Strategic Choice and EvaluationExxon Mobil

Brenda Catron, Ashley May, Darrelle Pan, Elizabeth Patz, Bobbi Ready, Diana Velez & Hridya Warrier

STR/581

March 30, 2015

Dan McFadden

Introduction

This week our team has researched Exxon Mobil’s growth over the years. The paper presents an in-depth analysis of the company’s value discipline, current generic strategies and grand strategies.

The team also puts forth strategic choices Exxon should follow to improve the company image, foster growth, increase profits, and boost its market share.

Exxon Mobil SWOT Analysis Strengths

Leading market position and strong R&D capabilities

Weakness

Employee unrest and continued weak performance in the US

Opportunities

Increasing demand for liquefied natural gas (LNG)

Threats

Environmental regulations and risks associated with conducting business outside the country.

The “Best Value Discipline”

Selecting the right value principle when operating a company is crucial, as it is the identity of a company. The three main principles are described below. The most apt principle that suits the company’s culture and ethics is the Best Value Discipline.

Operational Excellence

Product Leadership

Customer Intimacy

Operational Excellence

The “Best Value Discipline”

Generic Strategy

Global Circulation

Business Vitality

Competitive Advantage

Cost Leadership

Differentiation

Focus Strategies

Generic Strategy

Grand Strategies

Grand strategies provides a master long-term plan with basic direction with major actions for achieving long-term business objectives, also known as a comprehensive approach (Pearce).

Concentrated Growth

Focused resources to dominant market, product and technology, also known as market penetration strategy

Market Development

Organizations market existing products or other uses for existing products, and introduce into new markets.

Product Development

Developing new products through substantial changes to existing products leveraging current market. Strategy includes maximizing, minimizing, substituting, modifying, rearranging, reversing, combining new products.

Innovation

Includes R & D, benefits can include competitive edge. Used with other strategies to avoid high cost and risk as product life cycle is determined by competitors’ replication of innovation and cost of implementation.

Grand Strategies Horizontal acquisition

Acquiring similar firms eliminates competition and promotes expansion into new markets. Can be strategic geographically; acquiring similar companies in select markets are targeted to increase returns

Vertical acquisition

Acquired company supplies raw materials for the final products of the acquiring company or provides new customers for the company. This strategy can increase the dependability of supply and improve the quality of materials. Enhance a customer base for the supplies and control competitive edge in industries with limited resources.

Concentric Diversification

Strategic acquisition of businesses that think alike in terms of market, technology, or products. Acquired business is independent from the acquiring business, but their synergy decrease weakness and threats

Conglomerate Diversification

Strategy employed by organization seeking to increase financial gain. It is the acquisition of a company based on profitability. Organization seeking to diversify their financial portfolios, increasing financial leverage for future endeavors

Grand Strategies Turnaround

Turnaround strategy is, to convert, change or transform a loss-making company into a profit-making company. Turnaround is a restructuring strategy that tries to reverse the position from loss to profit, from declining sales to increasing sales, from weakness to strength and from instability to stability.

Divestiture

The selling of a firm’s assets, or the disposal of those assets to achieve greater liquidity or to reduce the debt burden of the firm. Selling off the parts of a firm which lose money or do not have a strong return on investment.

Liquidation

The selling off of a firm’s assets, including physical assets, and intellectual assets, from plant to merchandise and from brands to patents. The goal of a liquidation strategy is to recoup as much money of an owners invested money before shuttering the business.

Bankruptcy, Two approaches:

1. Liquidation, where a firms assets are completely distributed to creditors who usually receive a small fraction of the total owed to them.

2. Reorganization, which involves the temporary freezing of claims while the company reorganizes and rebuilds it’s operations in a more profitable manner. Reorganization bankruptcy is seen as the more advantageous as it offers the maximum repayment of a firm’s debt if their recovery strategy is successful.

Grand Strategies

Joint Ventures

A new firm is formed to achieve specific objectives of a partnership , like temporary arrangement, which are advantageous as a risk reducing mechanism in planning new market penetration, and in pooling resources. The problems of equity ownership, operational control, and distribution of profits or losses are unique problems of the arrangement.

Strategic Alliances

A strategic alliance is an agreement of cooperation among two or more independent firms to work together toward common goals. Firms in a strategic alliance do not form a new entity to further their purpose but collaborate while remaining apart and distinct.

Consortia

Consortia is a group made up of two or more individuals or companies that work together toward achieving a chosen objective. Each being responsible for only the obligations set out in the consortium’s contract. Every entity that is under the consortium remains independent in his or her normal business operations and has no say over another member's operations that are not related to the consortium.

