Term Paper on

Strategic Analysis of Exxon Mobil

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Professor Dr. M. Mahmodul Hasan

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ID

Islam, Md. Rakibul

14-97633-1

Submitted on December 14, 2014

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December 14, 2014

Professor Dr. M. Mahmodul Hasan
Faculty of Business Administration
Department of Management
MBA Program

Subject: Submission of Term Paper.

Dear Sir,
Here is our report named Strategic Analysis of Exxon Mobil which you have assigned
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Islam, Md. Rakibul

14-97633-1

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Acknowledgement
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Executive Summary
Exxon Mobil Corp., or ExxonMobil, is an American multinational oil and
gas corporation headquartered in Irving, Texas, United States. It is a direct descendant
of John D. Rockefeller's Standard Oil Company, and was formed on November 30, 1999,
by the merger of Exxon and Mobil (formerly Standard Oil of New Jersey and Standard Oil
of New York). It is affiliated with Imperial Oil which operates in Canada.
ExxonMobil is the largest of the world's super majors with daily production of
3.921 million BOE. In 2008, this was approximately 3 percent of world production, which
is less than several of the largest state-owned petroleum companies. When ranked by oil
and gas reserves, it is 14th in the worldwith less than 1 percent of the total.
ExxonMobil has been subject to numerous criticisms, including the lack of speed during
its cleanup efforts after the 1989 Exxon Valdez oil spill in Alaska, widely considered to be
one of the world's worst oil spills in terms of damage to the environment. ExxonMobil has
drawn criticism for funding organizations that are skeptical of the scientific
opinion that global warming is caused by the burning of fossil fuels. Questions have been
raised about the legality of the companys foreign business practices. Critics note that
ExxonMobil increasingly drills in terrains leased by dictatorships. The company has also
been the target of accusations of improperly dealing with human rights issues, influence
on American foreign policy, and its impact on the future of nations.
Competitive strategy concerns what ExxonMobil is doing in order to gain sustainable
competitive advantage. This study was to establish the competitive strategies adopted by
ExxonMobil to meet the competition in the sector. ExxonMobil transmitted to all
independent Lubricants marketers who are currently active in the Market as listed in
Petroleum institute of East Africa insight publication of 1st Quarter 2012. A response rate
of 63.6% was achieved. The study explored characteristics of marketers/factors that
influence the competitiveness and hence adoption of the various competitive strategies.

Table of Content
Content No

Content

Page
No

Definition of Strategy
1

Discovery

Strategic thinking

Strategic planning

Strategy roll-out

Strategy tune-up/adjustment.

Most Strategic Management Model

EFE Matrix of ExxonMobil

CPM Analysis of ExxonMobil

4-5

Value Chain

20

Analyzing VISA Model

22

10

Analyzing SMARTER Model

24

11

BCG Matrix

26

12

Pure Objectives

26

13

GREAT - Model

27

14

Market Analysis including Market Segmentation

29

15

QSPM Analysis of ExxonMobil

30

16

Financial analysis

32

17

Competitor Analysis

37

18

Breakeven Analysis

39

19

Industry Key Success Factors (KSFs)

41

20

Strategy Evaluation

42

21

Contingency Planning

43

22

Recommendation

45

23

Conclusion

45

Reference

47

Definition of Strategy
Strategy is a method or plan chosen to bring about a desired future, such as achievement
of a goal or solution to a problem. The term is derived from the Greek word for generalship
or leading in army. It is also called as tactics.
Some important definition of Strategic Management theory:

Strategic Management (Theory: 2000 2010)

Strategic Management can be defined as (1) the art and science of formulating, (2)
implementing, and (3) evaluating cross-functional decisions that enable an
organization to achieve its objectives.

Strategic

Management

focuses

on

integrating

management,

marketing,

finance/accounting, production/operation, research and development (R&D) and

computer information systems to achieve organizational success.

Strategic Management (Theory: 2011 2015 )

Strategic management involves strategy development, which is comprised of five

stages:

1. Discovery,
2. Strategic thinking,
Exxon Mobil Corporation is committed to being the world's premier petroleum
and petrochemical company. To that end, we must continuously achieve superior
financial and operating results while simultaneously adhering to high ethical
standards of business conduct. These unwavering expectations provide the
foundation for our commitments to those with whom we interact.

3. Strategic planning,
The vision of this company is to become the center of excellence for key waterrelated technologies particularly those applicable to the petroleum and municipal
sectors.
4. Strategy roll-out,
Business Strategy of Exxon Mobil:
ExxonMobil employ a business model focused on achieving excellence in our daily
operations, generating superior cash flow, and creating long-term shareholder value. As
a result of the consistent application of this proven business model, we possess
competitive advantages that support strong results today and position us well for decades
to come.
Operate in a Safe and Environmentally Responsible Manner.
Uphold High Standards
Attract and Retain Exceptional People
Maintain Financial Strength
Competitive Advantages
Balanced Portfolio
Disciplined Investing
High-Impact Technologies
Operational Excellence
Global Integration
5. Strategy tune-up/adjustment.

Most Strategic Management Model

There are several strategic management models existed. Among these some are given
below:
I.
II.

PEST Analysis
STEER Analysis

III.

Five Forces Model

IV.

