Exxon Mobil Corporation
Exxon Mobil Corporation
Products and Services
Exxon Mobil Corporation is an American multinational and a world leader in the oil and gas business. It is the largest publicly traded oil and gas company worldwide. The company is responsible for the significant production of the following products: butyl, ethylene propylene diene (EPDM) rubber, polyethylene, polymer modifiers, polypropylene, tackifiers, thermoplastic vulcanizates (TPV), specialty catalysts as well as chemical and fluids. The products within the chemical and fluids category include: base stocks for lubricants, branched alcohols, branched higher olefins, neo acids, plasticizers, and solvents. In addition to products, the international company also offers various technology licensing and services in the downstream that comprise: planning and process studies, development of design specifications, operations support during start-up and commissioning, ongoing technical services for optimization or troubleshooting, catalyst performance monitoring
According to Exxon Mobil’s annual report, the company made sales worth a revenue of two hundred and thirty-eight billion dollars by the final quarter of last year. Over the past five years, the sales revenue has fluctuated from a high of close to four hundred billion US dollars in 2013 and low of two hundred billion dollars in 2016.
ExxonMobil still reigns supreme in the oil and gas sector in terms of market share. The company has overwhelmingly weathered the plunge in oil prices and recently become profitable again holding onto its title as the world's largest publicly traded oil and gas corporation (Gensler, 2017, May 24). Macro trends estimates the market capitalization for Exxon Mobil (XOM) on the New York Stock Exchange as close to three hundred and forty-five billion dollars as of March 31, 2018. Exxon Mobil Upstream segment accounts for 5.03% of the market share followed closely by Chevron Corp’s exploration and production segment at 4.38%.
The Texas-based company is thirteenth on Forbes' 2017 Global 2000 list of the world’s biggest and most influential public companies, as measured by a composite score of revenues, profits, assets, and market value. It slipped four spots from last year but has started to see its fortunes turn as oil prices climb. Exxon reported a 122% surge in profits in its latest quarter (Gensler, 2017, May 24).
Exxon Mobil operates in an oligopolistic market structure. Indeed, the oil and gas industry is characterized by the following distinct features specific to the oligopoly market structure. First, the sector subjugated by a small number of large firms including Exxon Mobil (Kumar, 2016, August 29). These large firms can collectively control the variables within the market including price, but no particular firm has absolute power of autonomy and operation within the market. Secondly, these firms sell either identical or differentiated products.
The oil and gas sector operates within the identical product oligopoly structure in that they produce similar intermediate products for use by other industries. Exxon Mobil produces, among others, rubber that is used by the automobile industry. Thirdly, the industry has significant barriers to entry especially given the imminence of the high start-up costs associated with any firms looking to approach this industry (Kumar, 2016, August 29).
Though Exxon Mobile has its headquarters in the United States, the company has diversified far and wide in the following regions (Explore the many locations of operations, exploration and marketing of Exxon Mobil Corporation, 2018):
• North America – Canada, Caribbean / Guatemala, México, United States
• Middle East – Iraq, Kuwait, Qatar, United Arab Emirates, Saudi Arabia.
• Asia Pacific – Australia, China, Guam Sub-Cluster, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Papua New Guinea, Singapore, South Korea, Taiwan, Thailand, Vietnam
• Europe - Azerbaijan, Belgium, Germany, Cyprus, European Union, Finland, France, Ireland, Italy, Kazakhstan, Luxembourg, Netherlands, Norway, Romania, Russia, Turkey, United Kingdom
• South America – Argentina, Brazil, Colombia, Guyana
• Sub-Saharan Africa - Angola, Chad, Cameroon, Guinea, Mozambique, Nigeria, Tanzania
Competition to Exxon Mobil Corporation
The oil and gas industry faces competition especially amongst the most significant firms especially given its global scale of operation. Five among the great competitors to Exxon Mobil are Royal Dutch Shell, British Petroleum, Chevron Corp, ConocoPhillips and Honeywell International Inc. These firms have significant market share given their size and influence in the market. Additionally, the five firms enjoy the benefits of being significantly established such that they all experience almost similar levels of economies of scale. In this, they are able to effectively cut on their costs of production and thrive suitably on pecuniary profitability (Gensler, 2017, May 24).
Economic Concepts for Competitive Advantage
In a bid to remain at the top spot in an environment dominated by giant industries, Exxon Mobil embraces the various techniques. Notably, the oil and gas giant hires and retains exceptional staff. Primarily, the best and most important asset of any given corporation is its employees. Exxon Mobil is alive to this fact, and hence the company recruits the best talent around the globe and trains for technical expertise and leadership capacity (ExxonMobil's business model and competitive advantages, 2018). Needless to say, Exxon Mobil maintains an unmatched financial position allowing it to thrive competitively as it can quickly benefit from economies of scale. Any given company with international scope must operate within reasonable yet globally suitable financial health to maintain its fundamental presence and influence.
Additionally, in light of the dynamism being witnessed in the global business scale, Exxon applies high impact technologies. Notably, the company prides in being a global leader in the development and application of technology on all of its arms of operations. Such technology fosters efficiency within the firm and reduces the costs associated with production. In addition, the corporation has diversified globally and hence attaining significant value across the entire supply chain (ExxonMobil's business model and competitive advantages, 2018). The structural advantages of such integration have made it significantly complicated for competitors to replicate.
Essentially, Exxon Mobil operates in a safe and environmentally friendly manner. The nature of the oil business is such that it can cost the company billions of dollars if the company is found to be non-compliant to environmental laws. Exxon has significantly reduced the chances of incurring such fines by observing the relevant rules. Finally, the company has mastered the capacity to invest such as to bear the most significant investor value over time (ExxonMobil's business model and competitive advantages, 2018). With such a return, the company can hence remain afloat and thrive suitably against global competition across the industry.
Impacts of Recent Market Events
All markets are sensitive to market changes. The oil and gas sector has been vehemently affected by the changes in the Benchmark Crude Oil Prices. Such change resulted in the notable fluctuation of the value of Exxon Mobil in line with changes in crude oil benchmark (Gensler, 2017, May 24). For instance, a drop in the WTI crude oil price to $43 in 2016 led to a loss in value of Exxon Mobil by approximately 2.7%. A subsequent rise in the benchmark to $51 raised the company’s value by 5.7% last year. Notably, fluctuation in the WTI crude oil price in any given direction has a direct implication on th...