Petron Corporation Jose Stephen Stephen T. T. Sanosa MD080074
Executive Executive Summary Summary
Petron Corporation Corporation is the the largest oil refining refining and an d marketing company in the Philippines Philippi nes Supplies 40% of the countries requirements Operates a refinery refine ry in Limay Bataan, with a capacity of 180,000 180,000 barrels a day Offers a huge range of petroleum petrole um products, which include gasoline, diesel, LPG, jet fuel, kerosene, industrial fuel oil, petrochemical petrochemical feedstocks benzene, toluene, xylene and propylene
Has 32 depots and terminals situated throughout throughou t the country, country, with over 1,700 service ser vice stations nationwide nat ionwide Exports petroleum and non-fuel non-f uel products to Asia Pacific countries such as Japan, India, Malaysia, Singapore, South Korea, Thailand, Pakistan, and even UAE Net income of 7.9 billion in 2010, which is an 86% increase from the previous year. Market share reached nearly 38%, leading the nearest competitor by nearly 10%
Company History
1933 - Stanvac was was created 1960’s - Company was split into Exxon and Mobil Both sold their th eir shares to PNOC which was later renamed Petron 1994 – 40% of shares were sold to Saudi Saud i Aramco, Aramco, 40% 4 0% remained with PNOC, while 20% were publicly owned owned 2008 – Ashmore group group gains 90% of stocks, then the n majority of stocks were were offered to SMC Now No w – SMC controls 51%, Ashmore 40%, 9% public
Mission Vision
To be the leading lea ding provider of total customer solutions in the energy sector and its derivative businesses. busines ses. We will achieve this by: Being an integral part of our customers’ lives, delivering consistent customer experience through innovative products products and services; Developing strategic partnerships in pursuit of growth g rowth and opportunity; Leveraging our refining refi ning assets to achieve competitive advantage; advantage; Fostering an entrepreneurial culture cult ure that encourages teamwork, innovation and excellence; Caring for fo r community community and the environment; Conducting ourselves with professionalism, professionalism, integrity and fairness; Promoting the best interest of all our o ur stakeholders. stakeholders.
Criteria
Evaluation
1
Customers
Be an integral part of the customers' lives, delivering consistent customer satisfaction through innovative products and services
2
Products/ Services
Deliver exceptional products and services through its extensive network of channels
3
Markets
Be the superior superio r choice and acknowledged leader in the energy sector in the Philippines Philippi nes
4
Concern for survival, growth, growth, and profitability
Developing strategic partnership in pursuit of growth and opportunity, ensuring sustainable and long-term increase in shareholder investment.
5
Technology echnolog y
A company that strives to continue the tradition of being the leading provider of total customer solutions in the energy sector and its derivative businesses
6
Philosophy
A professional professio nal organization organizat ion that conducts its business with integrity and fairness
Criteria
Evaluation
7
Self-concept
A company that delivers quality products in the energy sector and its derivative businesses
8
Concern for Public Image
A company focused on operating plants that are environmentally safe and conforms to industry standards regarding safety
9
Concern for Employees
A work environment that fosters an entrepreneurial culture that encourages teamwork, innovation, excellence and personal growth
10
Concern Building
for
Nation-
An organization organization that is caring caring for community and the environment and fosters growth in the community
Porter’s 5 forces analysis New Market Entrants Moderate
