ExxonMobil Company Analysis - Essay Example

? ExxonMobil Company Analysis ExxonMobil Company Analysis Company Background ExxonMobil is an American multinational that deals witha wide range of products in the petroleum and petrochemical product segments. The firm has professional and committed leaders that ensure that ExxonMobil achieves its objectives. These leaders ensure that employees interact effectively with the work environment and focus on the organization’s objectives (Coll, 2012). ExxonMobil ensures that employees conform to discipline and commitment standards in order for them to execute the firm’s business strategy. As a result, ExxonMobil has benefit from suitable competitive advantages, in addition to market leadership. ExxonMobil is organized on a geographical level besides having an effective leadership and focus on the firm’s objectives. The organization of ExxonMobil is dependent on business services and geographical location. The firm has functional groups that are categorized into three crucial operating divisions. The three groups are the upstream, downstream and chemicals division (Coll, 2012). The upstream management level or division of the firm dominates the firm’s cash flow. This division accounts for 70 percent of ExxonMobil’s revenues. The upstream division is responsible for business activities such as oil exploration, extraction, shipping and wholesaling. These operations have their headquarters at Texas. The downstream operations oversee business activities such as marketing, refining and retailing. These operations are dependent on the firm’s Virginia operations. The chemical division oversees business activities that involve the production and use of chemicals in the operations of the firm. This division has its headquarters in Texas. ExxonMobil has over 82,000 employees located in different locations globally. These employees support the activities of the three organizational levels by ensuring that the organization achieves stability in operations. It is worth stating that ExxonMobil has different brands such as Exxon, Esso and Mobil. The firm also owns subsidiaries such as Imperial Oil Limited and SeaRiver Maritime (Coll, 2012). ExxonMobil’s upstream division has operations such as “ExxonMobil Upstream Ventures, ExxonMobil Exploration Company, ExxonMobil Development Company, ExxonMobil Production Company, ExxonMobil Gas and Power Marketing Company and ExxonMobil Upstream Research Company” (ExxonMobil, 2013). Downstream operations are achieved by the activities of “Sea River Maritime, Lubricant & Specialties Marketing Company, ExxonMobil Refining and Supply Company, ExxonMobil Research and Engineering Company, ExxonMobil Fuels and International Marine Transportation” (ExxonMobil, 2013). Operations of the chemical division are achieved through the activities of ExxonMobil Chemical Company. Flat or Tall Organization According to the organizational structure used by ExxonMobil, and the firm’s website, ExxonMobil is a flat organization. This means that the firm provides effective communication and interactive platforms (Bhairaw & Manoj, 2012). At ExxonMobil, every employee, regardless of level, status or job description can approach anyone at the firm and ask questions or share perspectives. ExxonMobil has an informative atmosphere. The flat organizational structure is based on ExxonMobil’s hierarchical structure. This structure was important because it helped the group access one of the firm’s representatives. The representative helped in filling out the survey form. Tall organizational structures rely on traditional corporate structures that have mid-base and upper management levels. Tall organizational structures feature complex hierarchies that lead to long management chains (Bhairaw & Manoj, 2012). As the organization expands, the management levels increase. Managers form numerous ranks that control reduced numbers of employees or areas of the organization. Flat organizational structures have minimum management levels. This means that the firm does not have numerous levels of management. Flat organizations are characterized by one management level controlling a large number of employees. Flat organizations such as ExxonMobil center on empowering their employees. Employees are empowered to act accordingly, without relying on chains of command. The strategy encourages autonomy and self-direction, which leads to the advancement of employees (Bloomberg, 2013). The organizational structure used by ExxonMobil shows that the firm taps on the creativity and talent of its employees. Additionally, the flat organizational structure used by ExxonMobil helps its employees to solve problems through collaboration. ExxonMobil focuses on career development and advancing its employees. The firm has processes of ensuring that its employees work in different areas of the firm in order to familiarize themselves with the firm’s operations. This aims to create talented and trained managers and workers who will drive the firm’s operations