Comparison of British Petroleum and ExxonMobil

This paper compares the international strategies of British Petroleum and ExxonMobil. It discusses their internalization strategies, technological advantages, and geographical advantages. Both companies have gained comparative advantage through international trade.

Running head: ECONOMICS
Economics
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Comparison of British Petroleum and ExxonMobil
Introduction
The international trade allows the country to expand their markets for both goods and
services which might be not available for the country. International trade is known as the
exchange of services and goods which is present between the countries (Cortez and Johnston
2017). This type of trade gives rise to a world economy where prices, demand and supply are
known to be affected by the global events. The global trade also allows wealthy countries to
use their resources in an efficient way. When a country will not be able to produce an item
efficiently, it can obtain the item by trading with other countries which is known as the
specialization in international trade.
The paper will be comparing the international strategies of two famous petroleum
industry in the world which are the British Petroleum and the other is Exxon Mobil.
Introduction of ExxonMobil and British Petroleum
The British Petroleum company is a British Multinational oil and gas company which
is located in London. This particular company is one of the world’s seven oil and gas super
majors. British Petroleum known as BP have been found in the year 1909 which is more than
100 years ago. It is also a vertically integrated company which is known to operate in the
areas of oil and gas industry which also comprises of production, distribution and exploration
of petrochemicals in the industry. It is also known to operate in more than 40 offshore oil as
well as in gas fields (Morschett, Schramm-Klein and Zentes 2015). The downstream
activities of BP comprises of refining, manufacturing, marketing and supply of crude oil. The
British Petroleum is also known to market the petroleum products in more than 50 countries
worldwide and have around more than eighteen thousand service stations.

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ExxonMobil on the other hand, is an American multinational gas and oil corporation
present in Texas. This particular company is also known to be 9th largest organization by
revenue. It was formed on 1999, by the merger of Exxon and Mobil (Kapustin and
Grushevenko 2018). The primary brands of ExxonMobil are Exxon, Mobil, Esso and
ExxonMobil chemical. It is also the world’s 9th largest company in terms of revenue and is
one of the largest of the world’s Big Oil companies. However, it was criticized for the slow
response to clean-up efforts due to the oil spill in Alaska.
Foreign direct investment and outsourcing
The World Investment Report of 2018 states that the inflows of the foreign direct investment
had been USD275 billion which went down a little from 2016. The country also remained
one of the top destination for foreign direct investment in the year of 2018, as a result of large
consumer base, productive workforce, developed infrastructure and a favourable environment
for business which fosters innovation (Morschett, Schramm-Klein and Zentes 2015).
ExxonMobil will also be investing around $20 Billion in order to create thousands of high
paying jobs.
Internationalisation strategies in case of British Petroleum
Internationalisation strategy involves the plans that is known to guide commercial
transactions taking place between entities in various countries. It might also involve business
strategies which refers to the pans and actions of the private companies in order to increase
profit.
British petroleum have adapted itself in a complex market environment. It is known to
operate in more than eighty countries worldwide where it has earned a revenue of around
$380 million. British petroleum is always looking for better opportunities in order to conduct
business around the world (Meyer and Peng 2016). It have also known to develop

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relationship with Ford in order to build fuelling stations and hydrogen vehicles in California
and Michigan.
Amoco Corp and BP Co. plc. agreed to unite their business on a comprehensive basis for
becoming the largest ever industrial merger. The combined firm which is based in London
have become of the biggest company of United Kingdom where BP is known to hold 60%
equity interest.
The unique characteristics of British Petroleum which acts as internalisation strategy
are its unique pricing policy, products, place and promotion strategy. In case of product it can
be said that fuel is known to be the commodity product which is offered by all the oil
companies around the world. The unique characteristics of British Petroleum is that it sells
petrol and diesel which is better for the environment. It is also known as the only company in
the world which sells superior fuels which is better for the environment. The product line of
BP includes fuels and stations, motor oil and lubricants and convenience shop. In case of
price it can be said that when the prices between the competitors are easily matched it
becomes quite difficult for differentiating the products based on prices. The pricing strategy
of BP is mainly completion based and profit oriented for inelastic demand (Lundin 2018).
The service stations of the British Petroleum is the vital strength in marketing strategy and
are also located in some of the best locations. They also have a significant investment in
direct as well as indirect investment and distribution channel. The loyalty programmes are
some of the valuable point of differentiation which is used to drive sales volumes and counter
the activity of
Licensing policies
British Petroleum known to have chosen licensing for expanding its foreign
operations. The strategies of licensing involves

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Proprietary technology: British Petroleum is the first company for identifying the need to
invest into development and have invested more than 8 billion dollars for developing new
technologies in production.
Risk: BP also have strengths like knowledge of consumers and brand strength and for this
reason British petroleum should be investing into research of alternative fuels. It have also
tried to establish by pacing high opportunity cost (Meyer and Peng 2016).
Access to raw materials: British Petroleum is also known to gain competitive advantage by
reserving the copyrights of the technology that can be used for converting the alternative
resources of energy and will also help in generating revenue.
Geographical advantage
British Petroleum have strong positioning in Europe as well as in American market
which is based on the analysis of the internal as well as in external environment. British
Petroleum also has a lot of potential to invest in Asia with the help of foreign direct
investment and can also focus on places such as Honkong, Malaysia and Singapore where the
consumer demands are mostly towards quality and reliability instead of lower price (Lundin
2018). This particular organization s also hugely affected by the economic growth of the
country since when there will be growth in the economy, the demand for oil will also be
increasing and this growth in the demand for oil will be directly related to the growth rate of
the world economy. For this reason it can also be said that income distribution is one of the
vital social factor.
Technological advantage
The technological strategy of British Petroleum shows that it has diverted its IT
support through outsourcing. The outsourcing have helped in shaping the department of IT.
The BP Ventures have set up more since 2004 for identifying and investing in high growth

