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    Oil Industry Essay (7099 words)

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    The oil industry can not be discussed without mentioning the name John D. Rockefeller. Rockefeller changed the business of oil distribution. In the 19th century Rockefeller began his humble beginnings with a small investment, along with two other partners, in the oil refining business. Eventually Rockefeller upset at the direction of the company bought out his partners.

    He was now buying into refining and developing kerosene and other petroleum-based products. He later named this company The Standard Oil Company which by 1872 nearly owned all the oil refineries in Cleveland. In 1882, Rockefeller took all his holdings and merged them into the Standard Oil Trust. Through smart business practices and some deception, Rockefeller was able to control three-fourths of the petroleum industry by the 1900’s. After his retirement the company faced problems. (Rockefeller archive) The U.

    S. government believed that the Standard Oil Trust was a monopoly and ordered its breakup much like the process that is taking place today with Microsoft. With the government eventually breaking up the trust into thirty-eight companies, the world of petroleum products was about to change. Few companies could survive.

    They lacked focus and sustainability, basically they needed a strategic plan. When first broken up the companies needed to sever from their Standard ties while remaining a brand name that people recognized. With so much competition one company had to find an edge over the other. They needed to be the low-cost leader in the industry. Out of this struggle is where three of the biggest oil companies emerged.

    They are Exxon, Mobil and Chevron. With the breakup of the Standard Oil Trust also came a great opportunity for a foreign company to compete. Though Europe was battling some of the same problems that Standard Oil had, a few companies were able to break into the U. S market.

    Though it took many years to get in British Petroleum was able to start with a selective group of stations and build from there. BP, Chevron, and ExxonMobile today make up three of the biggest in the oil industry. (Chevron Official Website)These three companies have all been created by many purchases and mergers over the last hundred years and must be described to have a better understanding. It was the demand for low oil prices, convenience, and superior quality that led to the companies tremendous growth in the last century.

    Out of the Standard Oil Trust breakup came two companies named Standard Oil of New Jersey and Standard Oil of New York otherwise known as Sonoco. Since they were not allowed to use the Standard name in territories given to the other breakup companies they had to change the name of their brand. They would market their gas under the name Esso and Mobilgas with the Standard label still displayed on their signs. With this increased competition Jersey Standard and Socony were forced to focus on quality and a low cost. To achieve this low cost they purchased interests in overseas oil mostly in the Middle East. Both these companies also were able to compete in overseas markets in Europe and Asia.

    With the take off of the car, the gasoline industry was booming. Both suffered from fierce competition. However Jersey and Socony had a greater ability to build up their resources. They used their interests in the Middle East to become a low cost producer as well as increase production with pipelines and expansion.

    (ExxonMobil Official Website) Jersey Standard realized early on to stay in this industry it was going to have to be competitive in every market. They built the company up through mergers and large acquisitions. They bought over fifty percent interests in a competitor named Humble Oil, a Texas’ company. This increased their contacts with suppliers because Humble had a series of pipelines and was a huge transporter of oil. They also had many oil refineries in Texas.

    Socony was able to merge with an original Standard Oil Trust company named Vacuum. This helped their brand because it was able to not only merge with a competitor but lessen the number of companies using the Standard name. They marketed their Mobilgas in Vacuum properties and the brand symbol became the red wing horse. Both companies struggled in distribution. They both had plenty of interests in oil fields outside the U. S.

    but very few markets there. Jersey and Sucony decided on a fifty- fifty joint venture in about fifty countries. This marked the first time these companies worked together since the days of the Standard Oil Trust. By 1935 though expansion abroad was decreasing with the rise of WWII. The companies were forced to focus on supplying the Allied war effort.

    Jersey Standard focused on differentiating itself with their new technology of boosting fuel octane. With the ability to test such technologies in the military the Jersey Company was able to grow at a rapid rate. These technologies were introduced to the market at a tremendous success. This increased the revenues at Jersey, which also increased their reputation as being a quality brand. They were selling their gas at a lower cost then any other competitor with their new technologies.

