Impacts Of Globalization On Organizational Performance: A Caltex Essay.

You are then to select one of the following factors to be the primary focus of their presentation and report:

1. Regional Economic Issues
2. Globalisation
3. Cross Cultural Management.

You are to assess the impact of the chosen contextual factor, identify the critical issues and generate a series of appropriate recommendations that will enhance organisational performance.

This is a task that requires a formal presentation in class, to be delivered to present their findings using appropriate support materials. you should adopt the perspective of a group of professional consultants providing strategic advice to the CEO or Board of Directors of the firm.

In addition, an Executive Business Report to be submitted, which summarises key literature, issues, identified problems and recommendations.

The report is based on the study of Globalization and its impacts on one of the renowned Petroleum product Caltex. The company, which started its operations from the island continent of Australia, is the best example of a joint venture firm around the world. The joint venture is between two organizations namely Chevron Corporation and Texaco. Established in the year 1936 Caltex specializes in producing petroleum and other by products of black gold. The report prepared by the researchers is a key work on the management concept of the organization, which has not been conducted earlier. The research has focused upon the different features of the business that determines its operational capabilities like marketing plans, financial conditions and many more as such. SWOT analyses, PESTEL analysis, Five Force Model were used to analyze the condition of the firm.

Globalization is the latest trend of the globe which refers to the freedom in the movement of all the things that is available in the modern world without any hassle. It has practically no conclusion as different items, service; information has achieved a free and fast flow. Everything can now be attained in a short span of time given the latest technological improvements. Globalization in business is somewhat similar as it refers to the free transfer of manufactured goods and the capability of the business to adapt to the changing needs of the customers (Beck, 2015).

Chevron group of company has been instrumental to achieve success in the modern days as because it has been able to influx modern technologies that have helped it to sustain itself (Belleflamme & Peitz, 2015). The year 2012 saw a sharp growth in the petroleum sector and thus helping the company to garner revenue through the selling of its product more extensively. The company has started its search for new offshore and onshore fields to enable the expansion of its present capacity as it aims to outpace its close rivals in the race. Before entering any new market, the company aims to complete a market research to test the acceptability of its product in the given market (Dissanayake, Xia & Wu, 2015).

Caltex is a superior quality product that is accepted by a large number of customers (www.caltex.com). The company had taken special care to satisfy its customers, which is one of the basic ways to go with globalization. The demands of the customers are changing every now and then thus the company is always extra cautious to have the latest idea on customer demand. Chevron also keeps a thorough knowledge on the strategies of their competitors (Yin & Kaynak, 2015). This helps them to prepare their plans and programs and keep a tight grip of the market.

In a business situation analysis is the methods and tools that are used by the top management of the company to get the idea of the intramural and extramural environment in which the specific organization operates (Mikesell, 2016). The particular analysis helps the company to fix its strategies based on its strengths, weakness, political aspects, social aspects and risk factors.

Situation Analysis

Globalization has changed the means of world transportation. The demand for petroleum and lubricants is on the rise because of the large number of vehicles that operates in Australia.   The rise of the living standards of the people, rise in the purchasing power is the main reasons behind such a change in the transportation scene of the country (Ferrell & Hartline, 2014). Caltex has a number of competitors around the globe namely Shell, Zic, Mobil, PSO and many such. The companies provide a stiff challenge to the smooth operations of Caltex and have a good market share globally. Globalization has been beneficial in increasing the revenue of the company but there has been a more negative effect on the company (Shuen, Feiler & Teece, 2014).

The market is flooded with cheap and low quality lubricants that is affecting the sales and in turn is affecting the revenue of the company (Hunter, 2014). The mentioned organization has lost its number one position to Shell group, as it is the most preferable brand of the customers in the world. The company analyses the current situation of the market based on five questions,

1. What are the exact needs of the customer?
2. How much big is the opportunity for Caltex?
3. What will be the cost of the product?
4. How profitable can Caltex be in new markets or existing markets?
5. How will the customers react to the new strategy of the company?

Chevron group of companies has prepared the PESETEL analysis and the Porter five forces model to determine the external factors affecting the mentioned organization whereas the internal factors of the same were determined by conducting the Mc Kinsey 7’s Framework. The integration of the two factors helped in determining the SWOT of the company (Khan & Sawicka, 2016).

Every Business organization has some fixed strategy that determines its success in the market. The top leaders in consultation with the stakeholders of the company fix the strategy that is implemented in a timely basis. Strategy helps the organization to understand their capabilities, their weakness, what the opportunities are for them in the future, what are the risks that are involved and many more (Sharf, Malanina & Kamynina, 2014).

As mentioned earlier carrying out the SWOT of the organization clearly identifies the strength, weakness, opportunities and threats that the company may face in future (Frynas & Mellahi, 2015). Chevron group has implemented one of the best marketing strategies to outclass others in their quest for success. It has created an elite marketing team termed LMAT, which creates different marketing strategies or furnishes the traditional strategies to achieve competitive advantage (Yan & Luo, 2016). The company has been able to produce excellent results; clear all the problems related to its products and have formulated a perfect structure to keep its hold on the market. The organization has recently launched Revtex and Havoline, which are two high performance engine lubricants, designed to enhance the life of the two wheelers and cars respectively (Mikesell, 2016).

Chevron has given special attention towards motorcycle lubricant and has selected Asia as their base for promoting the sales of bike lubricants as the region has the largest concentration of two wheelers of the globe (Solomon, 2014). The LMAT team has transformed the company from a 600 million organization to the present state of some billion amounts.