Strategy to Improve Image

Actively participate in Social Media Presence through Facebook, Twitter, and YouTube

Use of digital and social media to build engagement in Exxon Mobil’s website

Use of innovation through marketing and adverting campaigns

Offer scholarships, grants, and professional learning

Willing to be vulnerable

Strategies to Foster Growth

High global energy demand

Significant advancements in oil and gas technologies

Projecting America to a Net energy exporter

New Global trade opportunities

Strategies to increase Profitability

Upgrade Belgium Refinery

Boost Refinery Performance

Integrated Business Model

Cut Back on Spending

Strategies to Improve Market Share

Increase reserves and production

High demand for oil and gas

Increase in flat earnings

Enhance dividend growth

Recommended Strategy

Exxon Mobil Analysts Study in Energy Supplies

1. Global Energy Demand to Increase 30% by 2040

2. Electricity Demand will make natural gas the fastest growing energy source

3. Natural gas is expected to meet 60% of energy needs over three decades

Recommendation in an Investment Plan

1. Five Year Plan

2. $185 Billion Investment

3. Develop New Energy Supplies

4. Domestically and Globally

References

Crowe, T. 2014. 3 Reasons ExxonMobil's Stock Could Rise. The Motley Fool. Retrieved from http://www.fool.com/investing/general/2014/08/13/3-reasons-exxonmobils-stock-could-rise.aspx

Exxon Mobil Term Paper. Academia.edu. Retrieved from http://www.academia.edu/9651877/Exxon_Mobil_Term_Paper

Exxon Hydraulic Fracturing Environment and Safety, report to shareholders. Exxon Mobil Corporate. Retrieved from http://corporate.exxonmobil.com/en/engineering/hydraulic-fracturing/environment-and-safety/unconventional-resources-development-risk-management?parentId=0792cb2b-f5b0-43d5-95a4-49bc4dda2285

Exxon Mobil SWOT Analysis. Yousigma.com. Retrieved from http://www.yousigma.com/comparativeanalysis/exxonmobil.html

Exxon Mobil (2015) Guiding Principles. Exxon Mobil Corporate Retrieved from http://corporate.exxonmobil.com/en/company/about-us/guiding-principles/our-guiding-principles?parentId=9d0ed0ac-4f85-4578-8c18-4ed13f4aff74

Exxon Mobil Operations Integrity Management System. Exxon Mobil Corporate. Retrieved from http://corporate.exxonmobil.com/~/media/Brochures/2009/OIMS_Framework_Brochure.pdf

Exxon Mobil Summary Annual Report 2013. Retrieved from http://cdn.exxonmobil.com/~/media/Reports/Summary%20Annual%20Report/2013_ExxonMobil_Summary_Annual_Report.pdf

References

Horovitz, B. 2014. Exxon 3Q profits up on refining boost. USA Today. Retrieved from http://www.usatoday.com/story/money/business/2014/10/31/exxon-exxon-mobile-gasoline-refining-earnings-petroleum-gas-prices/18233701/

Investing, 2014. Forbes. Retrieved from http://www.forbes.com/sites/greatspeculations/2014/07/11/exxon-plans-to-boost-its-downstream-profitability-with-belgium-refinery-upgrade/

Investing, 2015. Forbes. Retrieved from http://www.forbes.com/sites/greatspeculations/2015/02/10/whats-driving-our-96-per-share-price-estimate-for-exxon-mobil/

Koch, W., (2014). Exxon Valdez oil spill, 25 years later, offers lessons. USA TODAY. Retrieved from: http://www.usatoday.com/story/news/nation/2014/03/21/exxon-valdez-25th-anniversary/6707983/

References

McCreery J. Phillips E. Cigala F. (2013) Operational excellence: The imperative for oil and gas companies. Retrieved from http://www.bain.com/publications/articles/operational-excellence-the-imperative-for-oil-and-gas-companies.aspx

Money Morning, 2015. Nasdaq. Retrieved from http://www.nasdaq.com/article/why-the-exxon-mobil-stock-price-hit-a-fresh-52-week-low-cm453835#/ixzz3VnnH8Jjl

News Releases, 2012. ExxonMobil press release. Retrieved from http://news.exxonmobil.com/press-release/exxonmobils-outlook-energy-forecasts-shift-global-energy-balance-and-new-opportunities

Pearce, 13th Edition. (n. d.). Strategic Management: Planning for Domestic & Global Competition, McGraw-Hill Create. VitalBook file. Retrieved from http://online.vitalsource.com/books/

References