This paper evaluates the different business level and corporate level strategies employed by ExxonMobil Corporation in its daily international business activities and operations and those strategies which will guarantee the oil and gas corporation long term success in the global market. This paper also analyzes the competitive environment facing ExxonMobil Corporation in the oil and gas global industry and its most significant competitor. Finally, this paper surveys whether the competitive environment facing ExxonMobil Corporation would differ in a slow cycle and fast-cycle markets.
ExxonMobil Corporation is a multinational company that is involved in international business activities and operations within the global oil and gas industry. It is an American private enterprise and has its headquarters in Texas, the United States of America. The company was founded back in the year 1999, following the merger of two oil and gas multinational companies, Exxon and Mobil, making it the third-largest company in the entire world in terms of revenue. Moreover, the merger and subsequent progress over the years have ensured that ExxonMobil Corporation becomes the second-largest multinational company in the world that trades publicly in terms of the oil and Gas Company’s market capitalization. Some of the major products that it manufactures and distributes in all its stores worldwide include petrochemicals, fuels as well as different types of lubricants. The firm employs over 75, 000 employees all over the world and its revenues in 2013 were the US $ 420.836 billion, indicating the sheer size and financial strength of the oil and gas multinational.
ExxonMobil Corporation also has numerous subsidiaries that carry out its business operations within different countries abroad such as Neftegas, Imperial Oil, Vacuum Oil Co. Aera Energy and Esso. Due to the large size of the company and the global business operations and activities that it usually engages in, the multinational oil and gas company is organized into a number of divisions to cover different types of services. For instance, the upstream division of the oil and gas multinational corporation covers business activities and operations that deal with the exploration and extraction of oil, different wholesale operations and the shipping of the different oil products, petrochemicals, and lubricants that the company produces. The downstream division, on the other hand, deals with the refining of oil, marketing the different products manufactured by the company as well as different operations involving retailers all over the world.
Other divisions deal specifically with minerals and coal mining business operations and activities, as well as the exploration of other minerals. As a huge multinational corporation, is the third-largest business company in the world by revenue as well as being a world leader in the exploration, extraction and refining of oil, gas and other mineral products in the world, ExxonMobil Corporation has to employ different effective and efficient business-level strategies to ensure that it continues to maximize on its strengths and opportunities, as well as maintaining its profits and global leader position. At the same time, since the multinational oil and gas company is a global and well-known corporation, the company has been forced to implement different corporate-level strategies globally, to ensure that its corporate image and other corporate activities that it is usually involved with are on track. The business-level strategies, as well as the corporate level strategies, are what have enabled the firm to rise into a global leader in the oil, gas and other minerals exploration and extraction industry.
Some of the business-level strategies that ExxonMobil Corporation has employed over a period of time in its different international business activities and operations include cost leadership and cost advantage, differentiation of its numerous oil, lubricants and petrochemical products, integrated focused low-cost and differentiation strategies among others. Some of the corporate-level strategies that ExxonMobil has also employed in its international business operations and activities include the transfer of core competencies within the company’s international and domestic operations, the diversification of macroeconomic and operational risks among others.
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Business Level Strategies Used by ExxonMobil Corp
Business Level Strategies refer to those strategies that different business organizations and enterprises normally employ to enable it to gain an adequate competitive advantage over its significant rivals and competitors and to also help them achieve long term success, growth, and profitability. Some of the business-level strategies employed by ExxonMobil include;
Cost Leadership. Cost leadership is a business-level strategy used by different business organizations and enterprises that refer to efforts by these business organizations and companies to lower the costs of the different goods, services and products they produce to outdo their business rivals and competitors. ExxonMobil has over the years been using cost leadership as a business level strategy to ensure that it grabs and maintains a substantial amount of the American domestic oil, gas and minerals industry as well as the global oil, gas, and minerals industry. By lowering the prices of its differentiated products such as fuel, petrochemicals, and lubricants from time to time, ExxonMobil has been able to gain a considerable cost advantage over some of its key domestic and international competitors such as the Royal Dutch Shell Plc., British Petroleum Plc. and Chevron Corporation. The cost leadership business-level strategy has also enabled ExxonMobil to standardize most of its fuel, lubricants and petrochemical products, ensuring the multinational oil and gas corporation increase its global share of the international market share and base. The firm has been able to achieve the business level strategy of being a cost leader through maintaining tight and firm control over the production process of its lubricants, petrochemicals, and fuels, as well as the overhead costs that normally arise in any business organization/company’s activities and operations.
ExxonMobil has also been able to be a cost leader in the American and the global oil, gas, and minerals industry through the minimization of costs that emanate from sales processes, as well as other business activities and operations of the oil and gas multinational such as research and development, to improve its products. Being one of the biggest companies in the world, both by revenue as well as by market capitalization, the firm has also had the unique ability to build facilities that are highly efficient and effective, which becomes difficult for some of its many competitors to compete on those terms.
The cost leadership business strategy has further helped ExxonMobil to remain highly profitable over the years since it was founded in 1999 even with the many competitors that it has since its business rivals both in the American and in the global market do not wish to engage in a price war, knowing too well the financial muscle and resources that the firm possesses. This particular business-level strategy has also ensured that ExxonMobil is able to absorb any price increases at the end of its numerous suppliers, hence, it has not been heavily affected by raw materials price increases from suppliers. Being a cost leader in the American and the global oil, gas, and minerals industry, the company has used its position to create barriers to entry into the industry by new oil, gas and mineral firms through cost reduction and efficient operations. Consequently, the cost leader business-level strategy has enabled ExxonMobil to invest in and develop different substitutes, thereby granting it a substantial cost advantage over its different domestic and global competitors.
