Variables

Potential Development
of Substitute Products

Excerpts
Biofuels program under review
Being the top coconut oil producer, the
Philippines has so far been able to locally
source the two percent blend for biodiesel.
However, recent typhoons have badly hit
coconut-producing areas. Combined with the
declining coconut oil production from aging
trees and loss of productivity from recent
infestations, authorities say they want to
make sure local farmers can keep up with
demand if the blend rate is increased to B5.
the Philippines may have to start importing
from as far away as the US and Brazil, which
will lead to higher cost due to transportation.

Threats
Low. Since recent typhoons have
badly hit the coconut-producing
areas of the country and the
production of coconut oil from
aging trees have been declining due
to recent infestations, importation of
biofuels would be considered. Thus
an increase in the prices of Biofuel
might take place which would not
affect entirely the companys sales
since its main products are not
mainly composed of Biofuels.

http://business.inquirer.net/184005/biofuelsprogram-under-review
Industry leader Petron Corporation initially
launched its new E10 Premium product in
selected service stations in Metro Manila as
part of its efforts to make available cheaper
and more environment-friendly fuels for
motorists. Petron E10 Premium is a new
specially formulated unleaded gasoline that
meets and exceeds the requirements of the
Philippine Biofuels Law. It contains 10%
fuel grade Ethanol and 90% Petron Premium
Unleaded Gasoline with enhanced fuel
additive.
http://www.petron.com/PETRON_LAUNCH
ES_ETHANOLBLENDED_GASOLINE.html
Rivalry Among
Competing Firms
Price Competition

A labor group has asked the Department of

Justice (DOJ) in its capacity as the
appointed "competition authority" to step
in and investigate oil firm Petron Corp. for
practices that allegedly hamper the growth
of smaller, independent rivals in the
downstream oil industry. In a statement,
the Trade Union Congress of the
Philippines (TUCP) said Petron wants to
enjoy "superior pricing power" by

High. Because this will affect

Petrons Market dominance and
there can be a percentage drop to its
net earnings. If Petron suddenly
change its prices this will reflect
movements in the international oil
market, and if there is price
reduction it will really affect the
sales of the company.

suppressing fair competition. "We're afraid

Petron has become the new bully in the
local oil markets, considering the way it
has been tormenting much smaller
competitors," said TUCP secretary-general
Ernesto Herrera.
http://www.gmanetwork.com/news/story/2
32179/money/labor-group-wants-doj-toprobe-petron-for-unfair-competition
New Products

Increased Levels of
Customer Service

BIO E10 Unleaded

Caltex Bio E10 Unleaded Petrol is a high
quality Unleaded Petrol formulated with
10% ethanol. It meets requirements of the
Fuel Quality Standards Act 2000. Caltex Bio
E10 Unleaded is enhanced with 10% ethanol
which a renewable non-fossil fuel. It helps
reduce greenhouse gas emissions and
reliance on fossil fuels. The ethanol in Caltex
Bio E10 Unleaded is made from sources
such as waste starch from processing of
wheat, molasses from sugar production and
sorghum, which is grown for ethanol
manufacture and stock feed.
http://www.caltex.com.au/FPL%20PDS/Bio
%20E10%20Unleaded.pdf
Fujitsu Service Connect
Caltexs in-house service request system and
the traditional channels with the Fujitsu
Service Desk were inefficient and unable to
adequately cope with the thousands of
service requests and incidents it received
every month. IT wanted to find a more
effective way to handle these demands. As a
long-term Fujitsu customer, Caltex turned to
Fujitsu Service Connect, which gives users
the ability to manage IT solutions, incident
resolution and overall IT service through a
reliable, central portal.
Benefits :
Automated software deployment
takes hours rather than days, boosting
user productivity and reducing the
burden on IT staff.

Richer information allows for smarter

decision-making, bringing down the
number of incidents from 2,500 to

Moderate. Because lots of motorists

still prefer to use the E10 of Petron
than BIO E10 Unleaded of Caltex,
besides E10 of Petron has superior
quality than that of Caltex but still
Petron needs to improve E10
because it contains 10% ethanol and
review says that it can damage your
engine.

