COMPANY LOGO

COMPANY HISTORY

Petron Corporation (PSE: PCOR) is the largest oil refining and marketing company in
the Philippines, supplying more than a third of the country's oil requirements. It
operates a refinery in Limay, Bataan with a rated capacity of 180,000 barrels per
day. From the refinery, Petron moves its products mainly by sea to 32 depots and
terminals throughout the country. Petron’s history dates back to September 7, 1933
when Socony-Vacuum Oil Company and Standard Oil of New Jersey merged their
interests in the Far East into a 50–50 joint venture named the Standard Vacuum Oil
Company. It operated in 50 countries, including the Philippines, New Zealand, China,
and the region of East Africa.

COMPANY VISION AND MISSION

Vision:

To be the leading provider of total customer solutions in the energy sector

and its derivative businesses
Mission:

• Being an integral part of our customers’ lives, delivering consistent customer

experience through innovative products and services;
• Developing strategic partnerships in pursuit of growth and opportunity;
• Leveraging our refining assets to achieve competitive advantage;
• Fostering an entrepreneurial culture that encourages teamwork, innovation, and
excellence;
• Caring for the community and the environment;
• Conducting ourselves with professionalism, integrity, and fairness; and
• Promoting the best interest of all our stakeholders.

COMPETITORS:

1. Shell
2.
SWOT ANALYSIS - SHELL

STRENGTHS

 Superb Performance in New Markets – Shell has built expertise at entering

new markets and making success of them. The expansion has helped the
organization to build new revenue stream and diversify the economic cycle risk
in the markets it operates in.

 High level of customer satisfaction – the company with its dedicated

customer relationship management department has able to achieve a high level
of customer satisfaction among present customers and good brand equity
among the potential customers.

 Strong distribution network – Over the years Shell has built a reliable
distribution network that can reach majority of its potential market.

 Good Returns on Capital Expenditure – Shell is relatively successful at

execution of new projects and generated good returns on capital expenditure by
building new revenue streams.

 Go to Market Strategies - Highly successful at Go To Market strategies for its

products

 Product innovation - Successful track record of developing new products.

 Strong Free Cash Flow – Shell has strong free cash flows that provide
resources in the hand of the company to expand into new projects.

 Strong dealer community – It has built a culture among distributor & dealers
where the dealers not only promote company’s products but also invest in
training the sales team to explain to the customer how he/she can extract the
maximum benefits out of the products.

WEAKNESSES

 Need more investment in new technologies-Given the scale of expansion and

different geographies the company is planning to expand into, Shell needs to put
 more money in technology to integrate the processes across the board. Right
now the investment in technologies is not at par with the vision of the company.

 Not very good at product demand forecasting -leading to higher rate of missed
opportunities compare to its competitors- One of the reason why the days
inventory is high compare to its competitors is that Shell is not very good at
demand forecasting thus end up keeping higher inventory both in-house and in
channel.

 The marketing of the products left a lot to be desired-Even though the product is
a success in terms of sale but its positioning and unique selling proposition is not
clearly defined which can lead to the attacks in this segment from the
competitors.

 There are gaps in the product range sold by the company-This lack of choice can
give a new competitor a foothold in the market.

 Financial planning is not done properly and efficiently-The current asset ratio and
liquid asset ratios suggest that the company can use the cash more efficiently
than what it is doing at present.

 Investment in Research and Development is below the fastest growing players in

the industry-Even though Shell is spending above the industry average on
Research and Development, it has not been able to compete with the leading
players in the industry in terms of innovation. It has come across as a mature
firm looking forward to bring out products based on tested features in the
market.

 High attrition rate in work force – compare to other organizations in the industry
Shell has a higher attrition rate and have to spend a lot more compare to its
competitors on training and development of its employees.

OPPORTUNITIES

 New customers from online channel – Over the past few years the company
has invested vast sum of money into the online platform. This investment has
opened new sales channel for Shell. In the next few years the company can
 leverage this opportunity by knowing its customer better and serving their needs
using big data analytics.

 Market Development - The market development will lead to dilution of

competitor’s advantage enabling Shell to increase its competitiveness compare
to the other competitors.

