Strategic Management of ExxonMobil Assignment

Running head: MANAGEMENT
Strategic Management
Name of the Student:
Name of the University:
Author Note:

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Executive Summary:
The objective of the report is to provide an overview of ExxonMobil which is one of the
most renowned oil and gas companies of the United States. The report commences
with a brief company overview. The report also puts forward a discussion on the
organizational strategy and provides an in depth analysis of the upstream, downstream,
chemical and the marketing operations. The report also undertakes a KPI analysis that
helps in determining the strategic position of the company. The strategic direction of firm
is analyzed with the help of the Ansoff Matrix and the BCG model that helps in
evaluating the strategic plan of the company. The report also provides a descriptive
analysis of the organizational strategy of the company through SAF framework based
on suitability, acceptability and feasibility. This is followed by recommendations on how
the ExxonMobil can enhance its sustainability factor.

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Table of Contents
1.0 Introduction..................................................................................................................3
1.1 Company Overview:.................................................................................................3
1.2 Organizational Operations and Strategy..................................................................4
1.3 Financial Overview:..................................................................................................6
1.4 Company’s Growth and Market Share.....................................................................8
2.0 Analysis......................................................................................................................10
2.1 Strategic Position...................................................................................................10
KPI Analysis:................................................................................................................10
2.2 Organization Direction Using Ansoff Matrix...........................................................11
2.3 BCG Matrix.............................................................................................................14
2.4 Organizational Strategy..........................................................................................16
SAF Framework Evaluation..........................................................................................16
3.0 Conclusion.................................................................................................................16
4.0 Recommendation.......................................................................................................17
References:......................................................................................................................18

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1.0 Introduction
1.1 Company Overview:
ExxonMobil refers to one of the largest companies across the world. It is a
multinational oil and gas firm based in America formed in the year 1999 through the
merging of the Exxon and the Mobil (corporate.exxonmobil.com 2019). The company is
considered as the largest refiners of the world with its headquarters in Texas, United
States. ExxonMobil has been also been parent company of Esso in UK. The company
however has a prolonged history of uncertain behavior that includes oil spill incident of
Exxon Valdez in 1989 in Alaska. This incident has also been a watershed moment for
the environmental critics of oil industry. There has been various incidents that led to the
criticism of the company. These incidents ranged from funding the sceptics of the
climate change to massive influence on the foreign policy of America. It also included
drilling in the terrains leased through dictatorship and involvement in the tar sands of
Canada.
Despite everything ExxonMobile remained one of the strongest leader in oil and
the gas market with a stronger hold in terms of the global land positioning along with the
dramatic earnings. The constant development of the breakthrough technologies
including the ones pioneered by the ExxonMobil aided the organization in keeping pace
with the rising demands of the global energy through availability of additional supplies of
energy. With the passage of time, technology became increasingly critical within the
industry as much of the oil and gas reserves remained located within the challenging
environments.

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1.2 Organizational Operations and Strategy
ExxonMobil has been an industry leader in every facet of its business that is
related to chemical and energy manufacturing (corporate.exxonmobil.com 2019). The
firm operates facilities or marketed its products in most of the countries across the world
and carried out exploration on the six continents. Here the study will concentrate on the
upstream operations, downstream operations, chemical manufacturing and marketing of
power and natural gas.
As a part of the upstream operations, ExxonMobil’s global endowment of
hydrocarbon coupled with geoscience capabilities allows the company in identifying and
developing highest level of quality resource (corporate.exxonmobil.com 2019). The
applied technologies allows the company in developing increasing level of oil and gas
reserves both at the new and the mature fields. Besides, advancement in reservoir
simulation, seismic imaging, facility and drilling design allowed the company in not only
exploring but also developing deposits which had previously been unreachable and
unidentifiable. In addition to the company’s extended history towards technological
leadership, investments and the operational excellence positioned the company also
takes up extremely challenging projects that includes heavy oil, natural gas and deeper
water projects.
The downstream operations of the company includes distribution and
manufacture of products derived from feedstock and crude oil
(corporate.exxonmobil.com 2019). The company also provides lubricants, fuels and
higher value products for consumers. The company is the leading supplier of base
stocks for lubricant and is also the biggest marketer of the finished lubricants. Exxon

