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According to Rutledge (2006), Chevron Corporation is one of the world largest energy companies in the oil and gas industry. It has its headquarters in America and conducts business in various parts of the world. Chevron deals in petroleum products, chemical products, mining, power generation, and energy services. The company was formed in 1879 under the name Pacific Coast Oil Company. Later on, the company changed its name to Standard Oil Company and subsequently, with the acquisition of Gulf Oil Corporation in 1984, to Chevron Corporation.
Considering the current trend of globalization in business, over the years, the company has conducted its business by expanding to other parts of the world. Bertho (2008), states that globalization has enabled the company to obtain more customers for its products since it is able to market and trade the products to the whole world. Through globalization, the company has also learned new methods of production from the fellow foreign competitors since there are a lot of interactions in the market. He further states that the demand for the company’s products has risen because of the large number of customers and this has led to proper use of the natural oil resources, so that the available resources are conservatively used. With globalization, various talents have been integrated into the company’s activities since employees of different experiences have been drawn from all over the world.
Inkpen & Moffett (2011) notes that globalization has also enabled the spread of risk of loss over a wide area. This is because the company covers various areas with different market trends; therefore, making it possible to compensate losses incurred in one particular market with the returns from the other successful markets. Since the company serves both foreign and domestic markets, its products’ qualities and services have been greatly improved enabling it to thrive well in the highly competitive environment. Globalization has also led to the growth of information and communication technology in the company since the company has to communicate properly and effectively to the outside market. Finally, globalization has also enabled many investors from all over the world to invest their money in the company and hence helping the company meet its capital requirements.
Modern technology is another important aspect in the world business today, which has been embraced by Chevron Corporation in performing its activities. Gaughan (2011) observes that with the use of technology, the company has been able to reduce the number of the human labor and thus saving on cost of labor since the newly invented machines are more efficient and effective. He further notes that technology has also enabled the company to meet the high market demand since the use of machines enhances a faster work execution. The use of technology in production has also led to quality improvement. The machines are very accurate in performing tasks.
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Additionally, Mtsiva (2003) notes that with the introduction of the use information and communication technology in the company, effective communication within the company, the local market, and the foreign market has been achieved. This has been very important to the company. It has got an opportunity to obtain important market information from every part of the world. Mtsiva (2003) further observes that the use of technology has also enabled the company to share production ideas with other firms in the industry without having to travel from one place to the other each and every time. Additionally, technology has also helped improve the transportation of the company products such as refined oil to various destinations through the use of environmental friendly modes such as the underground pipes.
Technology has also been very important in communicating to the potential investors from any part of the world. This is very important since it has enabled the company to get potential investors continuously. They have helped the company meet the capital requirements through the sale of shares. Through the use of advanced technology, more oil reserves have been discovered by the company and hence maintained the raw materials stock needed for production.
According to Hax (2009), technology has also enabled the company to drill the areas which were initially considered risky such as frozen regions, beneath deep waters, and hard terrains by means of technologically flexible drills. For instance, by the development of the three-dimensional seismic drilling method, drilling process has been advanced. Hax (2009) observes that technology has led to the recovery of the oil fields which were initially considered depleted. It has thus extended the lives of the existing oil fields. Technology has also enabled the company to come up with cleaner and tight oil and gas storage systems which have greatly improved protection against environmental pollution.
In order to earn above average returns, the company can adopt both the industrial, organizational model and the resource based model strategies. According to Hit, Ireland & Hoskisson (2011), the Industrial Organization Model strategy is the focus on the industrial, business environment before making business decisions. While resource based strategy provides the business focuses on the internal capabilities and resources which it has before making decisions. To integrate the two, Chevron should try and understand both the internal competitive advantages and the external competitive advantages which it has.
