Exxon Mobil Corporation Strategic Analysis

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Company Analysis: ExxonMobil

Exxon Mobil Corporation or what is popularly known as ExxonMobil is an American international company that specializes in the exploration, production, and sale of oil and gas. This corporation was established in 1999, following the merger between Mobil and Exxon. Apart from producing and selling oil and gas, this business had an interest in copper and coal but abandoned it in 2002. Michael, Min, Ling, and Kai (2015) posit, “In 2008, ExxonMobil started to phase-out from the United States direct-served retail market by selling its service stations” (p. 189). In 2010, this multinational corporation bought XTO Energy, a firm that specialized in the manufacture and improvement of unconventional resources. In 2011, ExxonMobil partnered with Rosneft, a Russian oil company, establishing the Tuapse and East-Prinovozemelsky oil fields.

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Today, ExxonMobil is ranked 14th globally in terms of oil and gas reserves. It has 37 refinery plants that are spread across 21 states and produce over 6.3 million barrels every day (Exxon Mobil Corporation, 2018). This company has created employment opportunities for over 71,000 people across the globe (Exxon Mobil Corporation, 2018). It is divided into three global operating units, including upstream, downstream, and chemical branches. ExxonMobil has various subsidiary divisions like Coal & Minerals that operate autonomously. The greatest share of its income comes from the upstream division, which focuses on the exploration, mining, and transportation of crude oil (Shuen, Feiler, & Teece, 2014). Most activities of this unit are located in the Gulf of Mexico, Permian Basin, Caney Shale, and Bakken Formation. The downstream division is responsible for refining, marketing, and selling oil. This corporation has retail outlets in New Jersey, Texas, Pennsylvania, and Mid-Atlantic. In 2017, this business reported $19.7 billion in revenue (Exxon Mobil Corporation, 2018). ExxonMobil has been criticized for its role in environmental pollution.

SWOT Analysis

Strengths

Having a strong public image is critical to the success of an organization as it enhances customer loyalty. Among the strategies that businesses use to create rapport with the public is initiating corporate social responsibility (CSR) projects that address the challenges that affect society. One of ExxonMobil’s strengths is its capacity to create and run efficient CSR programs (Michael et al., 2015). Moreover, this company has established an effective communication strategy that facilitates decision-making. In the past, this corporation faced criticism from the public for failing to react quickly to the Valdez oil spill. Currently, ExxonMobil has an efficient disaster management program that enables it to respond swiftly to incidences of oil spillage and notify the environmentalists and public about its progress. Naumann and Philippi (2014) cite diversification as a key strength of ExxonMobil. This corporation has grown its portfolio by investing in other sectors like energy.

Weaknesses

The growth of any business lies in its ability to develop novel products and services depending on changes in consumer needs. It underscores the reason many companies invest in employee training and research and development. According to Michael et al. (2015), ExxonMobil spends little on research and development compared to other firms that serve in the oil industry. Shuen et al. (2014) contend that the failure to invest in these critical areas has led to this firm witnessing limited innovation. Technological advancement has enabled companies to improve their processes, thereby being able to compete on a global platform. ExxonMobil is unable to coordinate activities across its businesses because it has not procured modern technology. Alcheikhhamdon and Hoorfar (2016) claim that this corporation plans to expand its overseas market. However, it might not achieve this objective due to the inability to streamline operations across the board.

Opportunities

The demand for energy in developing countries continues to rise as governments and private investors open additional industries. ExxonMobil has been in the energy business for many years, winning a good reputation worldwide. Hence, this company has an opportunity to expand its operations to target developing economies in South East Asia, the Middle East, Europe, Africa, and Asia. The call for environmental conservation has led to countries looking for alternative sources of energy that are eco-friendly (Wu, 2014). Today, many companies are being encouraged to invest in green energy like wind and solar as a way to reduce the discharge of greenhouse gas. Therefore, ExxonMobil can take advantage of this need and invest in alternative forms of power that do not pollute the environment. The move would help this firm to grow its portfolio and boost its profit margin.

