Term Paper on

Strategic Analysis of Exxon Mobil

Submitted To

Professor Dr. M. Mahmodul Hasan

Submitted By

Name ID Signature

Islam, Md. Rakibul 14-97633-1

Submitted on December 14, 2014

December 14, 2014

Professor Dr. M. Mahmodul Hasan

Faculty of Business Administration

Department of Management

MBA Program

Subject: Submission of Term Paper.

Dear Sir,

Here is our report named “Strategic Analysis of Exxon Mobil” which you have assigned

us in order to give a clear concept of Strategic thinking, Evaluation and Implementation

of Strategic Management concept in real world.

In making this report a commendable one, we have tried our best to collect and gather the

relevant information about Exxon Mobil. Hope that it will be up to the mark and meet the

expected standard. And this report is done and ready for your assessment.

We also declare that neither this project nor any part of this project has been submitted

elsewhere for award of any degree or diploma.

Thanking You,

Yours Sincerely,

Name ID Signature

Islam, Md. Rakibul 14-97633-1

Acknowledgement

First of all we would like to thanks Almighty Allah for helping us to complete this term

paper successfully on time.

We are also especially grateful to our honorable course instructor Prof. Dr. Mahmodul

Hasan, for his kind and sincere guidance towards us and to make our report better and

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us for any kind of mistake.

Executive Summary

Exxon Mobil Corp., or ExxonMobil, is an American multinational oil and

gas corporation headquartered in Irving, Texas, United States. It is a direct descendant

of John D. Rockefeller's Standard Oil Company, and was formed on November 30, 1999,

by the merger of Exxon and Mobil (formerly Standard Oil of New Jersey and Standard Oil

of New York). It is affiliated with Imperial Oil which operates in Canada.

ExxonMobil is the largest of the world's super majors with daily production of

3.921 million BOE. In 2008, this was approximately 3 percent of world production, which

is less than several of the largest state-owned petroleum companies. When ranked by oil

and gas reserves, it is 14th in the world—with less than 1 percent of the total.

ExxonMobil has been subject to numerous criticisms, including the lack of speed during

its cleanup efforts after the 1989 Exxon Valdez oil spill in Alaska, widely considered to be

one of the world's worst oil spills in terms of damage to the environment. ExxonMobil has

drawn criticism for funding organizations that are skeptical of the scientific

opinion that global warming is caused by the burning of fossil fuels. Questions have been

raised about the legality of the company’s foreign business practices. Critics note that

ExxonMobil increasingly drills in terrains leased by dictatorships. The company has also

been the target of accusations of improperly dealing with human rights issues, influence

on American foreign policy, and its impact on the future of nations.

Competitive strategy concerns what ExxonMobil is doing in order to gain sustainable

competitive advantage. This study was to establish the competitive strategies adopted by

ExxonMobil to meet the competition in the sector. ExxonMobil transmitted to all

independent Lubricants marketers who are currently active in the Market as listed in

Petroleum institute of East Africa insight publication of 1st Quarter 2012. A response rate

of 63.6% was achieved. The study explored characteristics of marketers/factors that

influence the competitiveness and hence adoption of the various competitive strategies.

Table of Content

Content No Content Page

No

Definition of Strategy

1 Discovery 1

2 Strategic thinking 1

3 Strategic planning 1

4 Strategy roll-out 1

5 Strategy tune-up/adjustment. 2

Most Strategic Management Model 3

6 EFE Matrix of ExxonMobil 3

7 CPM Analysis of ExxonMobil 4-5

8 Value Chain 20

9 Analyzing VISA Model 22

10 Analyzing SMARTER Model 24

11 BCG Matrix 26

12 Pure Objectives 26

13 GREAT - Model 27

14 Market Analysis including Market Segmentation 29

15 QSPM Analysis of ExxonMobil 30

16 Financial analysis 32

17 Competitor Analysis 37

18 Breakeven Analysis 39

19 Industry Key Success Factors (KSFs) 41

20 Strategy Evaluation 42

21 Contingency Planning 43

22 Recommendation 45

23 Conclusion 45

Reference 47

Definition of Strategy

Strategy is a method or plan chosen to bring about a desired future, such as achievement

of a goal or solution to a problem. The term is derived from the Greek word for generalship

or leading in army. It is also called as tactics.

Some important definition of Strategic Management theory:

Strategic Management (Theory: 2000 – 2010)

• Strategic Management can be defined as (1) the art and science of formulating, (2)

implementing, and (3) evaluating cross-functional decisions that enable an

organization to achieve its objectives.

• Strategic Management focuses on integrating management, marketing,

finance/accounting, production/operation, research and development (R&D) and

computer information systems to achieve organizational success.

Strategic Management (Theory: 2011 – 2015 ±)

• Strategic management involves strategy development, which is comprised of five

stages:

1. Discovery,

2. Strategic thinking,

Exxon Mobil Corporation is committed to being the world's premier petroleum

and petrochemical company. To that end, we must continuously achieve superior

financial and operating results while simultaneously adhering to high ethical

standards of business conduct. These unwavering expectations provide the

foundation for our commitments to those with whom we interact.

3. Strategic planning,

The vision of this company is to become the center of excellence for key water-

related technologies particularly those applicable to the petroleum and municipal

sectors.

4. Strategy roll-out,

Business Strategy of Exxon Mobil:

ExxonMobil employ a business model focused on achieving excellence in our daily

operations, generating superior cash flow, and creating long-term shareholder value. As

a result of the consistent application of this proven business model, we possess

competitive advantages that support strong results today and position us well for decades

to come.

Operate in a Safe and Environmentally Responsible Manner.

