Economics of Business Strategy - Exxon Mobil - Assignment Example

Exxon Mobil Exxon Mobil is an American company operating under the energy sector. The company was formed in 1999, with the merger of Exxon and Mobil. Their main aim was to enjoy the benefits that come with the economies of scale. This is an example of a strategic alliance in the energy sector (Rubenstein, 7). The company is a multinational, operating in over 200 countries, and more than 40% of its revenue comes from its foreign investments. Ogunsola (16) observes that the headquarters of the company is in Texas, and it operates under four commercial divisions, namely, downstream, upstream, global services and chemical divisions. To satisfy the demands of the consumers, the company is always on the move looking for new channels of oil supply. This is because of the scarcity of the commodity. Technology will ensure effective delivery of energy supplies as well as reducing carbon emissions. This destruction results to an environmental disaster referred to as the global warming. Technology is an important aspect for drilling and energy production (Clarke, 8). This is because a large percentage of the world’s oil and gas reserves are in areas where it’s difficult to drill, without high capacity technological innovations. These resources are located on heavy oil sands, deep water channels, and tight gas and arctic regions, and there is need of heavy machineries for effective exploration ((Rubenstein, 13). Basing on these facts, the company aims to satisfy the rising energy demands, as well as enact policies that will protect and preserve the environment from harmful carbon emissions. (Coll, 16). The spill made the company to re-evaluate its risk management strategies, for purposes of ensuring compliancy with the various stake holders and relevant government agencies (Clarke, 21).The strategy is aimed at ensuring the safety of its employees and various stakeholders of the company. It also ensures the safety of its machineries, and the conservation of the environment. Clark (13) explains that despite the company’s capital strength, it does not have the ability to effectively meet the demands of its customers. To achieve its objective, the company has alliances with other energy producing companies. Clark (17) explains further that the company engages in such alliance under the established laws. In 2012, the company joined forces with XTO energies, to improve efficiency in the production, and supply of energy.This alliance is termed as the strategic alliance, and this paper therefore is a PESTEL analysis of the company in relation to this managerial strategy. Political Analysis of Exxon Mobil: The company seeks to obey all laws governing its operations. It ensures that its employees act as per the requirements of the laws. The United State Sherman act prevents any companies from colluding for purposes of increasing sales of their products. Such collusion may involve fixing prices of their commodities, limiting the quality of the competition, and colluding for purposes of stopping the supply of a product or service (Rubenstein, 31). Exxon Mobil strongly discourages such practices amongst its employees The Robinson-Patman act of the United States guides against abuse of dominance in of Companies in America. Exxon Mobil is the most dominant energy company in America, and it strictly follows the law for purposes of avoiding costly legal challenges. The law states that it is illegal to give a buyer competitive advantage over other buyers in relation to offering services.This aspect is called price discrimination. To ensure that the company follows this law, it enacts standard and uniform prices for its products based on the laws operating in America and the state of the operation. The company also ensures that it does not abuse its dominant position in terms of controlling the market share(Rubenstein, 27). It does this by establishing a documented code of ethics that guide the behavior of its employees and its operations. As a company in the oil sector, the organization has an elaborate policy to guide itself against lawsuits emanating from environmental degradation. The ethical practice of the organization is to engage its operations in a manner that promotes the conservation of the environment, through reduction of carbonemissions (Clarke, 21). In meeting this objective, the company balances its economic goals and environmental concerns. The policy of the company is to comply with all laws that aim to protect the environment. The company trains its employees on environmental conservation, and its importance. The company also seeks to design, and operate machinaries that have the capability of improving the methods of environmental conservation (Midttun, 14). Environmental preservation is a major concern of the company, and therefore it seeks to engage other stakeholders on this serious issue, and share its experiences with the public and other major companies (Clarke, 22). The issues of discussion are methods of conserving the environment, and the benefit that comes with environmental conservation. The company is a promoter of democratic policies of a state; however it does not involve itself with the activities of political parties, and political candidates, unless required by the United States laws.In view of this, the company only comments on the political issues that have a bearing on its operations(Rubenstein, 23).It is the policy of the company to encourage its employees to participate in the political process, but as individuals. Their participation does not influence the association of the company with them, nor does it influence their chances of career progression, and work compensation. Economic Analysis of Exxon Mobil: Exxon Mobil is the largest company operating at the energy sector. It is also the largest public traded company at the New York stock exchange, and it controls an approximate of 3% of the world’s energy production. The company has a presence in over 200 countries of the world, and for the last five years, it has established a stable growth in its profitability (Coll, 8). In 2005, the company made 340 billion dollars, in terms of revenue. In 2006, the company’s sales amounted to 335.1 billion dollars, representing a profitability of approximately 39.5 billion. The company’s asset base and capitalization is approximated at 460 billion dollars. This is more than the GDP of some third world countries. Basing on its performance in the market, and its asset base, Exxon Mobil is a rich and profitable company. The company has policies to regulate