Exxon Mobil is an American company that ventures in oil and gas geographic expedition. The amalgamation of Mobil and Exxon in 1999 formed this company, doing it one of the largest companies in the universe. The company is the most profitable in the universe, both in its line of concern, and in relation to the public presentation of other big transnational corporations ( Coll, 2012 ) .
Coll ( 2012 ) observes that the company operates in more than 200 states, with an plus base of 37 oil refineries ( p.34 ) . Due to these monolithic resources, the company refines an approximative value of six million barrels of oil per twenty-four hours. Esso, Exxon and Mobil are the trade names in which the company uses to consolidate the market. These are energy merchandises used in the petrochemical industry, lubrication and conveyance industry, and companies that require crude oil energy to drive their production ( Coll 2012, Abreu 2010 and Choi, 2008 ) .
This paper is a study on the strengths, failings, chances and menaces that face the company. It provides a critical rating of the above elements of the company, and where possible, this paper gives illustrations, and explains them. The chief purpose of this analysis is to foretell the future potency of the failing, and advice investors on whether it is wise to put in this company.
The importance of this SWOT analysis is to place whether it is a wise venture to put in ExxonMobil. To efficaciously explicate the strengths of the organisation, this paper highlights the undermentioned issues in respect to ExxonMobil, its place as the most dominant participant in its field of operation, and its varied beginnings of gross. This paper recognizes the company ‘s stable economic public presentation as one of its strengths.
This paper identifies and explains the undermentioned as the failings of the organisation, inordinate legal proceedings, employee instability, and a hebdomad upstream public presentation in the United States economic system, and its association with dictatorial governments in African states such as Chad. It identifies the chances of this company every bit, emerging markets for energy in China, an addition for the demand of liquified gas, addition in profitableness due to its extended base, among others.
In placing and depicting the menaces the organisation faces, this paper focuses on the economic recession in United States of America and Europe, buccaneering and panic menaces, and Torahs modulating the environment. This paper has a decision, and it is an analysis of the assorted described, and it gives a recommendation on whether puting in the company is a wise determination.
Strengths of Exxon Mobil:
Choi ( 2008 ) observes that, the size of Exxon Mobil as the largest oil and Gas Company in the universe makes it bask the benefits of economic systems of graduated table ( p.32 ) . Because of its monolithic size, the company has the ability to easy pull capital. The company is a big transnational organisation, and it operates in over 21 states of the universe. The company ‘s gross is high, because of its monolithic capital, since it operates an approximative figure of 37 oil refineries ( Coll, 2012 ) .
For case, in 2007, the company had an oil modesty whose value was 72 billion, with the capableness of enduring for 14 old ages. This if all the factors impacting oil supply and production remained changeless. The company, due to its size, has a capableness of polishing an approximative day-to-day value of 6.3 million barrels of oil ( Abreu, 2010 and Coll, 2012 ) .
This is a big figure sing how many a million barrel of oil can last, in a individual state. In per centum footings, the company controls 3 % of the universe energy supplies through its refineries and subordinate companies all over the universe.
Due to its place as the most dominant participant in the geographic expedition and production of energy, the company makes one million millions of net incomes. This gives it the ability to command the foreign of the American authorities. The company operates under three divisions, and they are downstream, chemical and upstream division ( ExxonMobil, 2010 ) .
Due to its monolithic gross and capital base, the company outperforms its rivals such as Royal Dutch Shell, BP and Chevron Corporation. ( Abreu, 2010 ) .
The company has different countries of geting gross, and this is its other strength. The company operates under three divisions, viz. upstream, downstream and chemical watercourse. At the chemical division, the company operates through ExxonMobil chemical company. This division concentrates with chemical energy, and its production ( Abreu, 2010 ) .
The division concerns itself with petro-chemical engineering, and produces substances such as aromatics and polymers. Anyone wishing to utilize them must obtain a licence from the company, and at a fee. It besides leases Zealot accelerator, for usage in petrochemical procedures. Another gross watercourse for Exxon Mobil is its upstream division ( ExxonMobil 2010 and ExxonMobil, 2009 ) .