Strategic Group Map

V.
VI.
VII.
VIII.

SWOT Analysis
Blue Ocean Strategies
Open Innovation
Seven S Model

EFE Matrix of ExxonMobil

Key External Factors

Weight

Rating

Weighted
Score

OPPORTUNITIES

1. Political Support
2. Demand Increase
3. Activities on Social Responsibilities
4. Activities on safety & Human Rights

0.20

0.60

0.15

0.30

0.10

0.40

0.05

0.10

THREATS

1. Competitive Market
2. International Rivals
3. Environmental Threats
4. Safety Risk

0.10

0.10

0.20

0.60

0.15

0.30

0.05

0.20

4= the response is superior

3= the response is above average
2= the response is average

Rating

1= the response is poor

TOTAL

1.00

2.60

CPM Analysis of ExxonMobil

Exxon Mobil

Concophilips

Chevron

Critical Success Factors

Weight

Rating

Score

Rating

Score

Rating

Score

Quality Management

0.20

0.80

0.60

0.40

SPIRIT Values

0.10

0.40

0.40

0.20

Exploration 0.10

0.20

0.40

0.30

0.10

0.40

0.40

0.30

Financial Strength

0.15

0.60

0.45

0.60

Technical Capabilities

0.20

0.80

0.80

0.80

Asset Quality and Scale

0.10

0.30

0.30

0.40

Global Expansion

0.05

0.20

0.15

0.20

Independent
& Production
Human Rights

Total

1.00

3.70

3.50

4= Major Strength, 3= Minor Strength, 2= Minor Weakness, 1= Major Weakness

i.

PEST Analysis of Exxon Mobil: PEST analysis stands for "Political,

Economic, Social, and Technological analysis" and describes a framework of
macro-environmental factors used in the environmental scanning component of
strategic management.

ii.

STEER Analysis: STEER analysis systematically considers Socio-cultural,

Technological, Economic, Ecological, and Regulatory factors.

iii.

Five Forces Model of Exxon Mobil:

iv.

Strategic Group Map :

1. Extent of Product diversity: Oil, Liquefied Natural Gas (LNG), Bitumen, Liquids

2. Extent of Geographic Coverage: Exxon mobil operates in Europe, North America,

Australia, Asia Pacific and Middle East, Canada, Other International Projects.

3.20

3.

Number

Market

of

Segment

Served: According to
the geography Exxon
mobil

segments

the

market to spread its

overall

business

internationally.

They

mainly focus on the market into groups of individual markets with similar wants or needs
that a company divides into distinct groups which have distinct needs, wants, behavior.

4.

Distribution

Channels

Used:

Natural gas is sold by

local

distributing

companies
marketing

as

well

companies,

transport natural gas via

firms,

interruptible transportation agreements to major market hubs.

5. Extent of Branding: Exxon Mobil brands its products through Newspaper, TV, and
Web based etc.

6. Marketing Effort: Environmental Laws and regulations while operating can add to
the cost and difficulty of marketing or transporting products across state and
international borders.

7. Product Quality: High quality is maintained while producing and operating the
natural gas, oil, bitumen etc.

8. Pricing Policy: Exxon Mobil follows consistent price policy. Exxon Mobil uses swap
contracts to convert fixed-price sales contracts.

5) SWOT Analysis of Exxon Mobil

Strengths: characteristics of the business or team that give it an advantage over

others in the industry.

Weaknesses: are characteristics that place the firm at a disadvantage relative to

others.

Opportunities: external chances to make greater sales or profits in the

environment.

Threats: external elements in the environment that could cause trouble for the
business.

6) Blue Ocean Strategy of Exxon Mobil

Exxon Mobil competes with private, public and state owned companies in all facets of
the E&P business. Some of the competitors have larger and greater resources. Each of
Exxon Mobils segments is highly competitive, with no single competitor, small group of
competitors, dominating.

7) Open innovation of Exxon Mobil

Exxon Mobil always focuses on engineering innovation and technology. Power generation
and certain technology innovations include Exxon Mobil emerging business segments.

8) Seven S-Model of Exxon Mobil

Business Environment/ Strategy:

Exxon Mobil has higher competition from

national oil company, while operation government law is maintain with high ethical
standards, operation as for lower effective tax rate.

Exxon Mobil Organogram:

Exxon Mobil Profile:

Exxon Mobil Corp., or ExxonMobil, is an American multinational oil and
gas corporation headquartered in Irving, Texas, United States. It is a direct descendant
of John D. Rockefeller's Standard Oil Company, and was formed on November 30, 1999,
by the merger of Exxon and Mobil (formerly Standard Oil of New Jersey and Standard Oil
of New York). It is affiliated with Imperial Oil which operates in Canada.

Type

Public

Traded as

NYSE:

XOM

Dow Jones Industrial Average

Component
S&P 500 Component
Industry

Oil and gas

Predecessors

Exxon
Mobil

Founded

November 30, 1999

Headquarters Irving, Texas, United States

Area served

Worldwide

Key people

Rex

W.

Tillerson

(Chairman and CEO)[1]

Products

Fuels, lubricants, petrochemicals

Revenue

US$ 420.836 billion (2013)[2]

Operating

US$ 40.301 billion (2013)[2]

income
Net income

US$ 32.580 billion (2013)[2]

Total assets

US$ 346.808 billion (2013)[2]

Total equity

US$ 174.003 billion (2013)[2]

Employees

75,000 (Dec 2013)[2]

