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PILIPINAS SHELL PETROLEUM CORPORATION

STRATEGIC PLANNING MATRICES


PILIPINAS SHELL PETROLEUM CORPORATION
INTERNAL FACTOR EVALUATION (IFE) MATRIX

Key Internal Factors Weight Rating


STRENGTHS
1 Strong market position 0.16 4
2 Good location 0.11 3
3 Decreased gearing ratio (27% in 2016 from 37% in 2015; gearing ratio measure of 0.16 4
4 Doubled net profit driven by retail performance 0.19 4
5 Responsible energy provision (eco-friendly advocacies) 0.12 3
WEAKNESSES
1 Reliance on oil based importation 0.07 2
2 History of tax cases 0.08 2
3 High shipping cost due to imported oil 0.05 2
4 Trademark considered to be assets of Shell Group instead of PSPC 0.03 1
5 Exposed to foreign currency exchange risks arising from currency fluctuations 0.03 1
TOTAL 1.00
CHECKING OK OK

Legend:
Weight:
0.0 = not important
1.0 = solely important
Ratings:
1= major weakness
2= minor weakness
3= minor strength
4= major strength
Weighted Score

0.64
0.33
0.64
0.76
0.36

0.14
0.16
0.10
0.03
0.03
3.19
PILIPINAS SHELL PETROLEUM CORPORATION
EXTERNAL FACTOR EVALUATION (EFE) MATRIX

Key External Factors


OPPORTUNITIES
1 Demand for fuel increases
2 Improvement in global information and technology system
3 Dialogue, co-operation and level ground competition
4 Promotions following trends
5 Market structure: OLIGOPOLY
THREATS
1 Depletion of natural energy resources
2 Fuel prices are regulated by organization in oil of big players
3 Operational risk and substitutions
4 Government regulations
5 Environmental laws
TOTAL
CHECKING

Legend:
Weight:
0.0 = not important
1.0 = solely important
Ratings:
1= response is poor
2= response is average
3= response is above average
4= response is superior
Weight Rating Weighted Score

0.12 4 0.48
0.10 3 0.30
0.10 3 0.30
0.09 2 0.18
0.12 4 0.48

0.11 3 0.33
0.09 2 0.18
0.08 2 0.16
0.08 2 0.16
0.11 3 0.33
1.00 2.90
OK OK
PILIPINAS SHELL PETROLEUM CORPORATION
INTERNAL-EXTERNAL MATRIX

IFE Total Weight

STRONG AVERAG
4.0 3.9 3.8 3.7 3.6 3.5 3.4 3.3 3.2 3.1 3.0 2.9 2.8 2.7
4.0
3.9
3.8
3.7
3.6
HIGH

3.5
3.4
3.3
3.2
3.1
3.0
EFE Total Weighted Scores

2.9
2.8
2.7
2.6
MEDIUM

2.5
2.4
2.3
2.2
2.1
2.0
1.9
1.8
1.7
1.6
1.5
LOW

1.4
1.3
LOW
1.2
1.1
1.0

Values Raw Rounded Off


EFE 2.90 2.9
IFE 3.19 3.2

BLUE Grow & Build


GRAY Hold & Maintain
RED Harvest or Divest
IFE Total Weighted Scores

AVERAGE WEAK
2.6 2.5 2.4 2.3 2.2 2.1 2.0 1.9 1.8 1.7 1.6 1.5 1.4 1.3 1.2 1.1 1.0
IE Matrix is a strategic tool based on the internal and external factors of the
organization. From the calculated IFE Matrix of Pilipinas Shell, the total weighted
score is 3.19 or 3.2 which shows that the company has a high internal strength. As
for the EFE Matrix, it shows a total weighted score of 2.90 which shows that the
company has a almost high ability to respond to its external factors. The IE Matrix
suggests that Pilipinas Shell should Grow and Build. The entity should focus on
strategies like Market Penetration, Market Development, Product Development, and
Horizontal, Forward and Backward Integration.
PILIPINAS SHELL PETROLEUM CORPORATION
COMPETITIVE PROFILE MATRIX (CPM)
PILIPINAS SHELL
PETROLEUM PHOENIX PETRON
CRITICAL SUCCESS FACTORS Weight CORPORATION
Weighted Weighted Weighted
Rating Rating Rating
Score Score Score

