Understanding the Business Environtment of Chevron

Chevron Corporation is an American multinational energy corporation, headquartered in San Ramon, California, and active in more than 180 countries. Chevron is an integrated oil and gas company which mean they participate in every aspect of the oil or gas business, which includes the discovering, obtaining, producing, refining, and distributing oil and gas and power generation. With approximately 62,000 employees, it has more than 32,000 service stations worldwide.

5 Forces Analysis of Chevron

1.      Competitive Rivalry

The main competitors of Chevron are Exxon Mobil, Royal Dutch Shell and Conoco Philips. The table below is the comparison between Chevrons with its competitor in term of the company size, market share / capitalization, revenue, their product and services positioning and strategy.

	Market Capitalization	Annual Revenue	Number of Employee	Positioning	Strategy
Chevron	$240,150,704	$257.3 billion	62,000	Cost leadership; Differentiation	Focused on upstream and downstream strategy. Upstream strategy is focused on their energy production, while downstream strategy is used in their refining and chemicals sector. While Chevron is more focused on the exploration and production of energy, they also remain committed towards the marketing of electricity and natural gas; and shipping or transportation of chemicals and oil products.
Exxon Mobil	$361,313,345	$453.123 billion	69,600	Cost leadership; Differentiation	Focus on delivering operational excellence and building technology leadership. Invest with intelligence and discipline.
Royal Dutch Shell	$192,175,309	$451.235 billion	90,000	Differentiation	Aims to improve energy efficiency in operations, support customers in managing their energy demands and continue to research and develop technologies in the production of liquid products and natural gas.
Conoco Philips	$91,096,627	$62.004 billion.	16,900	Focused low cost	Collaboration with key stakeholders to increase capacity for biodiversity protection, internally and in related institutions and communities.

2.      Threat of potential entrants:

Due to the cost of entry is very high (huge capital required) and specialist knowledge and advanced technology is needed, the barrier to entry for new entrants are high. Besides, the economics of scales advantages by the existing big IOCs which drives the whole value chain and the heavy regulations by government makes it harder to enter this industry. Other factor is national oil companies control more than 90% of the proven oil and gas reserves in the country.

3.      Threat of substitutes:

The main alternatives sources to oil and gas for producing energy are nuclear energy, coal, hydrogen, biofuels and other renewables sources such as solar and wind energy. The rising of the society awareness toward the environment; such as air pollution, emission converted using oil and gas (fossil fuels) might encourage the switching. However, the substitution is uneconomic. It is less efficient (hard to find) and usually more expensive. Hence, the limited number of substitution and high switching cost lead to low threat of substitutes.

4.      Power of suppliers:

Great player in the side of the suppliers are the oil rich countries or else OPEC has a significant bargaining power. OPEC nations own at least 70% or the world's oil proven reserves. The limited crude oil supplies which can be find on certain strategic location and government permission needed create a high supplier power. Besides, the supply of the advance technology such as the drilling machine, refining machine, and others is only supply by limited suppliers. 

5.      Power of buyers:

The main buyers of oil and gas products are refineries, both national and international oil companies, distribution companies, traders and to be exported to another countries. The buyer’s power is less because oil and gas cost is similar and fixed by government (there is a benchmark). And also the inelastic demand for energy will cause the price insensitivity. With lower buyer price insensitivity, price can increase and buyers will still buy the product.

5th week of MIS "Understanding a business"

Before start-up a business or entering a new industry, the first thing we need to do is to analysis the industry. We need to understand the business. One of the tools that can be used to analyze is Porter’s five forces which including competitive rivalry, the threat of new entry, the threat of substitution, supplier power, and buyer power.

1.      Competitive Rivalry

Identify the current market, and list the number of competitor in this industry. Then, we can identify what does each competitor offers, start from their product quality, prices, their delivering process, and many other differences such as bonuses or incentives given.

