Exxon Mobil is a petrochemical company based in Texas, United States of America (Exxon Mobil, 2013). The companys operations have been classified into three broad categories; upstream, downstream, and chemical sections. It was formed in 1999 following the merger of Exxon and Mobil oil companies (Exxon Mobil, 2013). The merger marked the beginning of a successful period. The success of the company can be attributed to a number of factors like increased asset base and improved efficiency.
The merger was a strategic move by both companies to increase both assets and capital. Both companies had operations in several countries across the globe. The merger enabled the company to acquire an expansive operation area at a low cost. Increased capital base enabled the company to expand its operations without incurring significant costs. In addition, each partner entered the deal with a huge asset base.
Operational efficiency is another factor that enabled the company to make significant profits. The primary focus of the company is to cut operational costs through introduction of efficient systems. The company uses technology to ease processes and to manage some operations. It also ensures that its supply chain is properly managed. It pulled out of the gas and fuel retail business to reduce its costs. Instead, it opted to form partnerships with independent retailers who would distribute its products.
It also employs innovative marketing to increase its sales. The company, in conjunction with the retailers segmented the market. For instance, it has premium products meant for high end customers. It is also involved in oil exploration in some countries. This is a strategy to expand its area of operation.
Demerits of Free Trade
Free trade has had great impact on governments, businesses, and people. There are several positive effects of globalization. However, it also has a number of negative effects. Negative effects of free global trade have received little attention yet they have the potential to permanently alter peoples lives. The negative effects associated with globalization include loss of jobs and income, loss of national sovereignty, environmental degradation, exploitation of the poor, and disregard of labour laws and policies.
Companies are constantly looking for ways to reduce their production costs. This has resulted in outsourcing of noncore operations to overseas companies (Hill & McKaig, 2012). The jobs are often outsourced to developing countries where labour is cheap. Outsourcing transfers jobs from one country to another.
However, its effects are felt more in the country of origin. Loss of a job may alter the life of an individual. It reduces the individuals purchasing power. Therefore, in the long run, outsourcing negatively affects the economy of a country.
Influx of cheap foreign goods has a negative impact on the economy of a country. Globalization has encouraged the free movement of goods and people across borders. Local industries may lose markets to the foreign products. This has a negative effect on the economy. A decline in the amount of manufactured goods reduces government revenue.
Free trade shifts economic power from governments and local agencies to international agencies like World Bank and IMF (Hill & McKaig, 2012). This may be attributed to the fact that economic power is linked to political power. People and companies are increasingly looking up to the international organizations. Most policies that end up forming the economic policies of many countries originate from these organizations. Loss of sovereignty is similar to losing identity and independence.
Globalization or free trade has encouraged environmental degradation and violation of labour laws (Hill & McKaig, 2012). Companies often move their operations to developing countries where labor laws and environmental laws are not strictly enforced.
This may lead to abuse of the environment and workers by unscrupulous companies. Environmental degradation will eventually have a negative impact on all people. Relocation may also lead to exploitation of the poor. Residents of developing countries may be exploited by unscrupulous companies.
hese practices are not tolerated in developed countries thus leading to relocation of dishonest companies to developing countries. These dishonest companies have argued that adherence to fair labour practices and environmental protection laws is expensive. Therefore, they opt to move to where they can easily reduce their costs by overlooking these regulations. This argument is not entirely true because environmental protection is priceless.
Doing business in other countries
Aramco is a Saudi Arabian petrochemical company. Its operations include oil and gas exploration, refining, shipping, marketing and distribution (Saudi Aramco, 2013). It operates in a number of countries. To do business in other countries some factors should be considered so as to increase the chances of success. These factors include benefits, costs and risks of doing business in a particular country.
The benefits of doing business in a country are measured in terms of monetary gains. The financial benefit of doing business in a particular country is influenced by market size, current purchasing power, future purchasing power, and first-mover advantage (Hill & McKaig, 2012).
In order to enjoy these benefits, a thorough assessment of the market should be done. The analysis should include the size of the market, purchasing power, and first-mover advantage. It is important for a company to expand its operations to areas that have a market with a growth. More importantly, the purchasing power of the people should be reasonable or at least show signs of growth.
The cost of doing business in a country should be thoroughly analyzed. A business can incur various types of costs. The costs incurred by a business may be political, economic or legal. Political costs refer to costs incurred in form of bribes (Hill & McKaig, 2012). It may be easy to do business in developed countries because they have good infrastructure. Litigation can increase the cost of doing business.
Risks are factors that are likely to adversely affect the business. Risks of doing business in a country are influenced by politics, the economy, and the legal system. Political risk is defined as the possibility that political forces will negatively affect profits and goals of the business.
Economic risk refers to the possibility that economic mismanagement will derange the goals of the business (Hill & McKaig, 2012). Foreign exchange risk is another risk that is related to economic risk. Legal risk refers to the possibility that a partner will unfairly use the law to gain an advantage. To lower the risks, entry into new markets should be well planned. Political, economic and legal risks should be monitored closely. Foreign exchange risk can be avoided in some cases through payment of goods in kind.
Countries should be selected with the above factors in mind. The benefits should outweigh costs and risks. For example, a country that offers first-mover advantage may be selected and those that have late-mover disadvantage overlooked. Similarly, entry into countries with significant economic and political risks may be delayed.
References
Exxon Mobil. (2013). Web.
Hill, C. & McKaig, T. (2012). Global Business Today (3rd ed.). Philadelphia: Mcgraw-Hill. Saudi Aramco. (2013). Retrieved from <https://www.saudiaramco.com/en/>.
