July 30, 2009
Chevron Business Analysis: Part II
Part I of this two part business analysis for Chevron covered the SWOT analysis where strengths, weaknesses, opportunities, and trends were uncovered. That information was converted to statements of relevancy, which allowed the material to be understood by a broader scope of individuals that might not be savvy with deciphering a SWOT analysis. To continue the examination of Chevron and make a complete analysis worthy of making investment decisions, some criteria still needs to be assessed. Acquiring the most recent income statement, balance sheet, and cash flow statement is necessary for a complete evaluation of financial health. Experienced investors would suggest comparing the findings to similar corporations to create a reference point, but the ultimate measure of corporate financial health will be derived from health metrics, especially if performance sustainability is an issue (Richard Dobbs, 2005).
Chevron is a global energy company with significant business activities in 35 countries throughout the world. Earnings, both current and future, are largely dependent on upstream transactions and projects, which are centered on exploration and production. Downstream, the price of crude oil (by the barrel) is dictating the availability of revenue since the downstream aspect of Chevron’s overall business plan is reliant on the refining process, transportation, and corporate marketing.
Operating expenses and capital expenditures are being affected by inflation throughout the world. Chevron feels the pinch un-proportionately upstream. When inflation and the fraternal twins, “regulatory and political” environment get together a party ensues, yet no one is invited. It is this type soiree that results in disposing of assets that do not supplement the company's growth and acquiring those that compliment. Managing the