Roque, Ezekiel John A.

2015707041

Threat of New Entrance

Phoenix
Unioil
Seaoil

Bargaining power of Threat of Rival Firms

suppliers Bargaining power of
Caltex
San Carlos Shell customers:
Bioenergy Inc. (SBCI) Total Formula 4 South East Asia
Chevron

Threat of Substitute and

Compliment
Unioil Electric Vehicle
Charging Station
1. Threat of New Entrance – Weak

Today, the fierce but friendly competition among industry players has become
more evident with the newbies having captured a respectable 40 percent market share.
These new players includes Seaoil Philippines, Phoenix Petroleum, Unioil Philippines,
Liquigaz, SL Harbor, TPC, TWA, PTT Philippines, Jetti, Isla Gas, Pryce Gases, Filoil,
Microdragon, Petronas, South Pacific, Eastern Petroleum and others. Petron Corp. has
remained the biggest oil company in terms of market share accounting for 30.4 percent.
followed by Pilipinas Shell Petroleum Corp. with 23 percent and Chevron Philippines as
6.9 percent market share last years. To stay afloat amid stiff competition among industry
players, oil companies try to offer competitive pricing, offer the best service to respond to
customers’ needs, come up with the best marketing and branding campaigns and find the
best strategic locations. Early this month, Petron teamed up with Uber, a leading ride-
sharing application, to give Uber partner drivers privileges and discounts.
Uber partner-drivers in Metro Manila are entitled to special bonus points, discounts and
privileges when using the Uber x Petron Value Card for gasoline and diesel purchases at
participating Petron service stations. Holders of Uber x Petron Value Card are also
entitled to savings of about 5 percent when they avail of the rebate/cash back benefit.
They can also avail of free 24/7 towing assistance, personal accident insurance coverage
and other privileges and benefits such as discounts at partner establishments.
“Petron has always been the Philippines’ leader in fuels and product innovations, while
Uber as we all know changed and more importantly improved the transport service in the
country,” Petron vice president for national sales Archie Gupalor said earlier.
For Chevron, the downstream oil industry in the Philippines allows the company to
compete well in the market primarily with its quality global standards fuel and lubricant
products. The oil players try to outdo themselves with having the best and cleanest
bathrooms. A Shell bathroom in one of its stations in Bohol has gained popularity due to
its clean and unique design while PTT Philippines opened one of its luxurious restrooms
called Restroom 20 located Lucena City. Restroom 20 is a concept adopted from PTT
Thailand. It is is a pay toilet that has first class amenities to ensure convenience of
customers. It has a lounge where customers could relax and stay for a while especially if
 they are in a long travel. “It’s really about offering the best service from gassing up,
comfort room amenities, more choices of goods and services, giving service with smile
and satisfaction to the customers,” Cesar Abaricia, Shell corporate communications and
performance manager. Not to be outdone, Petron also designed a comfort room “fit for a
king” located in Tomas Morato, Quezon City.

2. Threat of Substitute and Compliment - Moderate

UNIOIL Petroleum Philippines, Inc. has launched on Wednesday its second
electric vehicle charging station at its outlet along the northbound side of EDSA in
Guadalupe in the hopes that it will encourage more drivers to switch from their fuel-
powered cars. “If you come here, it’s free charging for all electric vehicles… until the
time comes that we see that there is sufficient demand,” Unioil President Kenneth C.
Pundanera told reporters during the opening of the charging site. Unioil on Nov. 27, 2017
became the first petroleum company in the Philippines to launch an e-vehicle (EV)
charging facility at its fuel station along Congressional Ave. Extension in Quezon City.
Right now, we are doing this to encourage more people to try the e-vehicles, to bring in
e-vehicles. We’re also showing the government that we’re already building the
infrastructure. No need to wait. We’re just waiting for the incentives for more e-vehicles
to be sufficient,” Mr. Pundanera said. Each EV charging station costs around P2.5 million
to P3 million to put up. “It’s very difficult to determine when the e-vehicles are gonna
come in. It’s very difficult to determine when consumers will start accepting e-vehicles…
the cost is a bit high for e-vehicles. We believe that this is the future,” Mr. Pundanera
said. Unioil’s EV charging station is equipped with the latest Chademo fast-charging
protocol, which is compatible with most Japanese, US and European cars. Even though
there are no electric vehicles currently using its charging stations, Unioil is anticipating
demand to spike in the future. “We can’t say that we will only build when there are
[electric] cars. Right now, what we’re doing is we’re putting first the charging facilities,
showing people that it’s going to be ready — do not be afraid to buy e-vehicles. And to
encourage government fast-track legislation that’s needed in order to encourage more e-
vehicles to enter the Philippine market,” Mr. Pundanera said. For now It is considered as
a low threat because there are still few electronic vehicle but since there are some now
 there’s a big possibility that there will be a lot to be produced in the near future so it
could be a major threat for upcoming years.