Subsidiaries

Aera

Energy,

Australia,

Esso,

Exxon,

Neftegas,
Oil(69,6%),
Producing
Maritime,

Esso
Exxon

Imperial
Mobil,
Nigeria,
Superior

Mobil
seariver
Oil

Co., Vacuum Oil Co., XTO Energy

Website

Exxonmobil.com

The world's largest company by revenue, ExxonMobil is also the second largest publicly
traded company by market capitalization. The company was ranked No. 5 globally
in Forbes Global 2000 list in 2013. Exxonmobil's reserves were 25.2 billion BOE (barrels
of oil equivalent) at the end of 2013 and the 2007 rates of production were expected to
last more than 14 years. With 37 oil refineries in 21 countries constituting a combined
daily refining capacity of 6.3 million barrels (1,000,000 m3), exxonmobil is the largest
refiner in the world, a title that was also associated with Standard Oil since its
incorporation in 1870.
Exxonmobil is the largest of the world's super majors with daily production of
3.921 million BOE. In 2008, this was approximately 3 percent of world production, which
is less than several of the largest state-owned petroleum companies. When ranked by oil
and gas reserves, it is 14th in the worldwith less than 1 percent of the total.
Shared Value: The mission of Exxon Mobil is that- We exist to power civilization. Exxon
Mobil SPIRIT values set the tone for how we behave withal our stakeholders, internally
and externally.
Structure: Exxon Mobil have 29800 efficient employees. They have several
departments those are Human Resource Department Marketing, Software Engineering,
Hardware Engineering, Project, Finance and Monitoring department etc.
Staff: Exxon Mobil hire talent employee when they recruit they consider knowledge,
skills and experience, they consider their employee as an asset.
System/ Infrastructure: Exxon Mobil offer attractive salary, pension plans, informs
estimated retirement date, provides health care services.
Skills: when they recruit they consider knowledge, skills and experience.
Style: they always focus on production quality, innovation as well as teamwork for better
performance of the company.

PESTEL Analysis of Exxon Mobil:

POLITICAL

ECONOMICAL

# Operation in more than 100 countries # As of 2011 the companys total proven
including 36 refineries in 21 countries reserves base grew to 24.9 billion oilworldwide

equivalent barrels, comprising 49% liquids

# Operations as for lower effective tax rate

and 51% gas.

# Exchange rates fluctuation hampers the
cash flow earnings

SOCIAL/SOCIO-CULTURAL

TECHNOLOGICAL

# Looks after the health issues of the # Uses latest technology for operation and
general public

procedures

# They are accountable for their actions to # Continuous research and development
the society.

activities goes on.

ECOLOGICAL

LEGAL/REGULATORY

#Hydraulic

fracturing

environment.

pollutes

the # Follows regulatory measures by the

Government

# Environmental regulations are high # While operation Law is maintained with

while operating in abroad

high ethical standards.

SWOT Analysis of Exxon Mobil:

STRENGTHS
Leading market position.
Approximately 75000
employees worldwide.
Internal

Largest exploration and

production (upstream)

WEAKNESSES
Cost of environmental
hazards
Pending Litigations.
Declining oil reserves
and production.

company.

OPPORTUNITIES
Increasing demand for

External

THREATS
Economic slowdown

refined products in

in the US and the

China.

European Union.

Increasing demand for

Risks associated with

liquefied natural gas

conducting

(LNG).

outside US.

Capital Investment.

business

Environmental
Regulations.

Porters Five Forces Analysis Of Exxon Mobil

The threat of new entry

This refers to the existence of factors that need to be overcome by potential entrants if
they are to compete in the industry. According to E&Y (2011) report on the US O&G
industry, the industry is highly specialized and highly capital intensive with the average
annual capital expenditure doubling from $72.8 billion in 2009 to $177.9 billion in 2010.
In order for an organization to set up in the O&G industry, it has to have access to reserves
and show that it has the financial capabilities, technical and operational expertise. Hence,
the likelihood of new entrants coming into the industry is low for Conoco Philips.
However, though this threat is low now, the rise of organizations with access to funds and
the rate of mergers and acquisitions have meant that high financial requirements may not
deter new entrants.
The threat of substitutes

This refers to products that offer the similar benefits to an industrys products - in this
case O&G. The major substitutes of Conoco Philips are such as solar, ethanol, biodiesel
etc. The threat of these substitutes is not high as it is very expensive to process and
transform to energy sources when compared with O&G of Conoco Philips. Hence, it can
be concluded that whilst this is not a very high threat now, it should not be over looked
by players in the industry like ExxonMobil as it could be a high threat in the longrun.
The power of buyers
Buyers in this case refer to immediate customers and not necessarily the final consumers.
The buyers in the O&G industry like Exxon Mobil can be grouped into various categories:
the oil majors, the refinery and the ultimate consumers that buy from the retail petrol
stations. Hence from all indications, this threat is very high, as it is easy to switch between
buyers due to low 9 switching costs and the buyers have the capacity to supply themselves,
as some of these buyers are oil majors who own refineries.
The power of suppliers
Suppliers in this context refer to those who supply organizations with what it needs to
produce the product. In the Conoco Philips, suppliers can be grouped into suppliers of
equipment like drilling rigs to E&P firms, and suppliers of crude oil to refineries. As stated
above, there are a lot of companies in the US O&G industry, hence there are low switching
costs, standardized products, and concentrated purchasers but there arent concentrated
suppliers. Hence this threat is regarded as low in the Conoco Philips industry.
Competitive rivalry
Competitors are organizations with similar products aimed at the same customer group.
This threat is very high in the US O&G industry, as there exist over 5,000 companies in
the industry. The competitors for Exxonmobil in this industry include conocophillips,
Chevron, Marathon Oil and Apache and their financial and operating performance. This
threat is also regarded as very high as the industry is characterized by high fixed costs,
high exit barriers and low differentiation of O&G products.

SWAN Analysis
Strengths

Weaknesses:

1. Leading market position

1. Legal proceedings

2. Improvement in Financial 2. Pending Litigations

Performance
3. Employee unrest
3.

Extensive

Research
4. Continued weak upstream

&Development Activities

performance in the US
4. Geographical Diversification
Geographical Diversification

Achievement:
1.

