The Company
The select company for the instant assignment is Valero, one of the largest players in the energy industry globally. The company owns and operates energy production systems at different levels and with a wide variety. This includes refining and fractional distillation of crude oil and production of electricity using both wind and ethanol as a source of power. Further, the company runs a massive marketing system with a global reaching, using both Valero as a brand as well as a collection of alternative brands through wholly owned subsidiaries (Valero, 2017) . Among the key strategies applied by the company are variety, spin-offs, and acquisition. As of 2016, the company had over ten thousand employees and an annual revenue surpassing US$87 billion.
Question One: Business-level Strategies
Business-level strategies relate to actions that an entrepreneur takes in order to provide value for the customers (Hill et al, 2014) . Further, the said strategies enable the exploitation of core competencies in particularized products and markets. Valero has a wide array of business-level strategies that will require a careful evaluation so as to establish the fundamental one. With regard to customer value, Valero’s strategy entails both variety in the product as well as cost cutting through ownership of a wider segment of the production system. In some instances, Valero seeks to have an ownership of the entire production system as well as mass production (Valero, 2017) . To place a focus on variety, Valero’s main marketed product is fuel, sold through service stations. In this regard, Valero provides variety by selling high priced premium product under the brand Valero. Yet, for the customer who seeks a lower price for regular products, Valero will still serve them through a variety of other brands such as Total and Shamrock. This enables the customers to select their preference. An alternative to the fossil fuel energy, Valero also uses variety to serve customers who seek alternative fuel that is less harmful to the environment. The company runs eleven ethanol fueled power plants that make over 1.2 billion gallons of ethanol annually. It also has a massive wind-farm with a production capacity of 50 megawatts. This means the company serves both customers that use fossil fuels which are cheaper as well as those who prefer to pay a higher price for environmental friendly energy.
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With regard to lower production cost through ownership of a wider segment of the production system, Valero applies the same both to ethanol products and crude oil products. For a start, the company is one of the largest refiners of crude oil globally, giving it a large advantage from the perspective of economies of scale. This is because producing in bulk makes unit production costs lower, thus enabling a lower price and also increasing unit profits. Further, Valero owns refineries, transport systems, distribution systems and retail systems (Valero, 2017) . This eliminates the proverbial middleman, keeping all revenues within the company. The same case applies to ethanol where the company acts as the manufacturer, distributor, and retailer at the same time. These combinations exponentially enhance profitability.
From a comparative perspective, all the aforementioned strategies have worked well for Valero, solidifying its global dominance in the energy sector. It is, however, the monopolization of the production system that can be considered as the most important business-level strategy. This evaluation is made premised on the present and future considerations. One of the largest nightmares facing global corporations is logistics within the supply chain, from raw product to end consumer. Having to deal with different parties within this process is not only expensive but also limiting. The ability for Valero to eliminate most secondary members of the supply chain and handle the production process in-house gives the company a major advantage as a business. It, therefore, qualifies as a fitting and effective business-level strategy and takes precedence over all the others.
Question Two: Corporate-level Strategies
Corporate level strategy is the entrepreneurial decisions that companies make that affect the fate of the entire company (Hill et al, 2014) . With regard to Valero, the main corporate strategies are kindred to acquisitions and spin-offs. It can be said that instead of fighting it out with competitors, Valero acquires them and uses them as operating bases (Valero History, 2017) . Further, instead of looking for space in the retail market, Valero develops spin-offs that operate as retailers yet have contractual obligations to move its products. The company started as a spinoff of a natural gas company in 1980 with zero assets kindred to the operations that have made it a global corporation. Almost immediately, it began acquiring companies that carry out the operations it intends to venture into. First, it acquired a small refinery in Corpus Christi and invested in expanding it and eventually started operating a refinery division in 1984 (Valero History, 2017) . This started a cascade of acquisition for both small and large refinery businesses within and around Texas, including the giant Pacific Gas and Electric Company and Basis Petroleum in 1997 as well as Paulsboro in 1998. From refining, Valero expanded into retailing of petroleum products through the acquisition of retail companies such as ExxonMobil's Benicia in California and Huntway Refining Company across the West coast. Valero continued acquiring different retailers and refineries, enabling the company to grow into one of the largest crude oil refiners and retailers in the globe. Among the largest acquisitions made by the company in this regard was Premcor, Inc. which cost over US$8 billion (Valero History, 2017) . On the international arena, a major acquisition undertaken by Valero was Chevron Corp within the European Union.
A unique feature in this acquisitions lies in the fact that Valero did not simply absorb the companies acquired and turn them into Valero brand. Instead, the acquired companies would continue to operate under their traditional trade and brand names while selling Valero products. Contemporaneously and in a mark of strategic genius, Valero was still using the acquired brands to develop a premium and high-cost Valero brand (Valero, 2017) . For example, after Valero acquired retailer Shamrock, its retail stations would continue to sell Valero products under the name Shamrock, alongside products under the name Valero, being marketed as premium products and at higher prices. In this manner, the company would make money from the Shamrock brand name that is already well established while still building its own brand. The Valero brand would, therefore, get a boost from brands that have been on the market for over a century, by being marketed as a superior brand alongside them.
Valero also operated spin-offs both in the refinery and marketing arena. Among the initial spin-offs were to take care of areas of production and manufacturing that the company wanted to diversify from. A good example of the same is the natural gas business, which was its original core area of operation. It is, however, in the marketing arena that the spin-off strategy flourished. A good example is the 2013 establishment of the CST Brands, Inc. a massive publicly traded marketer and retailer. The company operates a wide chain of convenience stores in several countries. Yet, CST already had a contract, circumspectly created at the instance it was created to always sell Valero products (Valero History, 2017) . This caused Valero to have constant availability of retail space.
