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ExxonMobil Marketing Project Report

ExxonMobil Marketing Project Report

ExxonMobil Marketing Project Report – IntroductionExxonMobil Marketing Project Report

ExxonMobil is headquartered in Irving Texas, and is the largest producer and marketer of crude oil, natural gas, petroleum products, chemicals, plastics and much more. ExxonMobil has several brand names under its umbrella such as Exxon, Mobil, Esso, and Imperial Oil in Canada. Exxon Mobil operates in 21 different countries, with more than 77,000 employees worldwide and annual revenues of about $500 billion. ExxonMobil also owns 32 refineries in 17 countries. Exxon acquired Mobil in 1998 forming ExxonMobil corporation, making ExxonMobil pass General electric as the largest company in the world based in market capitalization,

Major Issues

Organizational structure

The company lacks vision and mission statements. Through guided by their guiding principles, study of strategic management has shown the benefits of a company having a vision and mission statement to give direction to the company as well as constantly remind the company what they are about.  ExxonMobil uses the strategic business unit (SBU) organizational structure.  In the company’s organizational structure, it is noticeable that there is no Chief Operations Officer and Chief Accounting Officer. For such an organization with a diverse portfolio, these would be important positions to keep a good track of how each business unit is performing. Further, on the SBU structure, there is no head for each SBU. This brings a tricky situation on how the business units operate without head for the staff of each of the units to report to. Another of the issues noted at the ExxonMobil organizational structure is that there is lack of diversity in the managerial positions. There are no women at all at the top management as well as the notable lack of black, Hispanic or other diverse races in the structure, for such a large organization as this, with over 77000, this is a concern.

Oil spills

Another of the internal the issues surrounding ExxonMobil is the oil spills they have been associated with. Oil spills especially the Valdez in Prince William Sound, Alaska, in 1989. It is said after the initial Valdez spill, it took Exxon 10 hours to initiate any attempts to contain the damage and a further 7 day to release a press release. It is this spill that led to congress to pass the oil pollution act of 1990. After that, there were oil spills in Brooklyn in 2007,  Yellowstone river in 2011 and Baton Rouge Louisiana in 2012. These spills have caused Exxon a lot of reputation damage especially their response to the disaster, which led to an injured public image and event deteriorated financial performance around the times following the spills. Still, Exxon has never addressed these spillages properly, and it is viewed as a neglect of the harm the spillages has caused to the people and the environment.

Environmental issues

ExxonMobil has also been termed a threat to the environment on other times beside the oil drill. An example is being termed as a danger to the whale population in Russia due to oil waste, as well as paying for ads that encourage global warming. ExxonMobil pipelines have been accused of harming migration routes of Alaskan animals. ExxonMobil has also faced criticism regarding its impact on global warming especially on greenhouse gasses caused by burning coal and petroleum based fuels. Exxon was also a member of Global Climate Coalition a skeptic group on the possible nature of greenhouse gasses.

Financial issues

In terms of financial performance, ExxonMobil is showing increase in revenues each period especially in the US region revenue which rises from $150,343 million in 2011 to $151,298 million in 2012. In some non US countries however, there is notable decrease in revenue such as Belgium, Germany and a significant drop in Japan from $31,925 million in 2011 to $14,162 million in 2012. In comparison with its direct competitors BP and Chevron, ExxonMobil has significantly higher revenues, net incomes and net profit margin. The net revenue per employee is $5.9M in ExxonMobil compared to 4.7in BP and 3.9M in Chevron. ExxonMobil is enjoying the lead in the oil industry currently. On the other hand, ExxonMobil ranks third on S&P global oil industry classification standard, behind Saudi Arabia’s Aramco and National Iran Oil Company (NIOC), though they sell more than $6.4 million barrels a day more than the two Saudi and Iran state owned organizations and has an edge on the two in refining too being the top refiner in the world.

Business Segments

The business model of Exxon is divided itno two segments, the upstream and downstream segments.

Upstream

Upstream division involves exploration, production and development of crude oil and natural gas. In the upstream segment, the company is expanding its portfolio through global exploration, development, production and marketing. The upstream business segments accounted for the 67% of the earnings in 2012, and 84% in 2011. They expect to increase the oil and natural gas output in north America, which produces about 30% of Exxon’s products, and increase this to 35%. This is through a strategy to diversify the product range. To strengthen their upstream revenue, the company purchased XTO energy for $41 billion in 2009. The strategies used at the upstream are to apply effective risk management and safety procedures to ensure operational excellence. Further, ExxonMobil also strategizes on identifying and capturing the high quality resources as well as exercising a disciplined approach to investing and managing cost mostly through developing high impact technologies.

Downstream

The downstream involves manufacturing, selling petroleum, crude oil and natural gas products. It includes refining facilities in 17 countries. ExxonMobil is currently the largest global refiner of oil with downstream operations refining and distributing products derived from crude oil to customers around the world. In the downstream segment, products are marketed to customers through retail and three B2B segments: Industrial and wholesale, Aviation and Marine. The strategies used in downstream operations include ensuring they maintain best in class operations by providing quality and valued products and services, and capitalizing in efficiency and effectiveness. The fact that ExxonMobil are vertically integration ensures that they are in control of the whole process from raw materials to final production.

Exxon Mobil SWOT Analysis

ExxonMobil enjoys the strong brand name that has taken a lot of years to build, hence its capacity of being one of the largest brand names in the oil industry. Through vertical integration, ExxonMobil is able to take control of the whole process whereby from crude oil, ExxonMobil manufactures gasoline, diesel, lubes, aviation and jet fuel, liquefied petroleum gas, fuel oil, chemicals and waxes. Through the upstream segments, they are also involved in research and development, global exploration, marketing and distribution. This also gives them a diverse revenue stream and a wide geographical reach where they have opened their industries.