in the future (Bloomberg, 2013). As a result, the firm does not face replacement issues in case an individual retires or leaves. In such a case, ExxonMobil has five to six individuals who can take up the position. The focus on career development prevents the occurrence of strategic vacuums and gaps at ExxonMobil. ExxonMobil is also able to exploit the potentials of its workers while establishing them for long-term career development. The flat organizational structure gives ExxonMobil market and operational advantages. The structure provides employees with opportunities to excel while focusing on the strategic and business mission and vision adopted by ExxonMobil (Bloomberg, 2013). The success of ExxonMobil relies on platforms at the organization that enable employees to share information and results. This shows that a flat organizational structure is flexible, and it enables ExxonMobil to adapt to changes. ExxonMobil can foster democracy and improve communication because of the strengths provided by the flat organizational structure. Survey Results Name: Contact Details (Email and Tel): Position: Company: For each statement, please circle the number that most closely represents the extent to which this principle currently describes your company (Survey Form, 2013). Not at all To a weak extent To a moderate extent To a large extent To a very large extent Principle 1: Alignment Our business has aligned employee behaviors with stated company values and direction. 1 2 3 5 Principle 2: Distributed Leadership In our business, individuals and work teams are assigned, and accept, responsibility for operational decision making and performance improvement. 1 2 3 4 5 Principle 3: Integration of Effort Our business is not a functional/ hierarchical organization but a value creation/process focused organization. 1 2 3 4 Principle 4: ‘Out-Front’ Our business takes a lead in determining industry standards and practices. 1 2 3 4 Principle 5: ‘Up-Front’ We apply high standards of integrity and openness in everything we do. 1 2 3 5 Principle 6: Resourcing the Medium Term Our business is able to effectively balance short-term and medium term issues and requirements. 1 2 3 5 Principle 7: Time Based Time is a critical organizational value in our business. 1 2 4 5 Principle 8: Bias for Action Our business is good at implementing ideas and strategies. 1 2 4 5 Principle 9: Learning Focus Everyone in our business is involved in a learning/development program. 1 2 3 5 Principle 10: Discipline We invest in policies, procedures and standards and apply a strong systems perspective in our business. 1 2 4 5 Principle 11: Measurement/Reporting and Publication Our business measures and reports to our employees, the financial and non-financial performance information needed to excel. 1 2 3 4 5 Principle 12: Customer Value In our business, all employees strive to enhance customer value creation. 1 2 3 5 Principle 13: Capabilities Creation Business and organizational capabilities are defined as priority areas for development and investment. 1 2 3 4 Principle 14: Micro to Macro Our employees know how their individual efforts contribute to business success. 1 2 3 4 5 Company Strengths and Weaknesses Strengths ExxonMobil’s main strengths include cogeneration facilities, integrated refining and chemical operations, extensive research and development activities and wide geographic spread. ExxonMobil’s operations are spread out globally. ExxonMobil has 37 billion refineries located in 21 countries (Yahoo Finance, 2013). These refineries have combined refining capabilities of 6.3 million barrels of oil. The firm has global affiliate firms and divisions. ExxonMobil produces, operates and sells its products to over 200 countries. Though the firm has global operations, it is vital to note that it has a centralized decision making process. ExxonMobil has successfully integrated its chemical and refining operations (ExxonMobil, 2013). This has helped the firm in cutting costs while increasing productivity. Integration of the two operations has resulted to improved operational efficiency. The integration of these operations has also improved the flexibility of the firm. This has enabled ExxonMobil to adapt to changing business environments. ExxonMobil has effective cogeneration facilities that have supported the firm’s effectiveness and productivity (ExxonMobil, 2013). These cogeneration facilities are developed using proprietary technologies in order to provide ExxonMobil with competitive advantages. ExxonMobil is globally recognized for its extensive research and product development activities. ExxonMobil has benefitted from these activities through the production of quality products and market leadership (Johnston & Johnston, 2006). Research and development activities have led to improvements in different phases of petroleum production. As a result, ExxonMobil has effective exploration and production procedures and activities. Weaknesses ExxonMobil’s weaknesses include declining market