3. Bargaining Power Of Customers – Strong

Petron Corporation has signed a deal with Formula 4 South East Asia (F4 SEA) to
be their official fuel and engine oil supplier of the 2017/2018 season. The one make singe
seater championship will run on the latest Petron Blaze 100 Euro 6 fuel. Its 100-octane
should be put to good use in tough race conditions, providing better performance while
keeping the engines clean on the inside. Petron Blaze Racing, on the other hand, will
keep the 160 hp 2.0L engines used in Formula 4 well-lubricated. This is a high-
performance engine oil proven to deliver ultimate engine stress protection even at high
temperatures in racing. “We are proud to fuel the 2017 Formula 4 South East Asia
Championship, and we welcome this opportunity to demonstrate how our proudly
Philippine-made Petron Blaze 100 Euro 6 gasoline and Petron Blaze Racing engine oil
can meet the severe demands of international competitive racing. We hope that the young
Formula 4 drivers will appreciate the performance advantages of our world-class
products,” said Petron Corporation President and CEO Ramon S. Ang. This is a strong
point supplying product in big events like this where there’ll be a lot of witnesses among
the crowd like businessmen. This will give them instant publicity and a great way to
market there product.

4. Threat Of Rival Firms

In a bid to keep up with peers in the highly competitive downstream oil industry
in the country, service stations nowadays are offering discounts, freebies and even a
lifetime supply of fuel. Pilipinas Shell Petroleum Corp., for instance, is implementing a
P1 per liter discount for public utility vehicles (PUVs) dubbed as the “PUV Lane,” which
used to be the DOE (Department of Energy) Lane since this was an initiative of the
agency. Shell’s PUV Lane is not a promo. The company brands it as a market discount.
The recent promo offered by Shell was called the “Summer Promo” in which motorists
can avail themselves of free drinks every time they gas up. On their fifth visit, they earn a
chance to win a free vacation. Shell said these are meant to increase awareness on Shell
 fuels. “We merely match what the competition is doing so we can defend our areas of
responsibilities,” said a Shell official who asked not to be identified. Of the nearly 1,000
Shell stations all over the country, 85 sites in Metro Manila extend the discounts to
PUVs, 52 in North Luzon, 63 in South Luzon, 62 in the Visayas, and 38 sites in
Mindanao, according to company data. Some dealers of Petron Corp., the country’s
largest oil refiner, also offer cheaper gas prices in selected gasoline stations. The most
popular is the P1-P2/liter discount on some of its petroleum products. A Petron dealer in
Sucat, Parañaque City, said the signage of its price offering is large enough to attract the
attention of motorists. “The larger our sign, the better. As you can see, every gasoline
station here offers a promo different from its rival. We must be effective at attracting
motorists so they will choose Petron over the others,” said a dealer, who asked not to be
named.
5. Bargaining Power Of Suppliers
Oil giant Petron Corp. said it would tap additional local suppliers of ethanol to
prepare for the higher blending requirements mandated by the Biofuels Act. Ethanol is a
high-octane, water-free alcohol produced from sugar cane and other crops. It is used as a
blending component at five to 10% concentration in gasoline. Petron chairman Ramon
Ang said that they would continue to draw from existing ethanol suppliers, and at the
same time, go to the market for new domestic suppliers. he company estimates it will
have to import about 60 percent of its ethanol requirements to meet the five-percent
ethanol-blend mandate set in the biofuels law. With inadequate local supply, it is
estimated that Petron and other oil firms will need to source more imported ethanol next
year when they will be mandated to have a 10-percent blend in all gasoline products.
Ethanol is trading in the vicinity of $80 per barrel in the world market. That could result
in further depleting dollar reserves if the oil companies are forced to rely on the world
market for its ethanol requirements. “The essence of the law is to encourage more
investments in the local biofuels industry but so far supply hasn’t caught up with
demand,” Ang said. “By going into supply agreements with local producers, we aim to
address this imbalance and give the country a more stable and reliable supply of locally-
produced ethanol. ”Petron is the only oil company in the country with an existing
supply agreement with a local ethanol producer San Carlos Bioenergy Inc.(SCBI).
SCBI owns the country’s first integrated ethanol and cogeneration plant with a capacity
to produce 125,000 liters of ethanol daily. The company was also the first to purchase the
first locally-produced fuel grade ethanol from Leyte Agri Corp. in August 2008. Petron
supplies nearly 40 percent of the country’s fuel requirements. It likewise operates a
180,000 barrel-per-day oil refinery which produces a full range of petroleum products. It
sells gasoline, diesel and kerosene on its 1,500 service stations nationwide.