Uphold High Standards

Attract and Retain Exceptional People

Maintain Financial Strength

Competitive Advantages

Balanced Portfolio

Disciplined Investing

High-Impact Technologies

Operational Excellence

Global Integration

5. Strategy tune-up/adjustment.

Most Strategic Management Model

There are several strategic management models existed. Among these some are given

below:

I. PEST Analysis

II. STEER Analysis

III. Five Forces Model

IV. Strategic Group Map

V. SWOT Analysis

VI. Blue Ocean Strategies

VII. Open Innovation

VIII. Seven S Model

EFE Matrix of ExxonMobil

Key External Factors Weight Rating Weighted

Score

OPPORTUNITIES

1. Political Support

2. Demand Increase

3. Activities on Social Responsibilities

4. Activities on safety & Human Rights

0.20

0.15

0.10

0.05

3

2

4

2

0.60

0.30

0.40

0.10

THREATS

1. Competitive Market

2. International Rivals

3. Environmental Threats

4. Safety Risk

0.10

0.20

0.15

0.05

1

3

2

4

0.10

0.60

0.30

0.20

4= the response is superior

3= the response is above average

2= the response is average

1= the response is poor

Rating

TOTAL 1.00 2.60

CPM Analysis of ExxonMobil

Exxon Mobil Concophilips Chevron

Critical Success Factors Weight Rating Score Rating Score Rating Score

Quality Management

SPIRIT Values

Independent Exploration

& Production

Human Rights

0.20

0.10

0.10

0.10

4

4

2

4

0.80

0.40

0.20

0.40

3

4

4

4

0.60

0.40

0.40

0.40

2

3

3

3

0.40

0.20

0.30

0.30

Financial Strength 0.15 4 0.60 3 0.45 4 0.60

Technical Capabilities 0.20 4 0.80 4 0.80 4 0.80

Asset Quality and Scale 0.10 3 0.30 3 0.30 4 0.40

Global Expansion 0.05 4 0.20 3 0.15 4 0.20

Total 1.00 3.70 3.50 3.20

4= Major Strength, 3= Minor Strength, 2= Minor Weakness, 1= Major Weakness

i. PEST Analysis of Exxon Mobil: PEST analysis stands for "Political,

Economic, Social, and Technological analysis" and describes a framework of

macro-environmental factors used in the environmental scanning component of

strategic management.

ii. STEER Analysis: STEER analysis systematically considers Socio-cultural,

Technological, Economic, Ecological, and Regulatory factors.

iii. Five Forces Model of Exxon Mobil:

iv. Strategic Group Map :

1. Extent of Product diversity: Oil, Liquefied Natural Gas (LNG), Bitumen, Liquids

2. Extent of Geographic Coverage: Exxon mobil operates in Europe, North America,

Australia, Asia Pacific and Middle East, Canada, Other International Projects.

3. Number of

Market Segment

Served: According to

the geography Exxon

mobil segments the

market to spread its

overall business

internationally. They

mainly focus on the market into groups of individual markets with similar wants or needs

that a company divides into distinct groups which have distinct needs, wants, behavior.

4. Distribution

Channels Used:

Natural gas is sold by

local distributing

companies as well

marketing companies,

transport natural gas via

firms, interruptible transportation agreements to major market hubs.

5. Extent of Branding: Exxon Mobil brands its products through Newspaper, TV, and

Web based etc.

6. Marketing Effort: Environmental Laws and regulations while operating can add to

the cost and difficulty of marketing or transporting products across state and

international borders.

7. Product Quality: High quality is maintained while producing and operating the

natural gas, oil, bitumen etc.

8. Pricing Policy: Exxon Mobil follows consistent price policy. Exxon Mobil uses swap

contracts to convert fixed-price sales contracts.

5) SWOT Analysis of Exxon Mobil

• Strengths: characteristics of the business or team that give it an advantage over

others in the industry.

• Weaknesses: are characteristics that place the firm at a disadvantage relative to

others.

• Opportunities: external chances to make greater sales or profits in the

environment.

• Threats: external elements in the environment that could cause trouble for the

business.

6) Blue Ocean Strategy of Exxon Mobil

Exxon Mobil competes with private, public and state owned companies in all facets of

the E&P business. Some of the competitors have larger and greater resources. Each of

Exxon Mobil’s segments is highly competitive, with no single competitor, small group of

competitors, dominating.

7) Open innovation of Exxon Mobil

Exxon Mobil always focuses on engineering innovation and technology. Power generation

and certain technology innovations include Exxon Mobil emerging business segments.

8) Seven S-Model of Exxon Mobil

Business Environment/ Strategy: Exxon Mobil has higher competition from

national oil company, while operation government law is maintain with high ethical

standards, operation as for lower effective tax rate.

Exxon Mobil Organogram:

Exxon Mobil Profile:

Exxon Mobil Corp., or ExxonMobil, is an American multinational oil and

gas corporation headquartered in Irving, Texas, United States. It is a direct descendant

of John D. Rockefeller's Standard Oil Company, and was formed on November 30, 1999,

by the merger of Exxon and Mobil (formerly Standard Oil of New Jersey and Standard Oil

of New York). It is affiliated with Imperial Oil which operates in Canada.

Type Public

Traded as NYSE: XOM

Dow Jones Industrial Average

Component

S&P 500 Component

Industry Oil and gas

Predecessors Exxon

Mobil

Founded November 30, 1999

Headquarters Irving, Texas, United States

Area served Worldwide

Key people Rex W. Tillerson

(Chairman and CEO)[1]

Products Fuels, lubricants, petrochemicals

Revenue US$ 420.836 billion (2013)[2]

Operating

income

US$ 40.301 billion (2013)[2]

Net income US$ 32.580 billion (2013)[2]

Total assets US$ 346.808 billion (2013)[2]

Total equity US$ 174.003 billion (2013)[2]

Employees 75,000 (Dec 2013)[2]

Subsidiaries Aera Energy, Esso, Esso

Australia, Exxon, Exxon

Neftegas, Imperial

Oil(69,6%), Mobil, Mobil

Producing Nigeria, seariver

Maritime, Superior Oil

Co., Vacuum Oil Co., XTO Energy

Website Exxonmobil.com

The world's largest company by revenue, ExxonMobil is also the second largest publicly

traded company by market capitalization. The company was ranked No. 5 globally

in Forbes Global 2000 list in 2013. Exxonmobil's reserves were 25.2 billion BOE (barrels

of oil equivalent) at the end of 2013 and the 2007 rates of production were expected to

last more than 14 years. With 37 oil refineries in 21 countries constituting a combined

daily refining capacity of 6.3 million barrels (1,000,000 m3), exxonmobil is the largest

refiner in the world, a title that was also associated with Standard Oil since its

incorporation in 1870.