1 Price 0.10 3 0.30 4 0.40 3 0.30


2 Brand 0.13 4 0.52 2 0.26 4 0.52
3 Number of Branches and Franchises 0.12 4 0.48 2 0.24 4 0.48
4 Market Share 0.13 3 0.39 2 0.26 4 0.52
5 Services Offered 0.10 4 0.40 3 0.30 4 0.40
6 Technological Capability 0.11 4 0.44 3 0.33 4 0.44
7 Advertising 0.05 4 0.20 2 0.10 4 0.20
8 Global Presence 0.08 4 0.32 1 0.08 3 0.24
9 Customer Loyalty/Rewards 0.10 4 0.40 3 0.30 4 0.40
10 Financial Profit 0.08 4 0.32 3 0.24 4 0.32
TOTAL 1.00 3.77 2.51 3.82
CHECKING OK OK OK OK

Legend:
Weight:
0.0 = not important
1.0 = solely important
Ratings:
1= major weakness
2= minor weakness
3= minor strength
4= major strength
PILIPINAS SHELL PETROLEUM CORPORATION
TOWS MATRIX

1
2
3

OPPORTUNITIES
1 Demand for fuel increases

2 Improvement in global information and


technology system

3 Dialogue, co-operation and level ground


competition

4 Promotions following trends

5 Market structure: OLIGOPOLY

THREATS
1 Depletion of natural energy resources
2 Fuel prices are regulated by organization in oil
of big players

3 Operational risk and substitutions

4 Government regulations

5 Environmental laws
RPORATION

STRENGTHS
Strong market position 1
Good location 2
Decreased gearing ratio (27% in 2016 from 37% in 2015; gearing 3
ratio measure of the degree to which operations are financed by
debt)
Doubled net profit driven by retail performance 4

Responsible energy provision (eco-friendly advocacies) 5

SO STRATEGIES

Market Penetration - Offer more promotions (e.g. Lego, Ferrari) to


take advantage of the doubled net profit, thus, enhancing its
profitability and gaining more customers. (S1, S4, O4)

Product Development - Utilize modern technology to manufacture


and explore more sources of bio-oils in the country but considering
PSPCs eco-friendly advocacies. (S5, O2, O5)

Product Development - Co-operate to certain refineries and increase


the number of warehouses, fuel terminals and import facilities in the
Philippines and afterwards maximizing the demand that the company
receives from its consumers. (S2, S3, O2, O3)

Market Penetration - Increase environmental advocacies by


supporting more tree-planting activities and eco-friendly drives as
part of the companys corporate social responsibility as this would not
only improve public image but would also take part in refining the
nature. (S5, O4)

Market Development - Increase gas stations that would be accessible


to all kinds of travelers as this would increase sales due to high
demand of gasoline with limited competition in the market. (S2, O5)

ST STRATEGIES
Unrelated Diversification - Improve cash-generative, mature
businesses which will underpin Shells financial performance by
putting up convenience stores and other non-fuel retail offerings to
its established branches. (S1, S4, T1)
Market Development - Expand the branches in good locations such as
in major highways by making more Shell of Asia to attract more
customers, thus, generate more income. (S2, T2)

Backward Development - Utilize PSPCs facilities and infrastructures


(e.g. refinery, warehouses, fuel terminals) well to avoid use of
substitutes and expending to unrelated sources of energy. (S3, T3)

Unrelated Diversification - Establish food park near gas stations to


attract more customers and generate more income. (S1, T2, T4)

Market Penetration - Increase development of environmental


advocacies in taking part of following environmental laws and
regulations. PSPC may support more eco-friendly marathons and
tree-planting activities to preserve and protect the environment. (S5,
T5)
WEAKNESSES
Reliance on oil based importation
History of tax cases
High shipping cost due to imported oil

Trademark considered to be assets of Shell Group instead of


PSPC
Exposed to foreign currency exchange risks arising from
currency fluctuations
WO STRATEGIES
Product Development - Have a dialogue with competitors to co-
operate with their respective refineries and to work hand-in-
hand in exploring new sources of oil-based products. (W1, O2,
O3, O5)

Horizontal Integration - Focus on promoting the distinct Shell


products (e.g. FuelSave, V-Power) to increase competitive
advantage over competitors to gain power in the market
therefore getting the least cost for the supply of oil at maximum
benefit. (W1, W4, O4, O5)

Market Penetration - Strengthen the market strategy by making


more promotions or giving freebies to attract more
customers. This way, PSPC will maximize its sales to exceed cost
incurred on imported oil (W3, O2, O4)

Product Development - Align the local branding of Shell with its


international standards and utilize the brand by coping up with
new technologies from its international partners. (W4, O1, O2)

Market Penetration - Since global information and technology


system is now improved, PSPC may decrease its exposure to
foreign exchange risks by utilizing the modern technology to
plan its timing of importation settlements. (W5, O2)

WT STRATEGIES

Product Development - Invest on new technologies related to


producing oil from biological products available in the
Philippines. (W1, T1, T5)
Comply with government rules on taxes. (W2, T4)