The division has companies such as ExxonMobil Exploration Company, ExxonMobil Production Company, ExxonMobil Gas and Marketing Company. The duty of the geographic expedition company is to look for new oil production countries. As the company ‘s oil Fieldss and gas field diminish, the Exploration Company is responsible for placing new geographic expedition land ( Coll, 2012 and Choi, 2008 ) .
This ensures the company is in concern, and does non run out of stock. The downstream division consists of a refinery and a supply company. The intent of this company is to polish the barrels of oil in its ownership, and thenceforth sell them. Other organisations in this subordinate are ExxonMobil Fuels and Lubricants supply and ExxonMobil Engineering and Research Company ( APQC, 2004 ) .
This organisation of the company accelerates its efficiency in its concern, and this leads to increased profitableness, because the subordinate organisations, supplement the work of each other. As compared to other oil production companies, it is ExxonMobil that has the most sophisticated construction in footings of the operations of its subordinate companies and their direction ( Coll, 2012 ) .
Coll ( 2012 ) in his analysis of the company ‘s fiscal record observes that, the company has a stable economic public presentation, emanating from its strong public presentation of the 2005 fiscal twelvemonth ( p.12 ) . In 2004, the company made net incomes to the melody of 340 billion dollars. In 2006, the company performed somewhat lower than 2005, and made a net income of 335.1 billion dollars ( Coll, 2012 ) .
In 2012, the company became the most profitable concern organisation in the universe. It maintained this place from the last three old ages.
Failings of ExxonMobil
One of the failings of the company is that it faces legion legal challenges. An case involves a case by Ryanair against the company. The air hose company sought amendss amounting to 1000000s of dollars, avering that ExxonMobil overcharged it in footings of fuel monetary values. The air hose company sought at least 7.6 million lbs, as compensation for its lost net incomes. This is after a reappraisal of monetary values by the company, over a seven twelvemonth period ( Coll, 2012 ) .
The case alleges that, through its subordinate, Esso Italiana, the air hose paid higher monetary values for jet oil in Italian airdromes, as compared to other air hoses in Europe. The company in the case alleges that, the higher monetary values made them endure loss, because of low ticket gross revenues. Ryanair filed the case in 2011.
In 2006, the company faced charges of prosecuting in exchange of information with its rivals for intents of market domination. This was in relation to an effort of the company in commanding a refueling installation in Italy. The Italian oil regulator fined the company a sum of 315 million Euros ( Abreu, 2010 ) .
In 2006, the company faced a series of cases due to a escape of gasolene oil in Jacksonville. An approximative figure of 300 people filed a instance against the company demanding compensation over the wellness hazards associated with the escape. In July 2011, the tribunal awarded the complainant an approximative award of half a billion dollars in footings of amendss ( ExxonMobil, 2010 and ExxonMobil, 2009 ) .
The company faced a punitory mulct of 1.5 billion dollars, for carelessness and fraud in relation to the Jacksonville gas escape. In March 20009, a tribunal in Baltimore awarded some 300 people an approximative sum of $ 150 million, in relation to the Jacksonville escapes
. On February 26th 2009, the company faced a jurisprudence suit for environmental amendss, originating from the devastation of Kivalina. The company won the jurisprudence suit. In Yellow Stone County, the company faces legal proceedings, because of an oil spill on the Yellowstone River. An approximative value of 70,000 gallons of oil spilled into the river ( Coll, 2012 ) . The complainants brought legal proceedings against ExxonMobil on the evidences that the oil spill affected their lives, and animate beings.
The company faces challenges in respect to keeping the trust and confidentiality of their employees, particularly in its security sector. An case involves a group of Indonesian villagers who accused the company ‘s security officers of human rights misdemeanors. Harmonizing to the Alien Tort Statute of 1789, the company does non bask unsusceptibility. It must account for its actions, and hence command its employees.