Exxonmobil is the largest of the world's super majors with daily production of

3.921 million BOE. In 2008, this was approximately 3 percent of world production, which

is less than several of the largest state-owned petroleum companies. When ranked by oil

and gas reserves, it is 14th in the world—with less than 1 percent of the total.

Shared Value: The mission of Exxon Mobil is that- We exist to power civilization. Exxon

Mobil SPIRIT values set the tone for how we behave withal our stakeholders, internally

and externally.

Structure: Exxon Mobil have 29800 efficient employees. They have several

departments those are Human Resource Department Marketing, Software Engineering,

Hardware Engineering, Project, Finance and Monitoring department etc.

Staff: Exxon Mobil hire talent employee when they recruit they consider knowledge,

skills and experience, they consider their employee as an asset.

System/ Infrastructure: Exxon Mobil offer attractive salary, pension plans, informs

estimated retirement date, provides health care services.

Skills: when they recruit they consider knowledge, skills and experience.

Style: they always focus on production quality, innovation as well as teamwork for better

performance of the company.

PESTEL Analysis of Exxon Mobil:

POLITICAL

# Operation in more than 100 countries

including 36 refineries in 21 countries

worldwide

# Operations as for lower effective tax rate

ECONOMICAL

# As of 2011 the company’s total proven

reserves base grew to 24.9 billion oil-

equivalent barrels, comprising 49% liquids

and 51% gas.

# Exchange rates fluctuation hampers the

cash flow earnings

SOCIAL/SOCIO-CULTURAL

# Looks after the health issues of the

general public

# They are accountable for their actions to

the society.

TECHNOLOGICAL

# Uses latest technology for operation and

procedures

# Continuous research and development

activities goes on.

ECOLOGICAL

#Hydraulic fracturing pollutes the

environment.

# Environmental regulations are high

while operating in abroad

LEGAL/REGULATORY

# Follows regulatory measures by the

Government

# While operation Law is maintained with

high ethical standards.

SWOT Analysis of Exxon Mobil:

Internal

STRENGTHS

Leading market position.

Approximately 75000

employees worldwide.

Largest exploration and

production (upstream)

company.

WEAKNESSES

Cost of environmental

hazards

Pending Litigations.

Declining oil reserves

and production.

External

OPPORTUNITIES

Increasing demand for

refined products in

China.

Increasing demand for

liquefied natural gas

(LNG).

Capital Investment.

THREATS

Economic slowdown

in the US and the

European Union.

Risks associated with

conducting business

outside US.

Environmental

Regulations.

Porter’s Five Forces Analysis Of Exxon Mobil

The threat of new entry

This refers to the existence of factors that need to be overcome by potential entrants if

they are to compete in the industry. According to E&Y (2011) report on the US O&G

industry, the industry is highly specialized and highly capital intensive with the average

annual capital expenditure doubling from $72.8 billion in 2009 to $177.9 billion in 2010.

In order for an organization to set up in the O&G industry, it has to have access to reserves

and show that it has the financial capabilities, technical and operational expertise. Hence,

the likelihood of new entrants coming into the industry is low for Conoco Philips.

However, though this threat is low now, the rise of organizations with access to funds and

the rate of mergers and acquisitions have meant that high financial requirements may not

deter new entrants.

The threat of substitutes

This refers to products that offer the similar benefits to an industry’s products - in this

case O&G. The major substitutes of Conoco Philips are such as solar, ethanol, biodiesel

etc. The threat of these substitutes is not high as it is very expensive to process and

transform to energy sources when compared with O&G of Conoco Philips. Hence, it can

be concluded that whilst this is not a very high threat now, it should not be over looked

by players in the industry like ExxonMobil as it could be a high threat in the long–run.

The power of buyers

Buyers in this case refer to immediate customers and not necessarily the final consumers.

The buyers in the O&G industry like Exxon Mobil can be grouped into various categories:

the oil majors, the refinery and the ultimate consumers that buy from the retail petrol

stations. Hence from all indications, this threat is very high, as it is easy to switch between

buyers due to low 9 switching costs and the buyers have the capacity to supply themselves,

as some of these buyers are oil majors who own refineries.

The power of suppliers

Suppliers in this context refer to those who supply organizations with what it needs to

produce the product. In the Conoco Philips, suppliers can be grouped into suppliers of

equipment like drilling rigs to E&P firms, and suppliers of crude oil to refineries. As stated

above, there are a lot of companies in the US O&G industry, hence there are low switching

costs, standardized products, and concentrated purchasers but there aren’t concentrated

suppliers. Hence this threat is regarded as low in the Conoco Philips industry.

Competitive rivalry

Competitors are organizations with similar products aimed at the same customer group.

This threat is very high in the US O&G industry, as there exist over 5,000 companies in

the industry. The competitors for Exxonmobil in this industry include conocophillips,

Chevron, Marathon Oil and Apache and their financial and operating performance. This

threat is also regarded as very high as the industry is characterized by high fixed costs,

high exit barriers and low differentiation of O&G products.

SWAN Analysis

Strengths

1. Leading market position

2. Improvement in Financial

Performance

3. Extensive Research

&Development Activities

4. Geographical Diversification

Geographical Diversification

Weaknesses:

1. Legal proceedings

2. Pending Litigations

3. Employee unrest

4. Continued weak upstream

performance in the US

Achievement:

1. Strong competitive

advantages. That means,

exceptional quality of the

workforce provides a valuable

competitive edge. They strive to

hire and retain the most qualified

people available and to maximize

their opportunities for the

success through training and

development.