    Jersey started advertising on TV for the first time. They developed a mascot that was to been seen at every Jersey/Esso station around the world. This mascot was a tiger. People were able to identify the Jersey/Esso name by the tiger for the first time.

    They achieved brand recognition. Socony achieved technological success too as well. They created new synthetic lubricants. These technologies help them increase their product line. They now had something other competitors didn’t have. Socony focused on their new products to achieve a cost advantage.

    They had achieved product differences from their competitor while discovering brand identity. Sucony started using their mascot on more advertisements. The red winged horse soon would identify them. After the war the companies focused on their foreign markets more. In addition, they started finding new ways to use oil and oil BI-products. Both companies developed chemicals with new technologies.

    Socony created a chemical company called Mobil Chemical Company in 1963. With this new company Sucony became the first to produce such products. This gave them low costs to establishing the brand since they were first. Jersey was not far behind with their chemical company in 1965, the Exxon Chemical Company.

    Both chemical companies dealt with such products as olefins, aromatics, polyethylene and process fluids. They both had manufacturing locations in several countries, which increased their buyer power, and they were able to be closer to some of their suppliers. In 1966 the Socony-Vaccum Company changed its name to Mobil Oil Co. and Mobil Oil become its wholly owned subsidiary.

    Jersey followed suit with the change of their name in 1972 to Exxon in the U. S. and foreign markets to Esso. With the change of their name both companies where able to tie all the mergers and acquisitions under one name. This in turn would help their brand identity. (ExxonMobil Official Website)In the 1970’s came the oil embargo of Iran.

    This rocked Exxon and Mobil with rocketed prices and disruption in the companies’ suppliers. Also the companies were not free to develop new products to maintain their competitive advantage. Mobil and Exxon were forced to look for other oil opportunities around the world. They found new oil developments in the Gulf of Mexico as well as Africa and Asia.

    At the end of the embargo and the decade oil was in surplus. Both companies competed with very low costs to the consumer. They both would continue to compete against each other with very low prices. Competitiveness was worldwide now and new costs were arising with expansion. Exxon and Mobil used their new profits to continue to market new products and extend into high growth areas. Today the oil industry has changed rapidly to only a few companies.

    To compete in the markets Exxon and Mobil decided to merge with each other and become the number one oil company in 1998. Both companies’ had massive supplies of oil interests around the world along with its hundreds of markets across the world. They became the number one low cost producers in the world today. ExxonMobil accomplished this by having the most suppliers, the ability to save cost by merging their similar departments together, faster delivery time, and the focus on providing the customer with quality, efficient, low price products. Overall ExxonMobil has shown to have powerful strategies and commands the lead in market share in the oil industry.

    With the new merger ExxonMobil revenue is over 35 billion dollars more then its closest competitor. ExxonMobil has a net income of almost 8 billion dollars in 1999. Though they have had a decrease from a year ago in income they have determined it has come from the rise in crude oil prices. This has little affect on the future, as more then likely crude oil will eventually fall.

    (ExxonMobil Official Website)The Chevron Co. also is a company broken off of the Standard Oil Company. Chevron started out as the Standard Oil Company of California or Socal. Socal was the first oil refining company to have a gas station.

    They made it so customers no longer had to service their car with buckets of gasoline from a dry goods store. Socal developed large tanks of gas with a garden hose to fill your tank. They were also the first to use a rain-blocking canopy, which was the first example of customer amenity. (Chevron Official Website) With increased business, profits took off. More stations where built across the U.

    S. Today there stands over 200,000 stations in the U. S. alone. In 1926 Socal merged with Pacific Oil Company to increase market growth.

    With the merger Socal increased its competitiveness with other companies. Socal used the new capital from the merger to establish Bahrain Petroleum Company where they struck oil in 1932. They also invested in oil discoveries in Saudi Arabia. By 1936 Socal was ready to invest in other parts of the world.

    But they needed help from a competitor. They ventured into a partnership with Texaco, which brought in new markets in Asia, Africa and Europe. Still looking to stay competitive in the oil industry they continued expansion in the Gulf of Mexico and the North Sea after WWII. Through mergers Socal reached across the U. S. and established new markets competing against former Standard Oil Trust companies including Socony and Jersey.

