No business can succeed without a developed organizational structure. This vital asset allows the organization to communicate between the different sections within that organization. The organization structure has many sections, each designated to accomplish a specific work task that required when performing assigned duties, each section contributing to the organization’s mission. Without coordination and control of each section, an organization will not survive. The following will illustrate Valero Energy Corporation’s organizational structure, and compare and contrast with two of its biggest competitors, Exxon Mobil Corporation and Chevron Corporation.
Valero Energy Corporation founded in 1980 as a corporate successor of LoVaca Gathering Company, based in San Antonio, Texas. Valero engages in refining and marketing of petroleum products. Refining, retail, and ethanol are the company’s three main business segments. Valero Energy owns and operates 16 refineries in the United States, Canada, and in the Caribbean islands. Valero also owns 10 ethanol plants in the Midwest.
Today this company produces approximately three million barrels of petroleum products per day, emerging as the largest refinery company in North America. Valero Energy with a steady growth, emerged as a small company in a very tough petroleum market, thus becoming a very competitive corporate global company (Company History, 2013).
In 2011, Valero expanded into Western Europe’s market by purchasing four major pipelines and 11 fuel terminals, and a network of 1000 Texaco wholesale sites. Valero Energy became the largest branded network dealer in the United Kingdom, and the second largest in Ireland.
This move into Western Europe raised the company’s retail and branded wholesale sites to 6800, operating under the brand names of Valero, Beacon, Diamond Shamrock, and Ultramar (Company History, 2013). This company ranked sixth of 68 gas and oil refinery, and marketing companies, and currently ranked ninth in the Fortune 500 list of top businesses in the United States. Valero Energy Corporation made the list every year since 2000 that first ranked the company at 93. Currently, the company has approximately 21,000 employees andannual revenue of $33.7 billion.
The organizational structure of Valero Energy, like most big corporations has a vertical structure. The company has a 12-member board with Chief Executive Officer (CEO) Bill Klesse as board chairperson. The CEO has 10 top-level managers directly beneath him. The top-level managers list as follows: Chief Financial Officer (CFO), Chief Operating Officer (COO), Marketing and Product, Specialty Product, Chief Information Officer (CIO), Development, Ultramar, Legal and Secretary, Human Resources, and Refining Operations Officer.
These top Level executive managers are responsible for several sections beneath them. The staffing function of the company, with its business driven departments, mission focused on forecasting and technology continuing to evolve with practices and business process.
There is no comparison when comparing Valero Energy to its top two competitors. The competitive environment is very intense. In this market, little forgiveness exists for the poor business decisions. The critical decisions of Valero Energy enable them as a small company to compete with the much larger petroleum companies.
The enterprise of these competitors operates on a much larger scale. Exxon Mobil and Chevron is three to four times larger, containing three to four times more employees, and a much greater volume in annual revenue. The operational structure covers much more, containing more departments and sections. These companies have natural gas and oil exploration, drilling oil, refining, marketing, and distribution. Exxon Mobil and Chevron both have extensive operations around the world.
The organizational structure of Exxon Mobil functions using a vertical structure. The company operates with 96 executives and six subsidiaries, containing a 13-member board with CEO Rex Tillerson as board chairperson. Exxon Mobil has 12 top-level managers listed as follows: Chemical, Development, Foundation, Global Services, Research and Environment, Finance, two Senior Vice Presidents, Legal, Human Resources, Exploration, and Public Affairs. Exxon Mobil has an additional 15 middle management sections directly underneath the top-level managers.
Exxon Mobil ranked second on the Fortune 500 list having the second highest annual profit with an annual profit of $45 billion. In 2012, Exxon Mobil’s net income increase of 9.3% from the year before. The short-term goal for Exxon Mobil is to decrease oil and natural gas production by 1%, and to invest more into drilling the hard to reach fields (CNN Money, 2013).
The organizational structure of Chevron also uses a vertical structure. The company operates with 95 executives and six subsidiaries, containing a 10-member board with CEO John Watson as board chairperson. Chevron has 12 top-level managers listed as follows: CFO, Procurement, Secretary and Governance, Human Resources, Downstream and Chemicals, Policy and Planning, Technology and services, Facilities Engineering, Upstream and Gas, CTO, Legal, and Business Development. Chevron also has 15 middle management sections.
Fortune 500 has Chevron ranked third with an annual profit of $26 billion. The company’s short-term goal is investing 12% more on energy exploration, such projects of exploration of oil and natural gas in Western Australia.
Valero Energy often stands in the shadows of its competitors, each year continuing growth slowly catching its competitors. If Valero Energy continues to expand, grow, and move more in the global market, in a matter of time this company will come closer to its competitors. This company also needs to start looking into expanding within the company by investing into exploration and drilling if they want to compete with the larger petroleum companies.
Over the past 30 years, Valero Energy started as a small local company out of San Antonio, Texas, becoming a top business in the United States. Without a solid organizational structure, and an outstanding staff of leadership, this company would not be where it is today. Competing with top intense giant corporations in the petroleum market, Valero Energy sets the example of textbook management. In 10 years, this company could be a well-known name as regarding to Exxon Mobil and Chevron.