shares, increased production costs and declining reserves. With extensive global operations, ExxonMobil is subject to risks that result from unstable social and political environments (Johnston et al, 2006). In case of social and political unrests within its area of operations, the firm is forced to halt operations. Risks that arise in case of social and political unrest include loss of property, reduced operations and loss of profits. ExxonMobil is experiencing declining market share because of changing business dynamics (Fleisher & Bensoussan, 2007). Many oil exploration and production companies have come up and they target the same oil resources as ExxonMobil. This has led to a reduction in market share. Increased productions cost presents additional weakness to the firm. The firm must contend with fluctuating exchange rates, increased operational risks and reduced reserves (Fleisher et al, 2007). These increase production costs because the firm must explore new reserves. The firm must also set aside resources to deal with operational risks and fluctuating foreign exchange that cause instabilities. Discussion ExxonMobil is an American based gas and oil multinational. The firm is the leading company by revenue in the world. ExxonMobil has 37 oil refineries that are located in 21 countries. The combined refining capacity of these facilities is 6.3 million barrels (Simkins & Simkins, 2013). ExxonMobil trades around the world using different brand names such as Esso, Exxon and Mobil. The firm owns subsidiaries such as SeaRiver Maritime and Imperial Oil Limited. The upstream division of ExxonMobil dominates the firm’s cash flow. This division accounts for 70 percent of ExxonMobil revenues. ExxonMobil has over 82,000 employees globally. As of July 2013, ExxonMobil’s shares were trading at $92.96. During this period, the share price had dropped by $0.31. Financial analysts provide positive outlooks for ExxonMobil, which means that the share price and company’s performance will improve as the year progress (Simkins et al, 2013). It is important to note that ExxonMobil has high production levels. Additionally, the firm has numerous resources such as research and development and financial resources to support its operations. However, the firm faces numerous challenges such as diminishing oil resources and changing social and political landscapes. These lead to instabilities, which disrupt the operations of the firm. Currently, ExxonMobil is struggling to source new energy reserves. The firm replaces 95 percent of its oil volumes compared to 158 percent for its gas volumes. As ExxonMobil continues to pursue opportunities, I anticipate increased capital spending. ExxonMobil has the financial ability to invest in energy projects and increase its business cycle. This is vital for the growth of the business and profitability (Grant, 2010). The cornerstone to maximizing its resources and financial capabilities is operational excellence. The firm’s global functional structure, combined with effective and rigorous management systems provides platforms for the establishment of global operating units. The firm’s management levels have continuously provided resources that benefit technical expertise. Operational excellence facilitates safe and profitable operations. According to the survey, ExxonMobil employees continue to support the operations of the firm. These employees have shown an ability to focus their resources and energies towards the objectives of ExxonMobil. In the case of alignment, the survey shows that ExxonMobil employees have aligned their behaviors towards the firm’s direction and values (Grant, 2010). This is evident from the commitment levels at the firm. The survey also shows that to some extent, ExxonMobil provides opportunities for teams to work cohesively. The interviewee showed that teams at the organization are assigned duties and they take responsibility for operational decision-making. As a result, duties at ExxonMobil are completed in a timely manner. The interviewee also indicated that the firm has achieved excellent integration levels. ExxonMobil is a value creation organization. The firm explores mines and refines crude petroleum into finished fuel products and lubricants. According to the survey, important features of ExxonMobil were determined. The firm uses teams for the accomplishment of organizational tasks. The firm is a process-oriented operation. Though the firm is process focused, it is vital to note that its management levels are determined by the flat organizational structure (Grant, 2010). ExxonMobil is a market leader. Market leadership was achieved through the incorporation of openness and integrity to its operations. ExxonMobil emphasizes on training its employees in order to sustain high levels of workplace knowledge and expertise. ExxonMobil also strives to improve the value of its customers through value addition. This means that ExxonMobil’s customers purchase high quality finished products. Most importantly, organizational