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Chevron Corporation 2009 Case Solution


Chevron is an American based multinational vitality organization, built up in 1879. After different mergers and obtaining, in 1984, the organization was named Chevron Corporation. From that point forward, it has obtained two noteworthy organizations Texaco and NGDC Corporation. Chevron Corporation is perceived as a one of the huge five oil organizations on the planet principally due to its worldwide nearness and solid budgetary condition. Different organizations incorporated into huge five incorporate Exxon Mobil, British Petroleum, Royal Dutch Shell, and ConocoPhillips. But ConocoPhillips, all the staying four organizations have their nearness in about hundred organizations around the world. Furthermore, they have assets in practically every landmass of the world. Each of these organizations has their own focused position in the market. This review is composed from the point of view of Chevron Corporation with the end goal of breaking down its aggressive position, its present procedures, and destinations. The center vision of the organization is to end up distinctly the most appreciated organization as for its kin, accomplices, and execution.

Financial Analysis 
While the financial ratios calculated for Chevron outperform the industry average and the S&P, they were still slightly lower than past performances. The lower results were a result of a poor U.S. economy and an overall slow economic growth worldwide. Although the results in 2008 were lower than previous years, Chevron was still had the capacity to execute its operational strategies. 

The Internal Factor Evaluation (IFE) Matrix

The Internal Factor Evaluation allows us to evaluate the company as it refers to its internal strengths and weaknesses. The value of a variable can be assigned a 1-4, which gives a mean of 2.5. The higher the number, the better the internal situation is. Chevron has an IFE value of 3.10, which suggest that it is better, then the mean. Chevron is geographical diversity and strong distribution system put it in a position to capitalize on the growing demand for oil in developing nation and helps give it a high IFE value. While Chevron will benefit from growing demand in developing nations, it still faces threats from negative public perceptions and hostile governments, as such is the case with Ecuador who in 1992 filed and won a law suit in the billions of dollars against Chevron for damages to the Amazon caused by Texaco which it acquired in 2001. 

External Analysis

Economic Forces
The economic downturn in 2008 has affected Chevron's profits as oil prices increased, forcing already cash strapped consumer to consume less fuel. 

While profits in the U.S. slowed down, Chevron was able to profit from developing nation demand for oil and benefited greatly as the largest private oil provider in Kazakhstan. 

Social, Cultural, Demographic and Environmental Forces
Negative public image within the oil industry, particularly after the BP disaster, can greatly affect Chevron's profits and overall perception. While this perception may slightly hurt Chevron, growing demand in oil along with reputation marketing can prove to be more influential in developing nations worldwide. Chevron's merger with NGC corporation in the area of natural gas and acquisition of Unocal, the largest producer of geothermal energy, have position Chevron to be a leader in providing alternative energy as the demand grows for cleaner and safer energy. 

Political, Governmental and Legal Forces
New fuel economy regulations, the U.S. looking to close tax loophole for oil companies and increase taxes will affect profits. Strong environmental laws will also affect future oil drilling projects worldwide as Chevron looks for new oil deposits to combat decreasing oil reserves.

Technological Forces
Growing social media sites on the internet will play a key role in reputation marketing for Chevron. This will be beneficial in gaining public and governmental support of future projects in order to sustain Chevron's profits. New technology in drilling equipment will help keep environment safe and intact. Chevron also uses drill ships, which allow drilling in various places without having to build oil rigs through the world. 

Competitive Forces
Chevron is considered one of the Big Five, along with ExxonMobil, BP, Shell and ConocoPhillips. While Exxon is the largest publicly traded in the world and earned a record net income in 2008 of $45.2 billion, Chevron had a 106 percent replacement through exploration ratio, approximately 40 percent higher than its nearest competitor. They have also accomplished this with the lowest exploration cost in the industry, this is an important skill as commodity prices fall, affecting overall profits. As Chevron's competitors are reducing investment in renewable energy supplies, Chevron spent $3.2 billion in 2002 and plans to spend an additional $2.7 billion in renewable energy over the next three years.

Chevron has a value of 3.15 is above the average of 2.5. Chevron can greatly benefit from several external opportunities. The most immediate is the increasing demand from Chinese consumers as well as other emerging markets throughout the world. Also as the U.S. economy grows increase demand for oil will increase as people began to purchase more cars and businesses begin to grow. The increasing call for alternative fuels will also work to Chevron advantage. While Chevron is position to take advantage of many of these opportunities however, it still faces threats from stiffer taxes and environmental constraints, which together will affect both profits and oil exploration.

Competitive Profile Matrix
Chevron  Shell Exxon

The Competitive Profile matrix puts Chevron slightly ahead of Exxon and well ahead of Shell. This is a result of Chevron's global presence, inventory and strong financial position, as well as a strong management structure. Overall Chevron performed well in all areas, giving it a strong competitive profile. 

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