2. Higher customer satisfaction

throughout the world.

Next Steps:

1. Efficiency will continue to

play a key role in solving an

energy challenges.

2. Energy demand in developing

nations will rise 65 percent by

2040 compared to 2010,

reflecting growing prosperity

and expanding economies.

3. With this growth comes a

greater demand for electricity.

4. Growth in transportation

sector demand will be led by

expanding commercial activity

as our economies grow.

5. Technology is enabling the

safe development of once hard-

to-produce energy resources,

significantly expanding

available supplies to meet the

world’s changing energy needs.

Oil will remain the No. 1 global

fuel, while natural gas will

overtake coal for the No. 2 spot.

6. Evolving demand and supply

patterns will open the door for

increased global trade

opportunities.

TOWS Matrix

Value Chain

Exxon Mobil Analysis across the Oil and Gas Value Chain:

1) Primary Activities:

Supply Chain Management: Currently ExxonMobil relies on more than 175,000

suppliers of goods and services, including more than 85,000 third party contractor

personnel. Because its global reach expands well beyond its fence lines, they seek and

develop relationships with suppliers that uphold their commitment to operations

integrity.

Operations: ExxonMobil has an interest in around 40 producing oil and gas fields in

the North Sea. Many of these fields are operated by Shell U.K. Exploration and Production

as part of a joint operation. They are responsible for approximately 5% of UK oil and gas

production.

Distribution: Around 60 per cent of the refinery production of petroleum products is

exported, qualifying the refinery as one of the largest export companies of mainland

Norway.

Sales and Marketing:

Advertising

Market research

2) Support Activities:

a. Product R&D, Technology and Systems development:

Advance motor technology

Hydrogen fuel cells

Carbon Capture and Storage

Controlled freeze zone

b. Human Resource Management:

The Human Resources mission within ExxonMobil is to create competitive advantage

through people. HR has a crucial role to play in supporting the development of strategies

and people related initiatives, policies and programs that mean our employees view

ExxonMobil as their employer of choice, and that helps to ensure the long-term success

of our business.

The HR function is divided into two main areas:

Business Line HR - Roles in this area are both strategic and operational, and involve

working closely with managers and supervisors to implement HR strategies, effect

organizational changes, and ensure a productive work environment.

Services HR - Executing and continually improving core HR processes that are essential

to the smooth operation of the business, including recruitment, compensation and

benefits, policy development and vendor management. Roles in this area involve.

c. General Administration:

Operation safety

Environmental performance

Workplace

Analyzing VISA Model

Vision

Our vision is to be the E&P Company of choice for all stakeholders by pioneering a new

standard of excellence. Our SPIRIT Values consist of Safety, People, Integrity,

Responsibility, Innovation and Teamwork.

Our vision and values are essential building blocks in the continued success of Exxon

Mobil.

We further define and uphold our values through the following policies and positions.

The vision of the Global Water Sustainability Center (GWSC) is to become the center of

excellence for key water-related technologies particularly those applicable to the

petroleum and municipal sectors.

Strategy:

ExxonMobil has announced its plan to split into two separate publicly traded

companies, a refining company and an exploration and production business. While most

companies in the industry are working to consolidate production and refining, exxon

mobil is the first to purposefully separate the two.

The second largest oil firm in the U.S., exxon mobil believes the split will allow both

branches to better pursue their individual strategies. Analysts agree with the logic of the

split. “This is so positive for them,” said Fadel Gheit, an analyst at Oppenheimer.

“Everyone should stick to one business.” Apparently investors agree, sending exxon mobil

shares up 4.54% so far today. The separate is expected to be complete within the first half

of 2012.

Key objectives:

Improve insight into the regional distribution of oil and gas reservoirs and fields.

Improve knowledge of flow mechanisms and processes in the subsurface.

Develop and/or apply appropriate technologies to stimulate or coerce the reservoir

to release the most economic quantities of oil and gas.

Strong second-quarter production performance; raising full-year production

guidance.

Second-quarter production of 1,552 MBOED, including continuing operations of

1,510 MBOED and discontinued operations of 42 MBOED.

Major turnarounds and tie-in activity on plan.

Eagle Ford production of 121 MBOED, up 98 percent compared with second-

quarter 2012.

Christina Lake Phase E startup in July; four additional major projects on track for

startup by year end in the North Sea and Malaysia.

Exploration momentum continues with drilling in the Gulf of Mexico, Australia’s

Browse Basin, and unconventional plays in Canada and the Lower 48.

Increased quarterly dividend by 4.5 percent.

Action Plan:

As issues mature, the company develops strategies and specific action plans to address

them. Corporate strategies and action plans have been developed for key issues and are

updated periodically. The objective of our strategies is to prepare the company to succeed

in a world challenged by complex environmental, social and economic issues and

increasing stakeholder expectations. Strategies include updates on external expectations

and context, current status of the company’s activities addressing the issue, future

objectives and our plans to achieve those objectives. Strategies may begin with improving

our understanding of the issue, developing measurements of key data, or assessing risks

and opportunities related to an issue, for example.

Following development of corporate strategies comprehensive Issue Action Plans are

developed which create focus on key aspects of addressing the issue, clearly assign

accountability, and drive goal setting and engagement. In some cases, Business Unit

Action Plans then define goals, targets, objectives and/or key actions in more detail,

focused on the needs and priorities of the business and assets in that region.

An example plan, shown below could include 3-4 key focus areas and show linkage to

Technology and other functions.

Analyzing SMARTER Model

Specific: Having specific plan to enter into the new markets with specific objective.

Measurable: Yearly growth is increasing over years, also performance or outcome of

exxon is measured by different tools.