and business capabilities are vital components for investment and development. ExxonMobil’s employees understand their value and importance of their efforts to the organization’s objectives. Employees know that their effort contributes to the successes of the business. These aspects of the business also function as ExxonMobil’s strengths. Some of the weaknesses deducted from the interview show that the firm is experiencing internal operational challenges. ExxonMobil experiences laxity among team members. As a result, teams show tardiness in the completion of tasks. The organization does not take time seriously (Grant, 2010). According to the interviewee, most of the employees do not consider time as a vital organizational element. A combination to these two factors provides challenges in the implementation of strategies and ideas. The interviewee noted that ExxonMobil faces challenges during the implementation of strategies and ideas. Additional weaknesses identified from the interview include the lack of investment in procedures, policies and standards that may help in the establishment of appropriate business perspectives. The firm does not measure and report performance information that can improve productivity. These weaknesses show a breakdown in communication, which can be associated with the centralized decision making strategy. These weaknesses do not deter ExxonMobil from serving its clients and meeting its fiduciary responsibilities to its stakeholders. ExxonMobil is committed to establishing a premier petrochemical and Petroleum Company (Grant, 2010). In order to achieve this objective, the firm must achieve superior operating and financial results. The firm must also adhere to high operational and business standards. These expectations provide ExxonMobil with foundations for interacting with its stakeholders, personnel, clients and communities. ExxonMobil is focused on enhancing the long-term value of its investment. The firm expects its stakeholders to benefit financially after being rewarded with superior returns (Grant, 2010). The firm recognizes that it will achieve success by consistently satisfying the changing customer needs and preferences. Research and development activities are focused on ensuring that customers receive high quality services and products at competitive prices. ExxonMobil values the efforts of it employees. The firm recognizes its exceptional workforce, which has enabled the firm achieve a valuable competitive edge. In order to build on this advantage, ExxonMobil must strive to retain and hire qualified people. Recommendations ExxonMobil should provide effective communication platforms. These are vital for the performance of teams and individuals within the firm. The inability of teams at ExxonMobil to perform maximally is attributed to the lack of effective communication structures. Teams must wait for instructions from the firm’s centralized management (Grant, 2010). ExxonMobil should invest in policies, procedures and standards and apply a strong systems perspective in its business. This will help the firm overcome some controversies associated with its operations. For instance, developing procedures and policies that focus on environmental issues will help ExxonMobil show its stakeholders that it protects the environment. These policies will also help ExxonMobil deal with unexpected events such as oil spills. ExxonMobil’s policies such as the Equal Employment Opportunity Policy discriminates employees based on sexual orientation. The firm should realign this policy to the changing social environment that does not discriminate (Grant, 2010). ExxonMobil should invest in replacing its reserves. The firm should set aside financial and technological resources that will help in the exploration of new oil and gas reserves. ExxonMobil has the potential to increase its reserves because it occupies some of the most productive reserves in the world (Grant, 2010). Challenges Faced The first challenge faced during this company analysis was uncertainty. ExxonMobil operates in a volatile business segment. Additionally, the analysis was done in the face of uncertainty in the global economic outlook. Based on uncertainty, the analysis was faced with a need to focus on short-term issues (Flynn, 2008). In order to overcome this challenge, this company analysis focused on ExxonMobil’s reports and company analysis that provided long-term and short-term goals. An executive representative from ExxonMobil was used to fill the survey. This also helped in overcoming the challenge of focusing on short-term issues. Globalization was also a factor that provided challenges to the company analysis (Flynn, 2008). Because of the firm’s global operations, it was not possible to reach individuals who could provide vital information for the completion of the analysis. This company analysis overcame this challenge by using technological approaches such as online communication. Lessons Learned ExxonMobil’s company analysis helped