Strong

Next Steps:

competitive 1.

advantages.

That

exceptional

quality

Efficiency will continue to

means, play a key role in solving an

of

the energy challenges.

workforce provides a valuable

competitive edge. They strive to
hire and retain the most qualified
people available and to maximize
their

opportunities

for

the

success through training and

development.
2. Higher customer satisfaction
throughout the world.

2. Energy demand in developing

nations will rise 65 percent by
2040

compared

to

2010,

reflecting growing prosperity

and expanding economies.
3. With this growth comes a
greater demand for electricity.
4.

Growth in transportation

sector demand will be led by

expanding commercial activity

as our economies grow.
5. Technology is enabling the
safe development of once hardto-produce energy resources,
significantly

expanding

available supplies to meet the

worlds changing energy needs.
Oil will remain the No. 1 global
fuel, while natural gas will
overtake coal for the No. 2 spot.
6. Evolving demand and supply
patterns will open the door for
increased
opportunities.

global

trade

TOWS Matrix

Value Chain

Exxon Mobil Analysis across the Oil and Gas Value Chain:
1) Primary Activities:
Supply Chain Management: Currently ExxonMobil relies on more than 175,000
suppliers of goods and services, including more than 85,000 third party contractor
personnel. Because its global reach expands well beyond its fence lines, they seek and
develop relationships with suppliers that uphold their commitment to operations
integrity.
Operations: ExxonMobil has an interest in around 40 producing oil and gas fields in
the North Sea. Many of these fields are operated by Shell U.K. Exploration and Production
as part of a joint operation. They are responsible for approximately 5% of UK oil and gas
production.

 Distribution: Around 60 per cent of the refinery production of petroleum products is

exported, qualifying the refinery as one of the largest export companies of mainland
Norway.
Sales and Marketing:
Advertising
Market research
2) Support Activities:
a. Product R&D, Technology and Systems development:
Advance motor technology
Hydrogen fuel cells
Carbon Capture and Storage
Controlled freeze zone
b. Human Resource Management:
The Human Resources mission within ExxonMobil is to create competitive advantage
through people. HR has a crucial role to play in supporting the development of strategies
and people related initiatives, policies and programs that mean our employees view
ExxonMobil as their employer of choice, and that helps to ensure the long-term success
of our business.
The

HR

function

is

divided

into

two

main

areas:

Business Line HR - Roles in this area are both strategic and operational, and involve
working closely with managers and supervisors to implement HR strategies, effect
organizational changes, and ensure a productive work environment.
Services HR - Executing and continually improving core HR processes that are essential
to the smooth operation of the business, including recruitment, compensation and
benefits, policy development and vendor management. Roles in this area involve.
c. General Administration:

 Operation safety
Environmental performance
Workplace

Analyzing VISA Model

Vision
Our vision is to be the E&P Company of choice for all stakeholders by pioneering a new
standard of excellence. Our SPIRIT Values consist of Safety, People, Integrity,
Responsibility, Innovation and Teamwork.
Our vision and values are essential building blocks in the continued success of Exxon
Mobil.
We further define and uphold our values through the following policies and positions.
The vision of the Global Water Sustainability Center (GWSC) is to become the center of
excellence for key water-related technologies particularly those applicable to the
petroleum and municipal sectors.

Strategy:
ExxonMobil has announced its plan to split into two separate publicly traded
companies, a refining company and an exploration and production business. While most
companies in the industry are working to consolidate production and refining, exxon
mobil is the first to purposefully separate the two.
The second largest oil firm in the U.S., exxon mobil believes the split will allow both
branches to better pursue their individual strategies. Analysts agree with the logic of the
split. This is so positive for them, said Fadel Gheit, an analyst at Oppenheimer.
Everyone should stick to one business. Apparently investors agree, sending exxon mobil

shares up 4.54% so far today. The separate is expected to be complete within the first half
of 2012.
Key objectives:

Improve insight into the regional distribution of oil and gas reservoirs and fields.

Improve knowledge of flow mechanisms and processes in the subsurface.

Develop and/or apply appropriate technologies to stimulate or coerce the reservoir

to release the most economic quantities of oil and gas.

Strong second-quarter production performance; raising full-year production

guidance.

Second-quarter production of 1,552 MBOED, including continuing operations of

1,510 MBOED and discontinued operations of 42 MBOED.

Major turnarounds and tie-in activity on plan.

Eagle Ford production of 121 MBOED, up 98 percent compared with secondquarter 2012.

Christina Lake Phase E startup in July; four additional major projects on track for
startup by year end in the North Sea and Malaysia.

Exploration momentum continues with drilling in the Gulf of Mexico, Australias

Browse Basin, and unconventional plays in Canada and the Lower 48.

Increased quarterly dividend by 4.5 percent.

Action Plan:
As issues mature, the company develops strategies and specific action plans to address
them. Corporate strategies and action plans have been developed for key issues and are
updated periodically. The objective of our strategies is to prepare the company to succeed
in a world challenged by complex environmental, social and economic issues and
increasing stakeholder expectations. Strategies include updates on external expectations
and context, current status of the companys activities addressing the issue, future

objectives and our plans to achieve those objectives. Strategies may begin with improving
our understanding of the issue, developing measurements of key data, or assessing risks
and opportunities related to an issue, for example.
Following development of corporate strategies comprehensive Issue Action Plans are
developed which create focus on key aspects of addressing the issue, clearly assign
accountability, and drive goal setting and engagement. In some cases, Business Unit
Action Plans then define goals, targets, objectives and/or key actions in more detail,
focused on the needs and priorities of the business and assets in that region.
An example plan, shown below could include 3-4 key focus areas and show linkage to
Technology and other functions.