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Mobile delivers application expertise and a higher level of product quality due to a
stronger network for distribution, immensely trained field force and an abundant supply.
The company is also able to create longer term value through selling of higher quality
products and services on a day to day basis to customers on a global scale. The
company markets the Synergy branded fuels and the other products to customers
across the globe through Esso, retail service platforms and international business
segments. These products includes wholesale fuel, lubricant and aviation lubricant and
fuel and marine lubricant and fuel.
ExxonMobil also has a chemical manufacturing division having unique
portfolio of specialty business and commodity that generated annual sales of close to
25million tones (corporate.exxonmobil.com 2019). The products of the company is
considered to be building blocks for wider variety of the day to day industrial and
consumer products. The company is known to process the feed stocks derived from the
upstream and the downstream operations for manufacturing chemical products for the
higher valued end users. The company also focuses on the product lines that
capitalizes on the advantages in the scale and technology, building strengths of
advantaged feed stocks, performance products and lower cost process.
For the marketing of power and natural gas, ExxonMobil employs a globalized
team of the commercial experts for maximizing value of company’s power interest, gas
and the natural gas liquids in meeting the rising needs of consumers across the world.
Thus, ExxonMobil strives in providing the required energy for meeting the global
demand through maintaining unrelenting focus on the safe operations. Besides, the

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company also focus on the sustainable solutions based on the business practice.
Hence, the key elements of the business strategy includes (exxonmobilchemical.com
2019):
 Constant focus on the delivery of operational brilliance
 Depending on the technology leadership
 Take advantage of the benefits derived from assimilated business model of the
company
 Making investment with discipline and intelligence.
1.3 Financial Overview:
ExxonMobil had close to $21billion earnings in the year 2018. Cash flow from the
operating activities has been close to $36 billion which has been highest since the year
2014(corporate.exxonmobil.com 2019). In the year, the company had five additional
discoveries in the offshore of Guyana that enhanced the resource estimate to over 5
billion barrels. The company also had captured benefits from through the crude
differentials of North America with the help of integrated manufacturing and logistics.
The company also experienced a growth in the chemical sales which resulted in a
higher annual volume. Besides the merging of the company Exxon and Mobil positioned
it in delivering shareholders.

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Figure 1: Financial Highlights
Source: (corporate.exxonmobil.com 2019)
Figure 2: Diagrammatic Representation of the Return on Average Capital
Source: (corporate.exxonmobil.com 2019)

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Figure 3: Diagrammatic Representation of Net Income and Functional Earnings
Source: (corporate.exxonmobil.com 2019)
1.4 Company’s Growth and Market Share
ExxonMobil has been rolling its growth plans for substantially increasing the
earnings and the potential for cash flow while researching the technology breakthroughs
for reducing the emissions. As a part of its growth the company wants to do the
following (corporate.exxonmobil.com 2019):
 Plans for double earnings and generate cash flow potential by the year 2025
 Progression of key projects on schedule
 Focus on the adoption of the lower emission technologies including the carbon
capture and the biofuel.
The company also has an expectation of increasing the potential of annual earnings
by 140 percent and double the potential of the annual cash flow by the year 2025 from
the year 2017. The company also expects a progress on the key upstream projects that
will help in increasing the production to close to 5 million barrels of oil on a day to day