Amongst the several strategies aforementioned, all of which showcase the strategic prowess of Valero entrepreneurs, it is the development of the Valero premium brand through acquisitions that must be considered the very best. In the energy sector, most of the prominent brands that have risen to be considered as premium globally are over a century old a good example being British Petroleum. Yet, Valero is only 37 years old and has been marketing oil on an international capacity for about three decades (Valero History, 2017) . The company has been able to keep earning through purchased brand names while still using them to develop its own brand. Within the last few year, Valero has been moving to eradicate the secondary brands and market using the now established Valero premium brand. This strategy has worked well and is very likely to continue doing so into the future.
Question Three: Principle Competitor
Whereas Valero operates in several fronts, refinery, distribution and retailing of crude oil products is its mainstay. This separates the company from a majority of the largest energy companies in the world as many of them have a major focus on exploration, which Valero does not. It must, however, be said that a vast majority of the competition that Valero faces in the crude oil industry comes from these large companies involved also in exploration. Many of these multinationals such as Shell, Exxon and BP PLC have brand names that have been developed for over a century making them a fierce competition for Valero. Among the fundamental considerations in the crude oil business is that it is based on massive oil fields where the initial crude oil is harvested. Crude oil as an energy source has been a prized commodity for centuries and many players in the industry moved to acquire almost all the readily available potential and active oil fields. A relatively new player such as Valero will, therefore, commence at a major competitive disadvantage, yet it has given this traditional oil marketer stiff competition. A good comparison amongst competitors would be between Valero and British Petroleum (BP).
Business-level Strategies
As indicated, Valero’s main business strategy lies in the monopolization of the main production system within its supply chain so that as many processes as possible are done by Valero itself. This makes the product that it makes available at a cheaper price enabling good pricing and high profits. Further, the company focuses on high volume with little concern for quality. Indeed, quality is used as a marketing tool with Valero selling lower quality products at lower prices and premium products as higher prices. On the other hand, BP which has a well-established company with a respected brand that has been selling for over a century prides itself on quality (BP PLC, 2017) . Each and every product sold under the BP brand must be of optimum quality and, therefore, sold at optimum pricing. BP focuses on customers with a preference for quality and who are willing to pay the right price for the high quality offered. It can be said that BP is today, where Valero hopes to be in future when it gets rid of other brands and sells only the Valero premium brand that it is currently building. Yet, Valero at only 37 years is almost at par with the veteran BP as at now. In the future, therefore, Valero will be much more powerful than BP based on its superior business-level strategy.
Corporate-level Strategies
As outlined above, the corporate-level strategy of Valero entails a careful combination of spin-off and acquisitions, all of which have occasioned the exponential growth of the company in such a short duration. Whereas Valero is a well-established company, it presents itself as a motley collection of acquired companies and spin-offs. It is also worthy of notice that Valero itself commenced as a spin-off. BP on the other part is the exact opposite of Valero. The company has a well-established structure developed over the centuries and is clearly visible (BP PLC, 2017) . BP is not quick to make mergers and when it does, the companies, such as Amoco and Atlantic Richfield Company (ARCO) cease to exist with all their assets being rebranded to read BP. This is a great strategy, more so when based on a brand as powerful as BP. It is, however, also dangerous as the 2010 Deepwater Horizon oil spill revealed. With BP being the title and only brand the company runs, the scandal affects both stocks and sales. Had the same happened to Valero, it would have affected the stock but only a segment of the sales due to the diversification. With the future of marketing being dominated by informal regulation through social media, a strategy that puts all interests in one corporate basket can be dangerous. This makes the Valero approach superior to the BP approach.
Question Four: Slow-cycle and Fast-cycle Markets
Slow-cycle markets are markets where competitive advantages are shielded or extremely hard to replicate. The shielding in this regard includes the registration of patents as well as strict regulation to ensure that there are no breaches of intellectual rights. On the other hand, difficulty in replication means where strategies or products are so complex that they cannot be easily or cheaply replicated. The exact opposite of this is the fast cycle market, which refers to a market situation where strategies or products can be easily replicated without adverse consequences (Hill et al, 2014) .
Slow-cycle markets Comparison
From both the business-level strategies and corporate-level strategies perspective, the choice made above was for Valero. In a slow-cycle market, Valero which only came into the picture 37 years ago would not only have to develop new petroleum products by itself but also develop novel marketing strategies. The comparison and conclusions made above are mainly premised on the fact that Valero was able to achieve in a very short time what BP took decades to achieve. Infthe perspective taken was slow-cycle, the obvious choice would have been BP since developing a powerful singular brand would have been the key to success.
Fast-cycle Markets Comparison
There is extreme uniformity in the crude oil energy business with most products made such as gasoline, paraffin, and diesel being incapable of patenting. Furthermore, almost all marketers rely on the traditional concept of the service station. The instant industry is, therefore, almost a textbook example of a fast-cycle markets system thus the choice made in section three above would remain the same.
References
BP PLC. (2017). Our strategy. Retrieved August 03, 2017, from http://www.bp.com/en/global/corporate/about-bp/our-strategy.html
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: Theory: An integrated approach . Boston, Massachusetts: Cengage Learning
Valero History. (2017). Company History. Retrieved August 03, 2017, from https://www.valero.com/en-us/AboutValero/CompanyHistory
Valero. (2017). About Valero . Retrieved August 03, 2017, from https://www.valero.com/en-us/AboutValero