Analyzing SMARTER Model

Specific: Having specific plan to enter into the new markets with specific objective.
Measurable: Yearly growth is increasing over years, also performance or outcome of
exxon is measured by different tools.

Achievable: Goals are set in such way that it is achieved by the organization though the
goal is challenging.
Realistic: Perceived goals are realistic and feasible it is very important for exxonmobil
because the investment is huge and for long run.
Time: Have set specific time for each of the goals to be achieved. Most of the project of
exxonmobil is long run, for that reason they make its plan or goal with specific time
duration part by part.
Encompassing: Achieved goals are evaluated and will be used for future, Here
management find the future prospect from the selective project and make plan for future.
Reviewed: Based on the evaluation performance is reviewed and checked for redoing.
exxonmobil follow different evaluation tools for evaluation after evaluation management
decides what to do need any modification or not.

BCG Matrix

Pure Objectives

Positive: Exxon Mobil operate safely. As Their first SPIRIT Value, safety is the
cornerstone of every operation.

Understood

Performance: High performance in operations also in management.

Style: Operation and management style follows the strict standard.

Jargon: Maintain the Jargon glossary for oil and gas terms.

Culture: Exxon Mobil recognized that the key to their success depended on
keeping many aspects of their past culture, while making some changes for
the future.

Recorded: Maintaining the recorded database for future research and

documentation.

Ethical: Exxon Mobil obligations are for the long-term, not just for this quarter
or this year. These obligations demand the adhere to the highest professional,
industry and personal ethics. It will build on their history of integrity so that people
will have an abiding trust in the company and the employees; they will know they
can count on the ethical issues. They maintains the Code of Business Ethics and
Conduct very devotedly.

GREAT - Model
Goals

A truly integrated way to find and produce oil and natural gas.

To prove reserves and production of liquids and natural gas.

Exxon Mobil to power civilization. Exploring for, produce, transport and market
crude oil, natural gas, natural gas liquids, liquefied natural gas and bitumen on a
worldwide basis - the energy that plays a foundational role in enabling global
economic development and human progress.

Roles

The key focus areas include safely operating producing assets, executing existing major
projects and exploring for new energy resources in promising areas. Their portfolio
includes legacy assets in North America, Europe, Asia and Australia; growing North
American shale and oil sands businesses; a number of major international development
projects; and a global exploration program and active in a wide range of geologic and
geographic settings, including some of the worlds most challenging areas. From the
frozen Arctic to the arid desert, they have a proven track record of responsibly and
efficiently finding and producing oil and natural gas.

Expectations
One of the key strengths is the demonstrated ability to find new resources. Continually
striving to be at the forefront of reservoir prediction and characterization, as well as
advanced seismic and drilling enhancements enable the company to identify and better
characterize commercially viable resource deposits. The scientists use sophisticated and
proven technologies to locate and gain access to the resources deep beneath the earths
surface. Whether its exploration efforts in Norway where theyve operated for more
than 40 years or Poland where they are among the first wave of shale gas explorers
but their commitment is the same or everywhere.

Accountabilities / Abilities

Continually striving to be at the forefront of reservoir prediction and

characterization, as well as advanced seismic and drilling enhancements enable
the company to identify and better characterize commercially viable resource
deposits.

The scientific team use sophisticated and proven technologies to locate and gain
access to the resources deep beneath the earths surface.

Timing
Every project has its own time bounding. For example, Ekofisk, in Norway, first started
producing in 1971. At that time, it was forecasted to yield significant production for about
a decade. Now, with new projects under development, the field is prepared for production
until 2050.

Market Analysis including Market

Segmentation
The market analysis studies of the exxon mobil have the attractiveness and the dynamics
of a special market within the oil exploration industry. It is part of the industry analysis
and thus in turn of the global environmental analysis. Through all of these analyses the
strengths, weaknesses, opportunities and threats of the company has been identified.
Finally, with the help of these analyses, adequate business strategies of the company have
been defined. The market analysis is also known as a documented investigation of the
market that is used to inform the industrys planning activities, particularly around
decisions of inventory, purchase, work force expansion/contraction, facility expansion,
purchases of capital equipment, promotional activities, and many other aspects of exxon
mobil.
Dimensions of market analysis

Market size (current and future)

Market trends

Market growth rate

Market profitability

Industry cost structure

Distribution channels

Key success factors

Key success Details

Market segmentation is the basis for a differentiated market analysis. One main reason is
the saturation of consumption, which exists due to the increasing competition in offered
products of the company. Consumers ask for more individual products and services and
are better informed about the range of products than before. As the consequence, market
segmentation is necessary. The segmentation of exxon mobil includes a lot of market
research, since a lot of market knowledge had required segmenting the market. Market
research about market structures and processes had been done to define the relevant
market. The relevant market is the integral part of the whole market, on which exxon
mobil focuses its activities.

