Phillips 66 Case study 042217 - Running Head Phillips 66 1...

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Running Head: Phillips 66 1Phillips 66 Case StudyPhillips 66 Team:Texas A&M University – Corpus ChristiEcon 5315.W01: Managerial EconomicsTable of ContentsIntroduction...........................................................................................................................3A.Defining the Industry........................................................................................................4B.Analyzing the Structure of the Industry.............................................................................5C.Corporate Culture............................................................................................................6D.Five Force Analysis - Threats.............................................................................................8E.Value Net........................................................................................................................11
Phillips 66 2F.Strategic Moves to Sustain Competitive Advantage..........................................................12G.Value Provided to Customers..........................................................................................15H.Strategic Positioning in This Market................................................................................16I.Recommendation............................................................................................................17References............................................................................................................................19Introduction Phillips 66, a leader in the Oil and Gas Industry, dates its history back to 1917 when Lee and Frank Phillips started up the Phillips Petroleum Company, and specialized in the extraction of liquids from natural gas, and over the next 10 years, they became the nation’s largest producer of natural gas liquids. Phillips Petroleum Company then changed its name to Phillips 66 after testing a new type of gasoline on Route 66. During those tests the vehicle reached a top speed of 66 MPH(miles per hour), which sparked the idea of the brand name Phillips 66, and by 1927, Phillips 66 opened up its first gasoline and service station in Wichita, Kansas[Phi17].
Phillips 66 3Phillips 66 has had a long history of mergers and acquisitions throughout its lifespan; however, the biggest strategic move made by Phillips 66 in its history happened in 2012 when it split from the parent company ConocoPhillips. This move was made to split the upstream and downstream side of the business. ConocoPhillips kept the exploration and production side of the market while Phillips 66 split off with the midstream transportation and products refining side of the market. This split also helped focus the two companies on the vastly different types of markets, upstream being more boom or bust profit while the downstream historically providing more stable returns[Phi17]. Phillips 66, as one of the nation’s leaders in the production of gasoline, diesel, jet fuel andpetrochemicals, has a strong business model to increase growth for the next 100 years. This model come from their core values not only to the safety of the environment, but also to themselves. They also strive to have honor in the method of which they conduct their business, and commitment to perform at the highest levels of excellence in everything they do[Phi17].A.Defining the Industry An industry is a group of companies that are similar in the business activities and operations that they perform to generate revenue. There are many companies that have similar business activities, and are grouped together to create their own industry. Industries such as the medical industry, or the oil and gas industry, which Phillips 66 is part. Currently the Oil and Gas Industry’s performance is less than desirable by all companies in the industry, as they have all seen significant drops in revenues over the last 18-24 months. This has been the worst economicdownturn for the Oil and Gas Industry in over 30 years, and has influenced the Oil and Gas
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