they are just

starting to reap the benefits from their new global procurement process and from their

restructured support functions.

3. Capital stewardship: They reinvest about $5 billion annually in their business. It's

essential that they be wise stewards of their investors' money. They have a world-class

project-management process that is helping them improve greatly in two areas: decision

quality - ensuring that the right people have the right data when deciding whether a

project should proceed; and project execution - excelling in engineering, construction and

start-up so that they employ capital most efficiently. The start-up of Angola's deepwater

Kuito Field - under budget and just two and a half years after discovery - was a

remarkable achievement and is evidence of progress in this area.


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4. Profitable growth: Delivering on operational excellence, cost reduction and capital

stewardship will provide earnings growth. But they must do more.

They will seek continued profitable growth in their core businesses, particularly

international upstream. They will seek acquisitions and alliances that enhance growth. In

February, They announced a joint venture between their chemicals business and that of

Phillips Petroleum Company. The new $6 billion company will be a world-class

competitor in petrochemicals. They will also capture new opportunities. Currently,

they're growing in the power and gas business through Dynegy, in which they hold a 28

per cent interest. They're also investing in new process technologies, including a method

for converting natural gas to liquids.

Their Strategic Plan translates their vision into action. It aligns and integrates their

organization, inspires confidence, and differentiates them from the competition.

MAJOR BUSINESS STRATEGIES:

Their major business strategies will develop leading integrated positions in growth areas

of the world:

Global Upstream- grow profitably in core areas and build new legacy positions

Global Gas- commercialize their equity gas resource base while growing a high-impact

global gas business

Global Downstream- improve returns and selectively grow with a focus on integrated

value creation

Renewable Energy - invest in renewable energy technologies and capture profitable

positions


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ENABLING STRATEGIES:

Three enabling strategies apply to all parts of the company:

1. Invest in People to achieve their strategies

2. Leverage Technology to deliver superior performance and growth

3. Build organizational capability ("4+1") to deliver world-class performance in

operational excellence, cost management, capital stewardship, and profitable

growth

Underlying and aligned with each of their Major Business and Enabling Strategies are

more detailed plans, tactics, and metrics targeted to guide them to success in each of the

specific business areas where they choose to compete. These detailed plans are

continually tested against the competition and refreshed to achieve sustained competitive

performance.

INNOVATION STRATEGY:

They categorize innovation in three different ways: First, there is radical innovation.

Radical innovation is a game changer. In product terms, it is a radical new product --

Post-its for 3M was a radical diversion, for example. The problem is that of the hundreds,

maybe millions, of ideas that surface in a company, how many make it to becoming an

actual product? It is minimal.

Second, they look for reapplied innovation. Reapplied is where an idea or a solution to a

problem in one area actually might be radical when you bring it into a new area. You're

not reinventing the wheel, but you're adapting something to a new area or new product.


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There is some great stuff out in the industry where companies like Procter & Gamble set

targets for the number of reapplied ideas that they generate. Reapplied might be bringing

a cost-saving initiative you saw over in finance and applying it in the IT operations.

And then there is incremental. This is the hardest one for people to understand.

Incremental changes happen all over the place and innovations in this area are plentiful,

but they are the least recognized. So, by having people understand that if you take your

idea and add a couple things to it and somebody else takes your idea and improves it, that

is actually innovative thinking.

All three of them add up to a pipeline that gets you more of the radical [innovation] down

the road.

They built a space that is about 2,000 square feet where they can bring people together.

They have six purposes for this thing:

Collaborative thinking;

Training on innovation;

Experiments;

Business engagement;

Creative networking; and

Coaching and mentoring.

They use techniques from IDEO, the creative design company, on how to reconfigure

rooms and walk people through breakthrough thinking.

What they try to do is give people techniques they can utilize after they walk away from

this space.


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Process of innovation at Chevron:

The first step is to really understand what you are working on.