QSPM Analysis of ExxonMobil

QSPM MATRIX OF EXXONMOBIL
SERIAL EXTERNAL

ALTRNATIVE 1

ALTERNATIVE 2

NO

Exploration in Canada

Exploration in Singapore

STRATEGIC
FACTORS

WEIGHT

RATING WEIGHTED WEIGHT RATING WEIGHTED

SCORE

SCORE

Strengths
1

Strong
position

market 0.15

0.60

0.12

0.36

0.39

0.19

0.57

& Big

brand name
2

Diverse
operations

0.13
in

chemicals, coal,
power
generation

Talented

work 0.11

0.44

0.13

0.26

Excellent global 0.12

0.36

0.11

0 .22

force
4

research
Weaknesses
1

Legal issues

0.17

0 .51

0.15

0 .45

Employee

0.11

0.11

0.10

0.30

spill 0.12

0.24

0.12

0.36

0.09

0.08

0.16

management
3

Oil

controversies
4

Fraudulent

0.09

investments and
bribery cases

TOTAL

100%

100%

Opportunities
1

Increasing

0.12

0.48

0.14

0.42

0.19

0.57

0.13

0.39

well 0.13

0.26

0.11

0.22

0.11

0.33

0.12

0.24

0.15

0.45

0.17

0.51

fuel/oil prices
2

Increasing
natural gas

More

oil

discoveries
4

Increasing
demand for gas
and

refined

products
Threats
1

Government
regulations

Pollution

0.10

0.10

0.11

0.22

High labor cost 0.12

0.48

0.12

0.36

Hybrid cars not 0.08

0.16

0.10

0.20

2.83

100%

2.56

5.48

>

5.24

guidelines

using Fuel

TOTAL

100%

GRAND
TOTAL

Alternative 1: Exploration in North America

Alternative2: Exploration in Asia
Attractiveness Score:

1 = not acceptable;

2 = possibly acceptable;

3 = probably acceptable;

4 = most acceptable;

0 = not relevant)

Comment:
In the base of data, we see that exploration in North America is better than exploration in
Asia for ExxonMobil. Thats means alternative 1 is better than alternative 2.

Financial analysis
This section analyzes some of those aspects of financial performance in greater detail as
it relates to ExxonMobil, as seen throughout following Financial Exhibit. Approximately
eighty percent of ExxonMobils sales and operating revenues come from its downstream
operations; however, its upstream operations are the most profitable (following

Exhibit). In 2011, ExxonMobils upstream division accounted for only 9.71 percent of its
operating revenue, yet generated 79.1 percent of the companys net income. Since 2003,
the upstream division has averaged 8.8 percent of operating revenue and 73.3 percent of
net income. A year by year examination since 2003 shows that a mere 1 percent increase
in operating revenue for the upstream division can generate almost a 13 percent increase
in net income.

1.

2013
($

2012
in ($

2011
in ($

millions)

millions)

millions)

Net income

9221

8642

7683

Sales

54789

59436

151240

Net profit margin

16.83%

14.54%

5.08%

in

14.54%

20.00%

16.83%

5.08%

10.00%
0.00%

2011

Net Profit Margin

2012

2013

INTERPRETATION: The ratio tells investors the percentage of money a company

actually earns per dollar of sales. Net profit margin of the company is not satisfactory.

2.

3.
2013

2012

($ in millions) ($

in

millions)
EBIT

15,423

15,396

Total asset

117,144

153,230

ROI

13.17%

10.05%

13.17%
15.00%

2013

2012

10.05%

10.00%
5.00%
0.00%
ROI

INTERPRETATION: ROI of the company is in 2012 is better than 2011.

4. =

2013
($
Net income

2012
in ($

millions)

millions)

8,498

12,502

in

Equity

48,427

65,749

ROE

17.58%

17.56%
2013

17.58%
17.58%

2012

17.56%

17.56%
17.54%
ROE

INTERPRETATION: Return on equity is not satisfactory because ROE is increased

from 17.56 to 17.58% in 2013. It indicates firm should concentrate on the equity
management.

5.

2013
($

2012
in ($

millions)

millions)

Net Income

8,498

12,502

Total assets

117,144

153,230

ROA

7.66%

7.19%

in

2013

2012

7.66%
8.00%

7.19%

7.50%
7.00%
6.50%
ROA

INTERPRETATION: In 2012 ROA is 7.66% which was earlier in 7.19%. That indicates
assets are utilizing properly to generate its net income.

6.

Net Income Dividends on Preferred Shares

Weighted Average Number of Common Shares Outstanding

2013

2012

Net income

8,498

12,502

Dividend on P/S

2.64

2.64

Basic

1,243,799

1,375,035

Diluted

1,253,093

1,387,100

Basic

0.6830

0.9090

Diluted

0.6783

0.9011

Common Shares Outstanding

EPS

Competitor Analysis
ExxonMobil operates in three major industries: oil, natural gas, and chemicals. Since the
dynamics, opportunities, and challenges in each are very different, the competitors in
each industry are analyzed separately.
Firms Competitors
Oil Industry
The world oil market is dominated by government-controlled companies that actually
control the majority of both current production (more than 52 percent in 2007) and
proven reserves (88 percent in 2007). The companies operating in the world oil market
can be broadly classified into three categories:
National oil companies that function as corporate entities but have strategic and
operational autonomy and support of national governments. Examples are: Petro bras
(Brazil), Statoil (Norway), Petro China (China), and ONGC (India).
National oil companies that operate as an extension of the government Saudi Aramco
(Saudi Arabia), Pemex (Mexico), and PDVSA (Venezuela). They support their respective
governments programs like subsidizing fuels to domestic consumers.
Investor-owned oil companies (ExxonMobil, Shell, and BP) form a relatively smaller
segment of the world oil market and sell their output in competitive markets. ExxonMobil
is the largest among the six big non-states owned, vertically integrated oil companies,
popularly known as Big Oil (or super majors) companies; the others in this 16 category
are Royal Dutch Shell, BP, ConocoPhillips, Chevron, and Total S.A. In addition, there is
increasing competition from national oil companies like Saudi Aramco, Gazprom and
China National Petroleum Corporation (CNPC). Though the big oil companies have the
technological know-how and large assets at their disposal, they are at a disadvantage
when it comes to access to oil reserves, as OPEC controls the majority. Access to high