    Socal marketed with the Standard name in its territories but used Chevron name in new acquisitions. (Chevron Official Website) Along the way Socal started to distinguish itself from the rest of the competition. They started adding gardens or fruit markets to attract more customers. They added vending machines to keep the customers occupied while filling up. It took over 8 minutes to fill a tank back then.

    They also provided customers content by washing their windows, checking their oil and maybe even cranking their engine. Eventually their competition caught on and started to duplicate the Socal ideasWith new technologies Socal increased its brand identity and lowered its costs in many markets. Socal later was concerned of not having many markets on northeast side of the U. S.

    coast. So in 1984 Socal bought Gulf Corp. and restructured. Out of the restructuring Socal decided to change all their markets to the Chevron name.

    Markets where Chevron and Gulf competed where sold to BP. Most of these markets are in the southeast. (Chevron Official Website) With the new name and increased market growth Chevron lowered their costs. They gained new suppliers through the acquisitions and have been able to have a competitive advantage with their focus in the northeast.

    Chevron over the years has moved into over twenty-five countries. Many of these countries are where they have their suppliers. They have used these suppliers to supply them with low cost oil, which in turn has provided them the ability to offer their customers low prices. However, Chevron was late in getting into the international market place and does not have as many markets as leader ExxonMobil. Chevron has struggled over the years to compete with Exxon and Mobil and with their merger they faced trouble.

    Chevron knew in order to survive, they were going to have to find away to stay competitive. In 1999 they started talks with rival Texaco about plans for a merger. Today they have come to an agreement to merge and are on their way to a post merger company. This merger could be right in time. Chevron though not failing is clearly suffering in the last few years.

    It is unable to gain market share on ExxonMobil. They have been out sold the last two years buy over 60 billion each year. Their profits are still high but they have been unable to compete with the giant ExxonMobil. Until this merger is complete we have little fact that shows Chevron will ever be able to compete with ExxonMobil. They are by all means stuck in the middle.

    They lack the focus or the market share to compete in today’s oil industry. If they plan at making a run at ExxonMobil they will need this merger with Texaco to give it some life. British Petroleum or BP, based out of Britain, is one of the leading oil and petrochemical companies in the world. A guy named William Knox D’Arcy who had invested in oil interests in Iran at the turn of the century created BP.

    With little skilled workers and working in a country with out a strong government he was faced with many difficulties. It took D’Arcy over 8 years to eventually find oil in Iran. (BP Official Website) This was the beginning of oil exploration in the Middle East. By 1917 D’Arcy was retired and replaced by Charles Greenway as head of the company. Under Greenway BP avoided falling under the dominance of the Royal Dutch-Shell Co.

    But to stay competitive Greenway needed to find new capital and new markets to distribute its oil. Their first big customer was the Royal Navy. The government injected much needed capital into the company. The increase was huge, as the British government would enter WWI and later WWII. Between the two wars BP was able to grow with huge success. They marketed by new methods, which included roadside gas stations instead of cans of gas.

    They also entered into supplying gasoline for airplanes and massive ships. (BP Official Website) BP ended up exploring Canada, Africa and Europe looking for new oil and building new refineries. When Greenway retired in 1923 he released his main strategic goal. He wanted to establish BP as the worlds largest Oil Company but not only in gasoline and oil but also with presence in every phase of oil production. (BP Corp.

    Annual Report, 1999) From this, new products were developed and new chemicals were made. After the war the companies sales and profits had risen tremendously as well as employment and capital expenditure. They also had the largest oil refinery in the world and Iran was the leading oil producing Middle East country. The company decided to expand into more chemicals and spun of the British Hydrocarbon Chemical Co. in 1947.

    But trouble was occurring in the Middle East by 1950’s. The country had gone nationalist in the 50’s and started negotiating the terms of oil use. Eventually BP was no longer able to take oil from Iran. It would take over 3 years before BP was allowed to deal with Iran.

    This was only after a consortium of oil companies came up with a deal with the Iranian government. With the trouble in Iran, BP was forced to find new operations in other countries. They had lost their supply and were severely hurt. They found relief in crude oil deposits in Kuwait and Iraq. They also moved in to the lubricant industry in Dunkirk.