 Economic uptick and increase in customer spending- After years of

recession and slow growth rate in the industry, is an opportunity for Shell to
capture new customers and increase its market share.

 Decreasing cost of transportation - because of lower shipping prices can

also bring down the cost of Shell’s products thus providing an opportunity to the
company either to boost its profitability or pass on the benefits to the customers
to gain market share.

 Stable free cash flow – This provides opportunities to invest in adjacent

product segments. With more cash in bank the company can invest in new
technologies as well as in new products segments. This should open a window of
opportunity for Shell in other product categories.

 Government agreement – the adoption of new technology standard and

government free trade agreement opens up new markets which has provided
Shell an opportunity to enter a new emerging market.

 New environmental policies – The new opportunities will create a level

playing field for all the players in the industry. It represent a great opportunity
for Shell to drive home its advantage in new technology and gain market share
in the new product category.

 Taxation Policies - The new taxation policy can significantly impact the way of
doing business and can open new opportunity for established players such as
Shell to increase its profitability.

THREATS
 Technology Advancements - New technologies developed by the competitor
or market disruptor could be a serious threat to the industry in medium to long
term future.

 No regular supply of innovative products – Over the years the company has
developed numerous products but those are often response to the development
by other players. Secondly the supply of new products is not regular thus leading
to high and low swings in the sales number over period of time.

 Counterfeits and Imitations - Imitation of the counterfeit and low quality

product is also a threat to Shell’s product especially in the emerging markets and
low income markets.

 Currency Fluctuations - As the company is operating in numerous countries it

is exposed to currency fluctuations especially given the volatile political climate
in number of markets across the world.

 Isolationism - Increasing trend toward isolationism in the American economy

can lead to similar reaction from other government thus negatively impacting
the international sales.

 Increasing Costs - Rising pay level especially movements such as $15 an hour
and increasing prices in the China can lead to serious pressure on profitability of
Shell

 Consumers Buying Behavior - Changing consumer buying behavior from

online channel could be a threat to the existing physical infrastructure driven
supply chain model.

 Intense competition – Stable profitability has increased the number of players

in the industry over last two years which has put downward pressure on not only
profitability but also on overall sales.
SWOT ANALYSIS - PETRON

STRENGTHS

1. Largest oil refining in the Philippines – Petron Corporation supplies nearly

40 percent of the country’s oil requirement.
2. Wide variety of Petroleum Products – Petron Corporation operates a crude
oil refinery and petrochemical that process a full range of petroleum product
which includes gasoline, diesel, liquefied petroleum gas (LPG), jet fuel,
kerosene, industrial fuel oil and many more.
3. Upgrading and Rebranding Program – Petron Corporation was able to
transform all 550 “Esso” and “Mobil” stations to the Petron brand.
4. Excellent Customer Service – Petron focuses on the core strength of the
company which is to bring the Petron brand to the customers/consumers with
satisfaction.
5. Technology Advancement – Petron has a high technology advancement in
making and processing oil fuel (diesel and petrol).
6. Expansion in Malaysia – Petron has established a position in Malaysian
downstream oil sector through its acquisition of ExxonMobil’s downstream oil
business in Malaysia,
7. Numerous branches in the Philippines – As of today, Petron has a total of
2,400 branches in the Philippines raging from Luzon to Mindanao.
8. Different Services - The Company’s service station also provides a one-stop
service experience to travelers on the road, offering amenities such as treats
convenience stores, restaurants, and specialty shops.
9. Experienced management team and employees - The Company has an
experienced team of managers with substantial relevant experience in refining
operations and development of service stations.
10.Lubricants and Specialties - These products are marketed through a network
of appointed distributors in both West and East Malaysia to various industry
segments, namely, car and motorcycle workshops, transport and fleet
operators, manufacturing and industrial accounts.
WEAKNESSES
1. Reliability on small suppliers - The Company relies primarily on a small
number of suppliers for a significant portion of its crude oil requirements in
each of the Philippines and Malaysia.
2. Lack of Solution in the Disruption of operations - Any significant
disruption in operations or casualty loss at the Company’s refineries could
adversely affect its business and results of operations that can result into
potential liabilities.
3. Quality of service on Gasoline Stations – Some employees perform a bad
service towards the costumers that might affect the reputation of the brand.
4. High Employee turnover rate - High turnover rates can contribute to lost
productivity, employee burnout, and low employee engagement among
employees.
5. Fail Acquisitions – The Company can lose substantial assets and its
shareholders' interests may substantially diminish in value.
6. Lack of Marketing and Advertising Strategies – Lack of marketing
strategies can result to a great disadvantage to the company like decrease of
sales.
7. Lack of Customer Loyalty Strategies – Lack of customer loyalty strategies
can affect the relationship between the customers and the company.
8. Legal Suits - The company has faced a number of legal suits, most of which
are connected with oil spill.
9. Slow Growth Rates - The Company’s business and sales may be negatively
affected by slow growth rates and economic instability in the Philippines and
Malaysia, as well as globally.
10.Imposition of foreign exchange controls - The Company’s ability to access
foreign currency to purchase raw materials and equipment and to service
foreign currency denominated obligations could be adversely affected.