The next step is to observe: Go out and look at how the problem is affecting people and

how they respond to it -- what the real problem is, not just what you think it might be.

The next step is the one everyone thinks when you say innovation: to ideate. Here is

where people brainstorm and creatively think. The next step is to refine the ideas. Then

you prototype. After you're done with that, you can plug into your production cycle.

IT STRATEGY:

Chevron has had a federated model; they have data all over the corporation. They have

lots of data about people in one organization, another database about people in another

organization. Consolidating that information to have one source of the truth, to be able to

make faster, more competitive decisions more quickly, is a really important focus in

2010.

The executives who are coming into their roles today, while not as sophisticated, have a

much better understanding of how information technology provides a platform that theentire company lives off. And as the next generation of executives comes up, those who

have had computers their whole lives, the power of technology is going to be much more

integral to everything they do and all the decisions they make about the business.

SHARED SERVICES STRATEGY:

2007s Shared Services Project of the Year Award went to Chevron. The use of highly

detailed communications plans to help create momentum and support a complex Shared

Services development program at Chevron was just one of the factors that won the

company the award.


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Chevron had several clear goals for its Shared Services project:

migrating personnel data from different legacy systems in every country onto one

ERP (SAP) system

implementing self-service functionality

establishing an internal Shared Service Center

Transferring UK payroll to a new system and outsourcing all payroll

administration.

We can be impressed by both by the strength of the companys ambition and also the

thoroughness of its planning and attention to detail. For example, Chevrons Change

and Customer Relationship Management Program includes service standard

agreements with agreed turnaround times and accuracy rates plus a commitment to

regular feedback through an annual online survey, monthly reviews with embedded

HR groups and monthly employee and manager phone surveys.

They regularly reviewed the scope of their project and engaged with their stakeholders to

feedback progress. Decisions needed to be ratified by their Decision Review Board (a key

group of senior personnel, with a vested interest in making the project a success) which

ensured that they had fully researched issues, potential delays, and any changes to the

agreed process before recommending any changes. Regular team meetings ensured that

the project team were up to date and on board at all times.

They have an intensive multi-media approach, and rather than waiting for the customer or

business to come to them, they regularly seek their feedback in a variety of ways: they

invite themselves to meetings to stimulate discussion and solicit feedback; conduct an

annual online customer satisfaction survey; and solicit feedback via informal telephone

surveys on a fortnightly basis.


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A surprising comment was that although their stakeholders felt they had an effective

communication strategy they could've communicated and engaged them more. They have

taken this on board and have ensured that in their latest project (introducing four more

business units in Europe to our ERP platform) they have facilitated a support network for

all of their stakeholders by arranging a face to face meeting for them, and the project

team, at kick-off and at regular intervals throughout the project; an even more intense

program than in previous projects.

MARKETING STRATEGY:

Chevron is known around the world through their three brands: Chevron, Texaco and

Caltex.

Chevron's marketing organization supports approximately 22,000 branded service

stations.

Trusted by Customers

Chevron, Texaco and Caltex brands hold top positions around the world. Chevron and

Texaco consistently rank as the "Most Powerful Brands" in the United States, according

to the Oil Price Information Service, and Chevron was recognized by the Lundberg

Survey for its highest value margin at the pump of all U.S. brands. Their convenience

store brand, ExtraMile, joined their Food Mart and Texaco Star Mart franchises in

earning the Convenience Store Chain of the Year awarded by Convenience Store

Decisions magazine. Caltex was voted the "brand of choice" for the second year in a

prestigious Hong Kong poll and also was rated as having the best customer service.

Chevron stations serve drivers in the western and southern United States as well as in

British Columbia, Canada. Texaco stations serve customers primarily in southern U.S.

states, across Latin America, and in parts of Africa and Europe. Caltex stations are

known for their quality across Asia-Pacific and in parts of Africa and Pakistan.