Supplier Power High
Competitive Rivalry INTENSE
Threat of Substitute Product WEAK
Buyer Power Low
Competitive Profile Matrix Critical Success Facto Factors rs
Price Product Quality Market Share Channel of Distribution Financial Position Customer Loyalty Advertising Advertising
Total
Wt
0.20 0.20 0.15 0.15 0.10 0.10 0.10
1.0
Petron
Shell
Chevron
Rating
Weighted Score
Rating
Weighted Score
Rating
Weighted Score
4 4 4 4 3 3 2
0.80 0.80 0.60 0.60 0.30 0.30 0.20
4 4 3 3 3 3 2
0.80 0.80 0.45 0.45 0.30 0.30 0.20
4 3 2 3 2 3 2
0.80 0.60 0.30 0.45 0.30 0.30 0.20
3.6
3.3
2.95
Market Shares Petroleum 2009 Sales 18.8 37.1 14.1
Petron Shell Chevron Other Players
27.6
End Users
Market Shares Petroleum 2010 Sales
21.2 37.6
Petron Shell
11.9
Chevron Other Players 27.4
End Users
* DOE Website
Market Share LPG 2009 Sales 6.4
8.3
4 34.7
Petron Shell Liquigaz
28.6
Petronas 17.9
Total Pryce Gas
Market Share LPG 2010 Sales 6.9
7.5 34.4
Petron Shell Liquigaz
30.3
Petronas 16.9
Total Pryce Gas
EFE Matrix EXTERNAL OPPORTUNITIES
Force
Weight
Rating
Weighted Rating
1
Production of other chemicals
T
0.20
4
0.80
2
Expansion to South East Asia
C
0.20
4
0.80
3
Strong peso exchange rate
E
0.05
3
0.15
4
Harnessing local gas deposits
T
0.05
1
0.05
EXTERNAL THREATS 1
Heightened Heightened competition
C
0.20 0.20
4
0.80
2
Government tax laws
P
0.20
2
0.40
3
Crude Oil Importation Dependency
E
0.10
3
0.30
Total
1.0
3.1
IFE Matrix INTERNAL STRENGTHS
Force
Weight
Rating Ratin g
Weighted Rating
1
Strong brand quality and third party recognition
Culture
0.20
4
0.80
2
Technological echnologic al innovation
R&D
0.15
3
0.45
3
Cost effective solutions
R&D
0.15
3
0.45
4
Site acquisition/ proximity
Operations
0.05
3
0.15
INTERNAL WEAKNESSES 1
Marketing and advertising strategies
Marketing
0.10
2
0.20
2
Customer loyalty strategies
Marketing
0.10
2
0.20
3
Quality of service at gasoline stations
Mgmt
0.10
2
0.20
4
High employee Turnover Rate
HR
0.10
2
0.20
Total
1.0
2.75
TOWS Matrix TOWS Analysis
Opportunities 1. Expansion to South East Asia 2. Production of other chemicals 3. Strong Peso Exchange Rate 4. Harnessing local gas deposits
Strengths
Weaknesses
1. Strong brand quality and third party recognition 2. Technological innovation 3. Cost effective solutions 4. Site acquisition
1. Marketing and Advertising Strategies 2. Customer Loyalty Strategies 3. Quality of service at gasoline stations 4. High employee turnover rate
SO STRATEGIES 1. Create more chemicals from byproducts of crude oil oil (S2, S4, O2)
1.Produce high quality chemicals that can be sold for more profit (W1, O2)
2. Acquire distribution facilities within South South East Asia(S4,O1)
2. Improve the quality of service so that it can be classified as world class (W3, O1)
3. Invest in acquiring local gas deposits (S2, S4, O4)
Strengths 1. Heightened Competition 2. Government Taxes 3. Crude Oil Importation Dependency
WO STRATEGIES STRATEGIES
3. Extend loyalty programs to other products that Petron generates (W1, W2, O2)
ST STRATEGIES
WT STRATEGIES STRATEGIES
1. Use the company’s image as leverage to gain a larger market share and open new business opportunities (S1, S2, S4, T1)
1. Implement strategies which reward brand loyalty (W1, W2, T1) 2. Conduct customer loyalty surveys (W1, W2, T1)
2. Improve pricing schemes (S3, T1) 3. Fast deployment of cost effective
3. Find ways to do low cost marketing and advertising especially on far
Strategic Position Position and Evaluation Evaluation Matrix X Axis
Rating
Industry Strength (IS) 6 best, 1 worst 1. High entry cost
6
2. Availability Availability of substitutes
5
3. Intense rivalry with competitors
6 IS Average Average
5.66
Competitive Competit ive Advantage (CA) -1 best, -6 worst 1. Brand Image
-1
2. Sustained Growth Growth and Profitability
-3
