History Of The Exxon Mobil Corporation Management Essay

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Oil and gas industry has already become one of the leading industries in the world. The
company that has significant role and makes vast amount of profit from energy industry
is Exxon Mobil Corporation. History. Exxon Mobil Corporation or also known as Exxon
Mobil is an American international petroleum and natural gas company, which was
created in 1999. Company has an extensive history for about 125 years. It has had
history since 1870, the year when John D. Rockefeller and his partners established
Standard Oil Company. This company was very successful for thirty years and by the
year 1878, it was controlling 95% of US the oil industry (Wikipedia, Exxon Mobil, 2010).
Nevertheless, with public protest at a culmination in 1911, the Supreme Court of the
United States decided to divide one big company into 34 small companies. Two of these
companies were Jersey Standard and Socony, which finally became Exxon and Mobil. In
1998, these companies signed an agreement, which cost $73.7 billion, in order to merge
and create a new company called Exxon Mobil Corporation. The merger was completed
on November 30, 1999 and this corporation became the largest company on the planet
(Wikinvest, Stock-XOM, 2010)
Products. Exxon Mobil produces fuels, lubricants and petrochemicals worldwide.
Company operates in three main categories such as upstream, downstream and
chemicals.
Upstream operations are important part of a company, which are involved in the
exploration along with production of oil and natural gas. Exxon Mobil's upstream sector
earned $17 billion in 2009, which means 88.1% of 2009 earnings (Exxon Mobil, Annual
report, 2009 )
Downstream sector is involved in the refining as well as marketing of oil and natural
gas. It makes 9.3% of profit with $1.8 billion in 2009 year. (Exxon Mobil, Annual report,
2009)
Chemicals division uses oil to produce and sell commodity petrochemicals and earned
$2.3 billion, which made 11.9% of profit in 2009. (Exxon Mobil, Annual report, 2009 )

Exxon Mobil Corporation operates with three brands such as Exxon, Esso and Mobil. All
these brands are well known around the world, because there are 28,000 Exxon's and
Esso's service stations in 118 countries. As for Mobil brand, it can be example of motor
oil Mobil 1, which is also popular in Uzbekistan. (Corporate Watch, 2008)
Market share. According to Global 2000 list of Forbes, the company has been ranked #4
between largest public companies in the world (Forbes, 2010). In addition, it is #1 in oil
and gas industry in United States, which produces about 3% of the world's oil and 2% of
the world' energy sources(Exxon Mobil, 2010). Exxon Mobil's net income was $19.3
billion and its total revenue was $310.58 billion in 2009 (Exxon Mobil, Annual report, p
2009). In contrast with previous years it is much less, as in 2008 the net income of
company was $45.2 billion and total revenue exceeded $459.6 billion (Exxon Mobil,
Annual report, p 2009). It can be said that economic crisis influenced company's profit
significantly, but in spite of this challenges, company continuing working hard and
improving the quality of its products. The results of hard work can be seen from the
average of daily production that was 170 thousand barrels of oil and 149 million cubic
feet of sales gas in 2009 (Exxon Mobil, Annual report, p 2009). In third quarter of 2010,
Exxon Mobil reported that earnings during quarter were $7,350 million, up 55% in
comparison with the third quarter in 2009 (Exxon Mobil, 3rd quarter report, p 2010).
Financial Data (USD millions) [1]

Year-end
2005
2006
2007
2008
2009
Total revenue
358 955

365 467
390 328
459 579
301 500

Net income
36 130
39 500
40 610
45 220
19 280

Total assets
208 335
219 015
242 082
228 052
233 323

Total debt
7 991
8 347
9 566

9 425
9 605
Company size. The size of the company can be seen from the number of employees and
sectors around the world. Exxon Mobil has approximately 80,700 employees in 77
countries (Exxon Mobil, Annual report, 2010) and also it has 15 operating divisions such
as:
ExxonMobil Exploration Company
ExxonMobil Development Company
ExxonMobil Production Company
ExxonMobil Gas and Power Marketing Company
ExxonMobil Upstream Research Company
ExxonMobil Refining and Supply Company
SeaRiver Maritime
ExxonMobil Fuels Marketing Company
ExxonMobil Lubricants & Specialties Company
ExxonMobil Research and Engineering Company
ExxonMobil Chemical Company
ExxonMobil Information Technology
Global Real Estate and Facilities
Global Procurement
Business Support Centers (Wikipedia, Exxon Mobil, 2010)

Company Location. The main center of operations of the company is located at Irving in
Texas. The upstream and chemical divisions of Exxon Mobil are at Houston in Texas,
while the downstream division is placed in Fairfax in Virginia (Exxon Mobil, 2010).