2.      Threat of new entry

There are several threats to enter the business. Therefore, firstly we need to identify the cost of entry that business. For example in a certain industry such as mining need a huge entry cost that might need to consider about compare to open a restaurant. Specialist knowledge, an expert, and human capital are needed for certain industry. Several questions such as is the economics of scale is high?; Is there a cost advantage to entry?; And also is there any technology protection?; might help us to understand the threat to enter the business.

3.      Threat of substitution

In this modern area, where everything is changing; start from the advanced technology until the changes in human behavior. All of these changes will bring us to another alternatives way to keep improving our convenient and efficiency even to create a better environment for our future. One real example is people demand paper is decreasing, where the use of paper is substitute by everything that can be done digitally (E-book, E-news, online test, and etc.). This substitution is a way to increase efficiency while at the same time saving the world. Hence, the threat of substitution might need to be considered before entering the business.

4.      Supplier power

By considering the supply and demand rules, the numbers of suppliers have a certain effect on their power. If a certain industry has a limited number of suppliers, then their power is bigger and usually might control over the potential rise of price, which in turn would lower the profitability of a business. Then, we need to compare between those suppliers, start from their size or the ability to provide until their uniqueness in service.

5.      Buyer power

Same with the supplier power, the buyer power here also implemented the supply and demands rule. Number of suppliers, size of each order, price sensitivity and the ability to substitute are some points we need to analyze to know the buyer power.

Chickuy is Coming Soon!!

An interesting yet tiring project on our entrepreneurship subject is coming soon!!!

Meet our lovely team 💓💓

Chickuy Team

A challenge for me to become the CEO on this business project. I need to bear such a huge responsibility and pressure on me. Thank you guys for believing in me and give me a chance to bring all of us together to be the best team ever. Hahaha 💪💪💪

One more thing, I would like to say thank you for my vice CEO on this project. The one who I can always talk and discuss with every time. the one who shares the pressure with me. LOL  😂😂😂

Here is a short teaser of Chickuy Team!!

Stay curious and please enjoy !!!

4th week of MIS "Ethic"

What is ethics?

Basically, we know ethic as our principles to know what is right and what is wrong, or as guidance for us to make a decision. It is at the core of everyday life on a human being, as living things that differentiate us with other living things, we have our mind to think what is right and wrong.  Therefore, an ethical behavior can be defined as the act in the way what society and an individual typically think that it is a right thing or things that bring a good value.

Back again; is there an international standard on what is ethical behavior? While the ethics can vary depending on the way people mind and knowledge that help them to interpret some action and think in deciding what is right and wrong. Hence，a lot of factors will shape up people with a different definition of ethical behavior, such as knowledge，culture, religion, and belief.

Ethics can be applied to all aspects of the business. Applied to the work environment, it means that an ethical person has a higher standard than just avoiding a certain behavior or practice because it is illegal.  Organizations that conduct business in an ethical manner generate respect, trustworthiness, and loyalty from both employees and business partners. Ethics within the workplace includes the application of moral principles, standards of behavior, codes of conduct, and ethical principles to everyday business transactions. 

Happy Mid Autumn

Since today is the Mid-Autumn Festival, I would like to share something about this.

Mid-Autumn Festival which is also known as moon festival is held on the 15th day of the eighth month of the Chinese calendar. In 2018 it takes place on Monday September 24th on the Gregorian calendar.

The Mid-Autumn Festival is a harvest festival celebrated notably by the Chinese and Vietnamese people. Each culture and region has different way to celebrate this day. Meanwhile, the most identical things in this festival, especially in Indonesia is the mooncake. Mooncake is a Chinese bakery product traditionally eaten during the Mid-Autumn Festival. The festival is for lunar appreciation and moon watching when mooncakes are regarded as an indispensable delicacy. Mooncakes are offered between friends or on family gatherings while celebrating the festival. 

