Chevron Corporation Business and Corporate Level Strategies

free essayChevron Corporation is a multinational corporation that engages itself with international business operations and activities in the global vast energy industry. Chevron Corporation is the American company, and it is headquartered in San Ramon, California. It is one of the biggest companies in the world, both in terms of revenue and market capitalization, since it is a publicly traded company. Moreover, it forms a part of the large six energy, oil and gas companies that control the global energy industry. Among the main products that Chevron Corporation produces and sells to customers all over the world are the different kinds of petrochemicals, oil fuels, gas and also various types of lubricants. In terms of the employment, Chevron Corporation provides work for approximately 64, 600 individuals all over the world, given its active business operations and activities take place in over 180 countries globally (“Who are the major players supplying the world oil market?”, 2013).

It is such kind of spread and reach that has made Chevron Corporation a successful and huge energy, gas and oil multinational corporation, such that the energy behemoth has been able to be ranked with the other five most powerful energy, oil and gas multinational corporations such as ExxonMobil Corp, Royal Dutch Shell, British Petroleum Plc among others. The major areas of operations for the energy multinational giant include: Australia, South Africa, the Gulf Coast of the US, South East Asia, South Korea and also the West Coast of the North American region. It is also engaged in the alternative energy production operations, dealing in renewable energy sources such as biofuel, wind energy, solar energy, hydrogen, fuel cells and finally geothermal energy(“Who are the major players supplying the world oil market?”, 2013).

Business Level Strategies Used by Chevron Corporation

Some of the business level strategies that Chevron Corporation uses include the following.

Differentiation of Products

This business level strategy has been widely used by Chevron Corporation, and it has enabled the energy giant to differentiate its fuels, lubricants and petrochemical products. The differentiation is a business level strategy that refers to the process taken by different business companies and organizations in an attempt to distinguish their products and services from those of their competitors and rivals and consequently make them more attractive to customers all over the market. This particular strategy has assisted the oil and gas giant to create good value for its various products through the production of high quality products, management of the company’s image, high customer service, use of the advanced technology in its operations and also a rapid innovation for its products. This strategy has also enabled the energy giant to lower the products’ cost, while simultaneously increasing the buyer’s enjoyment and products’ performance. Furthermore, the corporation’s products have been able to gain a substantial competitive advantage over competitors’ products and substitutes. Finally, this strategy has allowed for the energy giant to maintain the customer brand loyalty in the global market despite a constant fierce competition from its key competitors (Falola & Genova, 2005).

Cost Leadership

The cost leadership is a business level strategy that refers to efforts by business companies and organizations to lower their goods and products’ costs in an attempt to outdo their business competitors and rivals. Chevron Corporation has used the cost leadership strategy to secure and maintain for itself a substantial size of the American domestic and also the global energy industry. Through the lowering its product prices, the energy giant has succeeded to gain a considerable cost advantage over some of its significant energy rivals as well as to standardize most of its energy products, thereby increasing its global share of the international market. By maintaining a tight and firm control over the production process of its different products and also the overhead costs, Chevron Corporation has been able to act as a cost leader. This particular business strategy has also assisted Chevron Corporation to remain highly profitable for many years even though it faces a stiff competition from rivals in the American and global energy industry. Furthermore, it has ensured that Chevron Corporation has the ability to absorb suppliers’ price increases, thus, it has not been heavily impacted by raw materials price increases. Through the cost reduction and efficient operations, Chevron Corporation has been able to act as a barrier to entry into the American and the global energy industry (Baker, 2006).

Therefore, the most significant business level strategy that can ensure Chevron Corporation achieves long-term success is the cost leadership business level strategy. This is because of the many various merits that being a global and domestic cost leader in the energy industry has availed to the energy giant. Such merits comprise cost advantages over rivals and competitors, increased profitability levels, absorption of increased supplier prices, expanding the market share and customer brand loyalty, etc. This is a good choice of a business level strategy, and it will guarantee long-term profitability and success for Chevron Corporation’s operations and activities (Falola & Genova, 2005).