in learning several business aspects. The first aspect is that communication is a vital business tool that can determine organizational outcome. Teams rely on communication to complete tasks. The analysis showed that businesses need to align their policies and procedures to existing social and economic environments (Flynn, 2008). Failure to align business procedures and policies will lead to the loss of competitive advantages. The company analysis showed that a line manager works in vertical structures. They have responsibility for the supervision of line workers. These managers are called line managers because they focus on productions and serving customers. The company analysis helped in the recognition of important leadership functions in an organization. Leaders help in the interpretation of situations and align organizational strategies and objectives. Leaders help the organization to build optimism, commitment, cooperation and trust. Leaders play an essential role of encouraging and facilitating collective learning. They obtain vital resources for the accomplishment of organizational goals. They also empower and develop employees, in addition to promoting morality and justice. Conclusion ExxonMobil deals with a wide range of products in the petroleum and petrochemical product segments. It is vital to note that ExxonMobil has professional and committed leaders. They ensure that ExxonMobil achieves its objectives. These leaders ensure that employees interact effectively with the work environment and focus on the organization’s objectives. ExxonMobil benefits from suitable competitive advantages and market leadership. The organization of the firm at geographical level has also benefited the operations of ExxonMobil. The firm has functional groups that are categorized into three crucial operating divisions. The three groups are the upstream, downstream and chemicals division. ExxonMobil’s main strengths include cogeneration facilities, integrated refining and chemical operations, extensive research and development activities and wide geographic spread. ExxonMobil’s weaknesses include declining market shares, increased production costs and declining reserves. The survey helped in outlining some of the weaknesses and strengths of ExxonMobil. According to the interviewee, ExxonMobil uses teams to accomplish organizational tasks. The firm is a process-oriented operation. It is vital to note that its management levels are determined by the flat organizational structure. ExxonMobil is a market leader as achieved through the incorporation of openness and integrity to its operations. ExxonMobil emphasizes training its employees in order to sustain high levels of workplace knowledge and expertise. ExxonMobil also strives to improve the value of its customers through value addition. Weaknesses deducted from the survey show that the firm is experiencing internal operational challenges. ExxonMobil experiences laxity among team members. As a result, teams show tardiness in the completion of tasks. The organization does not take time seriously. According to the survey, most of the employees do not consider time as a vital organizational element. A combination to these two factors challenges the implementation of strategies and ideas. ExxonMobil lacks investment in procedures, policies and standards that may help in the establishment of appropriate business perspectives. The firm does not measure and report performance information that can improve productivity. These weaknesses show a breakdown in communication that can be associated with the centralized decision making process. Appendix (Private and Confidential) Name of Company Representative M.J. Dolan-President, ExxonMobil Chemical Company Contact Details ExxonMobil Chemical Company Name of Company Representative S.M. Cassiani-President, ExxonMobil Upstream Research Company Contact details ExxonMobil Upstream Research Company References Bhairaw, G & Manoj, R. (2012). Strategic Management: Exxon Mobil Business Strategy. Bloomberg. (2013). Company Profile for ExxonMobil. Key Executives for ExxonMobil Corp (XOM). Bloomberg. Coll, S. (2012). Private Empire: ExxonMobil and American Power. S.l: Penguin Group US. ExxonMobil. (2013). A Managed Career with Unexpected Turns. ExxonMobil. Fleisher, C. S., & Bensoussan, B. E. (2007). Business and competitive analysis: Effective application of new and classic methods. Philadelphia, Pa: Wharton School. Flynn, G. (2008). Leadership and business ethics. Dordrecht: Springer. Grant, R. M. (2010). Contemporary strategy analysis and cases: Text & cases. Hoboken, N.J: Wiley. Johnston, D. C., & Johnston, D. (2006). Introduction to oil company financial analysis. Tulsa, Okla: PennWell. Survey Form. (2013). Management functions. Lecture 1 Simkins, B. J., & Simkins, R. E. (2013). Energy finance: Analysis and valuation, risk management, and the future of energy. Hoboken, N.J: Wiley. Yahoo Finance. (2013). ExxonMobil Corporation (XOM)-NYSE. Income Statement. Yahoo Finance. Read More