Achievable: Goals are set in such way that it is achieved by the organization though the

goal is challenging.

Realistic: Perceived goals are realistic and feasible it is very important for exxonmobil

because the investment is huge and for long run.

Time: Have set specific time for each of the goals to be achieved. Most of the project of

exxonmobil is long run, for that reason they make its plan or goal with specific time

duration part by part.

Encompassing: Achieved goals are evaluated and will be used for future, Here

management find the future prospect from the selective project and make plan for future.

Reviewed: Based on the evaluation performance is reviewed and checked for redoing.

exxonmobil follow different evaluation tools for evaluation after evaluation management

decides what to do need any modification or not.

BCG Matrix

Pure Objectives

• Positive: Exxon Mobil operate safely. As Their first SPIRIT Value, safety is the

cornerstone of every operation.

• Understood

– Performance: High performance in operations also in management.

– Style: Operation and management style follows the strict standard.

– Jargon: Maintain the Jargon glossary for oil and gas terms.

– Culture: Exxon Mobil recognized that the key to their success depended on

keeping many aspects of their past culture, while making some changes for

the future.

• Recorded: Maintaining the recorded database for future research and

documentation.

• Ethical: Exxon Mobil obligations are for the long-term, not just for this quarter

or this year. These obligations demand the adhere to the highest professional,

industry and personal ethics. It will build on their history of integrity so that people

will have an abiding trust in the company and the employees; they will know they

can count on the ethical issues. They maintains the Code of Business Ethics and

Conduct very devotedly.

GREAT - Model

Goals

• A truly integrated way to find and produce oil and natural gas.

• To prove reserves and production of liquids and natural gas.

• Exxon Mobil to power civilization. Exploring for, produce, transport and market

crude oil, natural gas, natural gas liquids, liquefied natural gas and bitumen on a

worldwide basis - the energy that plays a foundational role in enabling global

economic development and human progress.

Roles

The key focus areas include safely operating producing assets, executing existing major

projects and exploring for new energy resources in promising areas. Their portfolio

includes legacy assets in North America, Europe, Asia and Australia; growing North

American shale and oil sands businesses; a number of major international development

projects; and a global exploration program and active in a wide range of geologic and

geographic settings, including some of the world’s most challenging areas. From the

frozen Arctic to the arid desert, they have a proven track record of responsibly and

efficiently finding and producing oil and natural gas.

Expectations

One of the key strengths is the demonstrated ability to find new resources. Continually

striving to be at the forefront of reservoir prediction and characterization, as well as

advanced seismic and drilling enhancements enable the company to identify and better

characterize commercially viable resource deposits. The scientists use sophisticated and

proven technologies to locate and gain access to the resources deep beneath the earth’s

surface. Whether it’s exploration efforts in Norway – where they’ve operated for more

than 40 years – or Poland – where they are among the first wave of shale gas explorers

but their commitment is the same or everywhere.

Accountabilities / Abilities

• Continually striving to be at the forefront of reservoir prediction and

characterization, as well as advanced seismic and drilling enhancements enable

the company to identify and better characterize commercially viable resource

deposits.

• The scientific team use sophisticated and proven technologies to locate and gain

access to the resources deep beneath the earth’s surface.

Timing

Every project has its own time bounding. For example, Ekofisk, in Norway, first started

producing in 1971. At that time, it was forecasted to yield significant production for about

a decade. Now, with new projects under development, the field is prepared for production

until 2050.

Market Analysis including Market

Segmentation

The market analysis studies of the exxon mobil have the attractiveness and the dynamics

of a special market within the oil exploration industry. It is part of the industry analysis

and thus in turn of the global environmental analysis. Through all of these analyses the

strengths, weaknesses, opportunities and threats of the company has been identified.

Finally, with the help of these analyses, adequate business strategies of the company have

been defined. The market analysis is also known as a documented investigation of the

market that is used to inform the industry’s planning activities, particularly around

decisions of inventory, purchase, work force expansion/contraction, facility expansion,

purchases of capital equipment, promotional activities, and many other aspects of exxon

mobil.

Dimensions of market analysis

Market size (current and future)

Market trends

Market growth rate

Market profitability

Industry cost structure

Distribution channels

Key success factors

Key success Details

Market segmentation is the basis for a differentiated market analysis. One main reason is

the saturation of consumption, which exists due to the increasing competition in offered

products of the company. Consumers ask for more individual products and services and

are better informed about the range of products than before. As the consequence, market

segmentation is necessary. The segmentation of exxon mobil includes a lot of market

research, since a lot of market knowledge had required segmenting the market. Market

research about market structures and processes had been done to define the relevant

market. The relevant market is the integral part of the whole market, on which exxon

mobil focuses its activities.

QSPM Analysis of ExxonMobil

QSPM MATRIX OF EXXONMOBIL

SERIAL

NO

EXTERNAL

STRATEGIC

FACTORS

ALTRNATIVE 1 ALTERNATIVE 2

Exploration in Canada Exploration in Singapore

WEIGHT RATING WEIGHTED

SCORE

WEIGHT RATING WEIGHTED

SCORE

Strengths

1 Strong market

position & Big

brand name

0.15 4 0.60 0.12 3 0.36

2 Diverse

operations in

chemicals, coal,

power

generation

0.13 3 0.39 0.19 3 0.57

3 Talented work

force

0.11 4 0.44 0.13 2 0.26

4 Excellent global

research

0.12 3 0.36 0.11 2 0 .22

Weaknesses

1 Legal issues 0.17 3 0 .51 0.15 3 0 .45

2 Employee

management

0.11 1 0.11 0.10 3 0.30

3 Oil spill

controversies

0.12 2 0.24 0.12 4 0.36

4 Fraudulent

investments and

bribery cases

0.09 1 0.09 0.08 2 0.16

TOTAL 100% 100%

Opportunities

1 Increasing

fuel/oil prices

0.12 4 0.48 0.14 3 0.42

2 Increasing

natural gas

0.19 3 0.57 0.13 3 0.39

3

More oil well

discoveries

0.13 2 0.26 0.11 2 0.22

4 Increasing

demand for gas

and refined

products

0.11 3 0.33 0.12 2 0.24

Threats

1 Government

regulations

0.15 3 0.45 0.17 3 0.51

2 Pollution

guidelines

0.10 1 0.10 0.11 2 0.22

3 High labor cost 0.12 4 0.48 0.12 3 0.36

4 Hybrid cars not

using Fuel

0.08 2 0.16 0.10 2 0.20

TOTAL 100% 2.83 100% 2.56

GRAND

TOTAL

5.48 >

5.24

Alternative 1: Exploration in North America

Alternative2: Exploration in Asia

Attractiveness Score:

• 1 = not acceptable;

• 2 = possibly acceptable;

• 3 = probably acceptable;

• 4 = most acceptable;

• 0 = not relevant)

Comment:

In the base of data, we see that exploration in North America is better than exploration in

Asia for ExxonMobil. That’s means alternative 1 is better than alternative 2.

Financial analysis

This section analyzes some of those aspects of financial performance in greater detail as

it relates to ExxonMobil, as seen throughout following Financial Exhibit. Approximately

eighty percent of ExxonMobil’s sales and operating revenues come from its downstream

operations; however, its upstream operations are the most profitable (following

Exhibit). In 2011, ExxonMobil’s upstream division accounted for only 9.71 percent of its

operating revenue, yet generated 79.1 percent of the company’s net income. Since 2003,

the upstream division has averaged 8.8 percent of operating revenue and 73.3 percent of

net income. A year by year examination since 2003 shows that a mere 1 percent increase

in operating revenue for the upstream division can generate almost a 13 percent increase

in net income.

1. 𝑵𝒆𝒕 𝑷𝒓𝒐𝒇𝒊𝒕 𝑴𝒂𝒓𝒈𝒊𝒏 =

𝑵𝒆𝒕 𝑰𝒏𝒄𝒐𝒎𝒆

𝑺𝒂𝒍𝒆𝒔

2013

($ in

millions)

2012

($ in

millions)

2011

($ in

millions)

Net income 9221 8642 7683

Sales 54789 59436 151240

Net profit margin 16.83% 14.54% 5.08%

INTERPRETATION: The ratio tells investors the percentage of money a company

actually earns per dollar of sales. Net profit margin of the company is not satisfactory.

2. 𝑹𝑶𝑰 = 𝑬𝑩𝑰𝑻

𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕

3.

2013

($ in millions)

2012

($ in

millions)

EBIT 15,423 15,396

Total asset 117,144 153,230

ROI 13.17% 10.05%

INTERPRETATION: ROI of the company is in 2012 is better than 2011.

4. 𝑹𝑶𝑬 = 𝑵𝒆𝒕 𝑰𝒏𝒄𝒐𝒎𝒆

𝑬𝒒𝒖𝒊𝒕𝒚

2013

($ in

millions)

2012

($ in

millions)

Net income 8,498 12,502

0.00%

10.00%

20.00%

Net Profit Margin

5.08%

14.54%16.83%

2011 2012 2013

0.00%

5.00%

10.00%

15.00%

ROI

13.17%10.05%

2013 2012

Equity 48,427 65,749

ROE 17.58% 17.56%

INTERPRETATION: Return on equity is not satisfactory because ROE is increased

from 17.56 to 17.58% in 2013. It indicates firm should concentrate on the equity

management.

5. 𝑹𝑶𝑨 = 𝑵𝒆𝒕 𝑰𝒏𝒄𝒐𝒎𝒆

𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕

2013

($ in

millions)

2012

($ in

millions)

Net Income 8,498 12,502

Total assets 117,144 153,230

ROA 7.66% 7.19%

17.54%

17.56%

17.58%

ROE

17.58%

17.56%

2013 2012

INTERPRETATION: In 2012 ROA is 7.66% which was earlier in 7.19%. That indicates

assets are utilizing properly to generate its net income.

6. 𝐸𝑃𝑆 = Net Income − Dividends on Preferred Shares

Weighted Average Number of Common Shares Outstanding

2013 2012

Net income 8,498 12,502

Dividend on P/S 2.64 2.64

Common Shares Outstanding

Basic

Diluted

1,243,799

1,253,093

1,375,035

1,387,100

EPS

Basic

Diluted

0.6830

0.6783

0.9090

0.9011

6.50%

7.00%

7.50%

8.00%

ROA

7.66%

7.19%

2013 2012

Competitor Analysis

ExxonMobil operates in three major industries: oil, natural gas, and chemicals. Since the

dynamics, opportunities, and challenges in each are very different, the competitors in

each industry are analyzed separately.

Firms Competitors

Oil Industry

The world oil market is dominated by government-controlled companies that actually

control the majority of both current production (more than 52 percent in 2007) and

proven reserves (88 percent in 2007). The companies operating in the world oil market

can be broadly classified into three categories:

National oil companies that function as corporate entities but have strategic and

operational autonomy and support of national governments. Examples are: Petro bras

(Brazil), Statoil (Norway), Petro China (China), and ONGC (India).

National oil companies that operate as an extension of the government – Saudi Aramco

(Saudi Arabia), Pemex (Mexico), and PDVSA (Venezuela). They support their respective

government’s programs like subsidizing fuels to domestic consumers.

Investor-owned oil companies (ExxonMobil, Shell, and BP) form a relatively smaller

segment of the world oil market and sell their output in competitive markets. ExxonMobil

is the largest among the six big non-states owned, vertically integrated oil companies,

popularly known as “Big Oil” (or “super majors”) companies; the others in this 16 category

are Royal Dutch Shell, BP, ConocoPhillips, Chevron, and Total S.A. In addition, there is

increasing competition from national oil companies like Saudi Aramco, Gazprom and

China National Petroleum Corporation (CNPC). Though the big oil companies have the

technological know-how and large assets at their disposal, they are at a disadvantage

when it comes to access to oil reserves, as OPEC controls the majority. Access to high

growth markets in non-OECD countries is difficult as these markets are already served by

incumbent, local, state-owned companies like Petro bras in Brazil, Oil and Natural Gas

Corporation (ONGC) in India, and Petro China in China.