OPPORTUNITIES
1. Strengthening economy – Petron Corporation pays its taxes which
contributes to the economy.
2. Employment Creation – Petron Corporation provides opportunities for
employment.
3. Less dependency on import of gasoline – Since Petron Corporation is a
Philippine-based gas company, it results to less dependency on import of
gasoline.
4. Expansion – Petron Corporation has the ability in establishing more franchises
on additional locations.
5. Onsite car repair services – Petron Corporation can benefit in offering car
repair services since it is within the scope of their business.
6. Onsite convenience store – Convenience stores established creates
additional revenues for the gasoline stations.
7. Car wash – Car wash creates additional revenues for the gas stations.
8. Oil well discoveries – As oil wells are being discovered, it adds more to the
resources of the business.
9. Expand export market – Having high resources will help the company expand
export market.
10.Creation of products powered by fuels – There are products nowadays that
needs fuels to operate properly which can be an opportunity for Petron
Company.

THREATS
1. Lack of robustness of industrial process – Nowadays, it is not easy to
resist change which can threaten the company especially in industrial process.
2. Fire accident – All businesses that provide oil products and services are prone
to fire accidents.
3. Development of electric cars – As technology advances, electric cars can
replace cars which can decrease the profitability of companies that provides
gasoline and oils.
4. Oil prices – There are inflation and deflation that affects the prices of oils in
the market.
5. Customers’ loyalty – Customers can find for cheaper alternatives when oil
prices continue to inflate.
6. Depletion of easy resources – Petron Corporation needs to discover more oil
wells as there is depletion of easy resources.
7. Government regulations – There are government regulations that hinders
the discoveries of oil wells if it results to negative effect on the environment.
 8. High competition – High competition is always present in every industry and
oil companies are not excluded with having many competitors.
9. Malaysian Government Policies – The Company is affected by Malaysian
Government policies and regulations relating to the marketing of fuel products.
10.Compliance with environmental and zoning laws – Failure to comply with
relevant laws and regulations may result in financial penalties or legal
proceedings against the company, including the revocation or suspension of
the company’s licenses.

SWOT Matching
SWOT matching is a method of identifying and determining strategic alternatives to
find advantages by matching Strengths to Opportunities, while converting strategies
and by looking at the possibility of converting Weaknesses or Threats into Strengths
or Opportunities, or, if not possible, to minimize or avoid Threats and Weaknesses.
Moreover, it gives organizations or business entities an opportunity to discover
alternative solutions and explore possibilities for new efforts in order to address
various problems. Similarly, SWOT matching can be a big help in adjusting and
refining the plans of a specific organization. Especially, from time to time either
great opportunities suddenly appears which can open a wider avenues or a new
threat resurfaces that could close a path that once existed.