On the other hand, there are legal issues following business misconducts of ExxonMobil such as environmental damages and oil spills. As a result, this has cause poor publicity especially with the rise of global issues. There have also been notable issues in their organizational structure such as lack of diversity and SBU heads. The increase in world population and global economic growth is an opportunity for ExxonMobil since it will lead to more natural gas demand. With increasing concern of environmental issues, ExxonMobil has the opportunity to explore non conventional  energy resources. In terms of threats, ExxonMobil is faced by increasing environmental regulations and social responsibility. Also, expansion into different countries comes with their share of risks.

Strengths

Leading brand name

Vertical integration, control of all production from raw to final products

Has diversified revenue stream

Wide geographical reach and expansion

Years of experience in the industry

Continuous investment in global exploration

Strong R&D

Weaknesses

Legal issues relating to business misconduct

Lack of diversity in their top management

Poor record and publicity relating to environmental issues

Opportunities

Increase in population will lead to more natural gas demand

The chance to explore unconventional energy resources

Economic growth in developing countries will lead to increase in demand for oil and natural gas

Threats

Increasing environmental regulations

Expansion to other countries comes with risks

ExxonMobil PESTEL Analysis

ExxonMobil operates in over 20 countries, and therefore are expected to meet political and legal requirements that come with geographical expansion. On the economic concern, it is expected that there will be increase in global economic growth in the future by about 3% a year. This shows that the world will be demanding more use of natural gas and other fuels, further, natural gas is expected to gain market share beating coal at it by 2025, which is a major area of opportunity for growth for ExxonMobil. Further, demographic increase in population will result in global energy demand in the future. Advancement in technology has led to discoveries that have made oil more assessable, which is an advantage for oil drilling companies as it leads to operational efficiency.

On the other hand, there is demand for social responsibility on the side of companies especially for large production companies like ExxonMobil. This will require the company to adopt to social requirement, such as the diversity issue raised in their organizational structure. This goes hand in hand with the environmental requirements against global warming and oil spillages that ExxonMobil must address. With increase of need for global friendly sources of energy, ExxonMobil should consider exploring production of carbon free or carbon reduced sources of energy for the future. This is one way that the company can deal with legal issues faced and prevent some in the future.

Political

By the basis that they operate in different countries, faced by political challenges

Economic

Increase in global economic growth is expected to be 3% a year

Natural gas is expected to get gains in market share beating coal by 2025

Socio-Cultural

Increase in world population will increase energy demand

Increase in energy sufficient technologies may lead to decrease in energy consumption per unit

More demand for organizations to be socially responsible

Need for diversity in employing members of staff

Technological

Recent discoveries and advances in drilling and hydraulic fracturing making natural gas drilling more assessable

Environmental

Expected use of nuclear power and renewable such as wind, solar, geothermal in the next 30 years

Criticism on environmental effect of petroleum use

Oil spillages which have endangered aqua life

Legal

Faced lawsuits related to environmental and aquatic pollution

IE Matrix

In the internal factors matrix, ExxonMobil has above average on internal strengths. Evident on the SWOT analysis, the strengths of the company surpasses the weaknesses. On the other hand, ExxonMobil does not respond well to the external environment, as noted on the issues of environmental concerns, social responsibility and diversity. They therefore fall below average on the external issues response. As a result, ExxonMobil should maintain their internal strengths, while working on better response on the external factors.

EFE total weightIFE total weight
 Strong

(3.0-4.0)

Average

(2.0-2.99)

Weak

(1.0-1.99)

High (3.0-4.0)GrowAndbuild
Medium (2.0-2.99)holdAndMaintain
Low (1.0-1.99)Harvestanddivest

Alternative Causes of Action

  1. Hold current strategies
ProsCons
Already a market leaderPoor publicity

Poor diversity

Have large market shareMay lose this if they don’t deal with environmental issues
Knowledge in the industryCould be more efficient
High asset baseThey have reported low returns on assets
  1. Accept external pressure and adopt changes
ProsCons
Create environmental friendly productsMay have to alter their production processes

More research and development on how this can work without losing their asset base

Become socially responsible and acquire more clientsTakes quite a while to repair a damaged reputation
Strengthen relationships with customers, the government and other stakeholders
Improve on efficiency and increase revenues

Recommendations

Though ExxonMobil for a long time may still hold the mantle of being the largest non state owned oil company in the world, there are some adjustments that they must make in the future.

  1. To maintain a margin in revenues, ExxonMobil must work in increasing their efficiency in plants so as to cut costs.
  2. There is also environmental pressure due to the issue of global warming. ExxonMobil has no choice but to consider production of low carbon fuel that is more environmental friendly.
  3. There is the wave of social responsibility and consumerism, and people are looking up to the organizations to be socially responsible. Though they have got away with a slap on the wrist on issues of environment such as spillages of oil, this is not acceptable in the future, and ExxonMobil should take mitigation factors seriously to avoid such issues. There is need to ensure that its future economic growth is not to the expense of social and economic sustainability. At this day if consumer awareness, consumers have been known to boycott products by organizations that they feel do not reflect their interests, and Exxon though a giant, runs the risk of alienating existing and potential customers who are not impressed by their activities.
  4. With the issue of diversity, ExxonMobil should acknowledge such concerns and include diverse members in their boards and top management. For an organization operating in such many countries and with so many employees, they should have embraced this long ago to strengthen their reputation.

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