Effect of Economic Environment

Economic growth. Economic growth is one the main factors that can affect company's
revenue and expenditure. Exxon Mobil Corporation is very influenced by economic
conditions in United States. In the third quarter of 2010, economic conditions in USA
were slightly high than it was in the second quarter. The Gross Domestic Product rate
expended at 2.5 percent and this lead to increasing of product demand of Exxon Mobil
(Trading Economics, 2010). Due to higher demand for oil, earnings of company in this
district were $7.4 billion, up 55% from third quarter of 2009 (Exxon Mobil Financial
and Operating Report, 2009).
Income level of population. Population is very important aspect of every industry and its
income level have an effect on product prices. For instance, median income of
population in the United States for 2009 year was $49,777 (U.S. Census Bureau, 2010)
and this changed prices for crude oil. In 2009, price for per barrel of oil was about
$45.88 (Oil Prices, 2010). However, due to significant changes in economy in 2010 year
crude oil price averaged roughly $78 per barrel (Oil prices, 2010)

Interest rate. The standard interest rate in the United States was 0.25 percent for 2010
and rate decisions were divided between the Board of Governors of the Federal Reserve
and the Federal Open Market Committee (Trading economics, 2010). For Exxon Mobil
Corporation global oil demand is expected to increase by almost 35% until 2030, which
will make huge profits for the company (Exxon Mobil, 2010)

2
Inflation. Inflation rate is also one of the factors that can actively have an effect on
product prices. The last report about inflation rate in United States was made in October
of 2010 and the rate was 1.2 percent (Trading Economics, 2010). As it can be seen from
the table above, the inflation rate is decreasing in United States in 2010 year. These
fluctuations can slightly change the price for gasoline. As an example we can look into

the history, during The First World War price for gasoline was $0.25 per gallon (Trading
Economics, 2010). However, due to inflation rate in 2001 the price of gasoline has
averaged about $2.00 per gallon in inflation-adjusted dollars over the last 80 years
(Exxon Mobil, 2009). As inflation rate will increasing in the future and also prices for
energy will increase, too.

3
Fiscal Policy. One of the government's influences to company is a fiscal policy and this
factor has very big influence on company's revenue. From 2005 through 2009, Exxon
Mobil Corporation taxes for United States were $63 billion. In 2009, Exxon Mobil's tax
rate was 47 percent and its tax expenses amounted to $81 billion around the world. It is
more than four times of company's earnings. (Exxon Mobil, Taxes, 2010)

4
Exchange rates. Exchange rates help company to trade worldwide. The appreciation and
depreciation of currency can be either positive or negative. It depends on economics
conditions in particular country. For example, Exxon Mobil's effects of exchange rate
changes on cash were $520 million in 2009 (Wikinvest, Exxon, 2009). However,
corporation makes limited use of currency exchange contracts, futures contracts,
product forwards and swaps to mitigate the impact of changes in currency values and
product prices.

Effect of Industry Environment

Petroleum industry. There are about 200 oil companies around the world and totally all
of them produced 72.26 million barrels of oil every day in 2009 (Petro Strategies, Inc,
2010). A total product shipment of petroleum annually is about $219 billion, which
confirms that the petroleum industry is one of the largest industries. (Petro Strategies,
2010)
Exxon Mobil Corporation is one the six major public oil companies in the world. Its
competitors are:
Chevron Corporation

Royal Dutch Shell

British Petroleum
Total S.A.
ConocoPhilips
Chevron. The second largest oil and gas company, behind Exxon Mobil in United States
is Chevron Corporation. Chevron Corporation or Chevron was known as Standard Oil of
California and was established amid the antitrust break up of John D. Rockefeller's
Standard Oil Company in 1911(Wikinvest, Chevron, 2010). It was included on the
"Seven Sister" list, which was leading the world energy industry in the early 20th
century. Chevron operates in 180 countries and has network of gas stations such as
Chevron, Texaco and Caltex. The number of employees in 2009 year was approximately
67,000 people worldwide (Wikipedia, Chevron, 2010).
In the third quarter of 2010, the earning of company was $3.77 billion, or $1.87 per
share. In comparison the earnings of Chevron are two times less than earnings of Exxon
Mobil in third quarter which was $7.4 billion (Wikinvest, Chevron, 2010).
Royal Dutch Shell. Royal Dutch Shell or commonly known as Shell, is one of the major
private sector energy companies in the world. Shell operates in renewable sources of
energy including wind solar energy in more than 140 countries. In 2009, Shell's
profitability was effected by weak demand, high inventory levels and low margins, as a
result the profit of company was $9.8 billion for full year and this result was 69% down
than 2008 earnings (Wikinvest, Shell, 2010). The headquarters of company located in
The Hague, Netherlands and registered offices at the Shell Centre in London, United
Kingdom (Wikinvest, Shell, 2010).
British Petroleum. According to Forbes Global 2000 list the BP's rank through public
companies by their revenue is 10th with $16.68 billion (Forbes, 2010). BP operates in
more than 80 countries and produces 3.8 million barrels of oil equivalent per day. It
employed 80,300 people in 2009(BP, Annual report, 2009). The major division of BP is
BP America and located in Houston, Texas. Company has six main brands such as:

