Murphy USA SWOT & PESTLE Analysis

Strength

1. Strategic locations: The locations for Murphy USA stores help in increasing the revenue, while, some are strategically located near the supercenters like Walmart supercenter parking lots. As of 2016, 1401 stores are present in 26 states in USA. The stores are strategically targeted at core-value conscious consumers for higher return. The stores offer customers a broader assortment of convenience merchandise. Further, these prime locations will also provide competitive advantage in long term also, it is one of the reasons for the company to be listed in fortune 500 companies.

2. Raze-and-rebuild program: Through this program, the company is improving the quality and performance of existing store base. Also, as part of its Independent growth plan, it converted 10 high-volume locations from kiosks into larger 1,200 square foot formats which featured enhanced fuel and merchandise offers. As of 2016, the company completed 300 razor programs. Through this program, the company is acquiring new customers and tapping into new markets for increasing its Customer base and in turn to increase the company’s revenue in the long-run.

3. Diversified merchandise mix: The company formed a new supplier relationship with Core-Mark, this helped in boosting tobacco contribution to the company’s revenue. Also, Murphy USA loyalty program is designed to attract new value conscious customers and also reward existing loyal customers with discounted fuel and merchandise. With this, the company plans to acquire new customers and new markets for its sustenance in the future and to maintain its revenues in the long run.

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Weakness

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Opportunity

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Threat

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Political

1. Trump administration policy on Renewable Identification Number market: Murphy USA expects renewable identification number (RIN) market to be volatile. RINs are credit that refiners (obligated parties) use to show their compliance with blending quotas under Renewable Fuel Standards (RFS). Murphy USA made $181.1 million in 2016, by selling RINs as a no obligated party and blender. Recently RIN prices have swooned, due to a prediction that Trump administration might move the point of obligation downstream. Before Obama left office, Environmental protection agency (EPA) denied petitions requesting this downward shift. As this would have a negative effect on RIN market and also on large retailers like Murphy USA.

2. Impact of World politics: Geo-political events like change in government administration in countries like US, Europe, instability in Russia and Middle east, have the potential to offset the oil prices in the world. As witnessed, the production of oil increased, this resulted in an imbalance of demand and supply of oil and gas in the world, which further reduced the price of oil and gas. As a result, this curtailed investments in oil companies in America and forced a structural shift in global production capacity.

Economic

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Social

1. Growth of value-conscious customers in USA: There has been a growth of value-conscious customers in USA, hence it becomes very necessary to provide fuel at lower costs than the competitors. The improvement of store labour model, helped in maintaining lower store operating expenses, which is passed on to the customers. By standardizing the roles and responsibilities of employees, making them more efficient, task-oriented and engaging more with the customers. Also, the company’s distinct fuel supply chain is major competitive advantage for maintaining cost leadership.

Technological

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Legal

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Environmental

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