Market Penetration - Utilize the usage of the trademark thru


making more advertisements and putting up more sources of
income like convenience stores and fast-foods, thus, will help
the company generate more sales despite of controlled prices
by an organization. (W4, T2)

Market Penetration - Plan thoroughly the timing of importation


settlements with related parties and considering the forecast of
foreign exchange rates. (W5, T2, T4)

Market Penetration - Build more refineries and warehouses to


accommodate the branches and franchises nationwide. (W3,
T3)
PILIPINAS SHELL
STRATEGIC POSITION & ACTION EVALUATION (SPACE) MATRIX

EXTERNAL STRATEGIC POSITION


FINANCIAL STRENGTH Rating Value ENVIRONMENTAL STABILITY
1 technological innovation 4 1 political uncertainties
2 strong brand equity and recognition 4 2 ecological factor
3 cost effective solutions 4 3 technological changes
4 10% decrease on gearing ratio 3 4 corruption in oil business
Average 3.75 Average

COMPETITIVE ADVANTAGE Rating Value INDUSTRY STRENGTH


1 high quality workforce -1 1 growth potential
2 brand image -1 2 availability of substitutes
3 customer retention and acquisition -3 3 high entry costs
4 pricing -3 4 extensive research development
Average -2 Average

Legend:
Rating:
1= Worst
6= Best
ATEGIC POSITION
Rating Value
-3
-5
-3
-4
Average -3.75 0

Rating Value positive negative


6 negative positive
5
6
5
Average 5.5 3.5
PILIPINAS SHELL
STRATEGIC POSITION & ACTION EVALUATION (SPACE) MATRIX

Financial Strength

Conservative Aggressive

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. . . . . . . x . . . . .
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. . . . . . . . . . . . .
. . . . . . . . . . . . .
Competitive Advantage . . . . . . . . . . . . .
. . . . . . . . . . . . .
. . . . . . . . . . . . .
. . . . . . . . . . . . .
. . . . . . . . . . . . .
. . . . . . . . . . . . .
. . . . . . . . . . . . .

Defensive Competitive

Environmental Stability

Values Raw Rounded Off


X Axis 3.5 4
Y axis 0 0
SPACE Matrix is used to identify what strategies the company
needs to undertake using its internal and external factors. Based
on the SPACE Matrix, Pilipinas Shell is on the Quadrant 1 or on
Aggressive side which means all the dimensions are considered
positive. The company should consider strategies which can
aggressively grow the business namely: Market Penetration,
Market Development, Product Development, Horizontal, Forward
and Backward Integration strategies, and Related and Unrelated
Diversification strategies.
Industry Strength
PILIPINAS SHELL PETROLEUM CORPORATION
BCG MATRIX

Relative Market Share


0.5
High 1 0 Low

STARS QUESTION MARKS

20%
Industry Sales Growth

Industry Sales Growth


Medium 0

-20%

CASH COWS POOR DOGS


Low

Relative Market Share


SHELL PETRON PHOENIX
MARKET SHARE (DOE) 20.2 30.2 6.9
RELATIVE MARKET SHARE 0.67 1.00 0.23
MARKET GROWTH RATE -12.19% -4.54% 1.74%

BCG Matrix is a business tool used to evaluate the strategic position of the business
brand portfolio and its potential based on its industry growth rate and relative market
share. The BCG Matrix shows that Pilipinas Shell falls under the third quadrant called
"Cash Cows" with a market share of 20.2% and a -12.19% growth rate. This means
that Pilipinas Shell has a high market share but with a slow-growing industry. The
strategies to be implemented are Product Development, Diversification, Divestiture,
and Retrenchment.
PILIPINAS SHELL
GRAND STRATEGY MATRIX

Rapid Market Growth

QUADRANT 2 QUADRANT 1

Strong Competitive Position


Weak Competitive Position

QUADRANT 3 QUADRANT 4

Slow Market Growth

STRATEGIES

QUADRANT 2 QUADRANT 1
Market Development Market Development
Market Penetration Market Penetration
Product Development Product Development
Horizontal Integration Forward Integration
Divestiture Backward Integration
Liquidation Horizontal Integration
Concentric Diversification

QUADRANT 3 QUADRANT 4
Retrenchment Concentric Diversification
Concentric Diversification Horizontal Integration
Horizontal Integration Conglomerate Diversification
Conglomerate Diversification Joint Ventures
Divestiture
Liquidation
Grand Strategy Matrix is an instrument for creating different and alternative
strategies for the organization based on two dimensions: competitive position and
market growth. With the Grand Strategy Matrix, Pilipinas Shell falls on the Quadrant
4 which means that the company has a strong competitive position but with a slow
market growth. The strategies to be used for this quadrant are Related and
Unrelated Diversification, Horizontal Integration, and Joint Venture.
PILIPINAS SHELL PETROLEUM CORPORATION
GRAND STRATEGY MATRIX