The given report is devoted to the in-depth investigation of Exxon Mobil, an American multinational oil and gas corporation that is now considered one of the most influential and powerful global companies. The choice of the object for the investigation if preconditioned by several factors. First, the given sector possesses the strategical importance of the modern world as oil and gas remain the leading sources of energy. It means that there are multiple forces affecting the given segment and influencing the work of the company. Second, Exxon Mobil remains the worlds largest corporation by revenue, which evidences the effectiveness of strategies employed by its managers and the ability to correctly realize and use the current market trends to create the basis for further growth.
The report includes the evaluation of the whole industry and external stakeholders, such as competitors, vendors, customers, governmental entities. It helps to create an image of the environment where the company functions and its growth strategies. Additionally, internal stakeholders are assessed to conduct an in-depth analysis of Exxon Mobil. This category includes shareholders, the board of directors, management, and employees.
Finally, the paper offers a comprehensive SWOT analysis with a detailed description of all findings to understand the current position of the organization and its future opportunities for growth. All these elements are discussed in appropriate sections and incorporated within a single report to offer a complete analysis of Exxon Mobil, factors that impact its functioning and growth.
Background
The company has a long history and various stages of her development. It was founded in New Jersey in 1882 as a descendant of Standard Oil created by John Rockefeller ( Exxon Mobil Corporation, 2018). The company succeeded and managed to establish the basis for its further growth. During the next several decades, it managed to transform into the largest company in the world with stable income and opportunities for further becoming a leader in the given sphere.
The decision to enter global markets was followed by the creation of multiple subsidiaries in various areas and purchases of other companies functioning in the given field to empower its position and support its evolution ( Exxon Mobil Corporation, 2018).
Due to the sufficient strategies and correct managerial decisions, Exxon Mobil corporation became an influential actor in the oil and gas sector with the ability to compete with other powerful actors and generate stable income. It has facilities in Asia, Europe, Africa, Australia, and America and engages in new projects with the primary goal to avoid stagnation and participate in new projects ( Exxon Mobil Corporation, 2018). In such a way, in the 21st century, Exxon Mobil is the influential actor that competes with other giants working in the same sphere.
External Stakeholders
Industry
Prior to analyzing Exxon Mobil, it is essential to create the theoretical framework for the discussion by exploring the oil and gas industry in general. At the moment, it is a strategically important sector characterized by the existence of giant corporations that control the most significant part of the market and precondition its further evolution (Alfarhan, 2019). Petroleum, as the main industrys product, is vital for the modern industrial civilization and preservation of the current speed of its evolution (Colombano, 2015).
For this reason, the industry remains critical for many nations and attracts significant attention of governments, international unions, and regulatory bodies. Because of the highly competitive environment and high revenue (in 2018, the U.S. sector came to about $180 billion), there are multiple challenges companies face (Aarstad, Pettersen, & Jakobsen, 2015). Additionally, there are significant environmental impacts that are associated with this very sphere, which means that all actors should also engage in this sort of activity to remain attractive for potential partners and avoid claims regarding this very aspect of their work.
Competitors
As it has been stated previously, the existence of multiple opportunities to generate revenue and evolve, the industry is one of the most competitive ones if to compare with other segments. For this reason, Exxon Mobil has several powerful competitors that also work in the oil industry. One of the central rivals is the Shell corporation that is also considered an international company operating in the oil industry and trying to create a competitive advantage ( Exxon Mobil Corporation, 2018).
Shell possesses the desired amount of resources to succeed and should be taken as one of the most influential actors at the moment. Chevron is another multinational energy and technology company functioning in the same area and struggling for revenues. Other potent actors that should be mentioned are Valero Energy and British Petroleum ( Exxon Mobil Corporation, 2018). The existence of a high number of influential competitors evidences the need for effective strategies and constant improvement to remain competitive and be able to generate benefits. Exxon Mobil preserves leading places due to its traditionally practical cooperation with multiple partners and the creation of new facilities and departments.
Customers
Exxon Mobil acts as a supplier of its products to multiple companies working in different spheres. For this reason, analyzing its customers, it is appropriate to outline the industries that have a high demand for substances created by the company. Thus, customers in chemical, transport and logistics, and oil and gas industries should be taken as the most notable clients that generate the bigger part of income ( Exxon Mobils customers performance, n.d.).
The company is focused on the gradual improvement in relations with the major agents and companies that demand its products. For this reason, there is a forecast presupposing the further growth in the demand for oil and associated products. At the same time, there is a tendency for the appearance of clients in other industries such as software and programming industry, medical equipment and supplies sector, etc. which means that Exxon Mobil has a wide pool of customers that can be used to create the basis for its further growth and empowerment of its positions.
Vendors
At the same time, as any giant international company, Exxon Mobil remains highly dependent on vendors providing materials and equipment needed for the companys stable development and growth. The organization emphasizes the fact that improved work with suppliers is one of its main priorities as this type of collaboration, preconditions outcomes, and the ability to evolve. The companies working in the iron, metal, and chemical industries can be described as the leading vendors of Exxon Mobil. In accordance with the companys report, in 2018, the company paid to about 100,000 suppliers of goods and services globally ( Supplier collaboration, 2019).
The complexity of its supply chain presupposes the need for stable and continuously improving cooperation and involvement of new actors to avoid flaws or critical deterioration in outcomes. For this reason, new vendors are engaged in collaboration regularly. For instance, Trumbull Unmanned LLC, a specific business in Texas, serves as a supplier of aircraft systems and drones ( Supplier collaboration, 2019). The diversity of suppliers evidences the complexity of the companys strategy and its supply chain management.