Natural Gas Industry

Though the oil business has been dominated by the Big Oil companies, the natural gas

business in the U.S. was, until recently, managed by small, independent, non-integrated

companies. With replacement ratios for oil dropping and the oil-rich regions becoming

more politically unstable, Western oil companies are scrambling to find new ways to

address growing energy demand. Big Oil companies started foraying into natural gas, an

adjacent market. Globally, there are big state-owned companies. Gazprom, of Russia, has

17 percent of the world’s natural gas reserves. ONGC is an Indian state-owned oil and gas

company that contributes 81 percent of India's natural gas production. The Chinese

market is dominated by three local companies: China National Offshore Oil Corporation

(CNOOC), CNPC (parent of Petro China), and China Petrochemical Corporation (parent

of Sinopec). The natural gas market is highly fragmented, with dominant players in each

region and no single company having control over multiple geographies.

Chemical Industry

ExxonMobil also manufactures and sells commodity petrochemicals and a wide variety of

specialty products. The competitors for ExxonMobil in this market are: BASF (Germany),

Dow Chemical, Ineos (UK), Saudi Basic Industries Corporation, DuPont and Chevron

Phillips Chemical Company LLC (CP Chem). Primary Competitors Oil

The primary competitors for ExxonMobil in the oil industry are the other Big Oil

companies:

Shell, BP, ConocoPhillips, Chevron, and Total S.A. See following Exhibit for a detailed

comparison of competitors. The common trend across all competitors is the rise in

production of natural gas. This indicates that the Big Oil companies are now adjusting

their energy portfolio to account for the depleting oil reserves. ExxonMobil’s jump in

production of natural gas in 2010 is attributed to the acquisition of XTO. ConocoPhillips,

in particular, is seeing its overall replacement ratios falling and a drop is seen both in oil

and natural gas.

Breakeven Analysis

Break-even analysis can determine the minimum amount a company needs to sell in

order to cover fixed costs.

Break-even analysis represents the minimum quantity a company needs to sell to cover

costs like rent, building expenses, utilities, or other aspects of running day-to-day

operations.

Break-even analysis lets companies compare their production or sales to the minimum

point they need to achieve in order to stay in business.

Sales 57,967

Purchased commodities 25,232

Production and operating expenses 6,793

Variable Cost 32,025

C. Margin (Sales-VC) 25,942

Selling, general and administrative expenses 1,106

Exploration expenses 1,500

Depreciation, depletion and amortization 6,580

Impairments 680

Total Fixed Cost 9,866

𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑀𝑟𝑔𝑖𝑛 𝑅𝑎𝑡𝑖𝑜 =𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑀𝑟𝑔𝑖𝑛

𝑆𝑎𝑙𝑒𝑠 =

25942

57967 = 0.4475

𝐵𝐸𝑃 =𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡

𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑀𝑟𝑔𝑖𝑛 𝑅𝑎𝑡𝑖𝑜 =

9866

.4475 = $ 22046.92 million

Here the analysis shows that to have the no gain no loss position that mean breakeven

point ExxonMobil must sell $ 22,046.92 million.

MARKETCAP:

Medium to large-sized companies (the largest 1500 companies) should be chosen,

because they are more in the protected eye. Furthermore, the investor is exposed to less

risk of "accounting gimmickry", and companies of this size have more staying

power. COP has a market cap of $87,782 million, therefore failing the test.

Industry Key Success Factors (KSFs)

For the oil and gas industry, the five main Key Success Factors (KSFs) are: Exploration

and Oil discovery, Manufacturing, Financial, Technology and Marketing& Distribution.

Strategy Evaluation

In order to evaluate strategies first it is essential to identify suitable indices for evaluation

of strategies. Strategy evaluation will be based on main external (economical, political,

legal, social, Ecological, and cultural), internal

(management, marketing, finance, accounting, production, operations, research and

development, and IT), environmental, and innovative factors.

Identify and Selectively Capture the Highest-Quality Exploration Opportunities:

ExxonMobil’s fundamental exploration strategy is to identify, evaluate, selectively

pursue, and capture the highest-quality resource opportunities, ahead of competition.

The global organization allows us to explore diverse resource opportunities, in all

environments.

Maximize Profitability of Existing Oil and Gas Production:

ExxonMobil successfully maximizes the commercial recovery of hydrocarbons across a

reservoir’s life cycle. We apply our Operations Integrity Management System, cost-

effective technology, and disciplined and selective investment as key strategies in

delivering strong performance.

Invest in Projects that deliver Superior Returns:

Our rigorous, high-quality project management processes consistently deliver superior

project execution performance. When combined with our industry-leading portfolio of

more than 130 major projects, our disciplined investments will continue to deliver

maximum value.

Capitalize on Growing Natural Gas and Power Markets:

ExxonMobil is well-positioned with significant gas portfolio to deliver reliable supplies of

affordable natural gas and power to help meet increasing global demand. They have a

detailed knowledge of global energy markets allows to maximize the value of our gas,

natural gas liquids and power interest.

Since opportunities and threats are caused by external factors, and weak and strength

points from internal factors, in this model evaluation of strategies is considered by

taking into account the opportunities, threats, weak and strong points. This will be a

good foundation for formulating the strategy. Yet, observations have

revealed that SWOT analysis shows weakness in evaluation and measurement and

this weakness could be Covered by using QSPM model assuring in a more suitable

strategy design.

