Chevron Company in Global Business Environment Term Paper

Chevron is the second largest U.S. oil company after Exxon Mobil. In 2001, Chevron expanded dramatically by acquiring Texaco and subsequently in 2005 after acquiring Unocal. It has interests in chemicals, gas, fossil fuel explorations, geothermal power, and many other sources of energy. In addition, the company owns “stakes in over 25,000 gas stations around the globe, which operate with brands such as Texaco, Chevron, and Caltex” (Chevron Corporation, 2014). Chevron’s sustainable and continuous growth has been contributed by its compliance to its codes of ethics touching on issues such as operational excellence, human rights, antitrust/competition laws, internal laws, and company records. Other issues tackled in the codes of ethics include anti-bribery, anti-boycotts laws, and data privacy among other issues that are discussed in depth in this paper.

The Nature, Structure, Types Of Products Or Service of Chevron

Chevron is one of the major American multinational energy corporations, which is based in San Ramon, California, and has subsidiaries in more than 180 countries worldwide. In addition, Chevron is involved in “exploration, production, refining, marketing and transportation of oil, gas, and geothermal energy” (Chevron Corporation, 2014). It is also engaged in the manufacturing and sale of chemicals, electric power generation, lubricants, additives, petrochemicals, fuel cells, and hydrogen. Chevron has its main operations in areas such as the West Coast of North America, the United States Gulf, South Korea, Australia, South East Asia, and South Africa.

It is estimated that in 2010, the company managed to sell an average of 3.12 million barrels on a daily basis of refined products including gasoline and jet fuel. The three key issues that are critical for the success of Chevron as a multinational energy producing company include operational excellence through the protection of the environment, safety and health of people, and reliable and efficient operations. In addition, Chevron derives much of its success from its participation in government affairs and political involvement in accordance with high ethical standards. Finally, the company is one of the US organizations operating within the antitrust/competition laws (Chevron Corporation, 2014).

Codes of Conduct of Royal Dutch Shell Plc. and British Petroleum (BB) Plc.

The two companies that are also highly involved in the energy sector similar to Chevron are the Royal Dutch Shell Plc. based in the Netherlands and the British Petroleum (BB) Plc, which is a British multinational company with headquarters in London (British Petroleum, 2014). Chevron’s policy of operational excellence intends to protect the safety and health standards of employees and other people in community where it conducts its business, with major emphasis being on protecting the environment when conducting its operations (Chevron Corporation, 2014). This policy is also regarded as the secret behind the success of the two rival oil companies, BP and Shell. However, there is a slight contrast to Chevron’s policy in the sense that, whereas BP and Shell clearly tend to comply with Health Safety Environment (HSE) in operational countries, Chevron only stresses on endeavoring its operational excellence management system (OEMS).

The second policy involves government affairs and political involvement (Trevino & Nelson, 2010) where Chevron strives to maintain the highest ethical standards in its participation in the political arena in all countries in which it operates. Additionally, both BP and Shell also maintain transparent and legal standards in their interaction with governments in countries where their operations are present. The only contrast is that, whereas Chevron engages in lobbying activities, both Bp and Shell do not. The third issue concerns competition and antitrust laws where all three companies promote aspects of free market and fair competition. However, Chevron’s policy contrasts those of the other two companies in that it does not promote mergers and association unlike Bp and Shell (Chevron Corporation, 2014).

How Shell and BP have addressed Operational Issues

In both companies, the policy of operational excellence is highly regarded in the sense that, the safety of their workforce and the communities around their operations is given top priority. The protection of the environment is also emphasized. On the issue of government affairs and political involvement, both BP and Shell respect laws and regulations of the governments where they operate, and they do not involve themselves in any political contributions or corruption activities. The policies of competition and antitrust laws are highly regarded in that, both Bp and Shell comply with those laws and promote the obligation of free markets and fair competition (Shell International Limited, 2006).

If the two companies, BP and Shell, follow these policies, they are most likely to preserve the environment, avoid corruption scandals, and enhance fair competitions; this would boost their sales and profits. Failure to adhere to these policies would make the two companies likely to face environmental law suits as well as termination of business contracts and licenses by the governments due to breach of public integrity compliance in cases where they get involved in corruption. Lack of adherence to antitrust laws and fair competition may lead to cancelation of licenses or financial penalties by governments of the affected countries (British Petroleum, 2014),

Techniques to ensure Relevance of Code of Conduct

There are several techniques that Chevron can use to ensure that its codes of conduct remain relevant. These techniques include review and monitoring compliance techniques where Chevron can embed the condition of compliance in employment contracts when recruiting its employees (Morrison, 2011). This should be enforced to all employees to comply with the codes of ethics and report a conduct that might be in breach of those laws. A penalty or subsequent termination of employment can be arrived upon in case of failure to adhere to codes of ethics.

