Petron Corporation

Jose Stephen T. Sanosa

MD080074
Executive Summary

 Petron Corporation is the largest oil refining and

marketing company in the Philippines
 Supplies 40% of the countries requirements
 Operates a refinery in Limay Bataan, with a capacity of
180,000 barrels a day
 Offers 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 created

 1960’s - Company was split into Exxon and Mobil
 Both sold their shares to PNOC which was later
renamed Petron
 1994 – 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
1 Customers
2 Products/ Services
3 Markets
4 Concern for survival,
growth, and profitability
5 Technology
6 Philosophy
Evaluation
Be an integral part of the customers' lives,
delivering consistent customer satisfaction
through innovative products and services
Deliver exceptional products and services
through its extensive network of channels
Be the superior choice and acknowledged leader
in the energy sector in the Philippines
Developing strategic partnership in pursuit of
growth and opportunity, ensuring sustainable
and long-term increase in shareholder
investment.
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
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

10 An organization that is caring for community

Concern for Nation-
and the environment and fosters growth in the
community
Building
Porter’s 5 forces analysis
New
Market
Entrants
Moderate

Supplier Competitive Buyer

Power Rivalry Power
High INTENSE Low

Threat of
Substitute
Product
WEAK
Competitive Profile Matrix
Critical Success Factors Wt Petron Shell Chevron

Rating Weighted Rating Weighted Rating Weighted

Score Score Score

Price 0.20 4 0.80 4 0.80 4 0.80

Product Quality 0.20 4 0.80 4 0.80 3 0.60
Market Share 0.15 4 0.60 3 0.45 2 0.30
Channel of Distribution 0.15 4 0.60 3 0.45 3 0.45
Financial Position 0.10 3 0.30 3 0.30 2 0.30
Customer Loyalty 0.10 3 0.30 3 0.30 3 0.30
Advertising 0.10 2 0.20 2 0.20 2 0.20

Total 1.0 3.6 3.3 2.95

Market Shares Petroleum 2009

Sales

18.8
37.1
Petron
14.1 Shell
Chevron
Other Players
27.6 End Users
Market Shares Petroleum 2010
Sales

21.2
37.6
Petron
11.9 Shell
Chevron
Other Players
27.4 End Users

* DOE Website
Market Share LPG 2009

Sales

8.3 4
6.4
34.7
Petron
Shell
Liquigaz
28.6 Petronas

17.9 Total
Pryce Gas
Market Share LPG 2010

Sales

7.5
6.9
34.4 Petron
Shell
Liquigaz
30.3
Petronas
Total
16.9
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 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

IFE 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

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
1. Heightened Competition
2. Government Taxes
3. Crude Oil Importation
Dependency
Strengths
1. Strong brand quality and third
party recognition
2. Technological innovation
3. Cost effective solutions
4. Site acquisition
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)
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)
Weaknesses
1. Marketing and Advertising
Strategies
2. Customer Loyalty Strategies
3. Quality of service at gasoline
stations
4. High employee turnover rate
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)
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 Coordinates
Conservative Aggressive
5

1
(1.16, 2)

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

-1

-2

-3

-4

-5

Defensive Competitive
Internal External Matrix

The IFE Total Weighted Score

The EFE Total Weighted

IFE = 2.75 Strong Average Weak

EFE = 3.1
Score

High I II III
(3.0-4.0)
Medium IV V VI
(2.0-2.99)
Low VII VIII IX
(1.0-1.99)
Grand Strategy Matrix

Rapid Market Growth

Strong Competitive
Weak Competitive

Quadrant II Quadrant I

Position
Position

Quadrant III Quadrant IV

Slow Market Growth

Summary of Matrices and Analysis
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
Action Plans

Activities (Marketing) Time Table Expected Output Group Responsible

1. Generate social media March to June 2012 1. Enhance the Marketing/ Advertising
accounts of the company’s image Department
company
2. Create commercials/ March to December 1. Public will be more Marketing/ Sales
advertisements that 2012 knowledgeable about Department
promote the company’s the existing services/
existing promos/ products that Petron
products offers
2. Improve sales
3. Conduct regular March to December 1. Improve customer Marketing/ Sales
promos like raffle 2012 satisfaction Department
draws, etc 2. Improve sales
4. Conduct nationwide March to December 1. Attain feedback/ Marketing/ Sales
surveys regarding 2012 knowledge about Department
Petron’s services for its existing problems on
gasoline stations the gasoline stations
Activities Time table Expected Output Group Responsible

1. Construction of June to December 2014 1. More reliable and Special Projects Group
70MW Coal facility economical steam and
power supply
2. Cost savings
3. Internally generated
by-product (petrocoke)
can now be used to fuel
the power plant
2. Refinery Master Plan June to December 2015 1. Enhance company’s Special Projects Group
(RMP 2) 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%
Strategic Goals

 Increase net income by 4%

 Increase petroleum market share by 3%
 Improved customer service at gasoline stations
 Increased customer satisfaction
 Increase LPG Market Share by 4%
 Advertisements about the centralized customer hotline
 Increase loyalty card membership by 200%
 Increase advertisements about the perks of the card
 Improved perks
Financial Projections

Net Income, in Billions

 .92 .97

9.3
9.0
8.7
8.4

2011 2012 2012 2012

Net Income, in Billions

 End