Strategy Evaluation:

It is all about formulation of new strategies because it throws light the efficiency and

effectiveness to achieve the desired result. It includes:

Fixing benchmark of performance: We plan to achieve 3% to 5% compound annual

production growth, as well as growth in reserves, through drilling programs in our

legacy assets and sanctioned major projects globally. We also expect 3% to 5%

compound annual margin growth over the next 5 years at flat prices, as we divest

lower-margin assets and shift our production mix to higher-value products.

Measurement of performance: Our large, onshore continental U.S. position of 13.8

million net acres gives us access to scalable inventory that can generate substantial

production and margin growth in the years ahead. We are active in several major

North American unconventional plays, including the Eagle Ford, Bakken, Permian

and Niobrara in the United States, and the Duvernay, Montney, Canol and Horn

River (Muskwa) in Canada. We expect decades of production from these areas

going forward.

Analyzing variance: we should analyze other competitors and factors in order to

understand our present condition in the market.

Taking Corrective action: if necessary we must take corrective actions for the

betterment of present condition.

Contingency Planning:

The Contingency planning efforts covered a range of different emergency types – natural

disasters, conflicts, other emergencies like Technological, Political etc –

including planning for new emergencies and for

potential changes in ongoing protracted operations.

ExxonMobil’s operations around the world include activities both onshore and offshore

that can experience weather extremes and storms, large sea level variations and wave

height, and temperature and precipitation extremes. Technological, political, and

regulatory risks have been inherent in the oil and gas industry since its earliest

beginnings. The uncertainties associated with the physical and regulatory risks impede

assessment of potential financial implications.

ExxonMobil’s operations include activities in a variety of environments; severe weather

events can disrupt supplies or interrupt operations. While current scientific

understanding of climate change provides limited guidance on how the risks of weather

extremes may change in the future, they manage these risks through robust design and

operations contingency planning.

Current scientific understanding provides limited guidance on how trends in weather

extremes and storms will change in the future over a very long time horizon. They

currently design, construct, and Operate facilities to withstand a variety of extreme

weather conditions, including much of the range of potential outcomes.

At ExxonMobil, risks are mitigated with appropriate contingency planning and the

application of a comprehensive risk management system. Known risks are mitigated first

of all by factoring them into equipment and facility design, construction and

operations. Business continuity planning and emergency preparedness are two essential

elements to manage risks of business disruption, so that we can continue supplying fuels

for transportation and electrical power as well as Chemicals for consumer products, which

are vital to the world's economy.

Their approach to managing these risks includes the following elements:

• Incorporation of understanding of risk into design, construction and operation of

exposed facilities;

• Early and coordinated action to respond rapidly and effectively;

•Business continuity and emergency response plans to protect the safety of their

employees and operations.

• Worst-Case scenario emergency response exercises to practice coordination and

logistical response, and propose upgrades to standard processes and contingency plans.

ExxonMobil will respond to these uncertainties and developments using their traditional

approach: disciplined planning and investment, financial strength, efficient and reliable

operations, and research and development. Those best able to manage investment and

operating risks and operate efficiently will achieve competitive advantage.

ExxonMobil manages risk through a capable and committed workforce with clear

accountability, well-developed and clearly defined policies and procedures, high

standards of design, rigorously applied management systems, employee and contractor

training, and a systematic approach to assessing performance that drives continuous

improvement.

Recommendation

Appropriate slot ought to continue the existing process while using progress involving

using paying attention, like;

1. Identify and pursue all attractive perforations opportunities like Research and

Development, 90% oil reserves are Own by governments and upstream operation in more

than 40 countries.

2. For Maximization of Profitability the Capital expenditure should be focused 1) Future

Product Quality Requirements 2) Reduce Environmental Affects 3) Safety Systems 4)

Lower Operational Costs 5) Produce Higher Values Products 6) Lower Cost Raw Material

3. Maintain base in class operation in all aspects like globally integrated supply chain

and Strategic Alliance.

4. ExxonMobil’s ensure to provide quality, value products and services to customers.

5. ExxonMobil’s have to have regularly enhanced their particular options along with

techniques.

Conclusion

Despite recent economic challenges, global energy demand is likely to increase about 35

percent from 2005 to 2030. Virtually all the growth in energy use will occur in developing

countries, where demand will increase more than70 percent. The fastest growing major

energy source will be natural gas, reflecting strong demand for clean-burning fuels to

meet rising power generation needs. By 2030, natural gas will displace coal as the second

most prominent source of energy worldwide.

While the scale of the world’s energy needs today is enormous, ExxonMobil must continue

to find innovative ways to meet not only today’s demands, but the growing demands of

the future while managing the impact of energy on the environment. Critical to meeting

the world’s energy needs is the ongoing development of new energy technologies to

expand the supply of traditional fuels, develop new sources of energy, and allow us to use

energy more efficiently.

ExxonMobil is committed to continue the role of innovating and developing many of these

new technologies. While supplying the world’s energy needs requires constant

innovation, it will also require unprecedented levels of investment. ExxonMobil’s

financial strength allows continuing to invest with a long-term perspective that

transcends year-to-year economic conditions. Their capital and exploration expenditures

in 2010 were a record $32.2 billion. They will continue to invest at substantial levels –

more than $165 billion over the next five years deploying new technologies and delivering

new projects to efficiently supply energy to the world.

They know that developing and delivering energy involves risks – safety and

environmental risks, financial risks, geopolitical risks, and technical risks. ExxonMobil

will continue to improve and perfect their approach to assess and manage these risks.

Consumers and the public rely on ExxonMobil to deliver reliable, affordable energy that

enables them to achieve better lives and to do so in a way that minimizes risks to people,

communities and the environment.

References

Rajan, R. 2013. Strategic Analysis of Shell Corporation.

Wall street Journal, 2011. Exxon sees Burgeoning Demand for natural gas.

Ananthanarayanan et al., 2011. Capstone. Santa Clara University.

Global data, 2014. Exxon Mobil Corporation: Financial and strategic analysis review.

GDGE1203FSA :1-6.