    Years later the company would develop its first multigrade oil. Adding to their list of well-recognized products and expanding their brand. Later though BP success would be in Alaska not the Middle East. They discovered huge amounts of oilfields in the permafrost of Alaska. When they realized what they had they sold interest to an U.

    S. refinery. They sold it to a former Standard Oil Trust company called Sohio or later on Boron. BP invested in the company and had 25% of Sohio’s equity in 1978. Like the other oil companies in the 1970’s BP had shocks of its own.

    They felt the effects of the price of oil in the 70’s too. The world’s economy all felt the effects of this serious oil price increase. The 1970’s also produced the forming of the oil countries to what is known as OPEC. BP lost much of its suppliers to OPEC countries. OPEC took control of production and prices, which caused the crisis.

    BP demand had fallen since the oil crisis and their sales were way down. But BP had an advantage over other competitors because they had invested in countries outside what eventually became OPEC. They had the competitive advantage over others because they earlier focused on Alaska and the North Sea. They invested more then other companies and where able to survive. In 1987 the company made an offer to buy the rest of the Sohio Company for 4.

    7 billion pounds. (BP Official Website) With this purchase they had entered the U. S. market and formed the new company BP America.

    This gave BP access to the biggest market in the world. If BP wanted to compete with the big industries of Exxon, Mobil and Chevron it had to enter the U. S. market. Also on BP side, Sohio had a huge amount of cash flow. BP ended up with one-third of its assets in the U.

    S. BP biggest problem was they needed to diversify because they had entered many new businesses that were holding the company back. Over the years the company had entered the computing industry, mineral industry and its coal industry. These businesses were losing money for BP. The company decided on a new strategy and relied on a core activity.

    They decided on the petroleum and chemical industries. BP started working on its identity. They adopted the color green to represent the company. They developed a trademark shield to be known as the symbol of BP.

    (BP annual report, 1999) The stations in the U. S. started to come under one name and one color. To continue success in the future BP made changes in their organization.

    They relied on a project that would lead them to efficiency and flexibility. One part of the project was an effort to continue growth in the U. S. markets. In 1998 BP announced the biggest industrial merger of its time when they merged with former Standard Oil Trust member Amoco.

    Today the 1999 merger of Exxon and Mobil has replaced that merger. BP and Amoco have merged operations and have developed a joint symbol under the BP/Amoco name. It has not been determined as of yet if BP will drop the Amoco name in the future. With little recognition for BP in the U.

    S. it is unlikely that BP will drop the American name anytime soon. Strategy is not an easy world to define. Its also not a very easy term to describe to someone. But for the interests of corporations in business it has to be defined for them to succeed. Corporations must have a plan of attack, and most know where they want to go.

    Corporations cannot succeed without the help of a strategy. To define strategy I leave it up to three individuals to stress my point: Karl Von Clausewitz, Michael Porter, and Dr. Charles S. V. Telly. Karl Von Clausewitz has said this about strategy:“The strategist must therefore define an aim for the entire operational side of the war that will be in accordance with its purpose” Von Clausewitz is the author of Vom Krieg(On War) in 1832.

    Dr. Micheal Porter, author of such books as Competitive Strategies and Competitive Advantage has this to say:“Essentially, developing a competitive strategy is developing a broad formula for how a business is going to compete, what its goals should be, and what will needed to carry out those goals. ”Dr. Charles S. V.

    Telly defines strategy as:“An ever changing philosphy based on sound economic and financial principles which specifically analyzes the strengths and weaknesses of the corporation, the strengths and weaknesses of the competition, and the changing enviroment, and through various legal means gains a competitive advantage and realizes its goals. ”Strategy is more clearly defined after reading these definitions. What we must take out of these definitions is the clear statement that a corporation must use strategy to become successful and to stay successful. The top down in the corporation must clearly know the strategy and must know their role in the corporation. Without this knowledge of the company’s strategy the company will surely fail. In the beginning of the U.