Governmental Entities
Because of the strategic importance of the oil and gas industry, along with the global character of the company, cooperation with governments becomes a fundamental part of the work of Exxon Mobil. For this reason, it acknowledges the importance of disclosing relevant payments to governments to avoid corruption, unfair rivalry, and promote better economic stability in regions affected by the work of the corporation ( Engaging with governments, n.d.). It also functions in the existing legal field to avoid violation of host government laws or contractual obligations (( Engaging with governments, n.d.).
The cooperation with the local authorities presupposes discussion of terms and benefits that can be acquired by both parties. Exxon Mobil also complies with existing international trade conventions and treaties that introduce specific limits of conditions under which companies belonging to the oil industry should function ( Engaging with governments, n.d.). In such a way, governmental entities in different regions remain an important factor that impacts the work of the organization and serves as one of the forces that can either limit or promote its further evolution.
Communities
Exxon Mobils report also outlines the increased importance of communities and emphasizes the attention devoted to this factor. Because of the nature of the company, its environmental and social impact remains significant. There are several ways how the corporation cooperates with local people. First, it introduces a substantial number of new jobs in regions selected for the creation of new facilities (Exxon Mobil, 2018).
It contributes to the improvement in the quality of peoples lives and an increased level of income. Second, Exxon Mobil outlines that identification, avoidance, and mitigation of all negative impacts along with the enhancement of benefits is critical for the successful exploration, development, and production operations and the creation of positive relations (Exxon Mobil, 2018). For this reason, it tries to remain sustainable and evaluate the needs of the local population in an attempt to build productive cooperation.
The activities of Exxon Mobil include the struggle against poverty in emerging countries, the prevention of environmental harm, and the creation of better living conditions for communities affected by its work (Exxon Mobil, 2018). For this reason, there is mainly a positive attitude to the corporation and new attempts to establish positive cooperation.
In such a way, the outlined external factors evidence the existence of the environment that can promote the further growth of the organization. At the same time, the highly competitive environment and the complexity of the supply chain, along with the need for new vendors, might be challenging for a company and impact its development strategy.
Internal Stakeholders
Another step of the companys analysis is the investigation of internal stakeholders, which might include shareholders, the board of directors, management, employees, and actors responsible for decision and policy-making.
Shareholders
As many multinational companies, Exxon mobile has multiple shareholders investing in its development, and, at the same time, acquiring some benefits. In 2019, the Vanguard Group (8.15%), Black Rock (6.61%), and State Street Corporation (4.83%) can be considered the largest shareholders of Exxon Mobil ( Exxon Mobil Corp, n.d.). At the same time, there are individuals who possess the companys stock and are current or former executives of the firm. They also have significant authority and are involved in the decision-making process. These are Michael Dolan, Andrew Swiger, and Mark Albers ( Exxon Mobil Corp, n.d.).
There are also many other shareholders who possess Exxon Mobils stock; however, their impact is not as significant if to compare with the outlined companies and individuals. It also means that the company remains attractive for potential investors and can benefit from their decision to acquire shares and use them as a tool for the cooperation of generation of revenue.
Board of Directors
At the moment, all critical decisions impacting the further evolution of the company and strategic decisions are coordinated and approved by the board of directors. The chairman of this body and CEO of Exxon Mobil is Darren Woods. There are also other members representing the board: Susan Avery, Angela Braly, Ursula Burns, Kenneth Frazier, Steven Kandarian, Douglas Oberhelman, Samuel Palmisano, Steven Reinemund, William Weldon, and Darren Woods ( ExxonMobil Board of Directors, 2019).
The board has a high level of authority and powers that affect the work of the whole company. The functions include filling vacancies of the board, execute documents on behalf of the corporation, establish the long and short term strategy, engage in cooperation with other companies, implement major organizational changes ( ExxonMobil Board of Directors, 2019). As one can see, the Board of Directors possesses the high authority and severs as the unit responsible for the successful development of the whole company as their decisions are the highest instance and should be observed by all workers.
Management
The companys management also depends on the solutions of the Board of Directors as they determine the strategy and action plan. At the same time, there are not only CEOs and members of that body who are responsible for the evolution of the company. At the moment, there are many managers holding various positions and working to coordinate the work of multiple assents and facilities in different regions (Exxon Mobil, 2018).
The distribution of tasks and authority among this sort of specialists guarantees the effective work of the organization. There are also HR and, Public relations departments and other fundamental divisions that should be present in such big corporations to coordinate relations between multiple units and avoid misunderstandings or flaws in the work of the corporation (Exxon Mobil, 2018). The given approach helps to prevent the abuse of power of acceptance of doubtful decisions that might result in the companys collapse.
Employees
Being the giant multination corporation, Exxon Mobil gives jobs to a high number of employees globally. The recent report shows that in 2018 about 71,000 people were employed by the corporation (Garside, 2019). It introduces a high level of responsibility and the need for the creation of an appropriate working environment. The company guarantees social packages to specialists working there and tries to meet their requirements for the organizational climate and environment (Exxon Mobil, 2018).
Correctly realizing the importance of human resources, Exxon Mobil devotes much attention to this aspect of its functioning by guaranteeing high salaries and opportunities for personal and career growth. The average payment ranges from $15.648 per year for a common worker to $164.985 for a senior manager (Exxon Mobil, 2018). It preconditions the high attraction of existing vacancies and the emergence of a pool of workers who can be hired to contribute to the further evolution of the corporation.