Another technique is the review technique, which can be applied regularly to give Chevron an opportunity to assess its codes of conduct in terms of current and emerging needs. The review should involve the entire stakeholders who are affected by those codes of conduct (Chevron Corporation, 2014). Chevron has implemented the OEMS to meet the required standards, ISO certification; this is complemented by Environmental Performance Standards in its exploration and production organization. Chevron also increased its focus on minimization of oil spills, subsequently reducing spill incidents to 41 percent from the number of spills in 2008 (Chevron Corporation, 2014).

Approaches to Embrace Information Technology

Chevron’s partnership with the University of California assisted in creation of digital oil field at the Kern River operations. This has enabled Chevron to remotely manage thousands of pieces of equipment at operation in six continents, making the operations safer, cleaner, and highly productive. Secondly, the innovation of renewable (Conklin, 2012) forms of energy such as the one at Coalinga, the world‘s largest solar-to-steam generation project.

Three technological challenges that Chevron could face include the challenge to the provision of clean energy, deep water oil reserve exploration challenges to drilling and very thick and heterogeneous oil reservoirs. Strategies that Chevron could apply to Solve the problem of oil reservoirs is by providing complex reservoir management and surveillance solutions by recycling polluted water caused by deep water drilling. To provide clean energy, Chevron will need to improve on its primary oil recovery methods (Chevron Corporation, 2014).

Lobbying Strategy

Lobbying is a mechanism firms use to influence policy decisions through the provision of information to elected officials, either in government or private arena. It includes direct or indirect communication with public officials and providing support to them (Mine, Demirkan & Gokalp, 2013). Chevron has been involved in lobbying in the US on several occasions, and it is reported to be one of the largest oil company contributors to both the Republican and Democratic candidates for the position of Congress. It is estimated that the contributions total to about $481,715 to the 110^th US congress. However, the largest contribution was to Rep. Roy Blunt, amounting to $23,300, who consistently voted in support of fossil fuel industry on energy, war and climate bills in the house (Mine, Demirkan & Gokalp, 2013). In lobbying for support of these bills, Chevron reiterated its interest of safeguarding its core raw materials and the availability of ready market of its energy products; to a large extent, this move was appropriate enough, as it led to improved performance of the company in subsequent years.

Global Corporate Citizenship Efforts

Corporate citizenship is simply defined as the means through which business enterprises improve standards of life of the communities in countries where they operate while still maintaining their core objective of making profits and maximizing returns for stockholders (Aras & Crowther, 2012). In the US Gulf of Mexico, Chevron’s commitment to the aspect of safety and leading operational excellence programs and new technology has enabled it to tap into the demanded energy supplies and at the same time providing jobs to the community and business within the Gulf (Chevron Corporation, 2014). The same can be said about Chevron’s experience and performance in other countries.

For example, in Angola, the aspect of conservation through collaboration of marine life has improved, thus conserving the country’s ecosystems. Chevron has operated for more than 75 years in Angola and it has provided energy to the country both in times of stability and in times of unrest. Importantly, Chevron’s Cabinda Gulf Oil Co. Ltd is the largest foreign oil-industry employer. The conservation has also greatly supported the livelihoods of Angola’s fishermen (Chevron Corporation, 2014). Chevron’s fundamental objective is to make profits. In this respect, its incursion in both the Gulf of Mexico and Angola has achieved a tremendous success and sustainability as an energy producer. Indeed, fulfillment of its primary goals is not in jeopardy for now (Chevron Corporation, 2014).

Conclusion

Chevron has been one of the leading multinational corporations that have contributed significantly in transformation of global society. As evidenced in this paper, Chevron is one of the leading energy producers and its activities in countries where it operates have changed lives of communities, especially when it participates in economic, political, social and environment agendas in those countries. Its consistency in maintaining compliance to codes of ethic in delivering and conducting activities has made it easier to sustain its operations and achieve tremendous growth and profitability.

It is also worth noting that, Chevron operates in an industry and market where competition is rife, thus calling for strategies that can enhance attainment of competitive advantage. Some of the major competitors, as discussed above are Royal Dutch Shell Plc. and BP Plc., both of which tend to use similar strategies and policies in advancing their operations. Nevertheless, Chevron would sustain its positive performance in global market by maintaining compliance to code of ethics, collaboration with research institutions for advancement of oil exploration, liaison with governments, and upholding of corporate citizenship in all its operations.

References

Aras, G., & Crowther, D. (2012). Corporate Governance and CSR. Surrey, England: Gower Publishing, Ltd.

British Petroleum. (2014). BP Code of Conduct. Web.

Chevron Corporation. (2014). Chevron Business Conduct and Ethics Code. Web.

Conklin, D. (2012). The global environment of business: new paradigms for international management. Strategic Direction, 28(2), 1-5.

Mine, O., Demirkan, I., & Gokalp, O. (2013). Collaboration networks and innovation: does corporate lobbying matter? Journal of Strategy and Management, 6(3), 286 – 308.

Morrison, J. (2011). The Global Business Environment: Meeting the Challenges. Hants, UK: Palgrave Macmillan.

Shell International Limited. (2006). Code of conduct. Web.

Trevino, L., & Nelson, K. (2010). Managing Business Ethics. NJ, USA: John Wiley & Sons.