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Chevron is involved with oil, geothermal and gas energy industries. It deals with exploration, production and refining, chemical manufacturing; marketing and transportation, sales and power generation (Kaplan, 2010). Changes in the competitive world are worth attention and close analysis. Chevron management requires keeping an eye to its environmental developments so as to remain competitive. New entrants in the market change the level of competitiveness. They would reduce Chevron’s profitability significantly since they claim their own share of the market. Barriers of entry should be raised by the existing firms. This helps block potential competitors from entering the market.

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In addition, new entrants will impact on prices and hence affect profitability. Should Chevron decide to participate in a merger, then it would enjoy several advantages such as economies of scale, tax benefits, guaranteed dominance in global market, growth and expansion, increased market share and competitive advantage among others. Merger provides firms with an opportunity to penetrate potential markets, share customer base and share resources for mutual growth.

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Globalization increases market share, sales volume and profitability significantly. Chevron’s merger with corporations such as Caspian International Oil Corp enables it to become an internationally known brand. This will enable it to achieve dominance in price control. Once the company starts controlling price in the market, its profitability is sustained successfully. Chevron needs to go global and increase its market share. Its going global will also increase its sales volume and hence profitability. Therefore, the company should consider undergoing a conglomerate merger. This will allow it to merge with firms from different industries and different geographic operational areas (Barney and Hesterly, 2008). This is not only strategic, but also goal oriented. This is because Chevron will increase its territorial boundaries and extend its product range significantly. This type of merger will create brand awareness internationally.

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