power point final

Introduction

 The paper discusses how the Chevron, an American based multinational company operating in the energy industry, can effectively carry out its operations, to realize business sustainability. The energy industry is highly competitive, especially in the global markets, and therefore, the participants are required to adopt effective business-level strategies. Key elements to be covered in the paper include; analysis of the business-level strategies and Corporate-Level Strategies of the firm and proposal of the strategies that I think are the most appropriate in the company’s long-term success. The paper will also look into the competitive environment to determine the greatest competitor to the firm. The final consideration will be the market cycles, and whether the made choice of strategy will differ under slow and fast-cycle markets.

Business-Level Strategies

Chevron long term sustainability in the business is mainly based on its focused differentiation within a small market niche. The company identifies the market segments to offer its products, based on its interests, organizational goals and mission. Its main market segment is small businesses, who consume its products. The business strategy has been critical in promoting inclusive market environment, as it does help not only the company but also the small suppliers. Differentiation is further enhanced by targeting specific age groups. For instance, the company targets for educational purposes only and views students at the college levels as potential customers for its products. The business strategy adopted by this company has been effective in creating adequate product awareness at the market place. Through the differentiation strategy, the company has been able to establish a positive business relationship with local and small businesses, and they trust that the company offer quality and safe products.

Differentiation strategy adopted by the Chevron Corporation is ideal for its long-term business sustainability, as it creates customer loyalty. Customers form the backbone of businesses, as sales must be made for profits to be realized. Chevron has created a large pool of loyal customers, which guarantee a regular flow of income to the company. The revenues can be used in funding business operations and facilitating further expansion or growth.

Chevron does not experience any issues in executing its business-level strategy, as it has got the capability to do so. It has an adequate resource base, which funds the marketing campaigns, ensuring that the smallest targeted markets have been served effectively. Again, the company has got an experienced marketing team, who interact with the customers positively, thus creating a good relationship. It is through such positive relationships with the customers that the company has secured a significant market share and high sales. It is quite difficult for other firms to get market share in areas where Chevron has won (Chevron Corporation, 2020).

Corporate-Level Strategies

The corporate level strategy adopted by the Chevron is an expansion strategy, mainly focusing on concentration. Under the concentration expansion strategy, a firm focuses on directing the organizational resources, towards attaining specific goals. In the case of Chevron, the company is after achieving huge financial growth, disciplined or sound spending and increasing its production. Such targets are expected to have materialized within a span of five years.

The expansion strategy will have a significant effect on the company’s future sustainability, considering that it will increase its market share and revenues. The idea of increasing production results in large economies of scale, which will have got the benefit of reducing the production cost per unit. The lower the production costs, the higher the firm’s profitability. Chevron stands to benefit from significant business growth, based on the adopted corporate-level strategy. I believe that Chevron has adopted an effective corporate strategy, which will enable it to have a better position at the market in future when compared to its rivals.

Chevron has the necessary capacity for ensuring that the business expansion strategy has been executed successfully. It has got huge resource endowment, which will fund the business expansion needs. The company has got an effective management team, hence the key reason behind its success at the market. The management has got the capacity of making sure that the organizational resources have been allocated wisely and effectively utilized, towards realizing the expansion plans. Besides, the team will be able to manage the expanded business, as it has got the capability and experience (Chevron Corporation, 2020).

Competitive Environment

The energy industry is highly competitive, and that possesses a threat to Chevron’s success at the market and executing its business and corporate-level strategies. The greatest rival to Chevron Corporation is the Exxon Mobil. The company has remained to be the greatest competitor to the Chevron Corporation because the two seem to operate on under similar business and corporate strategies.

In the case of business-level strategy, Chevron Corporation focuses on serving the needs of small markets and suppliers, hence forming the basis of expanding to larger markets (Chevron Corporation. (2020). Exxon Mobil also uses a similar strategy. The company has invested heavily in technology and creating positive relationships with the communities it serves, in the process of trying to achieve global prosperity (Exxon Mobil Corporation, 2020). The two companies have established loyal customers to almost the same extent.

Concerning the corporate level strategy, even although the two companies have adopted an expansion strategy, Chevron has mainly focused on expanding its production and growing financial returns. In the case of Exxon Mobil, the main company focus is realizing a greater market share by going global (Exxon Mobil Corporation, 2020). The two companies have been differentiated by the corporate level strategy, which is ideal in determining the long-term business sustainability of growth. Comparing the two companies, Exxon Mobil is most likely to be successful in the future. Business success mainly depends on the market share and the number of customers served. Exxon Mobil is most likely to realize huge market share globally, hence generating large amounts of revenues when compared to the Chevron. The higher the market served, the higher the sales, and cost-saving arising from economies of scale (large scale operations). Not unless Chevron adopts effective corporate-level strategy, it will not be able to compete effectively with its rival, Exxon Mobile, in the coming years.

Market Cycles

 A slow market cycle occurs where resources have been shielded, and the concerned company maintains high monopoly levels at the market place, in such that the competitive pressures are put under adequate control (prevents competitors from joining the market). The fast cycle markets are the exact reverse of the slow market, as the markets are normally characterized by highly competitive pressures. To survive in the market, companies are required to remain innovative and effectively track the business strategies adopted by competitors. Companies are also required to identify new market gaps and serve them effectively (Hitt, Ireland, & Hoskisson, 2020).

In my choice under the competitive environment, I have argued that Exxon Mobil, which is after going global, will be more competitive than Chevron, which is focusing on financial growth and increasing production. The business-level strategies do not differentiate the two companies, with respect to the future, as they have got similar strategies.  

In the case of a slow market cycle, even although the two companies stand to grow at the same rate due to lack of competition, still Exxon Mobil will be better off. The company will easily cover a large global market, hence generating high sales. The difference between the two companies will be on the size of the market served. My choice will still remain the same. Under the fast market cycle, the choice will also remain unchanged. Both companies will be facing similar threats at the market (competition pressures), which inhibit their expansion plans.

However, Exxon Mobil has got an advantage over its rival, Chevron Corporation. The global market will provide huge business opportunities, which the firm can tap and make the best out of it. Chevrolet will face stiff competition at its limited market. In the end, irrespective of the state of the market cycles, Exxon Mobil will perform better than the Chevron Corporation. Such observation tells us that the long-term growth of business mainly depends on the adopted business level and corporate strategies.

Sources

1. Hitt, Ireland, & Hoskisson. 2020. Strategic management: Concepts and Cases: Competitiveness and globalization (13th ed.). Mason, OH: South-Western Cengage Learning