    S. oil industry it was dominated by one company and it had an unfair advantage against its competitors. It was nearly impossible to enter the market. With the breakup of the Standard Oil Trust we started to see the rejuvenation of competition in the industry.

    The problem is the oil industry is mainly made up of who has the oil supply. As most of the oil supply was already found and being used. It would be hard for a new company to enter the market. Entrance would have to come from buying into existing companies or expanding through mergers. In the early years of the breakup, 38 companies competed against each other, and only the focused could survive.

    For the purpose of clearing up confusions I will use their current names to compare them. Out of the breakup three strong companies survived: Exxon, Mobil and Chevron and one company who bought many Standard Oil companies to reach the U. S. market BP/Amoco.

    Exxon stayed competitive by entering new markets around the country. They started out in the northeast and merged with other former Standard Oils to reach to the south. To stay competitive against Chevron in the west and Mobil in the east Exxon marketed their brand. They created the tiger mascot to improve their identity. They also had superior products to those of their competition. They developed a cheaper more reliant gasoline they became the quickest growing company out of the industry.

    Chevron could do little to catch up. Chevron stayed in contention with its strategic ideas of marketing a service station. They were the first to provide low costs to their customers while others in the industry tried to catch up. Eventually Mobil and Exxon where able to develop their own stations and unique atmospheres to attract customers. What Mobil and Exxon had to their advantage was their linkage and interrelationship between the two. Though they were two different companies at the time they formed a partnership in oversea projects.

    These cost drivers help them keep the bottom line and gain strategic locations in the Middle East. (ExxonMobil Official Website) Chevron on the other hand had very weak partnerships and grew at a much slower rate. But Mobil, Exxon, and Chevron were becoming the leaders in the industry. Few small companies survived in the market and larger firms swallowed them up. Mobil, Exxon, and Chevron all had excellent marketing abilities to become the leaders.

    As the 1990’s approached the two American companies had a new competitor in the British company BP. BP launched an attack on the American oil companies with buying up other U. S. oil companies. BP determined the only way to enter the U.

    S. market was to buy into it. They were not going to be able to start of their own name. BP wasn’t a recognizable name or product. So they bought up Gulf, Arco and later Amoco.

    This gave them the brand identity they needed. With the right marketing these companies could have come together and be strong for BP. But the problem with BP is they lacked the ability to tie these companies together. BP never really has established stable ground in the U.

    S. and in turn that is why they are number three in the U. S. oil markets. But in recent years they have seemed to establish their identity and are growing faster now.

    Without new product lines these companies could not stay competitive. BP has stayed highly competitive by pushing their natural gas products. They emphasis their natural gas more then the other companies. They know they are not going to be able to compete in the gasoline business in the U. S.

    as much as ExxonMobil and Chevron. So they have used their advantages in natural gases to help them. They have taken full advantage of gas increases by offering customers price locks on natural gas. (BP Official Website)The customer locks in at price and BP guarantees that price. The other companies are not concerned as much with natural gas and have not adjusted to this new trend. BP also has been able to lock in their suppliers with long term purchasing, scheduling, imbalance and aggregation.

    This has put BP at an advantage over Chevron and ExxonMobil in natural gas. Exxon Mobil has not taken this approach but has concentrated on production of targeting the most crude oil they can pull out a day. They want to be the low cost producer so they have targeted the suppliers who can give them the most barrel outage a day. They have found 800 thousand barrels of liquid at one location a day by investing time and money into crude oil exploration. In 1999 they spent 8.

    4 billion in capital and exploration expenses. Chevron also has extended their capital in finding the quickest suppliers and cheapest. They are finding new products and cheaper oil prices in Angola, Nigeria, and the U. S. With OPEC again raising crude oil prices the big oil companies are all being forced to explore again.

    The oil industries biggest threat came in the 1970’s with the forming of OPEC. OPEC is made up of the leading oil producing oil countries and they set the price and output of the oil. In the 1970’s they decided to raise the price of the crude oil by quite a bit. Since oil prices are tied to the economy a great deal the world suffered a recession.

