Introduction
Chevron Corporation is among the top-ranked energy companies globally, with headquarters in San Ramon, California. It was founded in 1870 as a successor of the Standard Oil Company. The company mostly deals in oil and gas products with an international presence in the market’s value chain. Moreover, the corporation’s operations are categorized into two components: the downstream and upstream units. The downstream part of its business includes the production of petroleum products from the refining of crude oil, the selling and marketing of crude oil as well as its refined products, the production and marketing of fuel, petrochemical and lubricant additives, and the transportation of refined products and crude oil using pipelines, motor equipment, and marine vessel unit. On the other hand, the upstream unit of operations involves mainly the exploration, production, and development of natural gas and crude oil, including the liquefaction, processing, regasification, and transportation of crude oil (Chevron, 2022a). Additionally, the upstream unit deals with the storage, marketing, transportation, and selling of natural gas and moving crude oil using the major global oil export pipelines.
Summary of the Strengths and Weaknesses
Strengths
One of the strengths of the company is that it has a very strong market presence globally. Chevron Corporation operates in over 180 countries, including the United States, South Africa, Russia, Canada, Brazil, Denmark, Russia, China, Arabia, Congo, Nigeria, Brazil, and Norway, among others. This global presence widens its market scope, which in turn increases the market for the selling and production of its products, thereby increasing company revenue. In addition, the company possesses a broad variety of products ranging from fuels, base oils, additives, and marine oils. Its product range enables the company to maintain its competitive advantage against its rivals while maintaining its performance. Moreover, the company is able to completely integrate its products from manufacturing refineries, distribution, and selling products. This strength warrants the completeness of every component of the value chain process. Lastly, Chevron has a big and solid global brand value of 14588 million dollars in its market (Sonnichsen, 2022). This helps with product recognition universally, enhancing its competitive advantage and increasing company revenue.
Weaknesses
One of the weaknesses of Chevron Corporation is that it has been faced with many legal problems that have the capability of damaging the company’s brand reputation. The company has been actively associated with several illegal actions and legal proceedings, one of which the United States Environmental Protection Agency (EPA) fined the company. In addition, the company was suspended for breaking the law by not disclosing excessive emissions to Mexico. Another weakness is that Chevron is globally regarded as one of the most polluting oil and gas companies. This brings forth more legal challenges due to the need for occupational safety and environmental protection, which can severely affect its reputation, leading to a decline in company performance and income revenue. Furthermore, the company is faced with strong government policies and regulations, which hinder efficiency in its operations. Lastly, Chevron has encountered increasing debts, with a standing debt of 31,369 million dollars in 2021 (Chevron, 2022b). The increasing amount of debt disrupts the cash flow in the organization, which enhances business risk.
Present Opportunities for Adding Value
The pollution caused by many energy companies, together with the need for occupational safety and environmental protection, has initiated an increase in the global demand for renewable energy sources and natural gas. This creates a significant opportunity for Chevron, considering the company already has an ongoing plan to dominate the renewable energy and natural gas market. This follows the fact that Chevron has become one of the leading producers of geothermal energy. Moreover, the future of a safe environment is entirely reliant on energy companies moving from producing fossil fuels to adopting alternative energy methods such as renewable and natural sources of energy and gas. The shift to safer options ensures the sustainability of a clean atmosphere and diverse ecosystems (Gielen et al., 2019). Moreover, this will increase company income revenue as many countries are looking forward to investing in renewable energy.
Moreover, fossil fuels create harmful by-products that can severely cause harm to the surrounding ecosystems, atmosphere, and populations. First, energy companies such as Chevron Corporation have largely contributed to the significant release of greenhouse gases into the immediate atmosphere following their operations in the production and distribution of fossil fuels. The emission of greenhouse gases into the open atmosphere, including carbon dioxide, methane gas, and nitrous oxide, increases the risks of strengthening the greenhouse effect, which can result in significant climate change. Climate change due to the greenhouse effect is caused by the trapping of heat, leading to global warming (Perera, 2017). In addition, the emissions from fossil fuels lead to the creation of acid rain due to the mixing of sulfur dioxide and nitrogen oxides with oxygen and water. The acid rain produced results in severe environmental pollution and destroys existing water ecosystems.
In addition, the shift to renewable energy sources can be caused by the fluctuating prices of fossil fuels. The change in fossil fuel prices is mainly caused by the changes in demand and supply and geographical tensions. This is because most consumers are looking for energy alternatives that are cheaper to produce locally and have the capability to effectively protect their immediate environment from pollution and climate change. This follows the fact that renewable sources of energy do not emit greenhouse gases that could result in a greenhouse effect as well as global warming (Gielen et al., 2019). Moreover, using renewable sources helps stabilize energy prices by providing affordable energy. Furthermore, renewable and natural sources provide a constant and vast energy supply as they are easily replenished. Therefore, changing to renewable energy ensures adequate production of energy without polluting the environment and at a cheaper price.