its employees in relation to how it operates its financial activities. The company is concerned with proper ethical procedures that involve honesty, accountability and equity in handling its financial records (Midttun,17). In regard to this, the organization does not tolerate any falsified information in its book of account. The company also supports cooperation with its external auditors, and therefore the company disregards any form of dishonesty, and promotes accurate and fair reporting of its financial records. The company also cooperates with the United States Securities and Exchange Commission, for purposes of transparency in its financial dealings, and protecting the financial interests of its shareholders (Clarke, 17). The company has a policy to safeguard its assets, and it is the duty of directors, and other employees at ensuring compliance with this rules. It is the duty of an employee to use the machinery at his disposal in a convenient manner that will ensure its preservation, saving the company from expensive maintenance and repair costs(Rubenstein, 31).The Assets of the company must only be used to serve the purposes of the company, and these assets are either tangible, or non-tangible.Non tangible assets include classified information regarding the organizations financial records, new discoveries, or its patents.Others include the business predictions, competitive bids and technological innovations. The business considers these as assets that have the capability increasing their profitability, and maintaining their dominance in the market (Coll, 31). Social Analysis of Exxon Mobil: The company strongly advocates against discrimination and prejudice in its employment policies. It ensures that it employs a diverse group of people in its workforce, and this is in relation to color, the minorities and the race of individual persons. The company strongly advocates against sexual or physical harassment of its employees based on the office the individual operates, or the color, race and ethnic group of the victim (Midttun, 13). Rubenstein (5) explains that the objective of this initiative is create an environment where employees of the organization will work without fear. Its objective is foster a good working relationship amongst employees, and this will translate to better productivity of the company. Rubenstein (5) further states that this places have an effect of lowering the rate of sexual harassment at the company, because of the mitigation measures in place. Coll (21) observes that the organization investigates all violations of its ethical practices, and breaches in the internal control mechanism. The investigations by the company are impartial, and there main aim is to enforce the ethical values of the company. Coll further observes that communication channels within the company are always open, and employees can air their grievances to their heads of department. The company advocates for equal opportunities employment opportunities. The company affords equal opportunity to men, women, and other minority groups. The company, by following all laws applicable to employment, it ensures that it administers its policies in a fair and non-discriminate manner (Midttun, 14). It is the responsibility of the various managers and supervisors to implement this policy. The organization is also responsible for developing educational policies for other organizations that guide on how to employ women and the minority (Clarke, 12).It also builds and develops policies that promote diversity in a working environment, ensuring that the business achieves its objectives. The company advocates against alcoholic and drug abuse, and it has a strict policy regarding their use on its buildings or properties under the control of the company. To effectively prevent the use of drugs within its properties, the company usually conducts searches on its premises. Technological Analysis of Exxon Mobil: The company supports the idea of a technological innovation in the energy sector to reduce the carbon emissions, and the preservation of the environment. Through its advanced system and fuel technology, the company has developed numerous technological innovations. Examples include plastic automotive parts, advanced motor oils, and hydrogen fuels (Coll, 22). The motor oil technology has produced fuel economy oils, which are meant to protect the engine, and save on fuel. They improve the functionality of the engine, and are more reliable than the conventional oils(Rubenstein, 16). The Hydrogen fuels are meant to preserve the environment by reducing carbon emissions. The company is currently involved in developing recyclable plastics, for use on the bumpers of the car. This in turn will save on fuel, a major component of energy. Conclusion: In conclusion, the economic prospects of Exxon Mobile are great. The company’s social, political, economic and technological strategies make it ahead of its major competitors, such as shell. The companies massive capital, gives it the capability of shaping the foreign policy of United States of America. Its huge capital base is the biggest advantage of the company. In Europe, the company has presence in Italy, Greece, Germany, Belgium, among other European states. Exxon Mobile is commited to follow the regulation and laws guiding companies operating in Europe. One of the regulations are the Anti-Trust and Competition laws that regulate the behavior of a dominant company. The reason as to why the company engages in strategic alliances with other companies in Europe is to safeguard its interest, and seek help in penetrating a certain market. However, there are instances where the company is accused of sponsoring dictatorial regimes, especially in Africa, and to be specific, in Chad. These are just accusations, and there are no evidence to prove that the organization sponsored and supported these governments. Works Cited: Clarke, Ross. A matter of complicity? Exxon Mobil on trial for its role in human rights violations in Aceh. New York, N.Y.?: International Center for Transitional Justice :, 2008. Print. Coll, Steve. Private empire: ExxonMobil and American power. New York: Penguin Press, 2012. Print. Midttun, Atle. European energy industry business strategies. Amsterdam: Elsevier, 2001. Print. Ogunsola, Olayinka I., Arthur M. Hartstein, and OlubunmiOgunsola.Oil shale: a solution to the liquid fuel dilemma. Washington, DC: American Chemical Society ;, 2010. Print. Rubenstein, Doris. The good corporate citizen a practical guide. Hoboken, N.J.: John Wiley & Sons, 2004. Print. Top of Form Bottom of Form Read More