Strategic Management Report: ExxonMobil and BP Analysis Report

This report offers a comprehensive strategic management analysis of two major players in the oil and gas industry: ExxonMobil and British Petroleum. It begins with an executive summary outlining the report's objectives, which include examining the internal and external challenges faced by both companies and evaluating their competitive strategies. The report delves into the strategic planning of ExxonMobil, exploring its mission statement, objectives, and competitive advantages and disadvantages using a resource-based view. It assesses the value, rarity, imitability, and substitutability of ExxonMobil's resources. Furthermore, it provides a PESTLE analysis of the external environment, determining ExxonMobil's competitiveness. A similar analysis is conducted for British Petroleum, including its strategic planning, competitive advantages, and external environment. The report also includes a competitive analysis, identification of challenges and opportunities, and concludes with recommendations for both companies. The report highlights the importance of strategic management in navigating the competitive landscape of the oil and gas sector.

Running head: STRATEGIC MANAGEMENT
Strategic management
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Executive summary
The aim of this report is to discuss about the issues and challenges being faced by two major oil
and gas companies, ExxonMobil and British Petroleum. This report had discussed about the
external and internal challenges being faced by both these organizations. Competitive strategies
had also been used in order to determine the effectiveness of the product portfolio of their
products in the market. This report concludes that, both ExxonMobil and BP are having huge
market presence and capital currently in the global market. Moreover, the sector they are
operating is having huge potentiality for the future also.

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Table of Contents
Introduction......................................................................................................................................4
Strategic planning of ExxonMobil...................................................................................................5
Mission statement........................................................................................................................5
Objectives....................................................................................................................................5
Identification of the competitive advantages and disadvantages.................................................6
Valuation of the resources.......................................................................................................6
Rarity of the resources.............................................................................................................7
Imitable nature of the resources...............................................................................................7
Substitute of the resources.......................................................................................................8
Analysis of the external environment..........................................................................................9
PESTLE analysis.....................................................................................................................9
Determination of the competitiveness of ExxonMobil..............................................................11
Analysis of the internal environment.........................................................................................12
Strategic planning of British Petroleum........................................................................................12
Mission statement......................................................................................................................12
Objectives..................................................................................................................................13
Identification of the competitive advantages and disadvantages...............................................13
Valuation of the resources.....................................................................................................13
Rarity of the resources...........................................................................................................13

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Imitable nature of the resources.............................................................................................13
Substitutes of the resources...................................................................................................14
Analysis of the external environment........................................................................................14
PESTLE analysis...................................................................................................................14
Determination of the competition in the industry......................................................................15
Analysis of the internal environment.........................................................................................16
Competitive analysis......................................................................................................................17
Identification of the challenges......................................................................................................18
Identification of the opportunities.................................................................................................18
Recommendations..........................................................................................................................19
Conclusion.....................................................................................................................................19
Reference.......................................................................................................................................20

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Introduction
Contemporary business organizations face fierce competition in the market due to the
presence of huge number of competitors in the market offering similar set of products and
services. Moreover, in the present era of globalization, major business organizations are
operating in the global market and thus, they have to face various external threats in different
regions. There are various challenges being faced by them internally also, which are important to
identify and mitigate in order to enhance the effectiveness of the organization to deal with the
business challenges. Thus, it is important for the contemporary business organizations to involve
the theory of strategic management in order to identify the potential threats and challenges along
with the opportunities for them (Hitt, Ireland and Hoskisson 2012). This will help them to initiate
the strategies accordingly.
ExxonMobil is one of the leading and most prominent oil and gas corporations in the
world. They are originated from United States and having headquartered in Texas. Currently,
they are the largest company in the world in terms of the generation of revenue and second most
profitable company among the fortune 500 companies (ExxonMobil 2017). Though, they are in
the forefront in the global oil and gas sector, however, there are various challenges being faced
by them. One of the key challenges being faced by them is the competition being emerged in this
sector.
British Petroleum is another leading organization in the oil and gas sector. They are
originated from United Kingdom having headquartered in London. They are considered as the
twelfth profitable company in the world (bp.com 2017). However, they are having their
operations in more than 72 countries that make them one of the prime examples of multinational

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organizations. However, in term of the market challenges, they also face the issue of competition
in the global oil and gas sector. Moreover, with the increase in the competition in the market, the
average profitability of these organizations is reducing. Hence, it is important for both these
organizations to have effective strategies in place in order to retain the existing market share
along with identifying the potentiality.
This report will discuss about the external and internal challenges being faced by both
these organizations. Various elements and aspects of strategic management will be discussed in
this report. In addition, the business strategies being initiated by other players in the market will
also be discussed in this report. Competitive strategies will be used in order to determine the
effectiveness of the product portfolio of their products in the market. In accordance to the
identified issues, various recommendations will be discussed in this report.
Strategic planning of ExxonMobil
Mission statement
The mission statement of ExxonMobil states that, they want to be the leader in the global
energy sector by providing their customers quality products. Moreover, it also states that, they
want to be a committed player in the market by maintaining the heist ethical standards in their
operation along with safeguarding the interests of their external and internal stakeholders.
Objectives
The objective of ExxonMobil is to enhance their organizational excellence by
maintaining health and safety in the organization along with increasing the energy efficiency and
effective human resource management. Moreover, their objectives also include the future

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planning including investments, initiation of new technologies and global operations. Hence, the
objective of ExxonMobil covers all the present and future business criterions.
Identification of the competitive advantages and disadvantages
Resource based view will be used in order to identify the competitive advantage and
disadvantages of ExxonMobil. Resource based view states the competitive advantages of the
business organizations in terms of their tangibility, and other distinctive capabilities (Barney
2012).
Figure: 1
Competitive advantages
Valuation of the resources
According to the theory of resource based view, the first aspect is the value of the
resource for the organization. In the case of ExxonMobil, one of the key resources they possess
is their huge source of revenue and capital. According to the reports, ExxonMobil possess huge