3. Pricing
-3
4. Customer Retention and Acquisition Acquisitio n
-3 CA Average Average
Directional Direction al Vector Coordinate X = IS I S AVE AVE + CA AVE AVE
4.5 1.16
Y Axis Axis
Rating
Financial Strength (FS) 1. Strong brand equity and recognition
6
2. Technological innovation
4
3. Cost effective solutions
4
4. Site acquisition
6
FS Average
5
Environmental Stability (ES) 1. Production of other chemicals
-3
2. Expansion to South East Asia
-1
3. Strong Peso exchange rate rate
-3
4. Harnessing local gas deposits
-5
ES Average Directional Direction al Vector Coordinate Y= FS AVE + ES AVE AVE
-3 2
Space Matrix Matrix Vector Vector Coordinates Coordinates Conservative
Aggressive 5 4 3 2
(1.16, 2)
1 -5
-4
-3
-2
-1
1
2
3
-1 -2 -3 -4 -5
Defensive
Competitive
4
5
Internal External Matrix d e t h g i e W l e a r o t c o S T E F E e h T
The IFE Total Weighted Score IFE = 2.75 EFE = 3.1
Strong
Average
Weak
High (3.0-4.0)
I
II
III
Medium (2.0-2.99)
IV
V
VI
Low (1.0-1.99)
VII
VIII
IX
Grand Strategy Matrix
Rapid Market Growth e v i t i t e n p o i m t i o s C o k P a e W
Quadrant II
Quadrant III
Quadrant I
Quadrant IV
Slow Market Growth
S t r o n P g o C s o i m t i o n p e t i t i v e
Summary of Matrices and Analysis TOWS
SPACE SPA CE
IEM
GSM
Total
1. Forward Integration
0
1
1
1
3
2. Backward Integration
0
1
1
1
3
3. Horizontal Integration
0
1
1
1
3
4. Market Penetration
1
1
1
1
4
5. Market Development Developme nt
1
1
1
1
4
6. Product Development
1
1
1
1
4
7. Concentric Diversification
0
1
0
1
2
8. Conglomerate Diversification
0
1
0
0
1
9. Horizontal Diversification
0
1
0
0
1
10. Joint Venture
0
0
0
0
0
11. Retrenchment
0
0
0
0
0
12. Investiture
0
0
0
0
0
Integration Strategies
Intensive Strategies
Diversification Strategies
Defensive Strategies
Action Plans Activities (Marketing) (Marketing)
Time Table Table
Expected Output
Group Responsible Responsible
1. Generate social media accounts of the company
March to June 2012
1. Enhance the company’s image
2. Create commercials/ advertisements that promote the company’s existing promos/ products
March to December 2012
1. Public will be more knowledgeable about the existing services/ products that Petron offers 2. Improve sales
Marketing/ Sales Department
3. Conduct regular promos like raffle draws, etc
March to December 2012
1. Improve customer satisfaction 2. Improve sales
Marketing/ Sales Department
4. Conduct nationwide surveys regarding Petron’s services for its gasoline stations
March to December 2012
1. Attain feedback/ knowledge about existing problems on the gasoline stations
Marketing/ Sales Department
Marketing/ Advertising Department
Activities
Time table
Expected Output
Group Responsible Responsible
1. Construction of 70MW Coal facility
June to December December 2014
1. More reliable and economical steam and power supply 2. Cost savings 3. Internally Internal ly generated by-product (petrocoke) can now be used to fuel the power plant
Special Projects Group
2. Refinery Master Plan (RMP 2)
June to December December 2015
1. Enhance company’s capability to refine fuel from other sources 2. Production of fuels that meet the global clean air standards 3. Double Petron’s refining capabilities 4. Enhance proplylene production by 200%
Special Projects Group
Strategic Goals
Increase net income by 4% Increase petroleum market share by 3%
Increase LPG Market Market Share by 4%
Improved customer service ser vice at gasoline stations sta tions Increased customer satisfaction Advertisements Advertisements about the centralized centralized customer customer hotline
Increase loyalty card membership membership by 200%
Increase advertisements about the perks of the card Improved perks
Financial Projections
Net Income, in Billions
.92
.97
9.3 8.4
2011
Net Income, in Billions
8.7
2012
9.0
2012
2012
End