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Long standing reputation of this company was contributed by Rockefeller and his partner
to form Standard Oil Company, headquartered in Ohio with integrated facilities constituting that
largest refinery facilities in 1870. Due to some reasons, Standard Oil Co. was categorized into
Exxon and Mobil under different ownership but eventually by 1999 they were announced to
merge in order to be an effective global competitor in this competitive industry.
THE FIRM TODAY
ExxonMobil today is led by Rex W. Tillerson as Chairman and CEO since 2004. As
greatly known as complete integrated oil and gas company, ExxonMobil prolifically produce 4
million oil-equivalent per day. It continues to successfully advance in some upstream projects in
order to achieve 4.3 million oil-equivalent per day by 2017. Over the past years, it has completed
eight new major projects with more than 250 thousand oil equivalent per day. Some
ExxonMobils expertise projects that have been completed are Arkutun-Dagi in Russia; Cold lake
expansion in Canada; Lucius in the Gulf of Mexico. In the United States, it focuses more on
higher-margin liquid production to implement its advance technology across The Permian, The
Bakken, and The Ardmore/Marietta plays. Current start-up project is located in Banyu-Urip,
Indonesia; Kearl Expansion in Canada; and Hadrian South in Gulf of Mexico. While for
downstream and chemical businesses, ExxonMobil emphasize on diversifying feedstock through
integrated system, driving operational efficiency and maximizing sales of petroleum and chemical
products. Below would be shown past years ExxonMobil performance of its each business
activity.
ExxonMobil Chevron
Royal
Total
BP
Dutch
Shell
Total Revenue (2014)*
411,939
211,970
421,105
212,018
Number of Employees
75,300
61,456
94,000
100,307
Market Capital**
338.155
159.804
173.093
107.485
Note: *in Million USD include excise, value-added and similar taxes
358,678
84,700
89.343
High barriers to entry restrict mediocre players to grasp on existing market Barriers to
entry in this industry include huge capital requirements, stricter government policy
mainly due to unstable oil prices and environment issue, as well as cost disadvantages
independent of scale such as government subsidies to existing players, more desirable
locations, and favorable access to raw materials.
3. Threat of substitute
Due to enormous investment and capital needed, renewable energy sources are still
unable to substitute fossil energy usage completely. In addition, the possibility of utilizing
such energy sources are still under more advance research. Therefore, substitutes in this
industry is considered as weak.
4. Buyers bargaining power
In this industry, buyers have significantly great power to easily change their option. One
of the reason is they purchase a large portion of ExxonMobil total output. Greater amount
of information available as well as undifferentiated product offerings increase their
bargaining power even further.
5. Suppliers bargaining power
Suppliers bargaining power is considered as moderate because both ExxonMobil and
supplier need each other help and support. ExxonMobil can provide the facilities needed
to exploit a countrys natural resources for those that are unable to provide substantially
sufficient facilities. On the other hand, ExxonMobil needs the permission and willingness
from related country to explore and produce its products.
Situation Analysis
INTERNAL ANALYSIS
PERFORMANCE
Sales and profitability
Business performance is highly affected by oil and gas price change worldwide. Due to
several undesirable issues, ExxonMobil overall financial performance improved dramatically in
short period but kept declining over past 3 years. Table 1 shows that between 2013 and 2014, both
company sales and profit declined by 6.4% to USD 394 million and 7.6% to USD 109,977
respectively. However, earnings per share experienced slight increased by 3.1%, with final
dividends increasing to USD 2.7, to the benefit of shareholders. Another indicator performance
that ExxonMobil used specifically to measure historical capital productivity in its capital
intensive, long-term industry, as well as to make investment decisions.
Other factor that is affecting ExxonMobil performance is industry prices that
significantly driven by market supply and demand. On the supply side, industry production is
declining but basically being offset by production from new discoveries and field developments.
OPEC production policies also have an impact on world oil supplies. The demand side is largely a
function of global economic growth.