growth markets in non-OECD countries is difficult as these markets are already served by
incumbent, local, state-owned companies like Petro bras in Brazil, Oil and Natural Gas
Corporation (ONGC) in India, and Petro China in China.
Natural Gas Industry
Though the oil business has been dominated by the Big Oil companies, the natural gas
business in the U.S. was, until recently, managed by small, independent, non-integrated
companies. With replacement ratios for oil dropping and the oil-rich regions becoming
more politically unstable, Western oil companies are scrambling to find new ways to
address growing energy demand. Big Oil companies started foraying into natural gas, an
adjacent market. Globally, there are big state-owned companies. Gazprom, of Russia, has
17 percent of the worlds natural gas reserves. ONGC is an Indian state-owned oil and gas
company that contributes 81 percent of India's natural gas production. The Chinese
market is dominated by three local companies: China National Offshore Oil Corporation
(CNOOC), CNPC (parent of Petro China), and China Petrochemical Corporation (parent
of Sinopec). The natural gas market is highly fragmented, with dominant players in each
region and no single company having control over multiple geographies.
Chemical Industry
ExxonMobil also manufactures and sells commodity petrochemicals and a wide variety of
specialty products. The competitors for ExxonMobil in this market are: BASF (Germany),
Dow Chemical, Ineos (UK), Saudi Basic Industries Corporation, DuPont and Chevron
Phillips Chemical Company LLC (CP Chem). Primary Competitors Oil
The primary competitors for ExxonMobil in the oil industry are the other Big Oil
companies:
Shell, BP, ConocoPhillips, Chevron, and Total S.A. See following Exhibit for a detailed
comparison of competitors. The common trend across all competitors is the rise in
production of natural gas. This indicates that the Big Oil companies are now adjusting
their energy portfolio to account for the depleting oil reserves. ExxonMobils jump in

production of natural gas in 2010 is attributed to the acquisition of XTO. ConocoPhillips,

in particular, is seeing its overall replacement ratios falling and a drop is seen both in oil
and natural gas.

Breakeven Analysis
Break-even analysis can determine the minimum amount a company needs to sell in
order to cover fixed costs.

Break-even analysis represents the minimum quantity a company needs to sell to cover
costs like rent, building expenses, utilities, or other aspects of running day-to-day
operations.

Break-even analysis lets companies compare their production or sales to the minimum
point they need to achieve in order to stay in business.
Sales

57,967

Purchased commodities

25,232

Production and operating expenses

6,793

Variable Cost

32,025

C. Margin (Sales-VC)

25,942

Selling, general and administrative expenses

1,106

Exploration expenses

1,500

Depreciation, depletion and amortization

6,580

Impairments

680

Total Fixed Cost

9,866

25942

= 57967 = 0.4475

9866

= = .4475 = $ 22046.92 million

Here the analysis shows that to have the no gain no loss position that mean breakeven
point ExxonMobil must sell $

22,046.92 million.

MARKETCAP:
Medium to large-sized companies (the largest 1500 companies) should be chosen,
because they are more in the protected eye. Furthermore, the investor is exposed to less
risk of "accounting gimmickry", and companies of this size have more staying
power. COP has a market cap of $87,782 million, therefore failing the test.

Industry Key Success Factors (KSFs)

For the oil and gas industry, the five main Key Success Factors (KSFs) are: Exploration
and Oil discovery, Manufacturing, Financial, Technology and Marketing& Distribution.

Strategy Evaluation
In order to evaluate strategies first it is essential to identify suitable indices for evaluation
of strategies. Strategy evaluation will be based on main external (economical, political,
legal,

social,

Ecological,

and

cultural),

internal

(management, marketing, finance, accounting, production, operations, research and

development, and IT), environmental, and innovative factors.
Identify and Selectively Capture the Highest-Quality Exploration Opportunities:

ExxonMobils fundamental exploration strategy is to identify, evaluate, selectively

pursue, and capture the highest-quality resource opportunities, ahead of competition.
The global organization allows us to explore diverse resource opportunities, in all
environments.
Maximize Profitability of Existing Oil and Gas Production:
ExxonMobil successfully maximizes the commercial recovery of hydrocarbons across a
reservoirs life cycle. We apply our Operations Integrity Management System, costeffective technology, and disciplined and selective investment as key strategies in
delivering strong performance.
Invest in Projects that deliver Superior Returns:
Our rigorous, high-quality project management processes consistently deliver superior
project execution performance. When combined with our industry-leading portfolio of
more than 130 major projects, our disciplined investments will continue to deliver
maximum value.

Capitalize on Growing Natural Gas and Power Markets:

ExxonMobil is well-positioned with significant gas portfolio to deliver reliable supplies of
affordable natural gas and power to help meet increasing global demand. They have a
detailed knowledge of global energy markets allows to maximize the value of our gas,
natural gas liquids and power interest.
Since opportunities and threats are caused by external factors, and weak and strength
points from internal factors, in this model evaluation of strategies is considered by
taking into account the opportunities, threats, weak and strong points. This will be a
good

foundation

for

formulating

the

strategy.

Yet,

observations

have

revealed that SWOT analysis shows weakness in evaluation and measurement and
this weakness could be Covered by using QSPM model assuring in a more suitable
strategy design.

Strategy Evaluation:
It is all about formulation of new strategies because it throws light the efficiency and
effectiveness to achieve the desired result. It includes:

Fixing benchmark of performance: We plan to achieve 3% to 5% compound annual

production growth, as well as growth in reserves, through drilling programs in our
legacy assets and sanctioned major projects globally. We also expect 3% to 5%
compound annual margin growth over the next 5 years at flat prices, as we divest
lower-margin assets and shift our production mix to higher-value products.