    Since this happened it forced the oil companies to find alternative suppliers. BP decided to start oil searches in the Alaska permafrost and the North Sea. This turned out to be an advantage and helped them through the tough times. Exxon looked towards Africa and the Gulf of Mexico. Exxon found excellent suppliers in the Gulf and were able to keep their prices at a decent level to its customers.

    They also expanded their stations to get the customers out quicker and easier. They added swipe cards on their pumps to speed up payment. They were determined to kill off their competition. Soon Mobil followed suit with their swipe cards and later on the rest of the industry would switch to the swipe card. Exxon was able to gain the competitive advantage by establishing new suppliers and keeping their buyers happy with added amenities.

    Since Exxon was the first in the industry they quickly profited from the new services. (ExxonMobil Official Website)BP found their niche in the market in natural gas when they explored in Alaska. They also where able to stay a float in their U. S. gas stations but lacked a vision. They were the slowest to update their stations and many stations didn’t add the swipe card.

    One service that differentiated them from Exxon, Mobil, and Chevron was the full service stations they had. They were the only ones who kept a lot of their full service stations. They gained market share in the service of people who didn’t like to pump their own gas. This marketing strategy helped them pull in more women then the other companies. The threat of substitution helped all the companies in bringing their product to their consumers.

    In the early stages of the breakup of the oil industry the car industry was just getting started so the oil companies had time to build up. They needed to become a stronger company if they where going to succeed. Chevron knew its customers wanted speed and quality. So they added service stations. They became the first to give their customers what they really wanted.

    That was a quick way to fill their car and continue on in their travels. Later Exxon and Mobil would expand on Chevron’s ideas and add the quick easy paying system of the card swipe. Today when you go to the service station you can get your windows washed, pick up a drink or snack, or play the lottery. They have made it a one-stop shop. Exxon has expanded its TigerMarkets worldwide. They offer services no other company does.

    They have also marketed their stations at a better pace then their competitors. One other plus that Exxon has had in the past few years is negotiate with the Walt Disney Company to be the one and only gas station on Disney property. With the amount of people and cars that Disney parks see it is know wonder ExxonMobil has become the number one service station in the world. Technology has been the competitive advantage for ExxonMobil.

    They have come up with more technologies then any of their competitors. They offered their customers more choices at a regular basis then Chevron or BP. Exxon was the first into lubricants, and to test higher octane fuels. They also were the first to enter the market in petrochemicals.

    They have beaten their competitors at every turn. The reason that ExxonMobil is number one is because they never stopped competing. ExxonMobil has gone out to find the best suppliers. They have invented skyscraper-drilling platforms for the ocean looking for every competitive advantage. BP and Chevron took years before they were able to catch up in ocean drilling. Exxon was also tested and completed almost zero-emissions in lubricants and fuels.

    New technology is ExxonMobils competitive advantage. (ExxonMobil Official Website) ExxonMobil’s strategy is to be the leader in new technologies now and in the future. The U. S. has recently seen record growth in the last decade and has improved the oil industry tremendously. In the nineties oil prices reached lower prices then we have seen in a long time thanks to the drop in price in crude oil.

    People were able to travel more often because of the cheapness of the gas prices. Now it was the job of ExxonMobil, Chevron, and BP to get them to choose their gas. When you go to get gas you usually find gas stations on more then one corner. More then likely is the price is the same as the competitor.

    So to differentiate themselves from the other the companies they needed to try new things. Discussed earlier are the company’s strategic plans to draw customers. ExxonMobil established this plan the best. What also helped them was their market share. ExxonMobil market share is more then double their nearest competitor.

    They have more service stations per area then the rest. In 1999 ExxonMobil had net income of 8. 1 billion dollars compared to Chevron’s 2 billion and BP’s 5 billion dollars. With Chevron’s acquisition of Texaco it clearly showing that it needed to find away to gain the market share that ExxonMobil has.

    The merger has not cleared yet but it should soon be and make Chevron move up from the fourth largest oil company in the world. Without this merger Chevron will never be able to compete with the giants ExxonMobil, BP, and Shell. (Chevron Official Website)ExxonMobil is clearly the giant when it comes to marketing their product. They have adopted a mascot to identify their company.

