PESTEL Analysis of Chevron
This PESTEL analysis of Chevron will highlight the macro-environment factors that influence its business in the sector. The word PESTEL stands for Political, Economic, Social, Technological, Environmental, and Legal factors. The NYSE has listed Chevron for trading. PESTEL is a strategic management tool that the company can utilize to make better future decisions. They impact the company’s performance and operations in the country. Moreover, Chevron’s business sector is highly dynamic and requires proper planning to expand in the future. Let’s conduct the PESTEL analysis of Chevron.
Political Factors Affecting Chevron
Politics frequently has an impact on the degree and type of intervention made by local and federal governments in the economic and business environment. The governance system significantly influences the nature and goals of government policies.
- Chevron must deal with various restrictions in the different markets where it operates. The rules governing market entry and how Oil and Gas – Integrated companies can work in the regional market have changed over the past few years in the US and other developing nations.
- There is growing international pressure on the US government to abide by WTO rules governing the integrated oil and gas industry.
- The United States government may change after the next election, according to trends being observed at the moment. Chevron needs to be ready for this possibility because it will cause the priorities for governance in the energy sector to change.
- Other parties involved in the policy-making process in the US, such as non-governmental bodies, pressure groups, and activist movements, are crucial. Chevron should work with these groups in order to better support both their corporate goals and community goals.
- In the United States, local governments are vital to the creation of regulations and policies, in contrast to most other nations. Instead of creating national policies in the US, Chevron must closely monitor the territories and states where it operates.
- New government policies in the US may enhance investor confidence in the energy industry. Given that the population is more likely to accept the suggested policies, it is safe to say that they will last longer than the mandated term of the current US government.
Economic Factors Affecting Chevron
Exchange rates, interest rates, consumer disposable income, economic development, job market conditions, taxation, inflation, and other economic factors are crucial in Chevron’s PESTEL analysis.
- Chevron’s performance in the US is related to the health of the American economy. Over the past two decades, increased globalization and the use of regional resources to serve international markets have been the foundation of growth.
- Given government spending, stable demand due to disposable income, and growing investment in other sectors, the economic performance of the US will remain stable for the next five to ten years.
- Even though customer disposable income has stayed constant, rising social inequality will have a negative effect on consumers’ attitudes and, as a result, their purchasing habits.
- Chevron can target thriving economies and simple liquidity in the US equity market to flourish internationally.
- The US’s trade policies are becoming more liberal, which may encourage Chevron to expand its investments in previously untapped markets.
- The easy access to capital in the market following the 2018 Recession will cause inflation to rise in the US economy.
Social Factors Affecting Chevron
Every culture and society uniquely conducts business. Social factors include attitudes toward specific goods and services, leisure interests, gender roles, health and safety attitudes, demographics, cultures, acceptance of entrepreneurial efforts, and societal standards and functions. These social factors can aid businesses like Chevron in understanding not only the way that business is conducted but also the preferences of the customers in the US’s energy sector.
- The United States has a high standard of education, particularly in the Chevron industry. It can help the company make more of an impact in the US.
- The media significantly influence public opinion in the US. In the country, social and traditional media are both expanding quickly. Chevron can use this factor to position and advertise its goods more effectively.
- The American social structure differs from Chevron’s domestic market. To better serve its American consumers, it should work to assemble a local team that is familiar with cultural attitudes and standards.
- As liberalization progresses, there is a laxer attitude toward safety and health. The rate of failure in the US is too high, so the company needs to avoid adopting these attitudes.
- American society is changing its views on gender roles. Chevron can put different ideas to the test to accommodate and support the changing gender roles in American culture.
- US consumers favor experiential goods and services over traditional goods in the energy sector. Chevron can take advantage of this development to create goods that improve customer satisfaction.
Technological Factors Affecting Chevron
Numerous industries, including energy, are being rapidly disrupted by technology. Technology is influencing Chevron and the entire oil and gas sector in a variety of ways. Some technological factors include access to technology, greater informational access, innovation in customer services, disruption of the supply chain due to technology, innovation in product offerings, rate of technology-driven change, and availability of mobile phones.
- The life cycle of a product has been shortened, and suppliers can now create new products more quickly. This has exerted extra pressure on Chevron’s marketing division to maintain the suppliers’ satisfaction by promoting a variety of services and goods. Chevron’s operating expenses have gone up as a result.
- More companies are investing in R&D if the US has stronger protections for intellectual property rights.
- Chevron must closely monitor the growth and improvement of user experience with growing access and pace. This could completely change the customer experience in the oil and gas industry.
- The majority of players are competing for the latest innovations that will allow them to increase their market share in the US, as the technology in the oil and gas sector has yet to mature.
- Recent technological advancements made by Chevron’s rivals that they have put into practice can give us a good idea of what they are considering and where the future of the oil and gas business model is headed.
- As more players in the energy industry have access to data than just supply chain partners, technological innovation is quickly disturbing the supply chain.
Environmental Factors Affecting Chevron
Over the past ten years, environmental and sustainability concerns have become increasingly important to businesses. Companies are being urged to follow environmental norms by pressure groups and the government. A few environmental factors include; a growing emphasis on sustainability, climate change, safe water, waste management, safe disposal of chemicals, reducing carbon footprint, and other similar factors.
- Chevron’s operational costs are also increasing as a result of ongoing scrutiny from environmental institutions and bodies.
- One more intriguing area for Chevron is renewable energy technology. It can benefit from the current market trends. The US offers incentives for financial investments in the renewable energy industry.
- Waste management has become increasingly crucial for businesses like Chevron, particularly for units near urban centers. The US government has established strict regulations to manage waste in urban areas.
- Extreme weather is also increasing the company’s operations expense because it must invest in a more flexible supply chain.
- Realistic goals have been set by the Paris Climate Agreement for the US national government to follow. The environmental norms for the company in the US may be subject to more scrutiny as a result.
- Customer awareness has also elevated environmental concerns to the forefront of the company’s strategy. Customers anticipate Chevron to uphold legal requirements while also going above and beyond them to play a responsible role in society.
Legal Factors Affecting Chevron
Any country’s economy based on the oil and gas industry will benefit from the legal system. Before entering the global market, Chevron management must take into account the following legal factors: the legal system, copyright laws, the length of time it takes to get justice, bias against domestic competitors, discrimination laws, data protection laws, intellectual property rights, etc.
- Despite some countries adhering to international standards, resolution times can take years. Before venturing into a global market, Chevron must consider the typical length of time for particular cases.
- The severity of environmental regulations in the US and what Chevron must do to comply.
- Intellectual property, including IPR rights, copyrights, and patents, are legally protected in the United States. What effects there won’t be enough protection will have on Chevron?
- American standards for health and safety, what Chevron must do to comply with them, and how much will it cost to do so?
- The United States’s business laws process. Are these standards aligned with those of global organizations like the European Union, the World Trade Organization, etc?
- United States employment law and how it affects the oil and gas industry’s business strategy. Is it possible to duplicate or improve these conditions in a global market?
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