Exxon Mobil Value Chain Analysis and Oil Industry Report

This assignment involves a comprehensive analysis of ExxonMobil's value chain, including an examination of its internal activities such as refining, marketing, and transportation of petroleum products. It also includes a discussion on the company's corporate social responsibility initiatives, reputation risk management strategies, and its position in the competitive oil industry. The report highlights various studies and research papers related to ExxonMobil, including articles from journals and books that provide insights into the company's operations and strategies.

ExxonMobil

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Overview of Exxon Mobil ..............................................................................................................1
Applying Porter's five forces ..........................................................................................................1
PESTEL ANALYSIS......................................................................................................................3
Value chain analysis........................................................................................................................4
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Exxon Mobil is considered as one of the largest firms dealing with the oil and gas
industry. There are some models that helps in making a better and efficient analysis of the
company along with all its factors (Castaneda, Munoz and Ancheyta, 2014). The same way,
Porter's five forces and PESTEL analysis can be used in this report for analysing the competitive
as well as other factors of Exxon Mobil that are required for maintaining and increasing the
productivity as well as popularity of Exxon Mobil. The report is about Exxon Mobil and how it
is positioning itself for maintaining and increasing the competitive advantage.
Overview of Exxon Mobil
Exxon Mobil is classified as one of the very well known and popular oil and gas industry
on a multinational level (Singh, 2010). It is considered under the category of non government
owned which provides their products and sectors to almost every part of the world. The company
deals with a product range of various oil products, natural gas, crude oil, power generation, petro
chemicals etc. Out of all the oil and gas industries worldwide, Exxon Mobil comes at the seventh
position that is being traded by the capitalisation of the market. The company is known for
following a proper and balanced structure as it is sub divided in three divisions namely
Upstream, downstream and the chemical division. Out of all the three divisions, most of the
revenue comes from the upstream division. The chemical division includes products such as
ethylene glycol, polypropylene etc.
Applying Porter's five forces
Porter's five forces is considered as a strategic management tool which can be used for
Exxon Mobil because it is considered as an efficient tool for analysing the level of competition
for the company. It can help in giving a well analysis about the competitive players of the
company, the threats they are going through etc. So, describing different aspects of the model
below :
Threat of new entrants
For any organisation working with a major and competitive goal, entry of new
individuals with the same roles can act as a threat and it is obvious enough (Fragouli, 2016). So,
the same can happen for Exxon Mobil as well. Various new entrants that also belong to the oil
and gas innovations come in the market after every few days. So, it can act as a threat for Exxon
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Mobil. These new entrants often come with a strategy as they are aware of the companies that are
already going in the market. These strategies involve low pricing strategy, minimized costs,
providing various new features to the customers etc. as they use such tactics to attract the
customers. For avoiding this, Exxon Mobil can make use of some ways and methods to stay
prevented from such barriers and can easily tackle such new entrants. Exxon Mobil can focus on
involving some new products as it is an attractive feature that can attract many customers and
also the old ones. Also, there is a sort of loyalty factor with the old customers, so this can help
Exxon Mobil from decreasing productivity.
Bargaining power of suppliers
There are various suppliers that can help these new entrants. It depends on the overall
quantity of the new firms emerging in the market (Lendrum and et.al, 2013). There is a
possibility that when these new entrants are in a huge quantity, suppliers are soft to them but in
case of a few entrants, the suppliers can act dominant and that can be beneficial for Exxon
Mobil. So, Exxon Mobil can stay away from such issues by building a powerful supply chain
with various suppliers. It is important because it will not affect the company from some suppliers
engaged in supplying material to the new entrants.
Bargaining power of buyers
It has been said that more the bargaining power of buyers, more is the possibility for
seeking offers. So, Exxon Mobil can avoid this by building a huge base of the customers because
it will minimize the bargaining power of buyers and also will help in increasing the productivity
of the firm.
Threats of substitute products
When new entrants also provides some product or service that can act as a replacement
for some other one that is being provided by Exxon Mobile, so it can act as a threat for them. It is
because people always want to try new and modified products. But, it can be prevented by Exxon
Mobil as they can still focus on being service oriented rather than being product oriented.
Rivalry among existing competitors
There must be various rivals of the Exxon Mobil in the market place. When it seems
intense, then the company can attract the people with huge cut outs etc. But it can be avoided by
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Exxon Mobil by developing a sustainable differentiation, by uniting with the rivals so that they
can focus on increasing the market size instead of just competing with one another.