    The Tiger mascot first started appearing in the early 1900’s and it is known all around the world today. The ExxonMobil tiger ranks up there with Ronald McDonald, and Mickey Mouse. As the oil industry becomes more competitive with recent mergers the need for an effective marketing strategy increases. Exxon has increased there spending on marketing in the last few years to acknowledge the merger with Mobil. They must let the customers know that Exxon and Mobil are one now and they will deliver the same great quality.

    BP has a similar situation with the merge with Amoco. They have had trouble though marketing an American product. They do not have any catchy slogans or a mascot. In fact until very recently BP never had a definite symbol to represent its interests in the U.

    S. They have used the names NOCO, ARCO and Amoco until recently going to BPAmoco. Under one name they should be able to establish an identity. They must increase awareness to their customers by a full marketing campaign, which they have not done. Chevron is recognizable around the world for its bars underneath their name. They are the old Standard symbols.

    Chevron now has to work on a new marketing scheme to emphasis its merger with Texaco. They will be entering into new markets and must establish a name. They will have the advantage of the popularity of Texaco as a convenient service station. Texaco’s stations are some of the fastest stations to get out of. They have the newest state of the art technologies to pump the customer’s gas quicker and check them out faster.

    Chevron must hold on to Texaco’s loyal customers who hold Texaco spending cards. (Chevron Official Website)What all the oil companies have done has released smart cards to encourage customer loyalty. This card is kind of like a lot of the grocery stores new bonus cards. Each service station will offer you a card that can be used to pay your gas bill but also you may be allowed to purchase food and merchandise in the quickmart.

    They also offer the chance to receive rewards for using their cards. ExxonMobil has developed the best card and seems to be the most popular today. One reason for this is wherever you go around the country you will find an ExxonMobil. This helps the customer because they believe their card will be valid everywhere and it will.

    ExxonMobil also has come up with many promotions to get customers into their stations. They have given away basketballs and t-shirts along with other stuff. While most gas stations also do this they do not have the marketing exposure that ExxonMobil has. ExxonMobil clearly has the marketing advantage over its rivals. Chevron has a chance to gain share when the final merge with Texaco takes place.

    (Chevron annual report, 1999) As far as BP goes with only being in the U. S. market for 12 years they have a long way to go. If they ever want to compete in the U.

    S. and overtake ExxonMobil they must market better. In this highly competitive industry sustainability is a difficult task. Chevron saw that it was losing the battle so they orchestrated a merge. If they did not initiate this in all likely hood they would be bought out or dismantled.

    ExxonMobil has proved to be the low cost provider with its new technologies and new suppliers from around the world. ExxonMobil has seen its revenues go up some 25% in the last year. While Chevron has seen 52% and BP has seen 77%. It might seem that Exxon is falling behind but really the other companies are making a strong push to be competitive for the first time. BP has gone through major restructuring and has made productivity improvements. While Chevron has seen there products help boost them up and some decreased operating expenses.

    Every company was helped by the increasing price of crude oil. ExxonMobil has seen the rise in competition in the last years and has developed a strategy to continue success. They include:1. )Maximize profitability of existing oil and gas productions2. )Identify and pursue all attractive exploration opportunities3.

    )Invest in projects that deliver superior returns4. )Capitalize on growing natural gas markets. (ExxonMobil annual report, 1999)Chevron has been focusing on their recent merger with Texaco, which has still not been approved. Once the companies do merge they will establish a strategic plan. They continue to work through this business deal ready to challenge its competitors. BP has recently used a strong trading environment to gain a market advantage.

    They also have concentrated on their natural gas and chemical industries. To gain market share in the U. S though they are going to have to start investing more into the recently purchased Amoco. They have still not realized the full potential of the U.

    S market. BP clearly needs direction to over take ExxonMobil. There is little growth in the oil industry today. The oil industry has come down to four major companies competing against each other. Foreign markets determine today’s growths in the industry.

    Not only in finding new customers but also finding new suppliers. With oil production in the Middle East controlled by OPEC the oil industry is suffering from high oil prices, which is driving the economy down. The companies need to start to find a greater production out of none OPEC countries. (The Street. com)ExxonMobil has started using it strategic plan to go out and invest, secure, and explore new oil deposits. They have more interest today towards the natural gas solutions.

