Petron CorporationJose Stephen T. Sanosa

MD080074

Executive Summary

Petron Corporation is the largest oil refining and marketing company in the Philippines

Supplies 40% of the countries requirementsOperates a refinery in Limay Bataan, with a

capacity of 180,000 barrels a dayOffers a huge range of petroleum products,

which include gasoline, diesel, LPG, jet fuel, kerosene, industrial fuel oil, petrochemical feedstocks benzene, toluene, xylene and propylene

Has 32 depots and terminals situated throughout the country, with over 1,700 service stations nationwide

Exports petroleum and non-fuel 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 created1960’s - Company was split into Exxon and

MobilBoth sold their shares to PNOC which was

later renamed Petron1994 – 40% of shares were sold to Saudi

Aramco, 40% remained with PNOC, while 20% were publicly owned

2008 – Ashmore group gains 90% of stocks, then majority of stocks were offered to SMC

Now – SMC controls 51%, Ashmore 40%, 9% public

Mission Vision

To be the leading provider of total customer solutions in the energy sector and its derivative businesses. We will achieve this by:

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 community and the environment;Conducting ourselves with professionalism, integrity and

fairness; Promoting the best interest of all our 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 choice and acknowledged leader in the energy sector in the Philippines

4 Concern for survival, growth, and profitability

Developing strategic partnership in pursuit of growth and opportunity, ensuring sustainable and long-term increase in shareholder investment.

5 Technology 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 organization 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

10Concern for Nation-

Building

An organization that is caring for community and the environment and fosters growth in the community

Porter’s 5 forces analysis

Competitive Rivalry

INTENSE

New Market EntrantsModerate

Buyer PowerLow

Threat of Substitute

ProductWEAK

Supplier PowerHigh

Competitive Profile Matrix

Critical Success Factors Wt Petron Shell Chevron

Rating

Weighted Score

Rating

Weighted Score

Rating

Weighted Score

PriceProduct QualityMarket ShareChannel of DistributionFinancial PositionCustomer LoyaltyAdvertising

0.200.200.150.150.100.100.10

4444332

0.800.800.600.600.300.300.20

4433332

0.800.800.450.450.300.300.20

4323232

0.800.600.300.450.300.300.20

Total 1.0 3.6 3.3 2.95

Market Shares Petroleum 2009

37.1

27.6

14.1

18.8

Sales

PetronShellChevronOther PlayersEnd Users

Market Shares Petroleum 2010

* DOE Website

37.6

27.4

11.9

21.2

Sales

PetronShellChevronOther PlayersEnd Users

Market Share LPG 2009

34.7

17.928.6

6.4 8.3 4

Sales

PetronShellLiquigazPetronasTotalPryce Gas

Market Share LPG 2010

34.4

16.9

30.3

6.97.5

Sales

PetronShellLiquigazPetronasTotalPryce Gas

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 competition C 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

EFE Matrix

INTERNAL STRENGTHS Force Weight Rating

Weighted Rating

1 Strong brand quality and third party recognition

Culture 0.20 4 0.80

2 Technological 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

IFE Matrix

TOWS MatrixStrengths Weaknesses

TOWS Analysis 1. Strong brand quality and third party recognition2. Technological innovation3. Cost effective solutions4. Site acquisition

1. Marketing and Advertising Strategies2. Customer Loyalty Strategies3. Quality of service at gasoline stations4. High employee turnover rate

Opportunities1. Expansion to South East Asia2. Production of other chemicals3. Strong Peso Exchange Rate 4. Harnessing local gas deposits

SO STRATEGIES

1. Create more chemicals from by-products of crude oil (S2, S4, O2) 2. Acquire distribution facilities within South East Asia(S4,O1)

3. Invest in acquiring local gas deposits (S2, S4, O4)

WO STRATEGIES

1.Produce high quality chemicals that can be sold for more profit (W1, O2) 2. Improve the quality of service so that it can be classified as world class (W3, O1) 3. Extend loyalty programs to other products that Petron generates (W1, W2, O2)

Strengths1. Heightened Competition2. Government Taxes3. Crude Oil Importation Dependency

ST STRATEGIES 1. Use the company’s image as leverage to gain a larger market share and open new business opportunities (S1, S2, S4, T1) 2. Improve pricing schemes (S3, T1) 3. Fast deployment of cost effective solutions (S3, T2)

WT STRATEGIES 1. Implement strategies which reward brand loyalty (W1, W2, T1) 2. Conduct customer loyalty surveys (W1, W2, T1) 3. Find ways to do low cost marketing and advertising especially on far flung areas (W1, W2, T2)

Strategic Position and Evaluation Matrix

X Axis Rating

Industry Strength (IS) 6 best, 1 worst

1. High entry cost 6

2. Availability of substitutes 5

3. Intense rivalry with competitors 6

IS Average 5.66

Competitive Advantage (CA) -1 best, -6 worst

1. Brand Image -1

2. Sustained Growth and Profitability -3

3. Pricing -3

4. Customer Retention and Acquisition -3

CA Average 4.5

Directional Vector Coordinate X = IS AVE + CA AVE

1.16

Y 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 -3

4. Harnessing local gas deposits -5

ES Average -3

Directional Vector Coordinate Y= FS AVE + ES AVE

2

Space Matrix Vector CoordinatesConservative Aggressive

5

4

3

2

1

-5 -4 -3 -2 -1 1 2 3 4 5

-1

-2

-3

-4

-5

Defensive Competitive

(1.16, 2)

Internal External Matrix

The EFE Total

Weighted Score

The IFE Total Weighted Score

IFE = 2.75EFE = 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

Quadrant I

Quadrant II

Quadrant III Quadrant IV

Strong Competitive

PositionW

eak

Com

petiti

ve

Posi

tion

Rapid Market Growth

Slow Market Growth

TOWS SPACE IEM GSM Total

Integration Strategies

1. Forward Integration 0 1 1 1 3

2. Backward Integration 0 1 1 1 3

3. Horizontal Integration 0 1 1 1 3

Intensive Strategies

4. Market Penetration 1 1 1 1 4

5. Market Development 1 1 1 1 4

6. Product Development 1 1 1 1 4

Diversification Strategies

7. Concentric Diversification 0 1 0 1 2

8. Conglomerate Diversification 0 1 0 0 1

9. Horizontal Diversification 0 1 0 0 1

Defensive Strategies

10. Joint Venture 0 0 0 0 0

11. Retrenchment 0 0 0 0 0

12. Investiture 0 0 0 0 0

13. Liquidation 0 0 0 0 0

Summary of Matrices and Analysis

Action Plans

Activities (Marketing)

Time Table Expected Output Group Responsible

1. Generate social media accounts of the company

March to June 2012 1. Enhance the company’s image

Marketing/ Advertising Department

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 offers2. 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

Activities Time table Expected Output Group Responsible

1. Construction of 70MW Coal facility

June to December 2014

1. More reliable and economical steam and power supply 2. Cost savings3. Internally 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 2015

1. Enhance company’s capability to refine fuel from other sources2. Production of fuels that meet the global clean air standards3. Double Petron’s refining capabilities4. Enhance proplylene production by 200%

Special Projects Group

Strategic Goals

Increase net income by 4%Increase petroleum market share by 3%

Improved customer service at gasoline stationsIncreased customer satisfaction

Increase LPG Market Share by 4%Advertisements about the centralized customer

hotlineIncrease loyalty card membership by 200%

Increase advertisements about the perks of the card

Improved perks

Financial Projections

Net Income, in Billions

Net Income, in Billions

8.4

2011 2012 2012 2012

8.7

9.0

9.3

.92

.97

End