However, in Kepulauan Riau (my hometown hehe) we have the different type of mooncake. Our mooncake is made traditionally by the local, which is more look alike like bakpia. It comes with sweet and savory options.  I can’t find any here in Cikarang 😌😌

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Besides mooncake, actually, the modern celebration of mid autumn festival is also carrying of brightly lit lanterns lighting lanterns on towers, or floating sky lanterns. I used to join the lampion parade when I was a kid.  Its been a while though ~~~ 😥😥😥

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3rd lesson of MIS "Flowchart"

A flowchart is a type of diagram that represents an algorithm, workflow or process. The flowchart shows the steps as boxes of various kinds, and their order by connecting the boxes with arrows. Flowcharts are used in analyzing, designing, documenting or managing a process or program in various fields. Flowchart help visualizes what is going on and thereby help understand a process, and find less-obvious features within the process, like flaws and bottlenecks. 

Here are some basic symbol used in the flowchart

Below is an example of a flowchart in the business process

Flowchart for opening a bank account in Indonesia

Anyway, I made this flowchart in draw.io. It is an online website to make a diagram. You can easily add the shape and drag it to wherever you want.

Lastly, some tips from me if you want to make a good flowchart

1. This is a flowchart, not a guideline. So make sure you make it as clear as possible following the SOP.

2. Think about all of the possibilities that might happen after each process.

3. Identify the time needed for each process. This will help us to mitigate the problem and increase the efficiency.

4. To evaluate your flowchart, please make sure there is no other version of the flowchart that is applicable to this process. It must be the only one version to complete the process. And also it needs to be easy to understand by the other. So, if the flowchart can be applied by the other to do the process, it indicates that the flowchart is clear enough.

2nd Lesson of MIS "Global E-Business and Collaboration"

Global E-Business and Collaboration

The second lesson on MIS will talk about the global e-business and collaboration, continuing from the previous lesson which talking about the changes and globalization. The purpose of collaboration will definitely want to increase their performance or creating something they cannot be done alone. Hence, collaboration is usually done between two different business sectors. By doing so, they can share each expert and knowledge to create a new innovation that other single business cannot do.

Before going further, we need to know the organization structure of an organization. Basically, it is divided into the primary division and secondary division. Primary division is the basic or core department that a business need, no matter what the size. Operations, finance accounting, and sales marketing are the primary division that a company needs. Meanwhile, the secondary division is including human resource, IT, audit, and etc. Usually, a large scale company that has a lot of employees will need a clear job description for each department from the primary until the secondary. On the other hand, a small business like restaurant may only need the primary division.

The next question is ‘how do we achieve our company goals or objectives?’. There are several terms that we need to focus on in order to achieve the goals. The first is the efficiency measurement. By doing the evaluation, we can improve our efficiency level over the time. The second is getting the right product to the customer, following by making a better decision. And the last is deliver a good product at the least cost or cost control. The least cost will link us to one of the strategies in competition, what we know as cost leadership strategy. However, in a real practice, cost leadership strategy will not work to sustain in a long run. This strategy will only work for a few cycles until there will be always a competitor come at a lower price. 

Moving on to the business process; a business process is the collection of activities required to produce a product or service between each division. Each type of the business has each business process. The business process is needed to measure the efficiency and mitigate the problem. It provides a clear Standard Operating Procedure (SOP). The business process is accompanied by the flowchart so that it is easier to understand and being identified. In making flowchart, there are standards symbol uses.

Business Process Management (BPM) cycle

1.      Design: the first planning step in running a business. A business plan is made at this stage. The task involves here might be doing research to know the demand for the product.

2.      Model: in the second stages, the result of the planning is being tested. The testing process can be in term of a questionnaire to know the will of the target customer to purchase the product or services or questionnaire to know the price that they are willing to pay. Besides questionnaire, some products may need in lab experiment testing in this stage.

3.      Execute: in case the product or service passes the testing period, then the plan is ready to execute or another start running the business.

4.      Monitor: after running a business, the monitoring process start. This stage is needed to evaluate and mitigate the problems that might occur.

5.      Optimize: Finally, the result of the monitoring process will bring to the evaluation and optimize the business.

In this case, MIS help the business by identifying the bottleneck, the main of the problem or even the small things that might lead to a problem later on. For example is the automation. Automation will work well if the system had been set so that the input sensor will lead to the output we want. MIS provides the information needed to set the system.