High. Because Fujitsu Service

Connect has been very effective for
Caltex and with this they have
handled the complaints of the
customers better and they delivered
better services compared to Petron.

1,600 per month.

The company has a better view and

approval upfront of costs associated
with IT services, enabling them to
make better decisions in controlling
their costs.

http://www.fujitsu.com/au/about/resources/c
ase-studies/cs-2014sep-caltex.html
Warranties and
Guarantees

Advertising

Caltex Warranties and Guarantees

Caltex warrants that Caltex branded lubricant
products conform to Caltexs latest published
specifications and comply with Caltex
written product performance claims when
sold. Caltex has technical support available
to help you determine the cause of any
abnormal equipment wear or equipment
damage. If in Caltex's reasonable opinion
any such wear or damage is not related to the
failure of a Caltex Lubricant to conform to
its specification or comply with performance
claims, Caltex will not be liable for such
wear or damage but will endeavor to provide
information to assist you in resolving your
claim with the responsible party.
In consequence of the failure of a Caltex
lubricant to conform its specifications or
comply with performance claims, Caltex
will:
Pay for parts and labour only to
repair damage (if any) to your
equipment to the extent that damage
is directly caused by that failure; and
Pay for the cost of the replacement of
the Caltex Lubricant or the supply of
an equivalent lubricant.
http://www.caltex.com.au/FPL
%20PDS/Warranty.pdf
Caltex has launched its biggest brandfocused work in more than a decade with a
campaign that honours the many ways
Australia's leading fuel supplier keeps the
Philippines and the economy on the go every
day. The "With you all the way" campaign
uses a gradually building soundscape that
captures the myriad ways Caltex fuel enables
Filipinos to go about their daily lives. With
you all the way launched with a 30 second

Moderate. Because having the same

products and services Petron and
Caltex has almost the same
Warranties and Guarantees given to
consumers but in this case Caltex
has the slight advantage because
they have the better Warranties and
Guarantees
given
to
their
consumers.

Low. Because every oil company

has the same concept when it comes
to advertising, it just depends on the
content, meaning, and presentation
of the ads because in the end the
presentation that will catch the eyes
of viewers will be the effective one.

TVC airing nationally with the campaign

also set to run across digital and outdoor.
Caltex's reliable supply forms the backbone
of the economy in the Philippines. We fuel
the cars, trucks, trains, boats, buses, planes,
farm and other heavy machinery that not
only make Filipinos productive, but keep us
connected, fed, healthy and, ultimately,
prosperous too. Caltex truly is with
customers all the way. This campaign goes
beyond fuel in a tank. It's about what that
enables people to do - it's about how it drives
our nation, not just our nation's vehicles. The
layered approach to the creative reinforces
just how the Caltex brand helps take more
Filipinos to more places than any other every
day."
http://www.campaignbrief.com/2014/07/calt
ex-is-with-you-all-the-way.html
Potential Entry of New
Competitors
Economies of Scale
Product Differentiation

Capital Requirements

Caltex Diesel with Techron D is an

improved diesel which contains an exclusive
Techron D additive to control deposits, help
maintain fuel injector cleanliness and enable
optimum engine performance.
http://www.caltex.com/ph/products-andservices/techron-fuels/caltex-diesel-withtechron-d/

Moderate. Petron offers a type fuel

which burns fast but this type of fuel
does not do what Caltex Diesel
with Techron can do.

Moderate. We all know that not all

Filipinos have the capacity to own
The Caltex brand is backed by Chevron
and establish an oil business of their
Corporation, which one of the global
own knowing the amount of capital
leaders in the energy industry. For a
needed. On the other hand, there are
already few Filipinos who have the
minimum investment of P 5M for facilities
money to create their own oil
and equipment, you can become an oil
business, either by franchising or
retailer of Caltex. Of course, you will need to creating their own company.
set aside an amount for your initial
operations.
Well, actually Shell offers a franchise
opportunity with a twist: there is no franchise
fee.

http://www.negosyobuilder.com/how-tostart-an-oil-business-in-the-philippinesopportunities-from-the-big-3/ ,
http://invest.cfo.gov.ph/pdf/part1/retail-ofoil-products.pdf
Cost Advantages
Independent of Scale
Switching Cost
Access to Distribution
Channels
Governmental and
Legal Barrier
Bargaining Power of
Suppliers

Quality Issues (?)