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basis by the year 2025(corporate.exxonmobil.com 2019). The company acquired close
to 2.3 million acres in Brazil and looks forward for finalizing the developmental plans for
Carcara resource. For its Rovuma LNG project, ExxonMobil secured it’s off take
commitments in Mozambique while in Papua New Guinea, the company planned for an
expansion of liquefied natural gas. In downstream and chemical business, ExxonMobil
remained on track to over double its earnings potential with the investments that
capitalized on the proprietary technology.
In terms of market share, Exxon Mobile is one of the biggest companies across the
world. The year 2011 has been the most successful year in terms of the revenue. The
market valuation of the company at end of 2018 was close to 289 billion dollar
(statista.com, 2019). The upstream division included exploration and extraction and is
considered as one of the key divisions. With close to 14.1 billion dollars, the company
had been responsible for close to 68 percent of the net overall income. Besides, the
company is known for owning oil refineries across the world with refining capacity of
closer to 4.91 barrels on a day to day basis.

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Figure 4: Diagrammatic Representation of the Market Share of Exxon Mobile
Source: (statista.com, 2019)
2.0 Analysis
2.1 Strategic Position
KPI Analysis:
Exxon mobile’s performance is accessed at different levels from the individual
sites of operation to business lines for supporting the continual movement in most of the
sustainable areas (corporate.exxonmobil.com 2019). As part of the commitment in
maintaining transparency in communication, the company reported data related to the
key performance indicator over 7 year period. This is indicated by the table mentioned
below:

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Figure 5: Tabular Representation of KPI Analysis
Source: (corporate.exxonmobil.com 2019)
2.2 Organization Direction Using Ansoff Matrix
Ansoff Matrix also known as the market expansion Grid represents a tool through
which a firm is able to plan and analyze strategies for their growth (Hussain et al. 2013).
The matrix portrays portray four strategies that might be used for helping the firm to
grow while analyzing the associated risk with each of the strategies.

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Figure 6: Diagrammatic Representation of Ansoff Matrix of ExxonMobil
Source: (Chiang, Chen and Ho 2016)
Market Penetration: This strategy is used for increasing its share in the market
through concentrating on the existing product in the existing market. To achieve this
strategy an organization offers different deals and price discounts along with running
promotional campaigns and offering products in the new packages for achieving sales
growth while staying on same market. The strategic objective of ExxonMobil that
remains associated with market penetration strategy lies in increasing the sales by
lowering prices through the cost leadership. Alternatively, the company tries to attain the
growth strategy through integration of innovation thereby setting a basis for clear
differentiation. This enables ExxonMobil in growing its customer base in spite of market
saturation.

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Product Development: This particular strategy deals with newer product
development or the reformation of the present product lines for presenting them as fresh
to the present customer base. ExxonMobil has been found to adopt the strategy when
there has been limited opportunities of growth in the present market and the present
product lines. The intense competition in past few years has encouraged ExxonMobil to
introduce newer products to the targeted segments of the market. This enabled the
company in extending the product line and hedge risk since it is able to compensate
loss acquired from single line of product with necessary gains derived from the others.
Market Expansion: The key objective of the strategy lies in exploring and
entering newer markets. The successful entry in the newer consumer market played a
crucial role in determining ExxonMobil as the global brand. The key reasons for the
world presence includes affordable prices, stronger flavor and brand name. In addition
to this, effective marketing and promotional campaigns has also enabled ExxonMobil in
capturing the newer customers and acting as market leader in various countries. The
company has also expanded its distribution network in the developing countries through
an continuous investment in the research and development. ExxonMobil also takes into
account the need for understanding culture and thereby integrate the local values and
norms into the marketing campaign while entering newer geographic areas. High level
of cultural intelligence has enabled ExxonMobil in gaining acceptance in diversified
market for consumers.
Diversification: The portfolio diversification of ExxonMobil is mostly supported
by cost leadership and the existing infrastructure that makes it possible for the firm in
exploring newer opportunities of the product in the newer markets. The presence of the

