Exxon Mobil Corporation Business Analysis - Research Paper Example

?Exxon Mobil Corporation Exxon Mobil Corporation is one of the leading oil and gas companies in the world, providing varied products and services to its worldwide consumers. The corporation is involved in geologic exploration of oil resources, extraction of ores, refining, production, marketing and distribution of oil and gas products worldwide. Its major operations include upstream, downstream and chemicals production. It produces a wide range of oil related products such as petrochemicals, fuels and lubricants. It also holds various subsidiary companies such as Imperial Oil Limited in Canada and SeaRiver Maritime. The company headquarters are at Irving in Texas and employs about 80,000 people (mbaknol.com, 2012). Exxon Mobil has been marked with a higher market value than any other publicly-traded company in the world. History: Exxon Mobil Corporation is a merger of Exxon and Mobil, two great oil industry titans in the past century. The historic background of these two companies is a notable one and heads back to 19th century, when these two companies were established. Standard Oil Company of New Jersey (Exxon) and Standard Oil Companies of New Jersey (Mobil) were formed from John D. Rockfeller’s Standard Oil Trust which was started in 1870. With the increase in oil resources and implementation of various advanced techniques, they emerged as greatest oil corporations and formed individual identities for each. They indeed created a great impact to the American economy in the past century. Even after the dissolution of Standard Oil Trust in 1911, they subsisted to expand and grew in terms of their production, refining and research, making them leading companies in the oil and gas industry. Since the end of the World War 2, the company expanded its market to more than 100 countries. The companies stayed separate for nearly 87 years, until they signed a definitive agreement that the two would merge and form a new company, namely, Exxon Mobil Corporation. The unification came into existence in 1999, when these two companies decided to launch as one after so many years of existence as separate behemoths. On the occasion of official declaration of the merger in 1999, the directors stated, “This merger will enhance our ability to be an effective global competitor in a volatile world economy and in an industry that is more and more competitive” (Mousseau, 2006). Current Operations and Projects: Exxon Mobil involves in three major operations, mainly upstream, downstream and chemicals. Being the leading oil company in the world, Exxon Mobil has faced various ups and downs in the recent decades. For instance, In February 2010, Exxon Mobil reported $310.58 billion in revenue in fiscal year 2009. In fiscal year 2008, it reported $477.35 billion in revenue. (Taque, 2010). It is estimated that though there are rises in oil prices, there will be higher downstream revenue with the increasing demand for the energy resources among the developing countries. There was a decline in liquids production of the company which was subsequently compensated by the increase of the gas production. Exxon has come up with a discovery in the Gulf of Mexico in the past year and is beginning to work over the Julia deepwater fields in the future. The company has set up establishing new explorations in the Gulf of Mexico and in the Russian Arctic area. “More exploration is expected to happen in the U.S. with the government selling leases in the GoM and granting licenses in Alaska.” (Forbes, 2012). Its major development project includes the Kashakan project at Kazakhstan and the West Qurna field which is showing a great progress. The gas output of the company has been greatly increased by the shale exploration in U.S. “Exxon is also a partner in the $15.7 billion Papua New Guinea LNG project in Australia”. (Forbes, 2012). With its ongoing projects at Iraq, Kazakhstan and LNG projects in Australia, the company’s output volume will favorably increase with its production. Exxon Mobil is currently conducting test runs at its new specialty elastomers unit in Singapore. The unit is the second petrochemical project of ExxonMobil’s in Singapore. Marketing Strategies: With a diligent effort in application of varied strategies and advanced techniques, Exxon Mobil has been still maintaining its dominant position among the world oil companies. The company is keen in building its pricing and promotion strategies to market its products efficiently. The company’s pricing strategies probably depends on the global market prices of crude oil, supply and demand, government regulations and taxes. The company products are marketed throughout