mergers of Chevron and Texaco Case Study
“An organizational structure is a system that outlines how certain activities are directed in order to achieve the goals of an organization. These activities can include rules, roles, and responsibilities. The organizational structure also determines how information flows between levels within the company” (Kenton, Will. 2021). There are also several types of organizational structures, which includes: Hierarchical, Functional, Horizontal or Flat, Divisional, Matrix, Team-based, and Network. With this said, “Chevrons’ organizational structure is the geographic area structure. According to a press release pertaining to the merger of Chevron and Texaco, “For the company’s businesses, the new organization relies mainly on decentralized operating companies segmented by business and geography, with “strategic business units” managing relevant operations” (Chevron, 2014). A geographical structure can offer several operational and strategic advantages, including: (1) close communication with local customers, (2) strong collaborative teams at each location, (3) the ability to better serve local needs and tailor their approach to the local market, and (4) the ability to encourage positive competition between different departments.
As stated above, there are several organizational structures. In regard to Chevron Corporation and other than utilizing the geographic area structure as an advantage to their organization, Chevron Corporation also utilizes the hierarchical organization structure to operate more effectively. The reason for the mentioned is that the hierarchical structure “better defines levels of authority and responsibility, shows who each person reports to or who to talk to about specific projects, motivates employees with clear career paths and chances for promotion, provides each employee a specialty, and creates camaraderie between employees within the same department.
- Chevron Corporation. Retrieved from
- Kenton, Will. (2021). Organizational Structure. Investopedia. Retrieved from https://www.investopedia.com/terms/o/organizational-structure.asp.
- Williams, Shannon. 7 types of organizational structure (+org charts for implementation). Lucidchart. Retrieved from https://www.lucidchart.com/blog/types-of-organizational-structures.