Rapid Market Growth

QUADRANT 2 QUADRANT 1
Weak Competitive Position

QUADRANT 3 QUADRANT 4

Slow Market Growth

STRATEGIES

QUADRANT 2 QUADRANT 1
Market Development Market Development
Market Penetration Market Penetration
Product Development Product Development
Horizontal Integration Forward Integration
Divestiture Backward Integration
Liquidation Horizontal Integration
Concentric Diversification
QUADRANT 3 QUADRANT 4
Retrenchment Concentric Diversification
Concentric Diversification Horizontal Integration
Horizontal Integration Conglomerate Diversification
Conglomerate Diversification Joint Ventures
Divestiture
Liquidation
versification
Strong Competitive Position
versification

e Diversification
BCG IE GRAND SPACE
TOWS MATRIX MATRIX STRATEGY MATRIX TOTAL
Market Penetration 1 1 2
Market Development 1 1 2
Product Development 1 1 1 3 Eco-friendl
Horizontal Integration 1 1 1 3
Forward Integration 1 1 2
Backward Integration 1 1 2
Retrenchment 1 1
Divestiture 1 1
Liquidation 0
Unrelated Diversification 1 1 1 3
Related Diversification 1 1 1 3
Joint Venture 1 1
improve oldcleaner energy
PILIPINAS SHELL PETROLEUM CORPORATION
QUANTITATIVE STRATEGIC PLANNING MATRIX

PRODUCT DEVELOPMENT
KEY FACTORS Weight Attractiveness
Scores

OPPORTUNITIES
1 Demand for fuel increases 0.12 4.00
2 Improvement in global information and technology system 0.10 3.00
3 Dialogue, co-operation and level ground competition 0.10 4.00
4 Promotions following trends 0.09 3.00
5 Market structure: OLIGOPOLY 0.12 4.00
THREATS
1 Depletion of natural energy resources 0.11 3.00
2 Fuel prices are regulated by organization in oil of big players 0.09 2.00
3 Operational risk and substitutions 0.08 3.00
4 Government regulations 0.08 2.00
5 Environmental laws 0.11 2.00
TOTAL 1.00
STRENGTHS
1 Strong market position 0.16 4.00
2 Good location 0.11 4.00
3 Decreased gearing ratio (27% in 2016 from 37% in 2015; gearing ratio 0.16 3.00
4 Doubled net profit driven by retail performance 0.19 2.00
5 Responsible energy provision (eco-friendly advocacies) 0.12 3.00
WEAKNESSES
1 Reliance on oil based importation 0.07 2.00
2 History of tax cases 0.08 2.00
3 High shipping cost due to imported oil 0.05 3.00
4 Trademark considered to be assets of Shell Group instead of PSPC 0.03 2.00
5 Exposed to foreign currency exchange risks arising from currency fluc 0.03 2.00
TOTAL 1.00
TOTAL ATTRACTIVENESS SCORES
CHECKING OK OK

Legend:
Attractiveness Scores
1= not acceptable
2= possibly acceptable
3= probably acceptable
4= most acceptable
PRODUCT DEVELOPMENT DIVERSIFICATION HORIZONTAL INTEGRATION
Weighted Weighted
Weighted Attractiveness Attractiveness Attractiveness
Attractiveness Attractiveness
Scores Scores Scores
Scores Scores

0.48 0.00 4.00 0.48


0.30 3.00 0.30 3.00 0.30
0.40 4.00 0.40 4.00 0.40
0.27 0.00 3.00 0.27
0.48 2.00 0.24 2.00 0.24

0.33 0.00 3.00 0.33


0.18 3.00 0.27 2.00 0.18
0.24 0.00 3.00 0.24
0.16 0.00 2.00 0.16
0.22 0.00 2.00 0.22
3.06 1.21 2.82

0.64 4.00 0.64 4.00 0.64


0.44 4.00 0.44 4.00 0.44
0.48 4.00 0.64 4.00 0.64
0.38 2.00 0.38 2.00 0.38
0.36 0.00 3.00 0.36

0.14 0.00 2.00 0.14


0.16 0.00 2.00 0.16
0.15 0.00 2.00 0.10
0.06 2.00 0.06 2.00 0.06
0.06 0.00 2.00 0.06
2.87 2.16 2.98
5.93 3.37 5.80
OK OK
abs gma
asset turnover 21739339 12150
36889461 13278.15
59% 92% 75%

roi 3237211 2017783


38958850 77673821
8.31% 2.60% 5.45%

ROE 3237211 2017783


16949308 3053198
19% 66% 42.59%

21213344 75111732
17745506 2562089
1.195421 29.3166 15.2560090715