The presence of powerful suppliers reduces

the profit potential in an industry. Suppliers
increase competition within an industry by
threatening to raise prices or reduce the
quality of goods and services. As a result,
they reduce profitability in an industry where
companies cannot recover cost increases in
their own prices.
The cost of petroleum in the Philippines is
highly dependent on global oil prices. For
instance, todays crude oil is at 35$/barrel.
This is reflected in the low price of gasoline
and diesel in the gas stations here in the
Philippines with diesel going as low as
P18/liter.

Articles to find:
http://www.oil-price.net/
Bargaining Power of
Buyers
Low Cost Leadership

Definition: Cost leadership, in basic words,

means the lowest cost of operation in the
industry. The cost leadership is often driven
by company efficiency, size, scale, scope and
cumulative experience (learning curve). A
cost leadership strategy aims to exploit scale
of production, well defined scope and other
economies (e.g a good purchasing approach),
producing highly standardized products,
using high technology. In the last years more
and more companies choose a strategic mix
to achieve market leadership. This patterns

As mentioned before, the price of

gasoline and diesel in the
Philippines is dependent on global
crude oil prices. Everyone is
affected by price fluctuations, and
that includes the competition.

consist in simultaneous cost leadership,

superior customer
service and product
leadership.
Articles to find:

Chose Easy To Serve

Customers

Definition: If the base of customers are

expensive to serve, a producer will not be
able to offer competitive prices. In this case,
it is better to serve a smaller customer base
that is easy to access and less costly to
service.

Does Petron choose easy to serve

customers?
The obvious question is yes, Petron
gasoline stations are everywhere.

Basically, choosing easy to serve costumers

means choosing to sell to people who can be
accessed easily. In the petroleum industry,
this means setting up gasoline stations in
easy to access areas and easy to supply areas
(e.g. along highways, densely populated
cities, major intersections, etc.) It doesnt
make sense to build gasoline stations to far
flung areas just to serve a handful of
costumers. The cost of supplying and
maintaining that station would be more than
the revenue it produces. This is why in far
and hard to access provinces, local gasoline
stations are thriving.
Articles to find:
http://www.gmanetwork.com/news/video/50
502/24oras/gasoline-stations-in-quezonprovince-experiencing-supply-shortage
http://www.doe.gov.ph/consumer-edesk/contacts/1746-master-list-ofdistributors
Establish Walk Away
Prices

Definition: Walk-away price is frequently

used at auto dealerships. Buyers try to get a
low price and sometimes end up walking
away when the dealer wont go as low as
they would like them to. In this situation, no
transaction is conducted.

Does Petron have competitive

enough prices? Do the customers
have other options if the price of
Petron is not competitive enough? If
yes, then the threat level of the
competition is high. This means that
the customers will simply choose to
Questions to answer: How low can Petron go buy somewhere else. Otherwise,
in terms of their price compared to the Petron will continue to have its
competition? Obviously, Petron cant lower share of the market.
the cost too much otherwise, their revenues

will suffer.
This part is related to the price
competition thing.
Articles to find: price rollbacks,
average price of fuels across all
sellers.
http://www.doe.gov.ph/oil-pricemonitoring
http://www.mb.com.ph/oilcompanies-to-increase-gas-lowerdiesel-prices-on-tuesday/

Barriers to entry: http://www.startupbizhub.com/starting-an-oil-and-gas-business.htm

Book: https://books.google.com.ph/books?id=nXcAQAAQBAJ&pg=PA69&lpg=PA69&dq=Cost+Advantages+Independent+of+Scale+oil+industry&source=b
l&ots=fjQEz6gBmr&sig=NQ0yG94rLaLkECpkZyhBExyOfbg&hl=fil&sa=X&ved=0ahUKEwiFv9DMko7LAhWD
H5QKHd7oBNcQ6AEILjAC#v=onepage&q&f=false