Differentiation of Products. Another business-level strategy employed by ExxonMobil is through the differentiation of its fuels, lubricants and petrochemical products that it produces. Differentiation is a business level strategy that refers to the process adopted by different business organizations and companies in a bid to distinguish their products and services from those of their rivals and competitors to make it more attractive to consumers and/or customers. Differentiation has helped the oil and gas multinational to create value of its different products through high customer service, the production of high quality goods and products, the management of the oil and gas multinational’s image, use of advanced technology in its operations and products as well as rapid innovation in regards to the products it sells. Using this particular business-level strategy, ExxonMobil has been able to lower the cost for buyers while at the same time increasing the enjoyment and performance of buyers who purchase the oil and gas giant’s fuels, lubricants and petrochemicals and also the sustainability of its products. This business-level strategy has been able to provide a substantial competitive advantage to the various products made and sold. It has also enabled the oil and gas multinational to maintain customer brand loyalty across the globe despite the fierce competition from its key rivals and competitors and to bar any new business firms and enterprises seeking to venture into the America and the global oil, gas, and minerals industry.
Integrated Low-Cost/Differentiated Strategy. An integrated low-cost/differentiated strategy is a business level strategy that business organizations and companies employed to counter increasing global competition in their business operations and activities. ExxonMobil has utilized the integrated low-cost/differentiated business-level strategy over the years in its global business activities and operations, and this strategy has enabled it to adapt to any environmental changes occurring within the highly competitive and sensitive oil, gas and mineral industry. The integrated low-cost/differentiated business-level strategy has also enabled ExxonMobil to learn and adopt newer technologies, skills and innovative ideas that have helped it in its exploration, extraction and production processes. Finally, the integrated low-cost/differentiated business-level strategy has allowed the oil, gas and minerals giant to leverage its core business competencies, ensuring low cost and differentiated products.
Focused Low Cost and Differentiation. Focused low-cost and differentiation business-level strategy is a strategy that focuses on the two business strategies of differentiation and lowering of costs in order to increase the profitability and market share of a given business organization or company. ExxonMobil has also utilized this particularly focused business-level strategy to serve the consumer needs of particular domestic and global market segments, increasing consumer loyalty and market share among such market segments
In my view, the most important business-level strategy that can guarantee ExxonMobil with long term success is the cost leadership business-level strategy. This is because of the different and many advantages that being a global cost leader in the oil, gas and mineral industry has brought to ExxonMobil and will continue to bring to it. These advantages include cost advantages over its competitors, increased profitability, absorption of increased prices of supplies and raw materials and increased market share and customer brand loyalty among other advantages. This is a good choice of business-level strategy and will ensure long term success for the business operations and activities of the company as a whole.
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Corporate Level Strategies Used by ExxonMobil Corp
Corporate level strategies refer to those strategies that business organizations and enterprises normally undertake to provide strategic scope and direction to the management of the business organization, with the end result that the business organization will be able to achieve its numerous goals, missions, visions, and objectives. Some of the business-level strategies employed by ExxonMobil Corp. include:
- Transferring of Core Competencies. The transferring of the core competencies of a particular business organization or company is one of the major corporate-level strategies and refers to an area of operation that a company or business firm excels in beyond its competitors and enables it to increase its value to consumers. Core competencies usually come from a unique set of skills, innovation and techniques of production, distribution and sale of products. As a multinational company, ExxonMobil has used this particular corporate level strategy within the entire company, to make sure that the sales force, the channels of distribution and also the logistical networks in and around the oil, gas and minerals giant, thereby strengthening the company’s business operations. Furthermore, this corporate strategy enables restructuring in the company’s activities and operations, ensuring efficiency.
- Diversification of Macroeconomic and Operational Risks. This is another corporate-level strategy that different business organizations and companies normally use, and ExxonMobil has also used it over the years, especially due to the excessive amount of resources, both capital and human that it possesses. In my view, the corporate level strategy that has the ability of ensuring long term success for ExxonMobil is the transferring of core competencies, since they can be reused, it is tough for competitors to imitate these competencies and it increases product values for the company’s customers.
Competitive Environment Surrounding ExxonMobil Corporation
ExxonMobil operates in a highly competitive global environment since the international oil, gas, and minerals exploration and extraction industry comprises of other large multinational corporations and companies jostling for the global market share and profitability. Some of the key rivals offering the firm a massive level of competition in the global oil, gas, and minerals exploration and extraction industry include the Royal Dutch Shell Plc., British Petroleum Plc. and Chevron Corporation. These competitors also use business-level strategies of cost leadership, focused differentiation/low-cost, and differentiation of products to varying degrees. In addition, ExxonMobil’s main competitors employ similar corporate levels strategies such as transferring their core competencies and macroeconomic/operational risks diversification. In my view, ExxonMobil and the Royal Dutch Shell Plc are the two oil and gas companies with the best chance of achieving long term success due to the amount of capital, skill and human resources available to them, their big global market share, and their world leader positions in the global oil, gas and minerals industry.
ExxonMobil Corporation’s Competition and Slow/Fast Cycle Markets
Slow cycle markets refer to business markets that experience business cycles marked by low trade volumes or low levels of market volatility, hence, trade is not speedily carried out while fast-cycle markets refers to business markets that experience business cycles marked by high trade volumes or high levels of market volatility in terms of the speed of business activities. In slow cycle markets, the choice of ExxonMobil Corporation and the Royal Dutch Shell Plc would differ as these two multinationals depend on trade volumes and market volatility to be able to profit from their oil and gas products. On the other hand, their long term success wouldn’t differ in a fast cycle market, as is the current global oil, gas and minerals industry, where the volume of trade is relatively high and business operations are executed speedily.