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capital, which helps them to drive their global businesses along with gaining the economies of
scale. It helps in attaining economies of scale by increasing the infrastructure, which is not
possible for their competitors. This is due to the reason that, it is impossible for other players in
the market or the new entrants to match their revenue generation and capital investment. Thus,
the extent of their investment is much larger than many of their competitors (Hinterhuber 2013).
Rarity of the resources
The next aspect is the rarity of the resources. In the case of ExxonMobil, they have the
access to various strategic onshore and offshore facilities of natural resources. Having the access
of these strategic facilities helps ExxonMobil to have the seamless flow of the raw materials.
Moreover, this is rare in nature due to the reason that, the major source of the raw materials for
ExxonMobil is non renewable in nature including the source of the natural gas and petroleum
products. Access to these strategic facilities enables them to have the market leadership due to
the reason that, their competitors will not have the access of these strategic sources and moreover
due to the rarity of these resources, it is uncertain that, their competitors will have the access in
future.
Imitable nature of the resources
The next aspect is the imitable nature of the particular resources. In the case of the
ExxonMobil, one of the key in-imitable resources is their brand value and identity. As discussed
earlier, ExxonMobil is being considered as one of the leading energy organizations among the
top seven companies around the world. Moreover, they are having their market presence in every
major country around the world. Thus, these brand value and identity of them cannot be matched
or imitate by their competitors (Lazzarini 2015). This competitive advantage will be remained
with them and it will not get diluted by increase in the competition. The huge brand value of

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ExxonMobil will also help them to push their newly introduced products in the market more
effectively.
However, on the other hand, the source of revenue for them along with their capability of
huge investment in the market is imitable in nature. This is due to the reason that, their huge
source of earning is their competitive advantage, but it is also to be considered that, there are
other oil and gas companies who are capable to compete with ExxonMobil. Thus, the capital is
imitable in nature. This is one of their key competitive disadvantages.
Substitute of the resources
The last aspect is the available substitutes for the resources. In the case of ExxonMobil,
there are various competitors such as British Petroleum who are competing in the similar market.
Thus, the products of ExxonMobil can be easily substitutable. Moreover, the strategic sources
being with them may not be substituted by their competitors, but their competitors are also
having various other strategic sources, which are not accessible by ExxonMobil. Thus, these are
the key competitive disadvantages for ExxonMobil (Zekiri and Nedelea 2012).
On the other hand, the internal management of ExxonMobil including the effective
management of their human resources is one of the key comp0etitive advantages for them. This
is due to the reason that, the skill and expertise of their employees are exclusive to the
ExxonMobil and they are not be substituted by their competitors. Moreover, ExxonMobil
provides training to their employees across different levels in order to equip them to deal with
the organizational challenges along with enhancing their expertise. Thus, the internal
management of ExxonMobil can be considered as their competitive advantage.

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Analysis of the external environment
PESTLE analysis
Political  Economical is having their operations in different countries
around the world. Thus, they have to adhere to the different
political scenarios.
 Due to the fact that, oil and gas sector involves huge investment;
it will be risky affair for ExxonMobil to face the change in the
political scenario (Mackay and Munro 2012).
 Risk of terrorism is having negative impact on them due to the
fact that, it poses threats to the facilities as well as to the pipeline
of the oil and gas organizations.
Economical  Involves huge investment in building up new facility.
 Various global organizations are already present in the market.
 Price is normally determined by the governments.
 Increasing demand of the energy around the world.
Social  People are moré aware about the implications of burning
petroleum products.
 Electric vehicles are becoming more popular in the market, thus,
potentiality is decreasing for ExxonMobil.
 However, the extensive corporate social responsibilities of
ExxonMobil help them to gain positive image among the
communities (Du and Vieira 2012).
Technological  ExxonMobil involves huge investment in the field of research and

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development.
 It helps them to identify new resource field onshore and offshore.
 Technology up gradation is one of the key aspects in the oil and
natural gas industry.
 It is important for ExxonMobil to involve the initiation of the
latest technologies in order to extract resources from their raw
materials as much as possible.
Legal  More governments are coming up with stringent regulations for
the oil and gas sector due to the huge risk involved.
 Lawsuits can be attracted from the higher possibility of accidents
in this sector.
 Risk of penalty due to the mismanagement of the organization,
which will cause social impact.
Environmental  Pollutions are associated with the oil and gas sectors. They emits
huge of pollutants.
 Thus, ExxonMobil is more prone to the environmental
legislations.
 Risk of oil spills will also have negative impact on the
ExxonMobil.
Determination of the competitiveness of ExxonMobil
Threat of new
entrants
 Threat of new entrant is low due to the reason that, huge
investment is associated with this sector.

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 However, small organizations are operating in this sector and they
are rapidly enhancing their market share.
Bargaining power of
suppliers
 Huge number of suppliers is operating in the oil and gas sector.
 However, they are having the upper hand due to the reason that,
the cost of them will determine the profitability of the
organizations such as ExxonMobil.
Bargaining power of
Buyers
 Numerous companies are operating in this sector offering similar
products.
 Thus, buyers are having the bargaining power by switching from
one product to another.
 Switching cost is low.
Threats of
substitutes
 Similar offerings from all the competitors of ExxonMobil.
 Threat of substitute is high.
 It will reduce the profitability of ExxonMobil.
Industry rivalry  Industry rivalry is intense due to the presence of number of
players.
 This will cause reduction in the profitability.
Analysis of the internal environment
Strengths  Huge market and brand value.
 Huge market coverage around the world.
 Access to the strategic facilities.
Weaknesses  Huge cost of development being involved.