Information needed from MIS is different from each management level due to functions to carry their duties, level of security access, and the frequency it needs to be accessible. For example, the highest level of management who control the whole business will have the access to all departments where he or she can get the information needed.

Basically, the information system can be classified as Transaction Processing System (TPS) and Business Intelligent System (BIS). A transaction process system (TPS) is an information processing system for business transactions involving the collection, modification, and retrieval of all transaction data. The example is the payroll system.

Types of the system used in the business:

·         Enterprise system

Basically, the enterprise system manages the business processes, information flows, reporting, and data analytics. It works by gathering and storing information that was previously fragmented in many different systems into a single comprehensive data repository where it can be used by many different parts of the business. Types of applications use in the enterprise system are Oracle, Net Suite, and SAP.

·         Supply chain management systems

Supply chain management systems manage the customer requirement processing, purchase order processing, sales and distribution, inventory, goods receipt and warehouse management and also supplier management or sourcing. These systems help suppliers, purchasing firms, distributors, & logistics companies share information about orders, production, inventory levels, & delivery of products & services. The app use is the SAP.

·         Customer relationship management systems

Customer relationship management is used by the customer service officer to help manage their relationships with their customers regarding in sales, marketing, and service to optimize revenue, customer satisfaction, and customer retention. This information helps firms identify, attract, and retain the most profitable customers, provide better service to existing customers, and increase sales. The apps use are Dynamic CRM, SAP CRM.

·         Knowledge management systems

Knowledge management systems is a pool based knowledge system. It manages the collection of information from internal and external sources, classification of content using grouping, and expertise location. The app uses are MyBase, Google Drive, and etc.

Internet, Intranet, and Extranet

The benefit of collaboration and social business are increasing the productivity, quality product, service, and the sales and profit. At the same time, the obstacles are the difference corporation culture, organization structure, and objectives. Lastly, the one who manages it all is MIS department which consists of system analyst and programmer. 

"Alone we can do so little:

Together we can do so much."

-Helen Keller

First Lesson of Management Information System

Everything is changing nowadays. Start from the technology that influences people behavior or even their personalities in facing today’s globalization. So with how people demand efficiency is changing the technology development. This whole cycle also can be seen in the business environment. The element such as the organization structure, the people in an organization, and the technology used in a business are changing. Hence, the Management Information System will work as a tool to connect and link all of those changes.

A real example of changes that can be seen is globalization. People over the world are connected to each other easily using the social media platform such as Facebook, Instagram, or any other social media that are wide connected over the world. This phenomenon makes us can explore the whole world without exact travel to another country. So with the barriers between countries, the worldwide online shopping business is one of the examples that impact the people behave in the business sector. The e-business is emerging and brings the business competition to a higher level.   

Another example is the factory or the plantation. The business used to use a lot of labor in the production operation process and need each factory to fulfill the demand of each place. The factory strategy is now shifting to the limit employment of labor that being substitutes by the advanced machine. The same thing happens for the number of factories a business might consider. The strategy taken most of the company is to build a gigantic factory that might produce the product in a massive amount and distribute to each place regarding the demand. There is still a lot of examples such as the distribution method in business, and the working conditions.

The MIS process basically starts from the data gathering to data processing and lastly, the information got from the data. MIS work as a tool to gather the data and process them to find the link between them or connected them and resulting in the interpretation of information. MIS can help the business by collecting the information so that we can understand the pattern of business, for example, the habit of the customer which known as customer behavior. Finally, we can make the choices and correct strategy to win the business competition. The result of MIS is varied, starting with a new idea and product invention until the cost analysis to increase the profit.

The approaches to MIS are basically divided into two categories which are the technical approaches and behavioral approaches. The technical approaches are management science, computer science, and operation research such as queuing theory and optimization. On the other hand, the behavioral approaches are the studies of economics, psychology, and sociology.