SWOT Analysis
The SWOT analysis is a potent tool for the study of the work of any company to reveal problematic areas and advantages that can be employed to create the basis for future growth. For Exxon Mobil the following SWOT can be offered:
Strengths
The company has been a leader in the industry for about 100 years and is taken as a credible, reliable, and trusted brand.
The corporation constantly enters new segments of the energy industry, diversifies its activities.
Exxon Mobil has a strong presence around the world and benefits from working if fast emerging areas such as the Middle East, China ( Exxon Mobil Corporation, 2018).
The company helps to grow various economies, develop infrastructures, and meet energy needs.
The brand possesses multiple resources that can be used to finance new projects, enter new markets, and create the basis for its further development and growth.
Weaknesses
The company is blamed for not sufficient actions regarding the environmental protection, pollution, and overuse of natural resources in areas where it works (Supran & Oreskes, 2017)
The corporation critically depends on prices for oil and products associated with it. Serious oscillations in these showings might cause severe harm to revenues.
The alternative segment is not enough to decrease the brands dependence on oil. For this reason, it might limit future opportunities for its evolution.
Some customer and client groups consider it a giant corporation trying to generate benefit at any price.
Opportunities
The company can benefit from meeting demands for energy in developing economies in the Middle East, China, Asia ( Exxon Mobil Corporation, 2018).
The brand can become a leader in the sphere of alternative energy markets if sufficient resources are devoted.
The company can improve its image by engaging in more environmental projects
Exxon Mobil can cooperate with new emerging brands to spread its influence.
Threats
The highly competitive environment might pose a serious threat to the further evolution of the corporation.
The appearance of the alternative sources of energy and their growing population might introduce the need for a radical reconsideration of the companys strategy (Colombano, 2015).
Economic recessions in the most valuable markets can be a serious challenge for Exxon Mobil.
Environmental claims might also be a significant limiting factor that will deteriorate the image of the company.
In such a way, in accordance with the given SWOT analysis, the company has multiple strengths that are associated with the availability of significant resources and the prolonged history of the brand. However, some problems should be considered to improve outcomes and ensure its ability to continue its further evolution. Thus, because of the existence of multiple claims regarding the environment, it can be recommended to devote more attention to the creation of projects presupposing the reduction of pollution and minimization of harm done to the environment. It will help to improve the image of the company and its reputation. Moreover, Exxon Mobil can also focus on the development of alternative sources of energy as they become more popular today, and it will help to decrease its dependence on oil.
Conclusion
Altogether, the analysis shows that Exxon Mobil remains one of the leading companies in the oil industry. Its experience and long history contribute to the creation of a particular image that attracts potential partners and customers. The current internal and external conditions and stakeholders evidence that there are beneficial conditions for the future evolution of the brand and preservation of its leading positions. The SWOT analysis shows that there are still some problems that can be solved by devoting more attention to environmental activities and developing alternative sources of energy that are popular nowadays.
The issue/case that will be the subject of this paper is the Exxon pipeline spill in Arkansas in 2013. The company at the center of this case is ExxonMobil, one of the world’s largest oil and gas companies (Karnow, 2013). This case is important because it highlights the potential environmental impacts of oil and gas pipelines and the responsibility of companies to prevent and mitigate such spills (Karnow, 2013). The pipeline rupture released thousands of barrels of crude oil, causing damage to local waterways and wildlife. Legislation that addresses this type of incident includes the Clean Water Act and the Oil Pollution Act of 1990. These laws hold companies responsible for the cleanup and compensation of damages caused by oil spills.
Discussion
Available case law on this issue includes a settlement reached between ExxonMobil and the state of Arkansas. The company agreed to pay a $5 million fine and implement improved safety measures (Vogel, 2019). However, how much oil was spilled and the effect on groundwater and the environment still needs to be clarified. Potential resolutions of the case could include; increased oil and gas pipeline safety regulations, stricter penalties for companies that violate environmental laws, and more rigorous monitoring of pipeline operations.
The case has significantly impacted ExxonMobil’s sustainability efforts, as the company has faced criticism and legal action over its handling of the incident. It has also brought attention to the need for improved safety measures and more stringent regulations in the oil and gas industry (Chen, 2018). In summary, the Exxon pipeline spill in Arkansas in 2013 raises important questions about corporate responsibility and liability in the event of oil spills (U.S Environmental Protection Agency, 2020). The incident highlights the potential environmental impacts of oil and gas pipelines and the need for stricter regulations and improved safety measures.
Corporate liability in this event can be viewed in several ways. ExxonMobil is responsible for the cleanup and compensation of damages caused by the oil spill, as outlined in the Clean Water Act and the Oil Pollution Act of 1990 (McGowan, 2013). The company reached a settlement with the state of Arkansas, in which they agreed to pay a $5 million fine and implement improved safety measures (Karnow, 2013). However, the article suggests that the company may have needed to be more fully transparent about the amount of oil spilled, which raises questions about their level of responsibility for the incident.
Additionally, the article raises concerns about the safety and regulation of oil and gas pipelines and whether companies are doing enough to prevent and mitigate spills. The long-term effects on the groundwater and the health of the residents are not yet known (McGowan, 2013). The incident highlights the need for better monitoring and understanding of the impacts of oil spills on the environment and communities. In addition, the incident also highlights the need for stricter regulations and safety measures in the oil and gas industry to prevent such incidents from happening in the future.