PESTEL ANALYSIS
Pestel analysis is considered as a framework that is being used for analysing and
monitoring the factors of the external environment that has some impact on the organisation (Du
and Vieira, 2012). Different aspects of the PESTLE for monitoring and analysing the macro
environmental factors of Exxon Mobil are described below :
Political
Political factors have an influence on the overall operations and productivity as well of
the Exxon Mobil. So, the company can ensure about some factors before entering in some new
investment such as it is very important to check the political stability along with the importance
of integrated oil and gas sector. Also, in such cases, there is a risk of military invasion. Also,
political factor can make minor as well as major changes in the pricing and tax regulations. So, it
has to be ensured before entering in some specific market.
Economic factors
There are some factors that helps in determining the demand and investment of the firm
in the economy such as interest rate, inflation rate, foreign exchange rate etc. Exxon Mobil can
also get affected by some of these (MacKay and Munro, 2012). So, it is better for the company to
analyse the intervention of the government in the markets. Also, the quality of the infrastructure
is important, so it can be ensured before only by the Exxon Mobil in order to save themselves
from economic changes. Another factor that is to be ensured is the work force and their skills in
the oil and gas industry so that they can do the grouping on that basis.
Social factors
There can be various social factors that influence Exxon Mobil and its operations. Such
social factors involve demographics, power structure in the society, culture. Education level etc.
So, Exxon Mobil can consider all these factors in mind so that none of these factors can act as a
barrier or challenge for them in the future.
Technological
Technology has made various advancements in maximizing the operational ability as
well as productivity but at the same time, it can affect the operations negatively as well. So, it is
better for Exxon Mobil to ensure the positive as well as negative sides of technology so that they
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do not have to face any issue regarding this. Also, it has an impact on the structure of the value
chain of the material sector, so the same should be considered by the Exxon Mobil. There are
various other factors that has some influence on the organisation such as the rate of technology
diffusion (Gvozdanovic and et.al, 2012). So, Exxon Mobil should ensure this rate of diffusion in
mind for better and efficient productivity.
Environmental
Every market has different standards, so it can have an impact on Exxon Mobil. There are
many differences in the laws as well. So, before expanding in some area where they have not yet
expanded, Exxon Mobil should have to ensure about some environmental factors such as the
weather, climatic changes, regulating laws and legislations so that they can make the
procurement on the basis of that. This will help them in a better understanding of the expanding
with factors required and necessary to satisfy the customers.
Legal
The legal framework has an influence on the company and its operations. There are
various factors and legislations that can have some influence on Exxon Mobil and these factors
include discrimination law, data protection law etc. It is important because if legal implications
should be strong enough for maintaining the operations and services in an efficient way. A very
common example of this can be considered as the fact that if in some new place, where they are
expanding does not support some very important laws such as health and safety law, then it is
obvious enough that the employees may feel a little insecure in participating in the company. So,
Exxon Mobil should ensure these factors before expanding in some other market or area.
Value chain analysis
Value chain analysis (VCA) is a process that adds value to its final product by
analysing primary and support activities to reduce costs or increase differentiation (Nguyen and
Slater, 2010).
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Primary Activities:
Primary activities combines with supporting activities to create and provide delivery of a product
by improving the effectiveness or efficiency.
Supply Chain Management
It means the ExxonMobil is dependent on suppliers, developing better relation with them and
enhancing commitment, integrity.
Operations
Company's production of oil and gas fields takes place in the North Sea, of which mostly
is operated by Shell UK. Production process adds value to the raw material and turns it into a
final product which is consumable.
Inbound logistics
Inbound logistics is integral part that deals in transporting, procuring and delivering of
goods coming into the business, which are further processed in production (Coll, 2012).
Outbound logistics
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Illustration 1: Value chain analysis
Source : Ovidijus, 2013

When goods are ready for final consumption, they move out from their warehouses.
Outbound logistics provides distribution of goods with minimized transportation and storage
costs. Also, It keeps the finished goods safe till the actual delivery.
Distribution
Dispatching of goods or transportation of goods takes place. It delivers product to the
ultimate consumers. Exxon Mobil is one of the largest export companies of mainland Norway
with 60% export of oil(Hokroh, 2014).
