Exxon Mobile Case

Exxon Mobil is the largest U.S. Company in the world and it participates in three very profitable industries: Mining/Crude-Oil industry, Petroleum Refining, and Chemicals. Exxon Mobil is a multinational oil and gas corporation. They have evolved over the past 125 years as a regional marketer of kerosene in the U.S. to the largest publicly traded petroleum and petrochemical enterprise in the world. Today Exxon Mobil operates in most of the world's countries and is best known by their familiar brand names: Exxon, Esso and Mobil. They make the products that drive modern transportation, power cities, lubricate industry and provide petrochemical building blocks that lead to thousands of consumer goods.

Exxon Mobil was founded by John Rockefeller and his associates in 1870 originally named standard oil company. By 1882 Standard Oil Company was renamed Standard Oil Company of New Jersey (Jersey Standard) and the Standard Oil Company of New York (Socony). Standard Oil broke up into 34 unrelated companies after a U.S. Supreme Court ruling, including Jersey Standard, Socony, and Vacuum Oil. After 100 years in business the company went through yet another name change to Mobil Oil Corporation. In 1972 Jersey Standard becomes Exxon Corporation. In November 30, 1999, Exxon and Mobil join together to become Exxon Mobil Corporation. The merger increased their ability to be a more effective global competitor in the volatile economy and in an industry that is very competitive. In 2005 both Exxon Mobil and Qatar Petroleum with joint venture partners expanded the development of the giant North Field offshore Qatar, which is the largest non associated gas field in the world. Increased global energy demands and managing the risk of green house gases are the two critical challenges for them. They address these issues by applying science and innovation to find better, safer, and cleaner ways to meet the global energy demands. (Exxon Background)

Exxon Mobil's mission is considered "Guiding Principles" and "Taking on the world's toughest energy challenges." is an advertising slogan that Exxon uses. Their mission statement states: "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 adhering to the highest standards of business conduct. These unwavering expectations provide the foundation for our commitments to those with whom we interact." (Exxon Mobil)

The current issues that Exxon Mobil faces are: energy outlook, spill prevention, safety, hydraulic fracturing policy, capital investments, managing climate change risks, community investment, transparency, U.S. energy policy, environmental performance, energy technology, stable tax policies to spur long-term investment, political involvement, reducing greenhouse gas emissions from our operations, human rights and security, and Exxon Valdez. The biggest issue they face on a day to day basis is spill prevention. In 2009, there were about 27,000 marine vessel voyages, and there was only one leak of trace amounts of oil from a long-term leased vessel and this spill was not from an ExxonMobil marine affiliate owned and operated vessel or barge. Exxon credits this performance to a rigorous screening process for all marine vessels, which examines hundreds of technical, operational, and other noncommercial factors. Only those vessels that meet the highest criteria are considered for hire to ensure high levels of overall safety and quality.(Issues)

Porter's five forces analyses these issues: Threat of new entrants, business rivalry, supplier power, buyer power, and threat of substitutes. The threat of new entrants is low because barriers to entry include high capital cost, economies of scale, distribution channels, proprietary technology, environmental regulation, geopolitical factors, and high levels of industry expertise needed to be competitive in the areas of exploration and extraction. Additionally, fixed cost levels are higher for upstream, downstream, and chemical products; which makes it very difficult for new companies to enter the market. Business rivalry is high because of the commodity-based nature of the business. Also there is competition with other industries that supply chemical, energy, and fuel for both industrial and individual consumers. The industry growth rate (based on the global demand for petroleum) is estimated to be 1.9% in 2008 and does not pose a threat or an opportunity. Since the oil industry is a commodities market, the competitive advantage is primarily from the ability to produce products at a lower cost via operational efficiencies. The significant number of competitors includes ExxonMobil, BP, Chevron, Conoco Philips, and Royal Dutch Shell. The supplier powers are the oil mining and extraction firms. Supplier power is high because OPEC controls 40% of world's supply of oil and, thus, has a strong influence on the price of oil. OPEC's influence on oil prices is a threat because Exxon purchases oil on the open market. In addition, unstable countries that host Exxon oil reserves are a threat because they can seize Exxon's