Conclusion
In conclusion, the Exxon pipeline spill in Arkansas in 2013 raises important questions about corporate responsibility and liability in the event of oil spills. The incident highlights the potential environmental impacts of oil and gas pipelines and the need for stricter regulations and improved safety measures. The article also provides insight into the ongoing debate regarding the amount of oil spilled and the long-term impact on the environment and residents. It is important to keep monitoring the case and the impact on groundwater and the health of the residents.
References
Chen, C. (2018). The impact of pipeline spills on groundwater quality. Journal of Environmental Science and Health, 53(9), 835-844. Web.
Karnow, S. (2013). Exxon settles with Arkansas over an oil spill. Web.
McGowan, E. (2013). Exxon pipeline rupture: amount of oil spilled is still guesswork. Fosill Fuels. Web.
Exxon Mobil is a petrochemical company based in Texas, United States of America (Exxon Mobil, 2013). The company’s operations have been classified into three broad categories; upstream, downstream, and chemical sections. It was formed in 1999 following the merger of Exxon and Mobil oil companies (Exxon Mobil, 2013). The merger marked the beginning of a successful period. The success of the company can be attributed to a number of factors like increased asset base and improved efficiency.
The merger was a strategic move by both companies to increase both assets and capital. Both companies had operations in several countries across the globe. The merger enabled the company to acquire an expansive operation area at a low cost. Increased capital base enabled the company to expand its operations without incurring significant costs. In addition, each partner entered the deal with a huge asset base.
Operational efficiency is another factor that enabled the company to make significant profits. The primary focus of the company is to cut operational costs through introduction of efficient systems. The company uses technology to ease processes and to manage some operations. It also ensures that its supply chain is properly managed. It pulled out of the gas and fuel retail business to reduce its costs. Instead, it opted to form partnerships with independent retailers who would distribute its products.
It also employs innovative marketing to increase its sales. The company, in conjunction with the retailers segmented the market. For instance, it has premium products meant for high end customers. It is also involved in oil exploration in some countries. This is a strategy to expand its area of operation.
Demerits of Free Trade
Free trade has had great impact on governments, businesses, and people. There are several positive effects of globalization. However, it also has a number of negative effects. Negative effects of free global trade have received little attention yet they have the potential to permanently alter peoples’ lives. The negative effects associated with globalization include loss of jobs and income, loss of national sovereignty, environmental degradation, exploitation of the poor, and disregard of labour laws and policies.
Companies are constantly looking for ways to reduce their production costs. This has resulted in outsourcing of noncore operations to overseas companies (Hill & McKaig, 2012). The jobs are often outsourced to developing countries where labour is cheap. Outsourcing transfers jobs from one country to another.
However, its effects are felt more in the country of origin. Loss of a job may alter the life of an individual. It reduces the individual’s purchasing power. Therefore, in the long run, outsourcing negatively affects the economy of a country.
Influx of cheap foreign goods has a negative impact on the economy of a country. Globalization has encouraged the free movement of goods and people across borders. Local industries may lose markets to the foreign products. This has a negative effect on the economy. A decline in the amount of manufactured goods reduces government revenue.
Free trade shifts economic power from governments and local agencies to international agencies like World Bank and IMF (Hill & McKaig, 2012). This may be attributed to the fact that economic power is linked to political power. People and companies are increasingly looking up to the international organizations. Most policies that end up forming the economic policies of many countries originate from these organizations. Loss of sovereignty is similar to losing identity and independence.
Globalization or free trade has encouraged environmental degradation and violation of labour laws (Hill & McKaig, 2012). Companies often move their operations to developing countries where labor laws and environmental laws are not strictly enforced.
This may lead to abuse of the environment and workers by unscrupulous companies. Environmental degradation will eventually have a negative impact on all people. Relocation may also lead to exploitation of the poor. Residents of developing countries may be exploited by unscrupulous companies.
hese practices are not tolerated in developed countries thus leading to relocation of dishonest companies to developing countries. These dishonest companies have argued that adherence to fair labour practices and environmental protection laws is expensive. Therefore, they opt to move to where they can easily reduce their costs by overlooking these regulations. This argument is not entirely true because environmental protection is priceless.
Doing business in other countries
Aramco is a Saudi Arabian petrochemical company. Its operations include oil and gas exploration, refining, shipping, marketing and distribution (Saudi Aramco, 2013). It operates in a number of countries. To do business in other countries some factors should be considered so as to increase the chances of success. These factors include benefits, costs and risks of doing business in a particular country.
The benefits of doing business in a country are measured in terms of monetary gains. The financial benefit of doing business in a particular country is influenced by market size, current purchasing power, future purchasing power, and first-mover advantage (Hill & McKaig, 2012).
In order to enjoy these benefits, a thorough assessment of the market should be done. The analysis should include the size of the market, purchasing power, and first-mover advantage. It is important for a company to expand its operations to areas that have a market with a growth. More importantly, the purchasing power of the people should be reasonable or at least show signs of growth.
The cost of doing business in a country should be thoroughly analyzed. A business can incur various types of costs. The costs incurred by a business may be political, economic or legal. Political costs refer to costs incurred in form of bribes (Hill & McKaig, 2012). It may be easy to do business in developed countries because they have good infrastructure. Litigation can increase the cost of doing business.
Risks are factors that are likely to adversely affect the business. Risks of doing business in a country are influenced by politics, the economy, and the legal system. Political risk is defined as the possibility that political forces will negatively affect profits and goals of the business.
Economic risk refers to the possibility that economic mismanagement will derange the goals of the business (Hill & McKaig, 2012). Foreign exchange risk is another risk that is related to economic risk. Legal risk refers to the possibility that a partner will unfairly use the law to gain an advantage. To lower the risks, entry into new markets should be well planned. Political, economic and legal risks should be monitored closely. Foreign exchange risk can be avoided in some cases through payment of goods in kind.