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Around the world, they are adding Techron to their fuels. Gasoline with Techron helps

keep engines clean. More than 90 percent of the branded gasoline sold by Chevron

worldwide includes Techron.

Starting in 2009, they began applying Techron technology already used gasolineto

diesel fuel. They have successfully launched Caltex Diesel with Techron D in selected

markets in South Africa and Asia. Techron D is their proprietary engine-cleaning additive

for diesel fuel, formulated specifically for engines that comply with today's stringent

emission standards.

Chevron continues to introduce alternative fuels in markets around the world. Wherever

sold, Chevron biodiesel meets U.S. Biomass-Based Diesel requirements and original

equipment manufacturer's guidelines as well as their own high standards of quality,

reliability and performance.

Health, Environment and Safety

Chevron's marketing organization ensures that their network of service stations, product

terminals and transportation fleet operate safely and reliably. During 2009, they scored a

delivery reliability rating of 99.5 percent.

Their marketing group trains employees to promote safety, striving to make their Road

Transport Safety program the best in the industry.

Reliability is especially critical during natural disasters. To that end, they maintain spare

equipment and supplies in key facilities outside hurricane-prone areas. In 2008, this

preparation allowed the company to quickly restore fuel-delivery operations and provide

electrical generators, food and water to communities affected by Hurricanes Gustav and

Ike in the Caribbean and along the U.S. Gulf Coast.

Chevron demonstrates its commitment to both the environment and the communities

where they work through their underground storage tank system assessment and

replacement program.


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MANUFACTURING STRATEGY:

Chevron's global refining system manufactures fuels and other products sold by

Chevron's marketing, lubricants, and supply and trading organizations. They market these

products under three brandsChevron, Texaco and Caltex.

Including the company's share of affiliates, Chevron can process more than 2 million

barrels of crude oil per day.

Seven refineries make up more than 75 percent of the company's total fuel refining

capacity. Five of these core refineries in Singapore, Thailand, South Korea, and

Richmond and El Segundo, Calif. manufacture products for countries in the Pacific

Basin. The other two refineries, in Pascagoula, Miss., and Pembroke, Wales, United

Kingdom, supply countries primarily in the Atlantic basin. Many of these refineries are

capable of processing heavy crude oils and producing a variety of high-value products

such as transportation fuels.

Operating safely, reliably and with a commitment to protecting the environment remain

among our top priorities. Toward that end, they have implemented the Loss Prevention

System throughout our Chevron wholly operated facilities. This tool is a behavior-basedsafety system designed to help strengthen our culture of injury-free and incident-free

operations while also providing a base for strong, competitive performance.

Several of their refineries recently have undergone major upgrades.

In 2009, Chevron's 50 percent-owned GS Caltex affiliate continued work on projects atits refinery in Yeosu, South Korea, that improve the refinery's ability to process lower-

cost, heavier feed stocks. The project was expected to be completed in the third quarter

2010.


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At their refinery in El Segundo, Calif., they continue to invest in projects that improve

reliability and process flexibility. In 2009, modifications were made to the facility's fluid

catalytic cracker and one of its crude units. The work improves the refinery's ability to

process lower-cost, heavier feed stocks. In late 2010, the facility also is expected to begin

construction on a new plant that aims to increase the refinery's sulfur-handling capacity.

Project completion is expected in 2012.

At their Pascagoula refinery, they continued construction in 2009 on a new continuous

catalytic reformer unit, which is designed to improve reliability. Planning continued on

Pascagoula's lubricant base oil complex. In 2009, Chevron completed modifications that

enable the 50 percent-owned Singapore Refinery to meet regional specifications for clean

diesel fuels.

OPERATIONAL EXCELLENCE STRATEGY:

Chevron strives to protect the safety and health of people and the environment, and to

conduct their operations reliably and efficiently. The systematic management of safety,

health, environment, reliability and efficiency to achieve world-class performance is how

they define Operational Excellence (OE).Operational Excellence is based on five

objectives:

Achieve an injury-free workplace.

