Chevron Oil Industry Analysis Essay Example
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Chevron: Industry Analysis
Threat of New Entrants The threat of new entrants is extremely low due to several factors. First, the oil industry which consists of thousands of oil and oil service companies throughout the world is an extremely large market. “According to the Department of Energy (DOE), Fossil fuels which include coal, oil, and natural gas make up more than 85% of the energy consumed in the U.S. as of 2008” (investopia). The fact that it is such a large market, make it very competitive for new entrants. Also, the oil industry is already in the mature stage, dominated by many major players including Chevron that has been around for a long period of time with various locations worldwide. This shows that they have an established reputation that is hard to compete with. Also, there are several barriers to entry which make it a very competitive market. These challenges include high capital cost, economies of scale, distribution channels, technology, environmental and governmental regulation as well as high levels of industry expertise. According to the Turnkey Analyst, “it is very difficult to build sustainable competitive advantages in the energy industry where oil’s commodity nature inhibits pricing power within the industry. Market participants are constantly required to invest capital to maintain cash flows and market share.” Therefore, these barriers to entry make it hard for new players to enter the market. http://turnkeyanalyst.com/2012/06/turnkey-research-note-chevron-corporation-nyse-cvx/
Rivalry among Existing Firms
The oil industry is different from other due to the high demand for oil. Despite being a national company, Chevron has many competitors including regional as well as independent companies. Chevron is among the second largest oil companies in the world. Its competitors are Exxon, Royal Dutch Shell and BP. (chevron). Since oil is a commodity, the
Chevron: Industry Analysis
Threat of New Entrants The threat of new entrants is extremely low due to several factors. First, the oil industry which consists of thousands of oil and oil service companies throughout the world is an extremely large market. “According to the Department of Energy (DOE), Fossil fuels which include coal, oil, and natural gas make up more than 85% of the energy consumed in the U.S. as of 2008” (investopia). The fact that it is such a large market, make it very competitive for new entrants. Also, the oil industry is already in the mature stage, dominated by many major players including Chevron that has been around for a long period of time with various locations worldwide. This shows that they have an established reputation that is hard to compete with. Also, there are several barriers to entry which make it a very competitive market. These challenges include high capital cost, economies of scale, distribution channels, technology, environmental and governmental regulation as well as high levels of industry expertise. According to the Turnkey Analyst, “it is very difficult to build sustainable competitive advantages in the energy industry where oil’s commodity nature inhibits pricing power within the industry. Market participants are constantly required to invest capital to maintain cash flows and market share.” Therefore, these barriers to entry make it hard for new players to enter the market. http://turnkeyanalyst.com/2012/06/turnkey-research-note-chevron-corporation-nyse-cvx/
Rivalry among Existing Firms
The oil industry is different from other due to the high demand for oil. Despite being a national company, Chevron has many competitors including regional as well as independent companies. Chevron is among the second largest oil companies in the world. Its competitors are Exxon, Royal Dutch Shell and BP. (chevron). Since oil is a commodity, the