Countries should be selected with the above factors in mind. The benefits should outweigh costs and risks. For example, a country that offers first-mover advantage may be selected and those that have late-mover disadvantage overlooked. Similarly, entry into countries with significant economic and political risks may be delayed.
References
Exxon Mobil. (2013). Web.
Hill, C. & McKaig, T. (2012). Global Business Today (3rd ed.). Philadelphia: Mcgraw-Hill. Saudi Aramco. (2013). Retrieved from <https://www.saudiaramco.com/en/>.
Exxon Mobile has a strong community of dealers that provide the customers with all relevant and valuable information about services’ benefits and usage, along with a well-developed supply network. Another strength lies in the automatization of all operational processes and innovative approach to production and development of new and existing technologies. There are also many successful merges and acquisitions under company’s name that allowed it to integrate new sub-companies into the operation process and secure stable position on the market.
Weaknesses
Exxon Mobile does not have a Research and Development unit that can compete with the industry leaders, thus it tends to lag behind in terms of implementing new technologies. The products and services pool is not diversified enough, leaving a large gap in the company’s possible customers. Exxon Mobile’s profitability ratio and net contribution have fallen below industry average due to inefficient financial management.
Opportunities
A new possible market niche has opened for Exxon Mobile in the recent years due to securing an agreement with government. Moreover, the market is currently more stable due to the decrease in inflation rates, and the transportation costs have also been reduced. New taxation and environmental policies were introduced in the country, providing the company with competitive advantages.
Threats
The costs of raw materials is currently on the rise which might result in bigger expenses on Exxon Mobile’s side. The consumers’ behavior is changing, shifting towards isolationism which can result in lower revenues due to losses in stable income. The company has not provided any significant innovations in the latest years, lacking a competitive advantage against other companies. Finally, liability laws and currency fluctuations in the countries where Exxon Mobile operates make it difficult to secure stable profits on international market.
TOWS Matrix
Strengths
Weaknesses
Opportunities
SO: Expand the distribution network further to claim the new market niches; Integrate acquired companies further into operational processes and develop new technologies.
SW: Implement and develop technologies from acquired companies into the R&D unit; Expand the pool of products and services to appeal to bigger audience.
Threats
ST: Expand the supply network to secure better costs for raw materials; Train dealers to engage new and existing customers to facilitate brand loyalty.
WT: Use reliable and relevant data, especially in other countries’ markets to adjust the business strategy; Consult with existing laws and policies to ensure company’s stable presence on the market.
The given report is devoted to the in-depth investigation of Exxon Mobil, an American multinational oil and gas corporation that is now considered one of the most influential and powerful global companies. The choice of the object for the investigation if preconditioned by several factors. First, the given sector possesses the strategical importance of the modern world as oil and gas remain the leading sources of energy. It means that there are multiple forces affecting the given segment and influencing the work of the company. Second, Exxon Mobil remains the world’s largest corporation by revenue, which evidences the effectiveness of strategies employed by its managers and the ability to correctly realize and use the current market trends to create the basis for further growth.
The report includes the evaluation of the whole industry and external stakeholders, such as competitors, vendors, customers, governmental entities. It helps to create an image of the environment where the company functions and its growth strategies. Additionally, internal stakeholders are assessed to conduct an in-depth analysis of Exxon Mobil. This category includes shareholders, the board of directors, management, and employees.
Finally, the paper offers a comprehensive SWOT analysis with a detailed description of all findings to understand the current position of the organization and its future opportunities for growth. All these elements are discussed in appropriate sections and incorporated within a single report to offer a complete analysis of Exxon Mobil, factors that impact its functioning and growth.
Background
The company has a long history and various stages of her development. It was founded in New Jersey in 1882 as a descendant of Standard Oil created by John Rockefeller (“Exxon Mobil Corporation,” 2018). The company succeeded and managed to establish the basis for its further growth. During the next several decades, it managed to transform into the largest company in the world with stable income and opportunities for further becoming a leader in the given sphere.
The decision to enter global markets was followed by the creation of multiple subsidiaries in various areas and purchases of other companies functioning in the given field to empower its position and support its evolution (“Exxon Mobil Corporation,” 2018).
Due to the sufficient strategies and correct managerial decisions, Exxon Mobil corporation became an influential actor in the oil and gas sector with the ability to compete with other powerful actors and generate stable income. It has facilities in Asia, Europe, Africa, Australia, and America and engages in new projects with the primary goal to avoid stagnation and participate in new projects (“Exxon Mobil Corporation,” 2018). In such a way, in the 21st century, Exxon Mobil is the influential actor that competes with other giants working in the same sphere.
External Stakeholders
Industry
Prior to analyzing Exxon Mobil, it is essential to create the theoretical framework for the discussion by exploring the oil and gas industry in general. At the moment, it is a strategically important sector characterized by the existence of giant corporations that control the most significant part of the market and precondition its further evolution (Alfarhan, 2019). Petroleum, as the main industry’s product, is vital for the modern industrial civilization and preservation of the current speed of its evolution (Colombano, 2015).
For this reason, the industry remains critical for many nations and attracts significant attention of governments, international unions, and regulatory bodies. Because of the highly competitive environment and high revenue (in 2018, the U.S. sector came to about $180 billion), there are multiple challenges companies face (Aarstad, Pettersen, & Jakobsen, 2015). Additionally, there are significant environmental impacts that are associated with this very sphere, which means that all actors should also engage in this sort of activity to remain attractive for potential partners and avoid claims regarding this very aspect of their work.
