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Murphy USA SWOT & PESTLE Analysis

ID : 52355953 | Feb 2018

COMPANY PROFILE - Murphy USA

Business Sector : Retail

Operating Geography : North America

About Murphy USA : Murphy USA, a leading retailer of gasoline, was founded in 1996 by Murphy Oil Corporation. It serves as both retail gasoline store as well as a convenience store chain. It is ranked 291 among Fortune 500 companies. The primary focus of the store is to provide customers with low-cost fuel, tobacco and convenience store items. The company operates more than 1,400 fuel stations across USA.It has approximately 9000 employees in all its locations. In a day, the company serves approximately 1.6 million customers. Around 1000 of Murphy USA stores are located near the parking lots of Walmart retail stores. Post the end of Murphy USA and Walmart partnership in 2016, the company is now expanding its stores in new locations independent of Walmart locations to build new business avenues. The company also markets its other products at stand-alone stores under the name of Murphy Express.

Murphy USA Revenue : $11.59 billion– FY ending Dec 2016

Competitive Analysis of Murphy USA

The SWOT analysis for Murphy USA is presented below:
Strengths
Weaknesses
1. Strategic locations
2. Raze-and-rebuild program
3. Diversified merchandise mix
4. Cost leadership
1. Need for change in product positioning
2. Dependence on established retail stores
Opportunities
Threats
1. Increased investment towards building new business avenues
2. Change in oil regulations
1. Rise of a new competitor
2. Uncertainty in oil prices in the world market
3. Development of latest vehicles

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Detailed SWOT Analysis of Murphy USA

 

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.

4. Cost leadership: 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. This helps in having customer loyalty and in acquiring new customers from other players in the market.

Weakness

1. Need for change in product positioning: The retail gasoline industry in USA is highly competitive due to ease of entry; this industry has witnessed the entry of number of retailers offering similar products and services as that of Murphy USA. Several non-traditional retailers like supermarkets, discount club stores have imitated Murphy USA’s business model of marketing gasoline and convenience merchandise. Murphy USA, in order to retain its position in the market, should try to differentiate its product offering from competitors. This can be achieved by changing its current business model and product offerings. In 2017, Murphy USA reported a revenue growth of 6.36% which is below the competitor’s average revenue growth of 15.66% in the same third quarter.

2. Dependence on established retail stores: In 1996, Murphy Oil Corporation made an alliance between Murphy USA and Walmart retail store for marketing low priced gasoline. Murphy USA also participated in the discount program offered by Walmart, by offering additional fuel discounts to Walmart customers at all the Murphy USA stations. As a result, the dependency on Walmart stores further increased over the years with more than 1000 Murphy USA stores located near Walmart. With the end of this 20-year-old partnership, Murphy USA is in a need to establish itself as a standalone retail gasoline store, similar to Murphy Express. It is designing new loyalty programs and new retail outlets as part of its new business strategy.

Opportunity

This section is available only in the 'Complete Report' on purchase.

Threat

This section is available only in the 'Complete Report' on purchase.

References

1. Murphy USA Proxy Annual Report 2017:http://s22.q4cdn.com/506259022/files/doc_financials/annual_report/2017-PROXY-Final-Version.pdf

2. Murphy USA Annual Report 2016: http://s22.q4cdn.com/506259022/files/doc_financials/annual_report/Final-PDF-Annual-Report-2016.pdf

3. Murphy USA investor presentation: http://s22.q4cdn.com/506259022/files/doc_presentations/MUSA-Investor-Presentation-Website.pdf

4. Murphy USA losses Walmart: https://www.washingtontimes.com/news/2016/feb/1/murphy-usa-plans-for-growth-without-wal-mart/

5. Market share: http://incfact.com/company/murphyusa-eldorado-ar/

6. Growth of electric vehicles: https://about.bnef.com/electric-vehicle-outlook/

The PESTLE/PESTEL analysis for Murphy USA is presented below:
Political
Economical
1. Trump Administration
2. Impact of world politics
1. Uncertainty in Oil prices in the world
2. Effect of global economy
Social
Technological
1. Growth of value-conscious customers in USA1. Increase in manufacturing of latest vehicles by automakers
2. Latest technological innovations
Legal
Environmental
1. Change in oil regulations
2. Change in Corporate Average Fuel Economy standards
1. Demand impact due to natural calamities
2. New environmental policies by Trump administration
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Detailed PESTLE Analysis of Murphy USA

 

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

1. Uncertainty in oil prices in the world: Uncertainty in oil prices and a possibility of higher gasoline prices could mean a lower volume average consumption which would affect the company’s finances. As the high oil price will negatively impact the demand for oil and gas in the country. The only way the company can stay above its competitors by maintaining its low-price player position by shifting from its volume-first mindset. Further by improving the store labour model, will help in maintaining lower store operating expenses, which is passed on to the customers. The company should maintain its cost-leadership status to continue having a competitive advantage.

2. Effect of global economy: As the economic conditions of developing countries change or worsen, their consumption and demand for oil and gas will reduce, which will have a direct impact on several businesses in the world. This will further impact the energy needs of American companies and this result in reduction of demand for oil and gas by consumers in America which will affect the business of Murphy USA in long run. By maintaining its cost-leadership and supplying low-cost oil, it can have a competitive advantage in the market.

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

This section is available only in the 'Complete Report' on purchase.

Legal

This section is available only in the 'Complete Report' on purchase.

Environmental

This section is available only in the 'Complete Report' on purchase.

References

1. Murphy USA Proxy Annual Report 2017: http://s22.q4cdn.com/506259022/files/doc_financials/annual_report/2017-PROXY-Final-Version.pdf

2. Murphy USA Annual Report 2016: http://s22.q4cdn.com/506259022/files/doc_financials/annual_report/Final-PDF-Annual-Report-2016.pdf

3. Murphy USA investor presentation: http://s22.q4cdn.com/506259022/files/doc_presentations/MUSA-Investor-Presentation-Website.pdf

4. Murphy USA losses Walmart: https://www.washingtontimes.com/news/2016/feb/1/murphy-usa-plans-for-growth-without-wal-mart/

5. Growth of electric vehicles: https://about.bnef.com/electric-vehicle-outlook/

6. How Hurricane Harvey is Driving the Price ofGas:http://fortune.com/2017/08/27/hurricane-harvey-gas/

7. Change in oil regulations: http:// www.reuters.com/article/us-usa-trump-oil-regulation-insight/as-trump-targets-energy-rules-oil-companies-downplay-their-impact-idUSKBN16U1A9

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Murphy USA SWOT and PESTLE analysis has been conducted by Aparajitha Sanji and reviewed by senior analysts from Barakaat Consulting.

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