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risk factors forces the firm to focus on related diversification and avoid any kind of risky
experience into the unknown region. Instead, the company utilizes strength and brand
awareness for launching related products in global industry.
2.3 BCG Matrix
It represents a framework for evaluation of strategic position of the business and
it’s potential (Mohajan 2017). It classifies the business portfolio into four different
categories which includes stars, cash cows, dogs and question mark. Stars represented
units with higher share of the market within fastest growing industry. Cash cows
represent the units with a higher share of the market in slower growth industries. Dogs
are representative of units having lower share of the market in a slow growing and
mature industry. Question mark marks the lower share of market and lower generation
of cash.
Figure 7: Diagrammatic Representation of BCG Matrix of ExxonMobil
Source: (Shanbhag, Dutt and Bagwe 2016)

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Stars: In case of ExxonMobil the stars are represented by financial service of the
strategic business unit. It operate within a market that portrays future potential. The
company is believed to earn a significant level of income from its strategic business unit.
ExxonMobil should integrate vertically through acquiring the other firms with supply
chain. This will enable the firm in earning increasing level of profit.
Cash Cows: In case of ExxonMobil, this is represented by supplier management
service which has been in the operation for decades and helped ExxonMobil earn a
significant revenue. It has been found that market share for the ExxonMobil is higher but
overall market declines as the companies are seen to manage their suppliers instead of
outsourcing it. Thus, the company should stop any further investment in the business
and keep operating the strategic business unit till the time it is profitable.
Question Marks: The present shows an increasing consumer focus on the local
foods. Hence, this particular market shows a higher level of growth rate. In this regard,
ExxonMobil has lower level of market share. ExxonMobil should invest in the research
and the development that would enable it to come up with innovative features.
Dogs: The strategic business unit related to the plastic bags represented the Dogs
for ExxonMobil. This unit had suffered loss for the past five years. It also operated within
the market that had been in a declining state due to a higher environmental concern.
Exxon Mobil should divest this business unit thereby minimizing losses.

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2.4 Organizational Strategy
SAF Framework Evaluation
The SAF framework refers to the tool for determining strategic possibilities. It however
stands for suitability, acceptability and feasibility (Moulton and Sandfort 2017).
The suitability for ExxonMobil depends on various criteria that are particularly
vital to the company or its business. This includes the environmental suitability and
capability and expectation suitability.
The aspect of acceptability for ExxonMobil includes the measurement of the
risk, return and the reactions of the stakeholders. Returns are usually measured
depending on benefits which the stakeholders expects from a strategy that could be
either non-financial based on stakeholder’s decision.
The feasibility of ExxonMobil is determined by whether the business have
aptitude, resource and ability for implementation of a strategy determines key to
success. Hence, the financial feasibility needed assessment through analysis and
forecasting of the cash flows, performance of the break even analysis and the other
financial test.
3.0 Conclusion
On a concluding note, it can be said that ExxonMobil represents one of the
toughest player in the gas and the oil market having a stronger foothold in terms of the
global land position that is combined with the dramatic earnings. It is also to be noted
that development of the breakthrough technologies has aided the firm in maintaining a
pace with the increasing demand for the global energy through availability of the

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additional supplies of energy. In this regard, it can also be said that technology acted as
a critical factor in the industry as the much of the gas and oil reserves are found in the
challenging environment.
4.0 Recommendation
These includes:
 Reducing environmental impact of own operation for ensuring sustainability. This
entails in supplying the products that not only benefits customers but helped
them in reducing environmental impact.
 Adopt a three dimensional and disciplined longer term approach towards
sustainability with the Baytown project. This included reduction of the
environmental impact, ensuring value added products for consumers and benefit
shareholders.
 Newer industry investment in Asia, Middle East, Asia and the North America that
would help in increasing trade flows thereby benefiting the consumers and the
producers worldwide.

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obil-progresses-growth-plans-and-efforts-to-advance-lower-emissions-
technologies[ accessed 16 Dec, 2019]
corporate.exxonmobil.com, 2019. [online].Available at
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