Competitors
As it has been stated previously, the existence of multiple opportunities to generate revenue and evolve, the industry is one of the most competitive ones if to compare with other segments. For this reason, Exxon Mobil has several powerful competitors that also work in the oil industry. One of the central rivals is the Shell corporation that is also considered an international company operating in the oil industry and trying to create a competitive advantage (“Exxon Mobil Corporation,” 2018).
Shell possesses the desired amount of resources to succeed and should be taken as one of the most influential actors at the moment. Chevron is another multinational energy and technology company functioning in the same area and struggling for revenues. Other potent actors that should be mentioned are Valero Energy and British Petroleum (“Exxon Mobil Corporation,” 2018). The existence of a high number of influential competitors evidences the need for effective strategies and constant improvement to remain competitive and be able to generate benefits. Exxon Mobil preserves leading places due to its traditionally practical cooperation with multiple partners and the creation of new facilities and departments.
Customers
Exxon Mobil acts as a supplier of its products to multiple companies working in different spheres. For this reason, analyzing its customers, it is appropriate to outline the industries that have a high demand for substances created by the company. Thus, customers in chemical, transport and logistics, and oil and gas industries should be taken as the most notable clients that generate the bigger part of income (“Exxon Mobil’s customers performance,” n.d.).
The company is focused on the gradual improvement in relations with the major agents and companies that demand its products. For this reason, there is a forecast presupposing the further growth in the demand for oil and associated products. At the same time, there is a tendency for the appearance of clients in other industries such as software and programming industry, medical equipment and supplies sector, etc. which means that Exxon Mobil has a wide pool of customers that can be used to create the basis for its further growth and empowerment of its positions.
Vendors
At the same time, as any giant international company, Exxon Mobil remains highly dependent on vendors providing materials and equipment needed for the company’s stable development and growth. The organization emphasizes the fact that improved work with suppliers is one of its main priorities as this type of collaboration, preconditions outcomes, and the ability to evolve. The companies working in the iron, metal, and chemical industries can be described as the leading vendors of Exxon Mobil. In accordance with the company’s report, in 2018, the company paid to about 100,000 suppliers of goods and services globally (“Supplier collaboration,” 2019).
The complexity of its supply chain presupposes the need for stable and continuously improving cooperation and involvement of new actors to avoid flaws or critical deterioration in outcomes. For this reason, new vendors are engaged in collaboration regularly. For instance, Trumbull Unmanned LLC, a specific business in Texas, serves as a supplier of aircraft systems and drones (“Supplier collaboration,” 2019). The diversity of suppliers evidences the complexity of the company’s strategy and its supply chain management.
Governmental Entities
Because of the strategic importance of the oil and gas industry, along with the global character of the company, cooperation with governments becomes a fundamental part of the work of Exxon Mobil. For this reason, it acknowledges the importance of disclosing relevant payments to governments to avoid corruption, unfair rivalry, and promote better economic stability in regions affected by the work of the corporation (“Engaging with governments,” n.d.). It also functions in the existing legal field to avoid violation of host government laws or contractual obligations ((“Engaging with governments,” n.d.).
The cooperation with the local authorities presupposes discussion of terms and benefits that can be acquired by both parties. Exxon Mobil also complies with existing international trade conventions and treaties that introduce specific limits of conditions under which companies belonging to the oil industry should function (“Engaging with governments,” n.d.). In such a way, governmental entities in different regions remain an important factor that impacts the work of the organization and serves as one of the forces that can either limit or promote its further evolution.
Communities
Exxon Mobil’s report also outlines the increased importance of communities and emphasizes the attention devoted to this factor. Because of the nature of the company, its environmental and social impact remains significant. There are several ways how the corporation cooperates with local people. First, it introduces a substantial number of new jobs in regions selected for the creation of new facilities (Exxon Mobil, 2018).
It contributes to the improvement in the quality of people’s lives and an increased level of income. Second, Exxon Mobil outlines that identification, avoidance, and mitigation of all negative impacts along with the enhancement of benefits is critical for the successful exploration, development, and production operations and the creation of positive relations (Exxon Mobil, 2018). For this reason, it tries to remain sustainable and evaluate the needs of the local population in an attempt to build productive cooperation.
The activities of Exxon Mobil include the struggle against poverty in emerging countries, the prevention of environmental harm, and the creation of better living conditions for communities affected by its work (Exxon Mobil, 2018). For this reason, there is mainly a positive attitude to the corporation and new attempts to establish positive cooperation.
In such a way, the outlined external factors evidence the existence of the environment that can promote the further growth of the organization. At the same time, the highly competitive environment and the complexity of the supply chain, along with the need for new vendors, might be challenging for a company and impact its development strategy.
Internal Stakeholders
Another step of the company’s analysis is the investigation of internal stakeholders, which might include shareholders, the board of directors, management, employees, and actors responsible for decision and policy-making.
Shareholders
As many multinational companies, Exxon mobile has multiple shareholders investing in its development, and, at the same time, acquiring some benefits. In 2019, the Vanguard Group (8.15%), Black Rock (6.61%), and State Street Corporation (4.83%) can be considered the largest shareholders of Exxon Mobil (“Exxon Mobil Corp,” n.d.). At the same time, there are individuals who possess the company’s stock and are current or former executives of the firm. They also have significant authority and are involved in the decision-making process. These are Michael Dolan, Andrew Swiger, and Mark Albers (“Exxon Mobil Corp,” n.d.).