BP
Castrol
Arco
Aral
Am/pm
Wild Bean Caf
The headquarters of company located in London, United Kingdom (BP, 2010)
Total S.A. Total S.A. or formerly known as Total Fina S.A. was formed after World War
1, when Raymond Poincar the French Prime Minister rejected the idea being partner
with Royal Dutch Shell and gave new idea about creating new French oil company
(Wikipedia, Total S.A., 2010). The total assets of company in 2009 were 127.8 billion
and 8.447 billion of profit (Wikinvest, Total S.A., 2010). However, in current year
Total S.A. is working very hardly. For example, in the third quarter of 2010 the
company's earnings were $3.6 billion, in comparison with previous year's third quarter
the earnings were up 47% (Wikinvest, Total S.A., 2010). Moreover, in 2010 company is
employeing over 96,000 people and operating in more than 130 countries (Wikipedia,
Total S.A., 2010).
For the third quarter of 2010, Total's net income was $3.6 billion, a 47% increase from
the same period in 2009 (Wikinvest, Total S.A., 2010).
ConocoPhilips. The ConocoPhilips also as Exxon Mobil was formed by merge of two
companies such as Conoco Inc. and the Philips Petroleum Company on August 30,
2002. It works in all sectors of energy industry and also owns 20% share of Russian oil
company LUKOIL (Wikinvest, ConocoPhilips, 2010). Company produces its products
under the brands as
Philips 66, 76 - Unites States
Conoco - United States

Jet - Europe and Asia Pacific region

ProJet - Europe and Asia Pacific region (Wikinvest, ConocoPhilips, 2010)
As of 2009, the company had of proved 8.36 billion barrels of oil equivalent reserves
and its revenue was $246.182 billion. In the third quarter of 2010, the company
increased its profit in contrast with previous year's same period up to 8% and earned $3
billion (Wikinvest, ConocoPhilips, 2010)

Competitive Advantage of Exxon Mobil

Corporation
Exxon Mobil Corporation has a number of advantages, which make it leader.
Exxon Mobil operates in the major areas of petroleum such as North America, Europe,
West Africa, the Middle East, and Asia Pacific.
Exxon Mobil has the largest Exploration and Production portfolio, which makes easy to
company to choose investments and political risks
Exxon Mobil has technological advances which allow developing resources as tight gas,
natural gas and heavy oil. (Wikinvest, Exxon, 2010)

Competitive Advantage of Competitors

Chevron Corporation's progressive and various workforces are major advantages of
company which allow surviving in marketplace.(Wikinvest, Chevron,2010)
Royal Dutch Shell is a leading in industry because of its high performance and cleaner
fuels. (Shell, Annual report, 2009)
Providing pure ethanoic acid with low cost and approachable service for customers are
the major advantages of British Petroleum Company. (BP, Annual report, 2010)
Total S.A. operates with many western oil companies and has the largest reserves in
Africa and the Middle East. In addition, Total S.A. is one of the few companies which
have operations in Iran. (Wikinvest, Total S.A., 2010)

Competitive advantage of ConocoPhilips lies on its heavier and more acidic crude oil
and on providing clean product yields. (Conoco Philips, 2010)

Effect of Political and Legal Environment

Political Environment
As Exxon Mobil operates in about 118 countries, there are many restrictions and
advantages in law that can effect on company.
Restrictions. Some of the countries, where Exxon Mobil Corporation has its stations,
limit energy sources or can situate company in unavailable places from resources.
Moreover, some countries restrict the import or export of products based on point of
source. Hence, these situations make difficulties for company and this leads to declining
of demand and increasing of product prices. For the solution, the company should be
ready for every change in law or should avoid countries with regulations that have huge
impact on business. (Exxon Mobil, Politic, 2010)
Advantages. A number of advantages, which help company to work, are very little. For
example, in some countries, there are low taxes for oil industry, which can lead to
enormous earnings of Exxon Mobil. Also, governments can provide financial support to
search alternative energy sources and nowadays, through sponsorship of The Global
Climate and Energy Project at Stanford University Exxon Mobil making research into
hydrogen fuel cells and fuel-producing algae. (Exxon Mobil, Politic, 2010)