Sales and Marketing:
Customer needs are first identified and then the actual sales takes place. Price, promotion
and advertising contributes to this factor. Customer segment is targeted and as a result
competitive advantage can be achieved.
Support Activities:
It helps the primary activities in achieving synergy. Huge cost is paid in infrastructure,
such as control system, company culture.
Product R&D, Technology and Systems development:
It improves the process and product that takes place in the production process. Therefore,
supporting the value created activities.
Human Resource Management:
The mission is to create competitive advantage and achieve synergy . HR manager
creates policies and programmes after the recruitment and selection process is carried out.
ExxonMobil ensure the long-term success of our business. The HR function is divided into two
main areas:
Business HR- operational and strategic level management works together to achieve synergy ,
implementing HR strategies and positive work environment.
Service HR- By continuously improvement in all processes, through various stages starting from
recruitment, selection, and goes till overall development of an individual. Businesses identifies
various opportunity to avoid threat. Employee performance, safety and hygienic workplace is
provided to employees.
Conducting the analysis
There are two approaches to the value chain analysis namely ; cost and differentiation advantage.
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Value chain analysis model varies with organisation to organisation. Competitive Advantage
can be achieved by reducing the cost. The process of conducting analysis is as follows;
1. analyse the activities that generates most value to the business. Managers need to
provide incentives to employees for increased performance by improved technology and
proper feedback.
2. Identify the client's perception.
3. Find out the deficiency in existing implemented policies and practises,
4. develop a back up plan that can be undertaken instantly
Firm's success majorly depends upon its ability to manage the value chain.
CONCLUSION
It can be concluded from the report that Exxon Mobil can make use of the Porter's five
forces for analysing all essential factors such as threats, rivalry etc. Also, they can make use of
all the factors of PESTEL analysis so that they can stay ensure of all those factors while
expanding their products or services in some other market. Value chain analysis of Exxon Mobil
has also been done in order to understand the internal activities of the firm.
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REFERENCES
Books and Journals
Castaneda, L. C., Munoz, J. A. and Ancheyta, J., 2014. Current situation of emerging
technologies for upgrading of heavy oils. Catalysis Today 220. pp.248-273.
Clark Jr, W. H. and Babson, E. K., 2011. How benefit corporations are redefining the purpose of
business corporations. Wm. Mitchell L. Rev. 38. p.817.
Coll, S., 2012. Private empire: ExxonMobil and American power. Penguin.
Du, S. and Vieira, E. T., 2012. Striving for legitimacy through corporate social responsibility:
Insights from oil companies. Journal of Business Ethics. 110(4). pp.413-427.
Fragouli, E., 2016. REPUTATION RISK MANAGEMENT IN THE INTERNATIONAL OIL
COMPANIES. International Journal of Information, Business and Management, 8(2),
p.245.
Gvozdanovic, I. and et.al., 2012. 1/f behavior in cross-correlations between absolute returns in a
US market. Physica A: Statistical Mechanics and its Applications. 391(9). pp.2860-2866.
Harrell, L., 2016. British petroleum (BP): a critical analysis of its corporate and international
strategies. International Journal of Research in IT and Management. 6(3). pp.143-161.
Hokroh, M. A., 2014. An Analysis of the Oil and Gas Industry’s Competitiveness Using Porter’s
Five Forces Framework. Global Journal of Commerce & Management Prospective. 3(2).
pp.76-82.
Lendrum, P. E. and et.al., 2013. Migrating mule deer: effects of anthropogenically altered
landscapes. PLoS One. 8(5). p.e64548.
MacKay, B. and Munro, I., 2012. Information warfare and new organizational landscapes: An
inquiry into the ExxonMobil–Greenpeace dispute over climate change. Organization
Studies. 33(11). pp.1507-1536.
Mobil, E., 2012. The 2013 outlook for energy: a view to 2040. Irving: Exxon Mobil.
Nguyen, D. K. and Slater, S. F., 2010. Hitting the sustainability sweet spot: Having it all. Journal
of Business Strategy. 31(3). pp.5-11.
Singh, A., 2010. Strategies for oil and gas companies to remain competitive in the coming
decades of energy challenges (Doctoral dissertation, Massachusetts Institute of
Technology).
Online
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Ovidijus., J. 2013. Value chain analysis. [Online]. Available through:
<https://www.strategicmanagementinsight.com/tools/value-chain-analysis.html >.
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