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Challenges in the Global Business Environment

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Challenges in the Global Business Environment
Bus 457
11/25/2014

Chevron
Chevron, one of the oldest energy companies in United States, was first founded as Pacific Coast Oil Company in 1879 and was named as Chevron Corporation in 1984. Several companies were established after Standard Oil’s split during 1980s’ and Chevron Corporation was among those big energy corporations who merged with those companies. The company is publicly traded on NYSE, Dow Jones Industrial Average and S&P 500.
Chevron is involved in petroleum and natural gas industry. It does almost anything related to the industry from exploring to generating power. With over 60,000 employees Chevron operates business in 84 countries; Angola, Australia, Gulf of Mexico, Kazakhstan, Nigeria and United States are regions where the cooperation mainly operates primary exploration and production.
Other than oil and natural gas, Chevron is engaged to biofuel, geothermal, hydrogen, solar and wind energy production.
According to the official website for businesses Chevron offers following goods and services: * Additives * Aviation Oils * Base Oils * Chemicals * Fuels * Lubricants * Marine * MSDS * Specialty Products * Technology

And for consumers it offers goods and services listed below: * Fuels and Stations * Gift and Credit Cards * Pay Bill * Motor Oils and Fuel Additives

Code of Ethical Conduct
Chevron relies on values such as integrity, trust, diversity, ingenuity, partnership, protecting people & the environment and high performance. Among these core values trust, protecting society and the environment and integrity are vital to the success. Integrity provides huge confidence to the company to achieve ultimate ethical standards when it deals with all of its stakeholders. This value also pushes accountability and responsibility to be unavoidable factor on the corporation’s business operations. Internal and external auditors play a fundamental role in establishing and sustaining this core value. Chevron doesn’t lack to fulfill this requirement as well. Integrity is the base of well-established trust between the company and its stakeholders. Chevron acknowledges importance of having these two core values in order to create a sustainable relationship with stakeholders. Chevron is involved in such business that requires care for society and environment. It’s in Chevron’s interest and priority to work in healthy society and environment. Chevron needs to hold on to these core values in order to keep its long-lasting business alive for centuries to come. Customers, governments, employees, and societies are the most significant and influential stakeholders of Chevron, who benefits from these values. Business is a two-way transaction where both sides should get benefit out of it somehow. If the corporation doesn’t follow its traditional ethical values nor implements such values, it won’t take long for stakeholders to run away from conducting business with the organization. Deepwater Horizon Spill can be a great example for all energy companies. "The Court concludes that the discharge of oil was the result of gross negligence or willful misconduct by BP, the ruling from U.S. District Judge Carl Barbier said” (NBC News. Sept 4, 2014). Losing trust in United States’ government as a result of its negligence cost BP face restrictions in its business operations and pay billions of dollars of fine. Protecting environment can help Chevron to be more active in renewable energy market. Besides its core values, Chevron applies unusual method of sticking to ethical business. According to the official website, this process requires Chevron to ask following questions before proceeding business operation its business:
(Note: “The Chevron Way” is the term that defines Chevron’s aim, mission and plans) * Is it legal? * Is it consistent with Company policy, including Chevron’s Human Rights Policy? * Is it consistent with The Chevron Way? * If it were made public, would the company be comfortable?
The company uses all these tools to prevent possible unethical conducts. It shows how vital is dedicated ethical behavior for such corporations to keep its business unharmed by any means.
According to its website safety, respect, excellence, courage, and teamwork are code of conducts of BP. Internal audits, bribery and corruption, training, reporting violations and management control systems are code of conducts of ExxonMobil.
Compare to BP and ExxonMobil, Chevron shares somewhat similar values with its competitors.
For example, BP’s conduct of excellence and ExxonMobil’s conduct of reporting violations, aims to achieve the same result as Chevron’s conduct of trust. These conducts also help to establish a trust. Despite its damaged image, BP tries to build trust by excellence in its strict managerial system while ExxonMobil makes it possible for anybody to report violations related to the company’s operations. In BP’s case this attempt shows how responsible is the company and feeling responsible actions by a company builds trust in people’s eyes. In ExxonMobil’s case, the company invites everybody to contribute achieving more ethical business practices. ExxonMobil also uses preventive tools against bribery and corruption that leaves huge scars on society’s future development. Chevron’s protecting people and environment conduct is similar to ExxonMobil’s bribery and corruption behavior, but Chevron covers broader aspects to prevent harms to society due to its business operations, including possible bribery attempts. Even though BP highly engages itself to safety conduct, but recently it lacked to fulfill this goal.
Usually, giant companies hire financial companies to audit besides its employees. To picture company’s financial position, auditing helps to get an idea. ExxonMobil relies heavily on its internal audits where Chevron relies on both internal and external auditing. Regarding this conduct BP follows almost same strategy as Chevron. And auditing is an inseparable part of integrity, because publicly traded companies are liable to provide accurate information for all of its stakeholders about current financial position of the enterprise.
Legally, these three giant oil companies are obligated to address discussed issues. Meeting these obligations enables company to stand firm in the competition and keep their business to grow successfully. Government, society, employees, customers, shareholders and creditors forecast and cooperate with these companies based on information, integrity, and trust supplied by companies. Issues covered so far are related to all the stakeholders who have the power to impact on companies’ current and future destiny. Other than that it’s good for top managers to have an accurate image of a corporation’s financial health. In a trustworthy work environment, executive managers more likely will perform comfortable which is in favor of the enterprise.
Protecting society and environment will also help them to keep resources they use that they make business out of it. You try to keep the house you live in clean and secure, in the case of energy companies society and environment is the home of such businesses. Positive corporate image highly depends on social issues that these companies are engaged. And this strong image is one of the reasons for positive impact on their stock prices as well.