Such determinations affect the operation of its employees, taking cautiousness of their action, least they face disciplinary action, and perchance legal case. On April 2008, Nigerian employees of ExxonMobil went on an industrial action demanding better wage rewards, and good working conditions ( ExxonMobil, 2010 ) . The company under examination was Mobil Producing Nigeria, an affiliate company of ExxonMobil.
A diminution in the production of energy end products in its upstream division in United States of America is another failing confronting the company. There is a crisp diminution in the production of liquefied oil and gas in United States of America, and this affects the operations of the company in footings of its supplies ( Abreu, 2010 ) .
In the long tally, this state of affairs produces n consequence of cut downing the gross base of the company. For case, in 2012, ExxonMobil direction gave their quarterly net incomes, and its upstream division, which contributes a larger per centum of gross to the company, plunged in relation to profitableness ( Coll, 2012 ) .
The company attributed this to low monetary values of natural gas, falling monetary values of rough oil, and low production of oil and gas in America by its upstream division. In 2004, United States of America experienced a diminution of gas and oil production, and this state of affairs still exists many old ages down the line ( ExxonMobil, 2010 and Coll, 2012 ) .
To extenuate this state of affairs, oil companies in America use the hydraulic fracturing technique to work militias that they deem an expensive venture. To extenuate against low monetary values, the company drills shale ‘s that produce high value liquefied gas, and hydro Cs
Opportunities of Exxon Mobil:
One of the chances the company has is an addition in the demands of refined energy in Asia, and specifically China. China has the largest universe population, and its of all time seeking for new avenues of energy and gas supply. This presents the company with an chance of embarking into the Chinese market, heightening its growing ( Abreu, 2010 ) .
The company has an chance to spread out its operations in Qatar, in relation to exporting liquefied gas from Texas, a State in America. On August 2012, the company, through Qatar Petroleum International signed a proposal to export liquified natural gas ( Coll, 2012 ) .
The trade is approximated at 10 billion United States dollars ; nevertheless the company is cautious in this attack because of the hazards it entails. Due to the emerging markets of liquified gas, the company seeks geographic expedition sites that have liquefied gas ( Coll, 2012 ) .
For case, the company paid 2.86 billion dollars to get excavation rights in Alberta gas bring forthing parts of Duvernay and Montney.
The strength of its capital investing makes it possible for the company to prosecute in expansionist inclinations. ExxonMobil plans to put over $ 25 billion dollars, in the following approaching old ages, and the purpose of this is to fulfill the turning demands of energy ingestion ( Coll, 2012 ) .
The company seeks to develop new engineering, such as its progress vehicle fuel energy. These are technological steps by the company for the intents of cut downing fuel emanations emanating from vehicles. Other technological inventions are, the development of a distant gas sensing system that efficaciously detects hydro-carbons, guaranting a decrease in hydro-carbon emanations ( Abreu, 2010 ) .
Due to its strong capital base, the company managed to organize a group termed as Emerging Energy Sources Technology Team. The duty of this group is to measure and analyse emerging tendencies of technological know-how and implement them into the running the company ‘s personal businesss ( Abreu, 2010 ) .
The group analyzes a engineering in relation to the supply demand positions, and looks at the company ‘s ability to implement and originate the engineering. These new technological know-how is for the intents of increasing the organisation refinery capacity, guaranting a growing in its upstream, downstream and chemical divisions ( ExxonMobil, 2009 ) .
Apart from increasing the company ‘s gross base, the organisation to a great extent invests into new engineering for intents of bettering efficiency in the supply and production of energy.
Menaces Confronting ExxonMobil:
Economic recession in United States of America and Europe is one of the chief menaces confronting ExxonMobil. The company has operations in Europe, and its central office is in Texas, America, and hence economic jobs ‘ confronting these states is a menace to its fiscal laterality. Coll ( 2012 ) observes that the state of affairs is bad in Europe, with provinces such as Greece and Poland unable to protect their civilians against rough economic conditions ( Coll, 2012 ) .
Poor economic status, limits the demand of energy merchandises, ensuing to decreased profitableness. For illustration, as by 2nd November 2012, the monetary values of oil fell by 22 cents a barrel. Industrial experts denote that, this emanates from a lag in the United States economic system, ensuing to a diminution of energy merchandises, such as fuel and gas.