Table 1
ExxonMobil Financial and Productivity Performance
Performance Indicator
2014
2013
2012
2011
2010
(Million
(Million
(Million
(Million
(Million
USD)*
394,105
USD)*
420,836
USD)*
451,509
USD)*
467,029
USD)*
370,125
Revenue
Total Revenues and Other Income
Gross Profit (After Tax)
Return On Average Capital
Employed (ROCE)
Net Income
Earnings / (Loss) per Share
Cash Dividends per Common
-7%
-7%
-3%
21%
411,939
438,255 480,681 486,429
-6%
-10%
-1%
109,977
118,973 133,565 144,644 121,614
-8%
-12%
-8%
16%
16.2%
17.2%
25.4%
24.2%
21.7%
32,520
32,580
44,880
41,060
30,460
-0.2%
-38%
9%
26%
7.6
7.37
9.70
8.43
6.24
3%
-32%
13%
26%
2.7
2.46
2.18
1.85
1.74
Share
9%
Note: * Except per share amounts and ROCE
11%
15%
6%
CORE COMPETENCY
ExxonMobil principal business is energy, involving exploration for, and production of
crude oil and natural gas, manufacture of petroleum products and transportation as well as crude
oil, natural gas, and petroleum products. ExxonMobil is a major manufacturer and marketer of
commodity petrochemicals, including olefin, aromatic, and wide variety of specialty products.
Throughout its businesses, updated and ongoing measures are taken to prevent and minimize the
impact of operations on air, water, and ground which includes substantial investment in refining
infrastructure and technology to manufacture clean fuels, as well as to monitor and reduce the
side-pollutants that it might potentially produce, e.g. nitrogen oxide, greenhouse gas, etc.
Amid all the processes that it had, ExxonMobil distinct itself for being the worlds
premier petroleum and petrochemical company. To that extent, it continuously strives to achieve
superior financial and operating excellence and simultaneously adhering to high ethical standard.
By executing its structured business plans, following the guiding principles, striving to improve
efficiency as well as advance in research and development, ExxonMobil Corporation aims to be
at the leading edge of competition in each business units.
EXXONMOBIL GENERIC VALUE CHAIN
Primary activities
Inbound logistics sourcing oil, gas, and petrochemical products from rich natural sources
countries, e.g. Middle East with whom they have long-standing relationship and built up efficient
supply chain facilities
Operations - operates facilities and markets products worldwide across six continents. Upstream
base is geographically diverse with E&P acreage in 36 countries, production sites in 23 countries,
and sales of natural gas in 32 countries. It also has interests in 36 refineries in 21 countries plus
51 wholly owned and joint venture manufacturing of chemicals locations.
Outbound logistics ExxonMobil provides retail sites e.g. gas station and workshop to reach the
end customers. Also, selling through OEM (Original Equipment Manufacturer) for serving the
business-to-business market.
Marketing and sales Traditionally rely on the reputable brand of Exxon, Mobil, Esso, and Mobil
1 through its retail sites. Most of times ExxonMobil also sponsored and contributed as part of
corporate social responsibility.
Service ExxonMobils method to distinct itself from other competitors is high-quality service to
its end customers.
Supporting activities
Firm infrastructure they have well designed and tidy retail sites. They also have capable people
serving in different subsidiaries and necessary job functions such as legal, finance and accounting
to support their activities.
Human resource management Great benefits, employee empowerment, and the corporate
culture makes ExxonMobil drive efficient management in human capital.
Technology development Substantial amount of investment to enhance their operations in terms
of efficiency and reducing pollution.
Procurement ExxonMobil procures its petroleum products from different E&P sites across the
world.
EXTERNAL ANALYSIS
SWOT ANALYSIS
Strength
Weakness
ExxonMobils favorable reputation as the oldest and More expensive pricing compared to other players in
mature player in the industry
several product portfolio
Differentiation strategy through quality over price Several controversies regarding high-level of
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contamination and pollution produced as well as
imposed by US law
Opportunity
Threat
Globalized market reduces boundaries to explore more Unstable and volatile oil price reduce its strategic
energy market
position due to oil, gas and petrochemical business
nature itself is fundamentally commodity business
Renewable energy development would threat fossil
energy utilization and exploration hence would also
risk ExxonMobil resources
Environmental issue also threats ExxonMobil
existence in this industry
Access limitations implemented by some countries to
do investment of their oil and gas reserves tend to
increase the high commodity price and affect
ExxonMobil financial performance
More countries concern over the risk of pollutants
produced by oil, gas and petroleum companies that
now these countries adopted higher taxes and
restrictive policies that would cause higher price in oil,
gas and petroleum products.
RECOMMENDATION
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References
www.Bloomberg.com 24.Feb.2016 20.24
ExxonMobil Annual Report Series.(2014). Annual Report of ExxonMobil Corporation. US
Securities and Exchange Commision
Ireland, Hoskisson, Hitt.(2012). The Management of Strategy Concept 10th Edition. Canada:
South-Western Cengage Learning