If they lack to obey their ethical bylaws, like BP has done to cause major oil spill in Mexican Gulf, they will face criminal charges, probations, and fines. BP’s management team failed to communicate with each other to avert such failure before it occurred. It brings up trust issues between its employees and challenges its integrity. BP is still paying the cost of slipping off from its core values.
Chevron has gone through similar challenges. Allegations in Romania, Poland and recent Rio De Janeiro oil spill puts Chevron’s image, on-going businesses, and future perspective under jeopardy. Current lawsuit against Chevron requires billions of dollars fine and possible restrictions. Without even mentioning its damaged corporate image, it won’t be easy for Chevron to get away with damage it caused because of avoiding to obey its core ethical conducts.
Such allegations lead revenues and net incomes to yield downward for the time being.
To overcome irrelevant code of conducts companies should hire outsider to analyze and give suggestions. It would be ideal to partner with the government as an outsider controlling bodies, because in the case of failing to obtain up-to-date code of conducts companies may face aggressive reaction of governments and juridical bodies.
Another way would be continuous contribution on global social and environmental issues and issue surveys that require most of its stakeholders to involve. Therefore, the company can be aware of current needs, problems and expectations to re-shape its code of conducts.
Managing Environmental Issues
The company defines protecting environment as a principal value that is stated in The Chevron Way. Chevron is probably one of the few companies declaring every single step it follows to protect the environment. Steps it follows to ensure advanced care for the environment are; to consider the environment on decision making, reducing its negative impact on the environment, the ultimate responsibility for its operations, stewarding operational areas.
In this sense, Chevron invests heavily in renewable biofuel energy. This type of energy is less harmful to the environment and natural resources than non-renewable fuels. So far, the company has poured more than 2 billion dollars in generating renewable biofuel energy. Chevron also respects natural diversity in the environment and tries to protect water resources. Chevron so far showed willingness in applying Environmental, Social and Health Impact Assessment (ESHIA) process to conserve fishing grounds and essential habitats. And in 2010 the company started imposing initiatives that would provide data regarding the current status of fresh water all around its operational regions. Since 2013 Chevron initiated tools to control wastewater efficiently to make it reusable in the environment. It already aimed to make all the water used in production reusable. By this way, the company wants to achieve fifty percent cut in using fresh water.
Technological Advancements
Chevron Venture Capital (CVC) handles most of Chevron’s technological by investing in young companies that are essential to the enterprise. These young and small businesses can increase technological capabilities of Chevron. Through technological revolutions, it has gone through, and Chevron now uses most advanced technology to deploy energy resources from deep down from the water. It uses various technologies such as reverse time migration and integration of 3D Basin and Mechanical Earth Models to obtain seismic imaging. It also uses Single Trip Multi-Zone Frack Pack and Dual Gradient Drilling in its offshore drilling and completions. These technologies are needed to decrease covert risks during production and increase efficiency of platforms built on the water surface.
Chevron’s focus on recovering energy lead Chevron Technology Ventures (CTV) to research and invest in technology that would help the company to improve its hydrocarbon recovery. Current acquired technology enhances Chevron’s ability to achieve this goal. Its energy recovering initiates fell below ten percent when it took place for the first time, and now the company can recover energy in doubled amount.
Possible challenges it currently faces as it competitors do are efficient way of advanced exploring, processing energy and getting energy out of biofuels. Biofuels are considered to be the safest source for obtaining energy in the future. As stated above, Chevron has already pumped billions of dollars into this field and expecting to grow in the industry, but further technologies are still under improvement to achieve aimed goals. Also, Chevron initiates to improve its communication technologies and networking to advance remote operations in the sights. I believe, besides relying on CTV and CVC, Chevron should also increase participation of the large technological companies in solving the challenges it currently faces. For example, possible partnership can include Motorola to improve its communication and networking on fields. Others like General Electric, Tetra Tech, Schlumberger and Baker Hughes can be major technological partners of Chevron in wider aspects. Partnering with such companies would help Chevron to spend less time in achieving its goals since these enterprises already invested money, time and effort in advancing technology used in oil and gas industry.
Lobbying
Name of Stephen Sayle is among others who have so far used their best efforts to help Chevron to get government on its side, when it comes to Chevron’s lobbying disputes. His name wasn’t selected on a random basis; Stephen Sayle is a senior staff member of the House of Committee on Science, and served as chief executive at Dow Lohnes Government Strategies. It is a lobbying firm that Chevron has mainly benefited in 2013. The lobbying firm influenced Congress for Chevron to get away with Clean Air Act imposed by Environmental Protection Agency (EPA). Chevron also benefited from this lobbying in terms of different energy-related issues and for lobbying efforts in total Chevron paid more than $300,000 to this firm on a yearly basis. Records show that Stephen Sayle highly benefited from this business transaction as well.
These attempts by Chevron put its integrity and trust in jeopardy again. Such lobbying initiatives entirely destroy fair competition grounds and put honesty of the company’s efforts in following its core ethical values. As a result, we are lead to think whether these values are set to gain positive public image, or such companies are honest in implementing these ethical codes of conducts. Main principle of laws is to enable every individual and institution to compete, survive and operate under same rules somewhat. If the wealthiest ones are willing to avoid this essential principle then ethical bylaws, they have set become meaningless.
Global Corporate Citizenship
Environmental stewardship is corporate social responsibility that Chevron dedicated itself.
Throughout its 135 years of history, the company has tried to reduce oil spills around onshore and offshore fields. Following chart could prove this idea:

Chart 1. Shows reduction in oil spill in last 5 years (Corporate Responsibility Report, 2013. Chevron).
Protecting safety and health of its 61,000 employees and 200,000 full-time contractors is one of Chevron’s primary corporate responsibilities. The corporation tries to prevent any incident that would damage its employees’ safety or health by applying policies and using most advanced technologies. As a result of imposing effective policies, 98 percent of its employees reported that they follow Chevron’s operational excellence standards in their day-to-day operations.
Protecting its employees helped Chevron to increase motivation and courage of its employees. This social responsibility undoubtedly affects their efforts positively at work. The company aims to prevent itself from facing criminal charges, fees and probations by decreasing the number of environmental incidents.
Despite its efforts on protecting its employees and environment, Chevron should increase its efforts to maintain its relations with society. Disputes over environmental issues lead Chevron to face tremendous opposition from community in Ecuador. Its bad relationship with community cost the corporation to lose its partners and face allegations. Chevron should also increase its efforts on contributing society’s economic condition because economically stable society can also help the company to operate in criminally risk-free environment.

References
Business Conduct and Ethics Code, Chevron. 2014.
Retrieved from: http://www.chevron.com/documents/pdf/chevronbusinessconductethicscode.pdf Our Code, Our Responsibility, BP. 2014
Retrieved from: http://www.bp.com/content/dam/bp/pdf/code-of-conduct/bp_code_of_conduct_en.pdf
Code of Ethics and Business Conduct, ExxonMobil. 2014.
Retrieved from: http://corporate.exxonmobil.com/en/investors/corporate-governance/code-of-ethics-and-business-conduct/our-code

BP Found Guilty, Grossly Negligent for Gulf Oil Spill, NBC News. Sept 4, 2014.
Retrieved from: http://www.nbcnews.com/business/business-news/bp-found-guilty-grossly-negligent-gulf-oil-spill-n195781
Chevron’s Lobbyist Now Runs the Congressional Science Committee, Republic Report. February 21, 2014.
Retrieved from: http://www.republicreport.org/2014/chevron-science-committee/

Corporate Responsibility Report, Chevron. 2013.
Retrieved from: http://www.chevron.com/documents/Pdf/CorporateResponsibility/Chevron_CR_Report_2013.pdf

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