Promote a healthy workplace and mitigate significant health risks.

Eliminate spills and environmental incidents and mitigate environmental risks.

Operate incident-free with industry-leading asset reliability.

Maximize the efficient use of resources and assets.

They approach the five areas of OE as one priority because success in each helps ensure

success in the others, and ultimately, this success becomes a powerful driver for robust

business performance.


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Safe, reliable, efficient and environmentally sound operations just make good business

sense, and they strive to complete every task the right way, every time.

GREEN STRATEGY:

In 2001, Chevron started their Action Plan on Climate Change to define their

environmental strategy. This group came up with the following seven Principles forAddressing Climate Change on which the companys green strategy is based:

Global Engagement

Energy Security

Maximize Conservation

Measured and Flexible Approach

Broad, Equitable Treatment

Enable Technology

Transparency

The final point 'Transparency' is one that the company takes very seriously as they

have been recognized for their openness and accuracy of the carbon reporting. However,

both 'Global Engagement' and 'Broad, Equitable Treatment' discuss sharing the burdens

of global warming across all countries and all industries. There is certainly some virtue in

this, but coming from a major oil company it seems like a way to get others solve the

problem that Chevron has been instrumental in creating.

In their operations, Chevron has focused largely on energy efficiency to reduce their

carbon footprint. Since they started tracking energy efficiency in 1992, the company has

improved energy use per unit of output by 27%.


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This is a big improvement, although one based on a per sales method, not a total use of

energy and thus allows Chevron to meet their targets and still increase their use of fossil

fuels. The company also has extensive cogeneration facilities to improve their carbon

footprint.

The other area that Chevron aims to reduce their carbon footprint is from a reduction in

flaring and the carbon emissions it generates. While an unavoidable part of oil

production, flaring can be better managed to reduce its environmental impact.

Chevron, like most other major companies, has taken some preliminary steps in

expanding their portfolio to include renewable energy. They have taken on projects in

several energy sources including solar power, and they are the largest producer of

geothermal energy in the world, though this remains a small part of overall energy

production.

Chevron is a leader in carbon capture and storage technology and has one of the biggest

projects commencing in Australia that is expected to keep 120 million metric tons of

carbon emissions out of the atmosphere over the life of the project.

More broadly, to fight climate change, Chevron has been public in their stance that the

best options are energy efficiency, carbon capture and storage, and low carbon fuels like

biofuels. They have also said that the Kyoto Protocol asks for too aggressive emissions

cuts too quicklynot the most optimistic or ambitious position!


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REFERENCES:

VISION & VALUES:

http://www.chevron.com/about/chevronway

SWOT ANALYSIS:

http://www.wikiswot.com/SWOT/16_Oil___Gas/Chevron.html

GENERAL STRATEGY OF CHEVRON:

http://www.allbusiness.com/mining/oil-gas-extraction-crude-petroleum-natural/643526-1.html

MAJOR BUSINESS & ENABLING STRATEGIES:

http://www.chevron.com/about/chevronway/strategy

INNOVATION STRATEGY:

http://searchcio.techtarget.com/news/1408129/Innovation-strategies-How-Chevron-drives-ingenuity

IT STRATEGY:

file://localhost/E:/Chevron%20files/Chevron's%20IT%20Strategy%20-%20Forbes.com.mht

SHARED SERVICE STRATEGY:

PUBLISHED IN HROA EUROP, Date: 8 February, 2008

MARKETING & MANUFACTURING STRATEGY:

http://www.chevron.com/about/ourbusiness/refiningmarketingtransportation

OPERATIONAL EXCELLENCE STRATEGY:

http://www.chevron.com/about/operationalexcellence

GREEN STRATEGY:

http://www.cutyourfootprint.com/companyprofiles/chevron.html

chevron - rakshit upadhyay

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