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According to Hit, Ireland & Hoskisson (2011), in order for Chevron to implement the industrial organization model strategy, it should first know who his competitors are and the range of products that they offer. This is helpful for Chevron as it will aid in its choice of the appropriate range of products to produce. In addition, Chevron should try to lower its production costs below the ones for the competitors so as to achieve competitive advantage. Improvement of efficiency in production is another key strategy in trying to gain competitive advantage, because the products will be more preferred in the market. Chevron should also consider merging with some competitors so as to reduce the level of competition in the market and ultimately improve the economies of scale. The company should also seek to modify and package its products in a unique attractive manner so as to entice the customers to buy.
On the other hand, Chevron should also use the resource based strategy in order to thrive well in the market. According to Hit, Ireland & Hoskisson (2011), this is to be done by integrating the use of internal resources, which include capital, equipment, employee skills, and the management competency. Chevron should try and achieve a sustainable competitive advantage by combining its resources and capabilities in a manner that they can not easily be replaced by the competitors. The company should also endeavor to create economic rent; earning a favorable amount of money above the capital employed and not just profits. This can be done through creating a more cost effective production method and avoiding wastage of resources. Another important improvement technique is the continuous creation of balanced business systems. This should be done by employing the production architects who know how to put together and utilize the various factors of production and methods of production.
The persistent success of Chevron Corporation can be directly linked to the commitment to their mission and vision statements. The company’s mission statement states give the company’s foundation which is to build on its values. The value of the company helps by distinguishing and guiding its actions. It is also the company’s mission to conduct its business while ensuring its social and ethical responsibility. The company also holds as its mission the need to respect the law, protect environment, support universal human rights, as well as benefiting the communities it works with. On the other hand, company’s vision statement is to attain the position of being the global energy company whose performance, people and partnership are admirable.
According to Bertho (2008), the mission statement is important to the company since it is a constant reminder to all the stakeholders that their company values are very important for the company’s success. Therefore, it motivates them to work with honesty in all their business deals in order to meet high ethical standards for the prosperity of their business. It also enables them to embrace cultural diversity and the various different talents of the stakeholders which together can be put into production of better products and services. The company’s commitment towards benefiting the communities around them has also enabled them to have good customer relations and hence promoting their sales. And finally, their respect for the law and human rights has also enabled them a peaceful coexistence among the stakeholders and outsiders.
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On the other hand, the company’s vision statement reminds the staff members that their products are very vital in the community and should be of the highest quality possible. Also, it motivates the company stakeholders to maintain good customer relationships since the company wants to be admired for its partnership. Due to the commitment to high performance, the company workers are also encouraged to endeavor to improve its product’s quality and availability continually.
According to Gaughan (2011), Chevron Company has got various stakeholders who also contribute in various ways towards its success. These stakeholders include the government, stock holders, surrounding communities, employees, customers, suppliers, and some of the non governmental organizations such as the research partners.
The government is an important stakeholder since it contributes towards the company’s success by granting the company legal rights to obtain the raw materials, right to do research, and to expand the business into other areas both locally and internationally. On the other hand, the stockholders of the Chevron Company help the company achieve its production activities by providing the necessary capital through the buying of the company shares. They also help in decision making when called upon by the company’s management. Other important stakeholders to the company are the communities around the company’s locations. They assist the company achieve its success by creating an enabling and peaceful environment which is very important for business activities.
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Customers of the firm’s products are the other important stakeholders who provide the market for the company. They are the ones who buy products of the company and hence helping the company to earn revenue; which is its motive. Other key stakeholders of the company are the employees. The company’s employees assist the company in the production processes and hence making the products available for customers. Suppliers are also important to the company as stakeholders since they are the ones who provide the raw materials for the production of the company’s commodities.
Additionally, Gaughan (2011) notes that research partners are also one of the stakeholders who lead to the company’s success since they assist the company in discovery of new mineral deposits and even in inventing new production methods. Finally, he states that the company has the management team which acts on behalf of the shareholders. The management team is the body that acts as the agents to the company owners. Their work is to ensure that everything is running smoothly by controlling all the company operations. They are also the ones to remind the employees and the other stakeholders of the company’s mission and vision for continuous commitment to the statements by motivating them.
In conclusion, it is worth noting that in order for a business company to compete favorably, it has to combine various management strategies and include the stakeholders in decision making where necessary.