Another illustration that explains the symbiotic relationship between economic growing and oil production is the rise of oil monetary values on 25th October 2012, due to a information, explicating an betterment on the American economic system.
In Europe, states such as Italy and Greece face economic jobs, and ExxonMobil has subordinate companies runing in such economic systems. In Italy, the company has three subordinate organisations, and they are Esso Italiana, ExxonMobil Mediterranea, and Sarpom watering place ( Coll, 2012 ) .
Because of the hapless economic status in Italy, the company sought to retrench its staff, to a manageable degree. For illustration, in the twelvemonth 2004, due to economic recession in Europe, the company initiated a policy of work force decrease. It signed an understanding with the Italian Union of workers where it will cut down its work force by 346 ( ExxonMobil, 2005 ) .
In negociating the understanding, the company agreed to pay fiscal inducements to employees who volitionally left the organisation. The trade was to cut down its subordinate company, Sarpom watering place by 31 people, ExxonMobil Mediterranea by 32 and Esso Italian by 283 people ( Coll, 2012 ) .
Another menace confronting the company are hazards of making concern outside the United States of America ( ExxonMobil, 2000 ) . The company does concern in states such as Indonesia, and late, it closed its operations in the state due to build up struggle between the Rebels and authorities forces.
The political and economic in United States of America is feasible for concern operations, and American companies embarking outside the province, sums to tonss of calculated hazard taking. ExxonMobil has a presence in more than 200 states in the universe, through its trade names Exxon, ExxonMobil, Esso and Mobil ( ExxonMobil, 2010 ) .
The gross generated from outside United States of America sums to 70 % of its entire gross and therefore their international subordinate companies are of import. However, there are hazards of making concern outside America ( ExxonMobil, 2010 ) . For case political instability in states such as Nigeria and Chad, whereby there are armed struggles.
This makes their operations hard, and their employees risk losing their lives. In Europe, the company has presence in virtually all European markets. The European provinces face an economic recession, and this threatens its profitableness ( Choi, 2008 ) .
Environmental Torahs and legislative acts are other menaces that the organisation faces in relation to the geographic expedition and production of energy merchandises. The operations of the entity are capable to legion Torahs and guidelines that guide the protection of the environment.
The current century, there are legion environmental amendss such as planetary heating, caused by C emanations to the ambiance. Recently, the company faces a case in relation to oil spillage at the Yellowstone River.
In decision, ExxonMobil is a good company to put in. This is because the strengths and the chances of the company far outweighs the failings and menaces confronting the company. For illustration, as a leader in the market, the company manages to do extortionate net incomes to the melody of one million millions of dollars, and as per 2012, it was the taking company in the universe in relation to gross accretion.
The company has a stable fiscal record, and most investors prefer to put in a company that guarantees so net income. Since 2004, this company has seen growing in its profitableness, even though it faces legion challenges in relation to energy production, and ordinance ( Coll, 2012 ) .
Its diversified gross steam protects it against trusting on one beginning of income, and therefore doing it really attractive to put in it. Apart from its strengths, the company experiences growing on about all the sectors of its operation. For case, in 2000, the company acquired the Sable Offshore Energy Company, at a melody of 2 billion dollars ( Abreu, 2010 ) .
In 2002, the company created the ExxonMobil travels, while in 2006, the company made an entry into Germany and Poland markets. The purpose of the organisation was to administer lubricators ( Coll, 2012 and Abreu, 2010 ) . The company has confederations with other organisations such as, Infenium and Imperial oil. These confederations are for intents of protecting its market portion, and hence better its profitableness.
Finally, the ground as to why I advocate for puting into the company, it its efficient leading, and operational organisation. The central office of the company is in Texas, and it engages in the marketization of its merchandises through the trade name names of Esso, Exxon and Mobil. To efficaciously sell its merchandises, it uses subordinate companies such as Sea river maritime and imperial oil limited.