Corporate Level Strategies Used by Chevron Corporation

Corporate level strategies refer to strategies that various business enterprises and organizations usually carry out to enable them to provide strategic direction as well as a scope to the management process of the business firm. Consequently, the business enterprise or organization will have the ability to attain its numerous objectives and goals, as well as the company’s mission and vision. Among the corporate level strategies that Chevron Corporation uses are the following.

Diversification of Macroeconomic and Operational Risks

This is a corporate level strategy that different business companies and enterprises usually employ, particularly those firms with the excessive amount of resources in terms of both capital resources and human resources. Chevron Corporation has used this particular corporate level strategy for many years to enable it fine tune and get the maximum output from its corporate operations and activities (Baker, 2006).

Transferring of Core Competencies

The transferring of the core competencies of a given business company or organization is one of significant corporate level strategies that different business firms usually employ to improve their corporate activities and operations. Core competencies refer to areas of operation that a firm excels in far beyond its biggest rivals and competitors, thus enabling it to increase its value to consumers. Core competencies normally derive from a unique skill set, modern techniques of production and innovation, as well as the production, distribution and sale of a firm’s products. Being a multinational business corporation, Chevron Corporation has for some time employed this specific corporate level strategy within the structure of the entire firm, from the domestic American offices and manufacturing plants to the international ones, too. This has greatly improved the sales force, the logistical networks and also the distribution channels of the energy global giant; hence the company’s business activities and operations have been strengthened. Moreover, this particular corporate level strategy has enabled the energy firm to restructure its different business activities and operations, resulting in increased efficiency (Falola & Genova, 2005).

In this context, the corporate level strategy that has the capability of guaranteeing that Chevron Corporation achieves long-term success, growth and profitability is the transferring of the energy multinational giant’s core competencies. This is because some of the core competencies can be reused, which makes it very difficult for business rivals and competitors to copy or imitate the aforesaid competencies. Furthermore, the competencies increase the values of the products that Chevron Corporation produces on the end of the energy multinational’s customers all over the globe (Baker, 2006).

Competitive Environment Surrounding Chevron Corporation

Chevron Corporation undertakes its business activities and operations in an increasingly competitive global business environment, since the global energy industry is made up of other large and successful multinational corporations, known as the “super six” energy companies, among which is Chevron Corporation. All these super six energy multinationals are jostling for the profitability and the energy market share in the globe. Some of the major rivals and competitors that Chevron Corporation has to contend with in the domestic American as well as the global energy industry include ExxonMobil Corp., the Royal Dutch Shell Plc., British Petroleum Plc., Total SA Energy Corporation and ConocoPhillips Company. All the aforesaid energy corporations also use the business level strategies of the focused differentiation/low-cost, cost leadership, and the differentiation of products with varying degrees, intensity and success. In terms of the corporate level strategies, the aforementioned major competitors of Chevron Corporation also utilize those strategies used by Chevron Corporation such as the macroeconomic/operational risks diversification as well as the transferring of their core competencies (Baker, 2006).

In this sense, because of the amount of capital and human resources at their disposal, as well as the skilled workers, the Royal Dutch Shell Plc. and ExxonMobil Corp are the two energy multinational corporations with the best possibility of attaining long-term success at the helm of the global and domestic energy industry. However, due to the substantial global market share and the ever increasing demand for energy products, such as petrochemicals, fuels and lubricants, the other members of the “super six”, like Chevron Corporation, have the unique opportunity of sustained growth, development and profitability in the global energy industry (Baker, 2006).

Chevron Corporation’s Competition in Relation to Slow/Fast Cycle Markets

Slow cycle markets are business markets that regularly experience business cycles, characterized by low levels of the market volatility and low trade volumes, as a result, trade activities are not carried out in a faster way. On the other hand, fast cycle markets refer to those business markets that regularly experience business cycles characterized by high levels of the market volatility in terms of the speed of business activities and also high volumes of trade. In slow cycle markets, the choice of the Royal Dutch Shell Plc. and ExxonMobil Corp. would differ as these two energy giants heavily rely on the market volatility and trade volumes to be able to gain a meaningful profit from their various energy products. Conversely, their long term profitability and success would not differ in a fast cycle market, as is the current global energy industry, where the trade volume is relatively high and the execution of business activities and operations is very speedy (Energy in Brief, 2013).