Measurement of performance: Our large, onshore continental U.S. position of 13.8

million net acres gives us access to scalable inventory that can generate substantial
production and margin growth in the years ahead. We are active in several major
North American unconventional plays, including the Eagle Ford, Bakken, Permian
and Niobrara in the United States, and the Duvernay, Montney, Canol and Horn
River (Muskwa) in Canada. We expect decades of production from these areas
going forward.

Analyzing variance: we should analyze other competitors and factors in order to

understand our present condition in the market.

Taking Corrective action: if necessary we must take corrective actions for the
betterment of present condition.

Contingency Planning:
The Contingency planning efforts covered a range of different emergency types natural
disasters,
including

conflicts,

other

planning

emergencies
for

like

Technological,

new

Political

emergencies

and

etc

for

potential changes in ongoing protracted operations.

ExxonMobils operations around the world include activities both onshore and offshore
that can experience weather extremes and storms, large sea level variations and wave
height, and temperature and precipitation extremes. Technological, political, and
regulatory risks have been inherent in the oil and gas industry since its earliest
beginnings. The uncertainties associated with the physical and regulatory risks impede
assessment of potential financial implications.
ExxonMobils operations include activities in a variety of environments; severe weather
events can disrupt supplies or interrupt operations. While current scientific
understanding of climate change provides limited guidance on how the risks of weather
extremes may change in the future, they manage these risks through robust design and
operations contingency planning.
Current scientific understanding provides limited guidance on how trends in weather
extremes and storms will change in the future over a very long time horizon. They
currently design, construct, and Operate facilities to withstand a variety of extreme
weather conditions, including much of the range of potential outcomes.
At ExxonMobil, risks are mitigated with appropriate contingency planning and the
application of a comprehensive risk management system. Known risks are mitigated first

of all by factoring them into equipment and facility design, construction and
operations. Business continuity planning and emergency preparedness are two essential
elements to manage risks of business disruption, so that we can continue supplying fuels
for transportation and electrical power as well as Chemicals for consumer products, which
are vital to the world's economy.
Their approach to managing these risks includes the following elements:
Incorporation of understanding of risk into design, construction and operation of
exposed facilities;
Early and coordinated action to respond rapidly and effectively;
Business continuity and emergency response plans to protect the safety of their
employees and operations.
Worst-Case scenario emergency response exercises to practice coordination and
logistical response, and propose upgrades to standard processes and contingency plans.
ExxonMobil will respond to these uncertainties and developments using their traditional
approach: disciplined planning and investment, financial strength, efficient and reliable
operations, and research and development. Those best able to manage investment and
operating risks and operate efficiently will achieve competitive advantage.
ExxonMobil manages risk through a capable and committed workforce with clear
accountability, well-developed and clearly defined policies and procedures, high
standards of design, rigorously applied management systems, employee and contractor
training, and a systematic approach to assessing performance that drives continuous
improvement.

Recommendation
Appropriate slot ought to continue the existing process while using progress involving
using paying attention, like;
1.

Identify and pursue all attractive perforations opportunities like Research and

Development, 90% oil reserves are Own by governments and upstream operation in more
than 40 countries.
2. For Maximization of Profitability the Capital expenditure should be focused 1) Future
Product Quality Requirements 2) Reduce Environmental Affects 3) Safety Systems 4)
Lower Operational Costs 5) Produce Higher Values Products 6) Lower Cost Raw Material
3.

Maintain base in class operation in all aspects like globally integrated supply chain

and Strategic Alliance.

4. ExxonMobils ensure to provide quality, value products and services to customers.
5.

ExxonMobils have to have regularly enhanced their particular options along with

techniques.

Conclusion
Despite recent economic challenges, global energy demand is likely to increase about 35
percent from 2005 to 2030. Virtually all the growth in energy use will occur in developing
countries, where demand will increase more than70 percent. The fastest growing major
energy source will be natural gas, reflecting strong demand for clean-burning fuels to
meet rising power generation needs. By 2030, natural gas will displace coal as the second
most prominent source of energy worldwide.

While the scale of the worlds energy needs today is enormous, ExxonMobil must continue
to find innovative ways to meet not only todays demands, but the growing demands of
the future while managing the impact of energy on the environment. Critical to meeting
the worlds energy needs is the ongoing development of new energy technologies to
expand the supply of traditional fuels, develop new sources of energy, and allow us to use
energy more efficiently.
ExxonMobil is committed to continue the role of innovating and developing many of these
new technologies. While supplying the worlds energy needs requires constant
innovation, it will also require unprecedented levels of investment. ExxonMobils
financial strength allows continuing to invest with a long-term perspective that
transcends year-to-year economic conditions. Their capital and exploration expenditures
in 2010 were a record $32.2 billion. They will continue to invest at substantial levels
more than $165 billion over the next five years deploying new technologies and delivering
new projects to efficiently supply energy to the world.
They know that developing and delivering energy involves risks safety and
environmental risks, financial risks, geopolitical risks, and technical risks. ExxonMobil
will continue to improve and perfect their approach to assess and manage these risks.
Consumers and the public rely on ExxonMobil to deliver reliable, affordable energy that
enables them to achieve better lives and to do so in a way that minimizes risks to people,
communities and the environment.

References
Rajan, R. 2013. Strategic Analysis of Shell Corporation.
Wall street Journal, 2011. Exxon sees Burgeoning Demand for natural gas.
Ananthanarayanan et al., 2011. Capstone. Santa Clara University.
Global data, 2014. Exxon Mobil Corporation: Financial and strategic analysis review.
GDGE1203FSA :1-6.