Threats

The demand for renewable sources of energy and the call for mitigation of global warming are forcing companies to adjust their operations. Naumann and Philippi (2014) argue that ExxonMobil is facing stiff competition from rival companies which have invested heavily in green energy. This corporation is doing little to meet consumer needs, and it faces the risk of being overtaken by rival firms such as Chevron Corporation, Royal Dutch Shell, and ConocoPhillips. Indeed, ExxonMobil will not manage to maintain its present success if it does not improve its strategies. According to Wu (2014), the economic slump in major states like India and China is posing an immense threat to energy companies. The demand for oil, coal, gas and other sources of energy has declined significantly, affecting the performance of companies like ExxonMobil. Moreover, as countries continue to enact laws that limit the amount of carbon emission, the need for non-renewable sources of energy will go down. Hence, this firm will require spending the extra money to generate green energy.

Competitive Advantage

Companies require leveraging modern technology, innovation, and product or service differentiation to be competitive. ExxonMobil has been in the energy business for decades and has amassed knowledge about this industry. Therefore, it should utilize that experience to diversify operations and stand out from competitors. This corporation must increase the amount of money that it spends in research and development to allow it to identify alternative forms of energy which are in high demand. It is imperative to acknowledge that energy firms cannot win the war against environmental pollution, as many countries are enacting laws meant to curb global warming (Wu, 2014). The only option that these companies have is to diversify their operations to generate green energy. For instance, ExxonMobil should consider manufacturing solar panels which are in high demand, particularly in the Middle East. Harmonizing activities between the headquarters and overseas retails is critical for effective decision-making. One of the challenges that have hindered ExxonMobil’s growth is the lack of technology that facilitates seamless operations between its various entities. Therefore, this firm should procure modern technology to help it improve processes and ease decision-making amid its divisions.

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ExxonMobil is a renowned brand internationally; hence this firm would not encounter challenges expanding operations in overseas markets. Today, companies like Chevron Corporation, BP, and ConocoPhillips are targeting African countries as a way to boost their profit and overcome competition. ExxonMobil should consider investing in African states like Kenya, Ghana, and South Africa where the demand for oil and gas is high. Such a move will help this company to increase its profit and mitigate risks attributed to competition.

References

  1. Alcheikhhamdon, Y., & Hoorfar, M. (2016). Natural gas quality enhancement: A review of the conventional treatment processes, and the industrial challenges facing emerging technologies. Journal of Natural Gas Science and Engineering, 34(1), 689-701.
  2. Exxon Mobil Corporation. (2018). ExxonMobil 2017 summary annual report. Web.
  3. Michael, I. C., Min, W. Z., Ling, K. C., & Kai, Y. S. (2015). The proposition of an interactive process approach in exploring the relationship between corporate social responsibility (CSR) strategy and perceived CSR: Case of ExxonMobil in Nigeria’s petroleum industry. International Journal of Business and Management, 10(2), 186-195.
  4. Naumann, M., & Philippi, A. (2014). ExxonMobil in Europe’s shale gas field: Quitting early or fighting it out? European Management &Public Affairs Studies, 1(2), 17-34.
  5. Shuen, A., Feiler, P. F., & Teece, D. J. (2014). Dynamic capabilities in the upstream oil and gas sector: Managing next-generation competition. Energy Strategy Reviews, 3(1), 5-13.
  6. Wu, K. (2014). China’s energy security: Oil and gas. Energy Policy, 73(1), 4-11.

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BusinessEssay. (2022) 'Exxon Mobil Corporation Strategic Analysis'. 12 January.

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BusinessEssay. 2022. "Exxon Mobil Corporation Strategic Analysis." January 12, 2022. https://business-essay.com/exxon-mobil-corporation-strategic-analysis/.

1. BusinessEssay. "Exxon Mobil Corporation Strategic Analysis." January 12, 2022. https://business-essay.com/exxon-mobil-corporation-strategic-analysis/.


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