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and game changing technological companies across the entire energy resources. I mainly
operates in three regions especially in North America, Europe and China which together
account for more than fifty percent of the primary energy consumption of the world. BP have
also invested more than $30 billion in the North Sea since 1960s (Hughes and Hillebrand
2015). The British Petroleum have also entered the Canadian market by purchasing of a
minority stake Calgary-based Triad Oil Company. BP have operations in more than 70
countries worldwide where the headquarters are present in London. It also have three major
research as well as development centres in United Kingdom
Firm size
The size of the firms in many ways known to act as advantage in order to flourish in
the market. British Petroleum is known to have a record of 11 deep water rigs running in Gulf
of Mexico. It is also one of the world’s sixth largest oil and gas super majors. In the year
2017, British Petroleum had operated in more than 70 countries worldwide and also produced
around 3.6 million barrels per day (Meyer and Peng 2016). The company also have more than
18,000 service stations worldwide. The largest division of BP which is BP America is in US.
This particular oil company also owns 19 percent stake in Rosneft and also have primary
listings on the London Stock Exchange.
Internalization strategy of ExxonMobil
The reasons for the international presence of ExxonMobil is its strong brand
reputation as a leader in the oil and gas industry which also creates the sense of security and
trust among its customer base. ExxonMobil have also created as well as managed an effective
corporate social responsibility programme. The company also known its innovative strategies
and development as it has a strong Research and development organization which is focussed
on the needs of industry and stakeholder expectations.

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Technological advantage
ExxonMobil known will be exporting refined products throughout the world which
includes kerosene, natural gas and petroleum. Exxon Mobil also have ventures with Mobil
Producing Nigeria and has a joint venture with Qatar Petroleum which have helped Qatar the
world’s largest supplier of LNG. The company have also opted for investing in the
technology licensing program worldwide. ExxonMobil also known to have significant
opportunity and competitive advantage in terms of its proprietary technology and integrated
system which allows for unique operational efficiencies. Exxon Mobil have are also investing
$1 Billion per year in the emerging technologies. It have also remained a leader in energy
technology where they are known to invest huge amount in research and development
(Ottman 2017). It have been researching biofuels that are made from algae since they produce
natural lipids which are renewable in nature and are also the lower emission fuel which can
be used for transportation. ExxonMobil along with Synthetic Genomics Inc. have been
identifying and enhancing algae strains which have high lipid production. It have also
invested more than $200 million on biofuels research in the previous decade. Advanced
biofuels offer the possibility of achieving significant reductions of greenhouse gas emissions.
It is also one of the largest producer of natural gas in the United States of America.
ExxonMobil also uses the process of carbon capture and storage which is the process by
which the carbon di oxide is compressed and injected underground for storing it permanently.
Licensing
Another internalisation strategy is the catalysts and technology licensing. ExxonMobil
uses advantaged process technologies for refining, as and chemical needs. ExxonMobil also
helped refiners and manufacturers petrochemical to increase its capacity, lower their costs
and improve margins (Kapustin and Grushevenko 2018). International licensing firms are

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known to provide license patent rights, trademark rights, copyrights and products. This
particular strategy is mostly welcome by foreign public authorities. It is the market entry
mode which is used by various firms to enter into different markets.
Firm size of ExxonMobil
ExxonMobil is the world’s 9th largest company by revenue and the company was
ranked ninth globally in Forbes. In the year 2018, the company is known to rank second in
the Fortune 500. At the end of 2016, the total reserves of ExxonMobil had been around 20
billion. It is also the largest refinery in the world consisting of 37 oil refineries. The company
also known to have 25.3 billion barrels of oil equivalent reserves. All the activities of the
natural gas have been conducted by its subsidiaries XTO Energy and have owned more than
10 million acres in the United States.
Geographical advantage
ExxonMobil have a diverse portfolio of high quality projects and opportunities across
upstream, chemical business and downstream. It is known to present in America, Middle
East, Europe, Australia and Africa (Cortez and Johnston 2017). In Asia, Exxon have known
to hold most of its assets in the offshore locations and by the year 2013, Exxon Mobil’s net
acreage totalled nine thousand offshore acres in Asia. The production growth have been
highest in Latin America and Canada. The production of oil have surged by more than 16
percent. Asia was also the highest oil producing region in Exxon Mobil’s portfolio. It is also
one of the most profitable chemical companies operating in more than 16 countries. In case of
downstream, it can be said that they have world’s largest lubricant as well as fuels business. It
includes lubricating facilities in more than 20 countries.
Conclusion

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In order to conclude it can be said that the paper states the internalization strategy
followed by the two famous oil and gas companies which are British Petroleum (BP) of UK
and ExxonMobil of USA. It have been found that both the companies have geographical as
well as technological advantage which have helped these firms to operate internationally. The
firm size of both the firms are quite huge and are known to operate in several countries. As a
result of international trade, both the firms have gained comparative advantage.

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