There are also many other shareholders who possess Exxon Mobil’s stock; however, their impact is not as significant if to compare with the outlined companies and individuals. It also means that the company remains attractive for potential investors and can benefit from their decision to acquire shares and use them as a tool for the cooperation of generation of revenue.
Board of Directors
At the moment, all critical decisions impacting the further evolution of the company and strategic decisions are coordinated and approved by the board of directors. The chairman of this body and CEO of Exxon Mobil is Darren Woods. There are also other members representing the board: Susan Avery, Angela Braly, Ursula Burns, Kenneth Frazier, Steven Kandarian, Douglas Oberhelman, Samuel Palmisano, Steven Reinemund, William Weldon, and Darren Woods (“ExxonMobil Board of Directors,” 2019).
The board has a high level of authority and powers that affect the work of the whole company. The functions include filling vacancies of the board, execute documents on behalf of the corporation, establish the long and short term strategy, engage in cooperation with other companies, implement major organizational changes (“ExxonMobil Board of Directors,” 2019). As one can see, the Board of Directors possesses the high authority and severs as the unit responsible for the successful development of the whole company as their decisions are the highest instance and should be observed by all workers.
Management
The company’s management also depends on the solutions of the Board of Directors as they determine the strategy and action plan. At the same time, there are not only CEOs and members of that body who are responsible for the evolution of the company. At the moment, there are many managers holding various positions and working to coordinate the work of multiple assents and facilities in different regions (Exxon Mobil, 2018).
The distribution of tasks and authority among this sort of specialists guarantees the effective work of the organization. There are also HR and, Public relations departments and other fundamental divisions that should be present in such big corporations to coordinate relations between multiple units and avoid misunderstandings or flaws in the work of the corporation (Exxon Mobil, 2018). The given approach helps to prevent the abuse of power of acceptance of doubtful decisions that might result in the company’s collapse.
Employees
Being the giant multination corporation, Exxon Mobil gives jobs to a high number of employees globally. The recent report shows that in 2018 about 71,000 people were employed by the corporation (Garside, 2019). It introduces a high level of responsibility and the need for the creation of an appropriate working environment. The company guarantees social packages to specialists working there and tries to meet their requirements for the organizational climate and environment (Exxon Mobil, 2018).
Correctly realizing the importance of human resources, Exxon Mobil devotes much attention to this aspect of its functioning by guaranteeing high salaries and opportunities for personal and career growth. The average payment ranges from $15.648 per year for a common worker to $164.985 for a senior manager (Exxon Mobil, 2018). It preconditions the high attraction of existing vacancies and the emergence of a pool of workers who can be hired to contribute to the further evolution of the corporation.
SWOT Analysis
The SWOT analysis is a potent tool for the study of the work of any company to reveal problematic areas and advantages that can be employed to create the basis for future growth. For Exxon Mobil the following SWOT can be offered:
Strengths
The company has been a leader in the industry for about 100 years and is taken as a credible, reliable, and trusted brand.
The corporation constantly enters new segments of the energy industry, diversifies its activities.
Exxon Mobil has a strong presence around the world and benefits from working if fast emerging areas such as the Middle East, China (“Exxon Mobil Corporation,” 2018).
The company helps to grow various economies, develop infrastructures, and meet energy needs.
The brand possesses multiple resources that can be used to finance new projects, enter new markets, and create the basis for its further development and growth.
Weaknesses
The company is blamed for not sufficient actions regarding the environmental protection, pollution, and overuse of natural resources in areas where it works (Supran & Oreskes, 2017)
The corporation critically depends on prices for oil and products associated with it. Serious oscillations in these showings might cause severe harm to revenues.
The alternative segment is not enough to decrease the brand’s dependence on oil. For this reason, it might limit future opportunities for its evolution.
Some customer and client groups consider it a giant corporation trying to generate benefit at any price.
Opportunities
The company can benefit from meeting demands for energy in developing economies in the Middle East, China, Asia (“Exxon Mobil Corporation,” 2018).
The brand can become a leader in the sphere of alternative energy markets if sufficient resources are devoted.
The company can improve its image by engaging in more environmental projects
Exxon Mobil can cooperate with new emerging brands to spread its influence.
Threats
The highly competitive environment might pose a serious threat to the further evolution of the corporation.
The appearance of the alternative sources of energy and their growing population might introduce the need for a radical reconsideration of the company’s strategy (Colombano, 2015).
Economic recessions in the most valuable markets can be a serious challenge for Exxon Mobil.
Environmental claims might also be a significant limiting factor that will deteriorate the image of the company.
In such a way, in accordance with the given SWOT analysis, the company has multiple strengths that are associated with the availability of significant resources and the prolonged history of the brand. However, some problems should be considered to improve outcomes and ensure its ability to continue its further evolution. Thus, because of the existence of multiple claims regarding the environment, it can be recommended to devote more attention to the creation of projects presupposing the reduction of pollution and minimization of harm done to the environment. It will help to improve the image of the company and its reputation. Moreover, Exxon Mobil can also focus on the development of alternative sources of energy as they become more popular today, and it will help to decrease its dependence on oil.
Conclusion
Altogether, the analysis shows that Exxon Mobil remains one of the leading companies in the oil industry. Its experience and long history contribute to the creation of a particular image that attracts potential partners and customers. The current internal and external conditions and stakeholders evidence that there are beneficial conditions for the future evolution of the brand and preservation of its leading positions. The SWOT analysis shows that there are still some problems that can be solved by devoting more attention to environmental activities and developing alternative sources of energy that are popular nowadays.