    They are going to start competing highly against BP. If BP is as easy as a push over in the gasoline industry ExxonMobil will have little trouble to become number one in natural gas. Chevron has made little effort to get into the natural gas market but they do have a competitive advantage in marine technology. They may in the future concentrate on that to gain advantages.

    These companies will all sustain in the markets of the future. There will always be competition in the oil industry. ExxonMobil has shown that they will continue to be number one through their strategic plan of technology. They plan to beat the other companies to next newest thing. With the merger of Chevron and Texaco, Chevron has pushed itself to the elite.

    Now they must put together a strategic plan to overtake the giant ExxonMobil. BP is slowly organizing itself for a major push to be number one. The future of the oil industry is clearly wide open. With all the new mergers all one company has to do is develop their strategic plan and use competitive advantages over their competitors.

    ExxonMobil has shown to have down that are showing the results with the largest profits ever recorded this year with 17. 72 billion. (ExxonMobil annual report, 1999)Exxon has decided to look ahead into long-term benefits associated with improved capital efficiency. They will be the best business with the best opportunities around the globe.

    They believe they have the right explorations under way and the best portfolio in the industry. Exxon also has the most profitable petrochemical business in the world now with the merger. Chevron will now be looking for a new identity. They will have to make wise decisions in where they want to go. Do they want to compete head on with the giant ExxonMobil? Or are they content on being stuck in the middle.

    They have to develop a new strategic plan and differentiate themselves from other oil companies. BP has been able to gain solid ground on ExxonMobil in the last few years due to international markets. To stay competitive they must continue exploration around the world for new suppliers. However, their main concern should be identifying their U. S.

    strategy. They also better be on the look out for the new merger of Chevron-Texaco. If they are not careful they could be left on the side fighting for market share. Today the world is entering a period of economic adjustment and the oil industry is contributing to that.

    Oil prices are higher today then they have been in a long time. It has been said in the past that oil prices are tied to the economy. Does that mean that the three companies ExxonMobil, BP, and Chevron are in trouble? No they will all continue to survive. This adjustment occurs all the time and the oil industry will go on its business.

    In fact this will help the oil industry grow with their search around the world for new markets and new supplies. ExxonMobil has put itself in the best place to grow and prosper in the years to come. You must remember that this merger is only two years old and yet they are growing at an outstanding rate. The world has never seen the numbers that they have achieved. They have developed some of the most useful technologies and are clearly showing no sign of backing down.

    Today companies copy ExxonMobil’s strategic plan the time. ExxonMobil has the best market share, the biggest revenue and by far the most profits. They clearly are the standard of the oil industry. BP on the other hand has got to start developing a new strategic plan to stay competitive. They have not shown the know how to beat ExxonMobil.

    If they do not change they will become stuck in the middle. Chevron is opening up a whole New World right now. Nobody knows where Chevron could go. They are entering a phase that ExxonMobil was in a few years ago. They too could end up pulling off the same success as ExxonMobil.

    But if they come out of this new merger with out a strategy to become the best then they will surely be left at the bottom as they are now. In conclusion, of the three, ExxonMobil is the dominant company but must look out for, the growing company, Chevron. Bibliography:BIBLIOGRAPHYBP’s Corp. , Official Home Page: www.

    bp. com. BP’s Corp. 1999 Annual Report, BP Corporation, 1999.

    Chevron’s Corp. , Official Home Page: www. chevron. com.

    Chevron’s Corp. 1999 Annual Report, Chevron Corporation, 1999. ExxonMobil’s Corp. , Official Home Page: www. exxon.

    mobil. com. ExxonMobil’s Corp. 1999 Annual Report, ExxonMobil Corporation, 1999.

    Haddadin, Haitham. “ Stock Crash Reminds Pros of 1973-74 bear market” U. S. Market News, March 1, 2001.

    Park, Christopher. “ S. Korea, Russia agree to strengthen oil, gas cooperation” U.S. Market News, Feb. 27,2001.Yahoo: (3-1-01)

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