Legal Environment
Business competition. As Exxon Mobil is a United States company there are certain
countries which prohibits the doing business for U.S. companies. As an example we can
take the Islamic republic of Iran. Iran has large reserves of oil, but in this country there
are no Exxon Mobil stations and this leads to competitive advantage for non-U.S.
companies such as Total S.A. Total S.A. is an only company from six supermajors which
has stations in Iran. (Wikinvest, Total S.A., 2010)
Labor Market. Exxon Mobil makes every possible comfort to its employees. As it
employs more than 80,000 people, all employees are governed by company's Standards
of Business Conduct. According to Standards of Business Conduct, it is strictly

prohibited to discriminate employees, suppliers or customer in any area of Exxon Mobil

Corporation. Furthermore, all employees are provided with a competitive package by
company, which is based on the legal regulations and culture of other countries. (Exxon
Mobil, Annual report, 2010)
Consumer needs. Nowadays, all of suppliers are trying to produce most needed products
in market they operate. In contrast, United States use much more gasoline than Europe
or Asia. Hence, the producer in U.S. can produce and sell its products twice more than
others. In addition, it is very difficult to satisfy consumer needs, because of high demand
for premium gasoline. Nevertheless, Exxon Mobil is trying to do fuel better and employ
expert chemical engineers, in order to satisfy all needs of consumers and increase
demand for its products. (Exxon Mobil, Annual report, 2009)

Environmental Legislation
Environmental legislation is one of the most significant aspects of every oil company in
the world. As oil companies use natural energy resources to produce their products,
simultaneously they pollute environment. For example, fossil fuel is very efficient
energy, but it is heavy polluter and also, there are number of sources which cause
greenhouse gas. If company will try to make these damages less, it should increase costs
for energy. So, to avoid such complex situations, every year company pays for U.S.
Environmental Protection Agency. In 2009, Exxon Mobil's payments for environmental
liabilities were $504 million. (Exxon Mobil, Annual report, 2009)

Effect of Socio-cultural environment

Culture is an important part of nation or country. Every company which operates
internationally should respect traditions of its partners and should avoid cultural
problems which could face during its operations. One of the greatest affect of Exxon
Mobil Corporation for United States nation was Exxon Valdez Oil spill in 1989. (Exxon
Mobil, 2010)
The Exxon Valdez tanker was built by National Steel and Shipbuilding Company in San
Diego, California. It was 301 meters long, 50 meters wide and 26 meters depths. The
tankers could transfer up to 1.48 million barrels of oil with the speed 30 km/h and also
it was located in Alaska. However, the Exxon Valdez faced huge oil spill on 24th of

March, 1989 and this event was listed as a 54th largest oil spill in history. (Wikinvest,
Valdez, 2010)
The tragic accident damaged much historical and archeological significance, that were
important to population and also for future generation of country. However, after
cleaning up oil spill, the most of places were not renewable. There was impact on health
of subpopulation of Alaska. It caused many disasters such as radiation syndrome,
stochastic and genetic health effects. (George Pararas-Carayannis, 2007)
Exxon Valdez had also influenced on social environment of people. As oil spill began at
the beginning of fishing season, it caused impact on ecosystem of city. Major of earnings
for population were coming from fishing. As a result, people were threatened by the spill
and they experienced high level of depression during accident. The situation with Exxon
Valdez tanker was big experience for Alaskan Natives. Exxon made great effort to clean
up oil spill and it cost for company $4.3 billion (George Pararas-Carayannis, 2007).
Despite efforts 250,000 barrels of oil were lost. In 1992, with help of U.S. Coast Guard
the spill was completed (Exxon Mobil, Valdez, 2010).
Nowadays, Exxon Mobil Corporation created exact strategies to prevent oil spills. For
example, he has:
Modern modified tankers
Drug testing programs
Trainings for pilots and captains
In addition, if problems occur company has thousand of employees, fast working
response centers at many locations around the world. The Corporation is operating very
well and making great job to prevent any social or cultural accidents which could cause
many damages and loses for company. (Exxon Mobil, Corporate Citizenship report,
2010)