SO Strategies WO Strategies
S1, O1 – Being Petron as the large W1, O9 – High resources can help in
refining of oil in the Philippines, the avoiding the reliability on small number
company will use this as an advantage of suppliers, which in return can open
to strengthen its reputation and the opportunity to expand export
contribute to the growth of the market.
economy. W2, O3 – Less dependency on import
S2, O2 – By expanding and producing of gasoline means more control
more petroleum products, Petron will because the suppliers would be local,
then in need of staff and will create an which gives solution in the disruption of
employment opportunity to many operations; leading it to be more
people. controlled.
S3, O3 – Through the program of W3, O5 – Offering onsite car repair
upgrading, transforming and rebranding services will help in improving the
mobile or fuel station into Petron quality of services in gasoline stations;
brands, will make those consumers to provided that they will hire competent
enjoy our own fuel products and will employees.
lessen the importation of fuel products W4, O2 – Petron corporation provides
from abroad. employment opportunities and should
S4, O4 - By doing proper training to seek for committed employees, in
staff or employees and focusing on which way the turnover rate can be
giving excellent services to consumers, lessened.
will leave a good impression in the W5, O4 – More franchises on additional
company. locations would help Petron in keeping
S5, O5 - The company uses innovative its substantial assets and shareholder’s
way of advanced technology, giving the interest.
Petron a competitive advantage to offer W6, O6 – Onsite convenience store can
on-site services like repair services. be a great source of revenue on
S6, O6 - By entering into new gasoline stations which is also a great
distribution areas or expanding Petron marketing strategy to increase sales.
brands to other country, the company W7, O7 – Cars/vehicles need regular
will create more profits. carwash, and offering that can increase
S7, O7 - The advantage on having customer satisfaction which leads to
numerous brands will keep the customer loyalty.
company’s name in the level of bigger W8, O8 – Oil well discoveries add to
competitors. the resources of the business which
S8, O8-The offering of different also helps in minimizing the legal suits
services of Petron being a one stop site that are mostly related to oil spills.
that could available to the public W9, O10 – Creation of fuel-powered
especially to travelers will add more product is an opportunity to Petron, and
resources to the business. also to the Philippine economic stability
S9, O9- The experienced managers and help in the slow growth rates that
gives an advantage to manages all also negatively affects the company.
communication and transactions W10, O1 – Petron Corporation pays its
including refining operations and the taxes which contributes to the economy
expanding export markets of the and the government, which in effect
company. would mitigate the imposition of foreign
S10, O10- The Petron company is using exchange controls.
distribution channels to gain more
marketing opportunities and improve
company's bottom line.
ST Strategies WT Strategies
S1, T1 – Being the largest oi refining in W1, T1 – Since Petron only relies
the Philippines, Petron possesses the primarily on a small number of
ability to keep up with the vast changes suppliers, the company should have the
regarding industrial process in order for quality of being strong in acquiring
them to cater the needs of their more stocks for the industrial process to
customers. go on.
S2, T5 – Offering a wide variety of W2, T2 – To possess critical thinking to
petroleum products gives Petron an come up with a solution during any
advantage to supply millions of significant disruption in the business
customers with various necessities operations, considering that Petron
which could gain more and more provides oil products and services
numbers of regulars. which is very prone to fire accidents.
S3, T3 – Through the upgrading and W9, T3 – To arise into a new and
rebranding program of Petron, they can distinct product or service that has
establish a stronger image of their something to do with advanced
brand which could be of great help in technology since electric cars are being
terms of their revenue and even if there developed.
is the challenge brought by advances in W3, T5 – Having the ability to execute
technology. good quality service in connection with
S4, T4 – With the excellent customer the customers might satisfy them and
service of Petron gives them an influence them to return to the
advantage towards their customers in company even though prices will
order for them to keep coming back. In continue to increase due to inflation. As
this way although the oil prices keep long as the company will provide
increasing due to various factors, the quality service, then that would be a
excellent customer service could still great advantage.
make a difference. W4, T7 – The company must hire
S5, T2 – Being prone to fire accidents, employees who fit in the working
Petron having a high technology environment and should offer flexible
advancements could provide them work schedules. Furthermore, it will not
various options on how to avoid such be difficult for them to find oil wells that
incidents or other alternatives. do not have a negative effect on the
S6, T6 – Having an established position environment with regards to the
in other countries as part of their compliance with government rules and
expansion programs gives Petron a regulations.
chance to explore and discover more W5, T6 – Petron needs to find out extra
oils wells since there is a depletion of oil wells so that no matter when the
easy resources. number or quantity of resources/assets
S7, T7 – The numerous branches of are reduced, there would be an
Petron around the Philippines could alternative.
establish a great image for them when W6, T4 – In terms of inflation and
it comes to complying with government deflation, it directly affects the prices of
regulations relating to environmental oil. Hence, having an effective
issues. marketing strategy and advertising
S8, T8 – With the various services strategy can contribute into the success
offered by Petron that is very beneficial of the company such as obtaining an
for their customers could give them a increase in sales.
favorable customer feedback, which in W7, T8 – To build a good reputation
return would keep them ahead in the and develop high quality products for
close competition in this industry. Petron to keep up with the competition
S9, T9 – Having an experienced in the industry along with oil
management team and employees, companies.
Petron can create a detailed plan W8, T10 – Given that Petron is an oil
relating to marketing strategies that refining company, oil spills will occur,
would still comply with the government but they can contemplate solutions in
policies and regulations of Malaysia. order to avoid such event that will
S10, T10 – The need for Petron to keep prevent the company from complying
and maintain their network of with relevant laws and regulations or
appointed product distributors to legal proceedings against Petron.
various industries in West and East W10, T9 – The capability of Petron to
Malaysia, complying with environmental access foreign currency to purchase
and zoning laws wherever they are is raw materials and equipment is
favorable provided that the company
important. will comply with the Malaysian
Government policies and regulations
relating to the marketing of fuel
products.