Opportunities to Add Economic Value
Expansion
Expansion can be a great opportunity for Chevron to add its economic value. Global expansion of the company allows room for significant and faster business growth. This is because extending the market scope internationally enables corporations to reach new audiences and develop new customers that they can use to market and sell their products (Steinbruch et al., 2020). Moreover, new markets allow Chevron to gain reach or easily gain access to other countries within the open borders. Furthermore, expansion gives companies opportunities to reach local talent with diverse backgrounds that can help adequately market their products to increase company revenue. This is because the company will be able to acquire new talents with specific or unique skills that can help enhance its performance. The unique and diverse skills will help the company meet customer needs while enhancing its competitive edge to promote organizational performance through innovation, creativity, and effective problem-solving.
Corporate Social Responsibility
Corporate social responsibility activities are a great opportunity that can help enhance social value. This is because CSR activities help Chevron engage better with its consumers by directly interacting with them. In addition, CSR activities enable the corporation to gain direct feedback from its customers, which will help it learn what the company will need to improve on to meet its clients’ preferences and tastes. Following this, the corporation will be able to increase customer loyalty and retention. Moreover, corporate social responsibility gives the company the opportunity to reach potential customers to be able to increase its product sales. Furthermore, CSR activities in the company help enhance brand perception among its customers (Newman et al., 2020). This follows the fact that these activities portray the corporation as a positive force in the community. This will make customers develop trust in the organization’s brand as well as preserve and enhance its reputation. As a result, the company will be able to increase its product sales, which will result in high-income revenue, creating economic value.
Opportunity to Add Social Value
Corporate Social Responsibility
Corporate social responsibility activities are a way of investing in educating the community and society at large. This is because education plays a significant role in promoting societal progress via the development of the social structure. The contribution of CSR activities lies in corporations’ giving scholarships to the community to enhance the quality of education in society. In addition, CSR activities help provide supportive materials and growth activities to society that can help improve the quality of life (Mahmud et al., 2020). This helps communicate a company’s responsibility to society in improving the social standards of the community, hence creating social value (Pfajfar et al., 2022). In addition, company employees can use their skills in volunteer activities to help educate and strengthen the communities in which the company operates, thereby creating value in the community.
Opportunity to Add Environmental Value
Production of Lower Carbon Fuels
Production of lower carbon fuels is an opportunity that Chevron can implement to efficiently add environmental value. This is because the environment can be effectively protected from pollution if the company is able to provide cleaner, reliable, and affordable energy, which can start by producing lower carbon fuels. This can be beneficial to environmental safety, considering Chevron has already begun its energy transition with an objective to decrease its product carbon intensity, which will support climate change policy as a risk management strategy (Luderer et al., 2019). One way the company has done this is by purchasing the 65-megawatt wind power in the Permian Basin to enable the production of electricity from renewable sources, which helps optimize the self-generated power. For this reason, the company will be able to limit direct as well as indirect emissions that arise from its operations and help inhibit the life cycle of the carbon intensity of its products. Moreover, the company can focus on combining solutions for the storage of energy with lower-carbon fuel products.
Recommendation
Chevron should consider pursuing its goal of producing products with lower carbon intensity. This is because the company will be able to enhance environmental safety while keeping up with the rising demands for cleaner yet affordable energy. With the production of lower carbon products, it will be difficult for other energy companies to imitate due to the high cost of production, storage, refinement, and installation process. Furthermore, replicating fossil fuels’ qualities, such as their energy intensity and their capability to produce high heat, is a huge task. For this reason, the company will need to rely on low-carbon fuels to mimic these qualities and help acquire product differentiation and gain a competitive advantage. This innovative solution in delivering a future with low-carbon products will allow the company to gain a competitive edge while addressing the problem of climate change caused by the production and use of fossil fuels. This can be effectively done by taking advantage of its partnerships and extensive capabilities.
Conclusion
Moreover, it discussed a recommended opportunity that would allow the company to gain a competitive advantage against its rivals. The company’s strengths include its wide range of product portfolio, strong global presence, complete integration process, and solid global brand value. Its weaknesses include the company’s experience with legal problems, hard and strong regulations and policies, increasing debts, and environmental pollution. Shifting to renewable energy has shown to present an opportunity for Chevron to add value by reducing pollution and providing steady and affordable energy sources. Corporate social responsibility and global expansion proved to have the capability of adding economic value. Additionally, the paper showed how CSR activities could be used as an opportunity to add social value. Furthermore, the production and transition to low-carbon fuels presented an opportunity to promote and facilitate environmental value. Lastly, Chevron should consider investing in energy products that exhibit low carbon intensity to ensure that the company is able to maintain its competitive edge.
References
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Chevron. (2022b). 2021 supplement to the annual report. Web.
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