Effect of Ethical Environment

Every company should follow its ethical standards with attitude to stakeholders. Doing
unethical business with them can significantly effect on company's reputation. In order

to be successful Exxon Mobil Corporation has its Code of Ethics, which help to work
with stakeholders.
Exxon Mobil's stakeholders are:
Government
Community
Shareholders
Customers
Employees
Government. Exxon Mobil has exploration and production operations in 39 countries.
Its unethical attitude to government can be shown with pursuing the country's laws and
regulations. As Exxon Mobil is one of the main polluters of environment, also its
unethical approach to government can be environmental issues. However, Exxon Mobil
has specific strategies to avoid unethical business. For instance, we can take the carbon
capture and storage. In April 2009, company signed a Memorandum of Understanding
with Australian government and become member of the Global Carbon Capture and
Storage Institute. It means that company values the Australian government's worries
about environment and wants to continue partnership with Australia. (Exxon Mobil,
Stakeholders, 2010)
Community. Unethical behavior against the community can be displayed in delivering
irrelevant information about operations of company. Companies should avoid losing
trust of community. As Exxon Mobil Corporation understands the role of community
and every year it organizes sessions for communities, NGOs, government officials, in
order to provide better understanding about company's operations and investments.
(Exxon Mobil, Stakeholders, 2010)
Shareholders. People who did some investment into company are shareholders. In my
opinion, unethical decision alongside shareholders could lead to losing of money.
Therefore, it would be better constantly informing investors about company's
operations. In 2009, Exxon Mobil held 40 meetings with institutional investors and

investment groups to discuss political contributions, company's risks and other issues
which are connected with Exxon Mobil Corporation. (Exxon Mobil, Stakeholders, 2010)
Customers. Millions of customers purchase fuels at Exxon Mobil's stations everyday.
Customer and ethics in oil industry are connected with customer's demand for quality of
fuels and also with its price. If company sells premium fuels which worth its price,
customers' needs will be satisfied and which can lead to good profit and high demand.
In addition, to understand the future demand of customer, Exxon Mobil is creating a
line of advanced oils and greases that will improve productivity and promote longer
equipment life. (Exxon Mobil, Stakeholders, 2010)
Employees. Bad work conditions, violation and low salary can be listed as an example of
unethical behavior against employees. However, for company which violates to its
employees this can lead to many problems such as job strikes, losing employees.
Avoiding such problems, Exxon Mobil has its Standards of Business Conduct. According
to standards, company should provide good condition for employees and also employees
should be in ethical behavior into their activities and laws of corporation. Moreover,
company annually requires employees to read Standards of Business Conduct and
provides detailed trainings about ethics policy to all employees. (Exxon Mobil,
Stakeholders, 2010)

Effect of Technological Environment

Being up-to-date with technology helps every business in many ways. As for oil and gas
industry technological advancements lead to finding new sources which are located in
very challenging environments such as Arctic regions, deepwater, heavy oil sands.
Exxon Mobil Corporation has established fundamental research to enlarge advantaged
technologies for all its businesses.
Upstream technology. Exxon Mobil has the latest version of 3-D technology. To find
remaining hydrocarbon reserves Exxon Mobil uses advances in 3-D seismic imaging,
which provides more accurate representations of structure in complex areas. As a result,
with the help of seismic mapping employees of company could see exact images of land
structure and they would be able to reduce risk in exploration and production
operations.

In the future, Exxon Mobil is going to set new technology called Controlled Freeze Zone
(CFZ) which has a prospective to permit economic development of gas resources
challenged by carbon dioxide (CO2) and hydrogen sulfide (H2C). (Exxon Mobil, Annual
report, 2009)
Downstream technology. As diesel demand is projected to increase from 2009 to 2030
worldwide, Exxon Mobil Corporation is working with new technologies which are aimed
to improve the flexibility of refinery and which can to response to rapidly increase of
product demand. (Exxon Mobil, Annual report, 2009)
Chemical technology. The developing in chemical technology gives great opportunity for
a competitive advantage of Exxon Mobil. The company thoroughly improves using
advanced processes and catalyst technologies to give efficient energy and increased asset
utilization. (Exxon Mobil, Annual report, 2009)
Moreover, Exxon Mobil is a partner with Apple Company and on November of 2010,
Exxon Mobil introduced "Exxon Mobil Fuel Finder" iPhone and iPod touch applications
which helps to drivers worldwide to find locations of Exxon or Esso stations. In the
future, it would be better for Exxon Mobil constantly update its technologies (Exxon
Mobil, 2010). For example, it can replace its 3-D seismic imaging to 4-D, as it was said
that Exxon Mobil uses 3-D seismic imaging in order to get images of land structure.