Competitive Profile Matrix (CPM)

Competitive Profile Matrix (CPM) is an important strategic management tool

in comparing the firm with the major players of the industry. It is an essential
strategic analysis that consents one to compare a company to its competitors. It is
also used to reveal the company’s relative strength and weaknesses.

Companies often use CPM to better understand the external environment and
the competition, especially in the industry they belong. CPM recognizes the
company’s vital competitors and compares them using the industry’s critical
success factors. Consequently, a company can easily identify the areas that need
improvement and the areas that should be given more attention.

The critical success factors (CSF) are the areas that can be used to determine
a company’s competitiveness in the industry. In each CSF, a weight is assigned
which indicated the importance of the particular factor. Subjectively, the companies
are valued by giving the ratings to each company. Lastly, the total weighted score
determines what company is having a competitive advantage among others.

CRITICAL WEIG Petron Royal Dutch

Caltex
SUCCESS HT Corporation Shell
 FACTORS Ratin Weighte Weighte Weighte
Rating Rating
(CSF) g d Score d Score d Score
a. Breadth of
Product Line 0.05 3 0.15 3 0.15 3 0.15
(Scope)
b. Effectiveness
or sales 0.03 4 0.12 3 0.09 4 0.12
distribution
c. Patent
0.03 3 0.09 4 0.12 4 0.12
Advantage

d. Location of
0.07 4 0.28 4 0.28 4 0.28
facilities

e. Union
0.11 4 0.44 4 0.44 3 0.33
Relations

f. Production
0.08 4 0.32 4 0.32 4 0.32
Capacity

g. Technological
0.03 3 0.09 2 0.06 3 0.09
Advantage

h. E-commerce
0.09 2 0.18 2 0.18 1 0.09
Facilities

i. Market Share
0.11 4 0.44 3 0.33 3 0.33
Experience

j. Global
0.1 3 0.3 3 0.3 2 0.2
Experience

k. Inventory
0.04 3 0.12 3 0.12 4 0.16
System

l. Financial
0.08 4 0.32 3 0.24 3 0.24
Position

m. Management 0.07 3 0.21 4 0.28 4 0.28

n. Customer
0.02 3 0.06 2 0.04 4 0.08
Loyalty

o. Product
0.06 4 0.24 3 0.18 3 0.18
Quality

p. Customer
0.03 3 0.09 2 0.06 3 0.09
Service

TOTAL 1 3.45 3.19 3.06

A Competitive Profile Matrix (CPM) is used to provide necessary information of

competitive advantage based on critical success factors and it also serves as the
basis for an organization’s strategy. A company having greater overall rating among
other company is considered to have competitive advantage. The results show that
Petron Corporation has the highest net competitive advantage having a weighted
score of 3.45 compared to Royal Dutch Shell and Caltex with a weighted score of
3.19 and 3.06, respectively. The results also indicate that Petron Corporation holds a
strong position in the market. The companies should build a strategy according to
their strengths and weaknesses to increase their performance in the most relevant
areas of the industry.