the world in the brand names of Exxon, Mobil, Esso. The company engages sales promotion by advertising methods that increases its brand value. One of the best marketing strategies observed by the company is the Speedpass facility that is offered to its customers. With the value in this pass, a customer can fill in the gas with no cash or card from the outlets of Exxon Mobil. It also introduced the On-the-run Convenience store concept in more than 26 countries. Yet another concept handled by the company is the set up of Esso Express gas station which is an unattended retail gas station that serves the consumers efficiently. “Exxon Mobil sought to attract customers that are willing to pay additional premiums for their products and at the same time improving efficiency in the supply chain in order to reduce cost.” (Mbaknol,com). Corporate social responsibility: Exxon Mobil is aware of the risk it contributes to the environment and thus it is cautious in its approach towards corporate social responsibility issues. It assures that they tend to produce energy and chemical products in a safe and environmentally responsible manner. It emphasizes more on improving the efficiency of production and reducing harmful emissions in its operations. “The company has spent over US$1.6 billion on energy efficiency and greenhouse gas emission measures since 2006.” (Kaye, 2011). Other social initiatives performed by Exxon Mobil include improving education in various fields and helping women in developing countries for achieving the economic goals. It also provides financial support for good causes such as programs on prevention of malaria, AIDS, Save the tiger, etc., In addition, it aids several institutions that conduct researches on climate changes and supports biodiversity conservation. In spite of all these, it is been highly criticized for its lethargy in controlling carbon-di-oxide emissions from its energy operations. However, the company contributes to the social welfare by efficient and environment friendly production, community outreach programs initiation, and also human rights awareness. SWOT Analysis: SWOT analysis of Exxon Mobil implies the Strengths, Weaknesses, Opportunities and Threats of the company. Strengths: The leading market position of the company. Diversified business products and worldwide energy resources. Stabilized revenue flows and profits. Robust research and development strategies. Weaknesses: Legal proceedings. Constant criticism over environment issues. Centralized decision process. Weak upstream. Opportunities: Increase in demand for energy and fuels. Expanding capital investments. Minimal energy resources. Better growth opportunity with its better production and refining capacity. Threats: Requirement of replacement for the declining resources. Economic slowdown of the world as well as U.S. Government policies on issuing high taxes and price caps for the products. Increasing competitive business companies. Conclusion: Exxon Mobil is indeed moving forward in sustaining its growth in this oil and gas industry. With the increase in demand for the energy products and moderate supply chains, it is predictable that the prices would see a rise with the global economy. Taking the advantage of the increasing demand for the products and rise in prices, the company can serve well in the future by producing efficient products at competitive prices for its consumers. The company’s investments in research and development will probably boost the production and help in maintaining its leading position among the world. Overall, with its profitable investments and brand value, Exxon Mobil is in a better position than its competitors in the global market of oil and gas. Works Cited Abey, Francis. “Success Story of Exxon Mobil.” Mbaknol.com, 2012. Web. 17 Oct, 2012. < http://www.mbaknol.com/management-case-studies/case-study-success-story-of-exxon-mobil/> Kaye, Leon. “ExxonMobil Beats Its Own (Oil) Drum in Latest CSR Report.” Triplepundit, 26, May, 2011. Web 17 Oct 2012. http://www.triplepundit.com/2011/05/exxonmobil-beats-oil-drum-latest-csr-report/ Mousseau, Jessica. “ExxonMobil, One of the Biggest Influences in American Lives.” Yahoo, 10 May, 2006. Web 17 Oct, 2012. < http://voices.yahoo.com/exxonmobil-one-biggest-influences-american-36606.html?cat=3> Taque, Angela. “Exxon Mobil Corporation History and Facts.” Yahoo, 22 May, 2010. Web. 17 Oct, 2012. < http://voices.yahoo.com/exxon-mobil-corporation-history-facts-6032200.html?cat=15> Trefis team. “Exxon's New Projects To Pump Up The Volume.” Forbes.com, 17 Jan, 2012. Web 17 Oct, 2012. < http://www.forbes.com/sites/greatspeculations/2012/01/17/exxons-new-projects-to-pump-up-the-volume/> Read More