Marketing Strategy

Financial projection is the prediction of the amount of revenue or the expense that will be beared by the company. The prediction takes into consideration the internal or external factors of the organization that have a direct impact on the organization (Malonza & Ngugi, 2013). The organizations generally predict the expenses and revenues on a longer time or a shorter period depending upon its needs. The researchers term it as mirrors, which reflect the plans of the business and its sustainability (Yan & Luo, 2016).

The market survey conducted by the mentioned organization has implemented on a number of key indicators. It is seen that the brand Caltex has been growing at an annual rate of 35%. This has been possible because of the positive strategies undertaken by the management in consultation with the stakeholders of the company (Hunter, 2014). The globalization of the market has helped the organization to target the prospective customers in new markets and sell the product by offering different discounts. The Asian markets like Indonesia, India have been targeted just because of the increase in vehicular traffic in these countries. primarily Chevron have started operating from the capital cities of the countries and will soon expand to other areas once it reaches its calculated financial estimates (Hsieh & Bruno, 2015). Caltex has estimated a financial growth of 5% in the coming year and have targeted to cross the double marks within two years (Yan & Luo, 2016).

The financial implication thus helps to fix a proper plan to achieve success and avoid failures.

Implementation control is the process of dividing the roles and responsibilities of the persons in an organization. The division of roles helps the company to achieve the strategic goals of the company.

Chevron takes into consideration a number of things while implementing controls over the work of the company. Customer Lifetime Value is the main consideration among them. Loyal customers help to bring in old customers that help in the growth of the organization. The company believes in the vision that it is not the potential revenue of the customer that helps the company to acquire the customer in the first place. The increase in the loyalty base of the customer helps the company to enjoy a growth in revenue and rise in sales of Caltex. The joint venture company as mentioned in the report keeps aside the savings and uses these to increase profit from scraps (Yan & Luo, 2016).

Chevron has a strategic plan and tactics on how to achieve the growth of the company. As mentioned earlier in the paragraph the mentioned organization assigns different persons and identifies who is responsible for the implementation of the goals of the organization. A shift from the traditional control methodology Chevron has now started assessing the key performance indicators in regular intervals to set aside a contingency fund in case of emergencies. The checking is done in a systematic way, which starts from the execution of the work, checking the result of the performance levels and ultimately making sure of going in the right path. If the organization does not follow the right path, the plans are changed immediately and it is altogether fixed in a different way. The sole purpose of such a work is to ensure safety for the organization by making sure the availability of the contingency fund. The product thus faces less risk in the market for the special sustainability measures adapted by the organization (Hsieh & Bruno, 2015).

Financial Projections

Conclusion

The Report is based on how Caltex has transformed itself as a brand in the globalised era. The transformation of the product from a traditional petroleum brand to a modern brand has been amazing. The extensive product promotion and a rise in the petroleum prices helped the company to garner huge profits since the millennium. As mentioned, earlier the product was able to tackle the inflation period due to the presence of the contingency fund that was kept aside for such crises. After analyzing the report, it can be seen that the organization was correct in estimating the situation of the global market. The globalization of Caltex was possible because of the expansion of the business across Asia, which accounts for more than half percentage of two-wheeler presence in the world. To conclude the above report it can be said that the marketing strategy and the financial estimates have worked well for the mentioned brand. The change in the implementation controls of the management have led to a proper and systematic execution of the goals that the organization undertakes.

References

"Caltex Australia | Fuels, Convenience Retail & Lubricants". Caltex, (2017), https://www.caltex.com.au/.

Beck, U. (2015). What is globalization?. John Wiley & Sons. (Beck, 2015)

Belleflamme, P., & Peitz, M. (2015). Industrial organization: markets and strategies. Cambridge University Press.

Dissanayake, N., Xia, B., & Wu, P. (2015). Measuring sustainability performance within the Australian energy industry. In Proceedings of the 19th International Symposium on Advancement of Construction Management and Real Estate (pp. 135-143). Springer Berlin Heidelberg.

Ferrell, O. C., & Hartline, M. D. (2014). Marketing Strategy Text and Cases. South-Western Cengage Learning. In Library of Congress Control.

Frynas, J. G., & Mellahi, K. (2015). Global strategic management. Oxford University Press, USA.

Hsieh, P. Y., & Bruno, T. J. (2015). A perspective on the origin of lubricity in petroleum distillate motor fuels. Fuel Processing Technology, 129, 52-60.

Hunter, T. (2014). The role of regulatory frameworks and state regulation in optimising the extraction of petroleum resources: A study of Australia and Norway. The Extractive Industries and Society, 1(1), 48-58.

Khan, S. A., & Sawicka, H. (2016). Redesigning supply chain network of a lubricant company: an innovative approach. LogForum, 12.

Malonza, P. A., & Ngugi, P. K. (2013). The Influence of Service Quality on Consumer Preference in Petroleum Retailing in Thika District. International Journal of Social Sciences and Entrepreneurship, 1(2), 186-213.

Mikesell, R. F. (2016). Petroleum company operations and agreements in the developing countries. Routledge.

Sharf, I., Malanina, V., & Kamynina, L. (2014). Features of the marketing strategy of oil and gas companies in exploration drilling. In IOP Conference Series: Earth and Environmental Science (Vol. 21, No. 1, p. 012047). IOP Publishing.

Shuen, A., Feiler, P. F., & Teece, D. J. (2014). Dynamic capabilities in the upstream oil and gas sector: Managing next generation competition. Energy Strategy Reviews, 3, 5-13.

Solomon, M. R. (2014). Consumer behavior: Buying, having, and being (Vol. 10). Engelwood Cliffs, NJ: Prentice Hall.

Yan, A., & Luo, Y. (2016). International joint ventures: Theory and practice. Routledge.

Yin, S., & Kaynak, O. (2015). Big data for modern industry: challenges and trends [point of view]. Proceedings of the IEEE, 103(2), 143-146.